SOUTHENDPRIME RETAIL WAREHOUSE INVESTMENT OPPORTUNITY
ENTER
LONDON ROAD RETAIL PARK SS1 1PA
INVESTMENT CONSIDERATIONSn Southend-on-Sea lies 45 miles east of Central London with a fastest journey
time by rail of 50 minutes.
n The town is relatively affluent, as demonstrated by the mean income of the 20 minute catchment, being 4.6% above the UK average.
n London Road Retail Park is located in a prominent position on the A13 London Road close to the town centre, Southend Victoria and Central Railway Stations and directly opposite a Sainsbury’s foodstore. There is a limited amount of retail warehousing in the town and general area, with a number of outstanding requirements.
n The subject property totals 74,954 sq ft with 222 car parking spaces and is arranged as a standalone unit let to Homebase with a garden centre, and a separate terrace occupied by Currys PC World and Pets at Home.
n The property is fully let on 3 FRI leases to 3 strong covenants and currently produces a total rent of £1,177,322 per annum, at rents ranging between £15.37 – £19.00 per sq ft.
n We are instructed to seek offers in the order of £15,728,500 (Fifteen Million, Seven Hundred and Twenty Eight Thousand, Five Hundred Pounds) for the freehold interest, subject to contract. A purchase at this level would reflect a net initial yield of 7.00%, assuming purchaser’s costs at 6.73%.
SOUTHEND BACK | NEXT LONDON ROAD RETAIL PARK SS1 1PA
HOMEINVESTMENT
CONSIDERATIONS LOCATION & SITUATION DEMOGRAPHICS RETAIL WAREHOUSING& DESCRIPTION TENURE & PLANNING TENANCY &
COVENANT INFORMATIONERV, ASSET MANAGEMENT,
EPC & VATPROPOSAL &
FURTHER INFORMATION
LOCATIONSouthend-on-Sea is in Essex, approximately 45 miles east of Central London, 20 miles south east of Chelmsford and 15 miles east of Basildon, within the ‘Thames Gateway’.
The town benefits from excellent transport communications. The A127 and the A13 provide direct links to the M25 motorway and Thurrock to the west and Chelmsford via the A130 to the north west.
Southend-on-Sea is also easily accessible via train. There are 2 stations in the town, which provide services to London Fenchurch Street and London Liverpool Street, with the fastest journey time at just 50 minutes.
London Southend Airport is located 2 miles north of the town centre. A new terminal was built in 2012 and the airport now provides flights to over 20 destinations in Europe and the UK. Passenger numbers are expected to grow towards 2 million per year by 2020.
CHANNELTUNNEL
TERMINAL
LUTON
STANSTED
87
9
10
6
12
43 5
763 54
7
6
3130
4
5
2
8
9
2 1
99
5
4
2
1
2524
221
4
5
29
28
8
72
3
6
5
4
8
7
2
26
M23
M1
M2
M25
M20
M25
M25M26
M20
M10
M11
Canvey Island
Tonbridge
SevenoaksOxtedRedhill
Reigate
CroydonSwanley
Dartford
EpsomSutton
Kingstonupon Thames
Woolwich
Gravesend
Maidstone
Chatham
LONDON
HatfieldHoddesdon
Sheerness
Whitstable
Rayleigh
Chelmsford Maldon
FavershamSittingbourne
Tilbury
ChigwellEnfield Brentwood
Basildon
RochesterGillingham
Harlow
LONDON
Hertford
WelwynGardenCity
Ware Witham
BraintreeBishop's Stortford
Stevenage Colchester
SOUTHEND-ON-SEA
A13 LONDON ROAD
VICTORIA AVE A127
QUEENSWAYQUEENSWAY
LONDON RD
BRIGH
TEN RD
NO
RTH RD
AVEN
UE R
D
PARK RD QUEENS RD
PRINCES ST
ASHBURN
HAM
RD
GO
RDON
RD
NAPIER AVE
ELMER AVE
PARK ST
NORTH
RD
MIL
TON
RD
PARK TERRACE
BAXTER AVE
GORDON PL
HAM
LET
CT R
D
SALISBURY AVE
BALM
ORA
L RD
WINDSOR RD
OSBORNE RD
ST JOHN’S RD
ST HELEN’S RD
CANEWDON RD
PARK CRES
AVENUE TERRA CE
ALBANY AVE
CLIFF AVE
CHICH
ESTER RD
SHO
RT ST
WHITEGATE RD
MILTO
N ST
GRA
ING
ER RD
BURDETT AVE
BOSTON AVE
SOUTHENDVICTORIA
SOUTHENDCENTRAL
LONDON ROADRETAIL PARK
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SITUATIONLondon Road Retail Park is located in a prominent position on the A13 (London Road) junction with Queensway, directly opposite a Sainsbury’s foodstore. The property is within close proximity of thetown centre.
HOMEINVESTMENT
CONSIDERATIONS LOCATION & SITUATION DEMOGRAPHICS RETAIL WAREHOUSING& DESCRIPTION TENURE & PLANNING TENANCY &
COVENANT INFORMATIONERV, ASSET MANAGEMENT,
EPC & VATPROPOSAL &
FURTHER INFORMATION
DEMOGRAPHICSAccording to ACORN, the population within a 20 minute drive time of the property is 263,228, also encompassing the adjoining centres of Rayleigh, Rochford and Great Wakering. Car ownership is higher than average within a 20 minute drive time, with 76.4 % of households owning at least one car, compared to a national average of 73.9% (CACI). By far the dominant social group using the ACORN classifications within this catchment is ‘comfortable communities’ standing at 38.5% (101,300), as compared to the national average of 26.7%, and we would expect this sector to be prime users of retail warehousing.
In the CACI expenditure report for the area notable categories where the expenditure is above average are ‘house repair, maintenance & decoration’ at 106% of the index, ‘furniture, furnishings & floorcoverings’ at 106%, ‘household textiles’ at 110% and ‘tools & equipment for the house & garden’ at 125%. Items such as clothing, footwear and personal goods (watches, jewellery, etc) i.e. goods not generally sold from retail parks, are all below average. The affluence of Southend is further emphasised by gross family income data. The mean income of the 20 minute drive time area is £38,139; 4.6% above the UK average. By 2025, the catchment population is forecast to increase by 2.5% to 277,212 (ACORN).
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A13 LONDON ROAD
SOUTHEND VICTORIA
HOMEINVESTMENT
CONSIDERATIONS LOCATION & SITUATION DEMOGRAPHICS RETAIL WAREHOUSING& DESCRIPTION TENURE & PLANNING TENANCY &
COVENANT INFORMATIONERV, ASSET MANAGEMENT,
EPC & VATPROPOSAL &
FURTHER INFORMATION
A127
VICTORIA AVELONDON RD
A1160
A13
A115
9
A1159
A1159
EASTERN ESPLANADE
MARINE PARADE
WESTERN ESPLANADEWOODGRANGE DR
LIFSTAN W
AY
B1015
B1015
FAIRFAX DR
PRITTLEWELL CHASE
ROCH
FORD
RD
HO
BLEY
THIC
K LN
SOUT
HEN
D RD
SHO
PLAND R D
SUTT
ON
RD
CARLTON AVE
PRITTLEWELL
SOUTHEND AIRPORT
SOUTHENDCENTRAL
SOUTHENDVICTORIA
WESTCLIFF-ON-SEA
SOUTHENDEAST
Airport Retail Park(92,081 sq ft)Open A1 non foodTenants include: Argos, B&M,Sports Direct, Home Bargains, Carpetright, Dreams,Pets at Home
Greyhound Retail Park(110,000 sq ft)Open A1 non foodTenants include: Matalan, Mecca Bingo, Poundstretcher,Farmfoods
Fossetts Park(134,410 sq ft)Bulky goods consentTenants include: B&Q, Maplin, Majestic Wine
LONDON ROADRETAIL PARK
DESCRIPTIONThe subject property totals 74,954 sq ft and is arranged as a standalone unit let to Homebase with a garden centre and parking at the front, and a separate terrace occupied by Currys PC World and Pets at Home. This terrace was constructed as a second phase to the original unit occupied by Homebase, and also has car parking at the front.
Servicing is accessed via a separate road to the rear of the Homebase unit and leads to the rear of the other terrace. The scheme benefits from 222 car parking spaces, which equates to a car parking ratio of 1 : 337 sq ft.
The total site area is 5.25 acres, providing a low site cover of 31%.
RETAILWAREHOUSINGIN SOUTHEND
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HOMEINVESTMENT
CONSIDERATIONS LOCATION & SITUATION DEMOGRAPHICS RETAIL WAREHOUSING& DESCRIPTION TENURE & PLANNING TENANCY &
COVENANT INFORMATIONERV, ASSET MANAGEMENT,
EPC & VATPROPOSAL &
FURTHER INFORMATION
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33.2m
OAD
BRIG
HTEN
RO
AD
Car ParkWard Bdy
CR
33.5m
TCB
El Sub Sta
LONDON ROAD
BOST
ON
AVE
NU
E
Car Park
Sub StaEl
London Road Retail Park
15
23
35
61
Surgery
Nazareth House
St Helen's RC
Primary School
87
33.5m
Sub Sta
1 to 78
El Sub Sta
El 60
CharlotteM
ews
51
85
62
39
6
5856
20
32
22
34
850
5452
0m 25m 50m 75m
Ordnance Survey © Crown Copyright 2015. All rights reserved. Licence number 100022432. Plotted Scale - 1:1434
TENUREThe site, delineated in red opposite, is held freehold.
PLANNINGThe property benefits from an open A1 non food planning consent. Further details are available on request.
SOUTHENDLONDON ROAD RETAIL PARK SS1 1PA
HOMEINVESTMENT
CONSIDERATIONS LOCATION & SITUATION DEMOGRAPHICS RETAIL WAREHOUSING& DESCRIPTION TENURE & PLANNING TENANCY &
COVENANT INFORMATIONERV, ASSET MANAGEMENT,
EPC & VATPROPOSAL &
FURTHER INFORMATION
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TENANCYThe property is let on full insuring and repairing leases:
Unit TenantArea
(sq ft)LeaseStart
Lease Expiry
Next RentReview
Lease Term(years)
BreakOption
Passing Rent(per annum)
Rent(per sq ft)
Comments
1 Homebase Ltd 47,212 24-Dec-2002 23-Dec-2022 24-Dec-2017 20 £670,000 £14.19Lease states the floor area at review as 42,852 sq ft.
2 DSG Retail Ltd 21,150 29-Sep-2000 28-Sep-2020 29-Sep-2015 20 £401,850 £19.00
3 Pets at Home Ltd 6,592 21-Feb-2011 20-Feb-2025 21-Feb-2016 15 20-Feb-2021 £105,472 £16.00Side letter allowing tenant to pay rent monthly. Reviews to lower of OMV or 2.5% per annum compounded.
SubstationThe EasternElectricity Board
02-Apr-1979 01-Apr-2078 99 £0
Landlord responsible for external repair, although potentially recoverable via service charge. Terminable on 6 months notice if landlord wants to redevelop.
Total 74,954 £1,177,322 £15.71
There is an annual car parking receipt from Parking Eye for car parking charges, totalling approximately £50,000. Under the existing agreement, approximately 10% of this income is returned to the landlord and then put towards the service charge. The overall service charge budget is currently around £65,000, therefore reducing to around £60,000 with this receipt.
COVENANT INFORMATIONThe property is fully secured against 5A1 D&B covenants. We have summarised the most recent tenant accounts below:
Unit Tenant Year EndingSales Turnover
(000’s)Profit / Loss
Pre Taxes (000’s)Net Worth
(000’s)D&B Rating
1 Homebase Ltd27-02-2016 £1,360,112 £32,824 £8,263
3A228-02-2015 £1,408,807 £7,551 £379,666
2 DSG Retail Ltd02-05-2015 £4,314,000 £116,800 £395,900
5A130-04-2014 £4,078,300 £94,100 £377,500
3 Pets at Home Ltd26-03-2015 £689,697 £79,920 £517,138
5A127-03-2014 £633,429 £83,858 £462,445
HOMEINVESTMENT
CONSIDERATIONS LOCATION & SITUATION DEMOGRAPHICS RETAIL WAREHOUSING& DESCRIPTION TENURE & PLANNING TENANCY &
COVENANT INFORMATIONERV, ASSET MANAGEMENT,
EPC & VATPROPOSAL &
FURTHER INFORMATION
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ESTIMATED RENTAL VALUEWe consider that there are prospects for achieving a rental uplift on the outstanding Pets at Home rent review. At Fossetts Park, Eastern Avenue, adjacent to a Waitrose and B&Q Warehouse, the former Comet unit has now been let to Wren Living. The unit extends to 15,000 sq ft and we understand the landlord has agreed a rent based on £20.00 per sq ft. Adjoining Fossetts Park on a site comprising part of SouthendUnited’s training ground, there is a proposal for some 192,000 sq ft of retail warehousing and a 12 screen cinema, linked to a new football ground development for the local team. However, whilst we believe there would be strong occupier interest,particularly from traditional high street retailers requiringan open consent, we understand the proposals are currently on hold. On the Airport Retail Park, which comprises some 92,000 sq ft in 10 units, Argos (9,832 sq ft) agreed an increase from £20.00 to £21.50 per sq ft effective from 24 June 2014. More recently, however, we understand a retailer has bid a rent in excess of £30.00 per sq ft for a 7,000 sq ft unit here, but the landlord cannot currently secure vacant possession. In the light of this offer, we understand the landlord is proceeding with a rent review on the SportsDirect.com unit that is currently let off £22.48 per sq ft for 10,000 sq ft and this is now subject to Arbitration proceedings. Therefore, in our opinion, it is clear there is strong demand for quality retail warehouse accommodation in Southend and there are good prospects for an uplift at the outstanding rent review.
ASSET MANAGEMENT Following on from settling the rent review on the Pets at Home unit, we believe there is, in time, good potential to extend the Currys PC World lease. The retailer trades well from this location and the unit is of the right size. Currently, Currys PC World’s general policy is not to agree lease extensions unless connected to a required downsize when there is less than one or two years to expiry but we are quite confident that they will wish to extend their lease here. Following Bunnings’ takeover of Homebase, the DIY retailer is keener on larger units such as this, and we understand this unit has always traded well for Homebase and was never a unit they were seeking to dispose of. We would imagine, in the short term, that they will convert to the Bunnings format and look to refit, which should provide an opportunity for the landlord to agree a lease extension.
With all the covenants strong, it would therefore seem unlikely that there will be any accommodation here that would require re-letting, but we are aware of the following outstanding retailer requirements:-
Dunlem 20,000 sq ftTK Maxx 10,000 sq ftSmyths Toys 15,000 sq ft
Go Outdoors30,000 sq ft(could go to 50,000 sq ft)
Wickes 20-25,000 sq ft
Iceland10,000 sq ft(would need food consent)
Aldi 15/20,0000 sq ftHomesense 10,000 sq ftPoundland 5/7,500 sq ftHalfords 7,500 sq ft We consider that these outstanding requirements does demonstrate there is a demand / supply imbalance in the town and therefore good prospects for rental growth.
EPCEPC’s are available on request.
VATThe property has been elected for VAT, however, it is anticipated that the transaction will be treated as a Transfer of a Going Concern (TOGC).
HOMEINVESTMENT
CONSIDERATIONS LOCATION & SITUATION DEMOGRAPHICS RETAIL WAREHOUSING& DESCRIPTION TENURE & PLANNING TENANCY &
COVENANT INFORMATIONERV, ASSET MANAGEMENT,
EPC & VATPROPOSAL &
FURTHER INFORMATION
PROPOSALWe are instructed to seek offers in the order of £15,728,500 (Fifteen Million, Seven Hundred and Twenty Eight Thousand, Five Hundred Pounds), subject to contract and exclusive of VAT.
This reflects an attractive net initial yield of 7.00% (assuming purchaser’s costs at 6.73%).
CONTACTSPaul WilkinsonT: 020 7317 3799M: 07770 585313E: [email protected]
Wilkinson WilliamsHeathcoat House20 Savile RowLondonW1S 3PR
www.wilkinsonwilliams.co.uk
Ellie KirkbyT: 020 7317 3790M: 07764 241898E: [email protected]
MISREPRESENTATION NOTICE. Wilkinson Williams LLP give notice to anyone who may read these particulars as follows:1. These particulars are prepared for the guidance only of prospective purchasers. They are intended to give a fair overall description of the property but are not intended to constitute part of an offer or contract. 2. Any information contained herein (whether in the text, plans or photographs) is given in good faith but should not be relied upon as being a statement of representation or fact. 3. Nothing in these particulars shall be deemed to be a statement that the property is in good condition or otherwise nor that any services or facilities are in good working order. 4. The photographs appearing in this brochure show only certain parts of the property at the time when the photographs were taken. Certain aspects may have changed since the photographs were taken and it should not be assumed that the property remains precisely as displayed in the photographs. Furthermore, no assumptions should be made in respect of parts of the property which are not shown in the photographs. 5. Any areas, measurements or distances referred to herein are approximate only. 6. Where there is reference in the particulars to the fact that alterations have been carried out or that a particular use is made of any part of the property, this is not intended to be a statement that any necessary planning, building regulations or other consents have been obtained and these matters must be verified by an intending purchaser. 7. Descriptions of the property are inevitably subjective and the descriptions contained herein are given in good faith as an opinion and not by way of statement of fact. Plans are published for convenience of identification only and although believed to be correct, their accuracy is not guaranteed and they do not form part of any contract. January 2017. Designed and produced by Creativeworld Tel: 01282 858200.
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HOMEINVESTMENT
CONSIDERATIONS LOCATION & SITUATION DEMOGRAPHICS RETAIL WAREHOUSING& DESCRIPTION TENURE & PLANNING TENANCY &
COVENANT INFORMATIONERV, ASSET MANAGEMENT,
EPC & VATPROPOSAL &
FURTHER INFORMATION