Foodstore investment in East London with index linked uplifts - Colliers Retail Capital ...
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Foodstore investment in
East London with index
linked uplifts
INVESTMENT SUMMARY
• Located in Bow, a commuter suburb in the heart of
London’s East End.
• Prominent, modern, town centre foodstore and gym
comprising a total of 27,986 sq ft (2,600 sq m).
• Weighted Average Unexpired Lease Term of 10.4 years to
break and 11.1 years to expiry.
• Total gross income of £440,688 pa.
• 86% of the income is derived from the foodstore, let to
Tesco Stores Limited (5A1 D&B Rating) on a 15 year lease
from 26th June 2015.
• The foodstore benefits from 5 yearly RPI linked rent
reviews, subject to a collar and cap of 2% and 4% pa.
• The current passing foodstore rent is £330,000 pa
(£13.32 psf). The vendor proposes to top up the passing
rent to the estimated uplift at the June 2020 rent review to
£380,688 pa (£15.36 psf).
• Tesco benefits from 29 car parking spaces offering free
customer car parking for up to an hour.
• The gym, trading as Anytime Fitness, has a passing
rent of £60,000 pa subject to upward only open market
rent reviews.
• 150 year long leasehold interest from 23rd October 2008.
Offers sought in excess of £5,500,000 reflecting
a Net Initial Yield of 6.20% (subject to contract
and exclusive of VAT). Yields are net of
purchaser's costs of 6.61%.
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residential district forming part of the East End. Bow is situated 3.2 miles
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Neighbouring the 2012 Olympic Site, Bow emerged as a desirable place VILLE RD D
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the heart of Bow, the market is famed for its affordable women’s fashion,
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delicious street food and quality homeware.
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COMMUNICATIONS
Road: Train:
Gladstone Place is in close proximity to both the A11 and Bow benefits from excellent public transport links with a
A12 which provide direct access to the North Circular number of tube, bus, train and DLR links. The suburb is served
and the A12 connects to the M25 at Junction 2B. by Mile End and Bow Road tube stations, Bow Church DLR
station as well as Bethnal Green, Hackney Wick and Stratford
Airport: overground stations.
London City Airport is easily accessible from Bow with a Bow Road tube station is served by the District and
drive time of 15 minutes (5 miles). Hammersmith and City lines. With a journey time of
approximately 10 minutes to London Cannon Street and 16
minutes to the West End, Bow is a popular commuter location.
SITUATION
The property is situated on Gladstone Place, a recently
regenerated square, just off Gladstone Road and
Cardigan Road. The property benefits from the
draw of the street market at the north eastern end
of Roman Road. Roman Road is positioned within a
densely populated residential area with a catchment
population of 85,059 and 33,434 households within a
1.5 km radius of the property.
The main customer entrance to both Tesco and Anytime
Fitness is from Gladstone Place, also home to Idea
Library, which provides a hub for the local community.
Other notable occupiers in close proximity include;
Superdrug, Costa, Ladbrokes, Poundland
and William Hill.
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& MILE END
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FOOD STORE COMPETITION WANSTEAD
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Tesco benefits from limited food store competition with only one store with a
SHADWELL
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net sales area over 5,000 sq ft within a 1.5km radius of the property: TOWN
Tesco (37,568 sq ft net sales) - Hancock Rd, Bow, London, E3 3DA. This store
is a 24 minute (1.9km) walk from the subject property.
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DESCRIPTION
The property forms part of a significant mixed-use development which completed in 2012 comprising
the subject commercial space below 208 modern residential apartments on the upper floors.
The foodstore is well configured and is arranged with the sales area, servicing and car parking
at ground floor level and ancillary space at basement level. Tesco Metro benefits from a demised
car park providing 29 spaces, offering customers free parking for up to one hour. The car park is
accessed from Cardigan Road and there is a secondary customer entrance directly into the store.
The property is also serviced from Cardigan Road directly into the ground floor service yard at the
rear of the property.
The gym is accessed from Gladstone Place, with an entrance adjacent to the Tesco customer
entrance. Anytime Fitness is arranged with an open free weights area, cardio area and studio on
the ground floor with an area offering additional training space as well as member changing and
WC facilities.
ACCOMMODATION
The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition)
and comprises the following areas:
Trading As Floor Description Area (sq ft) Area (sq m)
Tesco Ground* Sales 16,596 1,541.8
Basement Ancillary 8,184 760.3
GIA 24,780 2,302.1
Anytime Fitness Ground** Sales 3,206 297.8
GIA 3,206 297.8
*Tesco has the right to use the 2,750 sq ft service yard.
**Anytime Fitness utilises a mezzanine of 715 sq ft (tenant improvement).
TENURE
The investment is held on a long leasehold interest under title number AGL355955 for 150 years less 3
days from 23rd October 2008.
The long leasehold interest is subject to a payaway of the higher of 17.5% of the rent received from the
underleases or £61,500 pa subject to annual indexation to RPI from 14th September 2015. The minimum
rent payable to the headlessee in 2019 is £68,938.75 pa. Following Tesco’s rent review in June 2020, the
rent payable will be 17.5% of rent received (estimated at £77,120.40 pa).
With the vendor topping up the gross rent to £440,688 pa, the assumed net passing rent is
£363,567.60 pa. For indicative purposes only
TENANCY
66 Vernon Road is let to Tesco Stores Limited on a 15-year full repairing and insuring lease from 26th June 2015 expiring on the 25th June 2030, providing 10.6 years unexpired.
The lease is subject to five yearly upwards only rent reviews to the greater of market rent or RPI increases subject to a maximum increase of 4% and minimum increase
of 2% annually.
The current passing rent is £330,000 per annum reflecting £13.32 per square foot. The vendor proposes to top up the passing rent to the estimated uplift at the June 2020 rent review
to £380,688 per annum (£15.36 per square foot). This forecasted rent is based upon actual RPI figures to date and assumes an annual percentage change in RPI of 2.5% for the final
year to June 2020.
62-64 Vernon Road is let to Heritage Capital Limited (trading as Anytime Fitness) on a 15 year full repairing and insuring lease from 9th August 2018 expiring on the 8th August
2033 with a break in year 10 on the 9th August 2028, providing just under nine years unexpired. The lease is subject to five yearly upwards only open market rent reviews. The
current passing rent is £60,000 per annum reflecting £18.71 per square foot.
The total gross passing rent including the Tesco rental top up is £440,688 per annum and the net income after the headlease ground rent is £363,567.60 per annum.
Address Tenant Trading As Area (sq ft) Lease Start Rent Review Break Lease Expiry Rent (psf) Rent (pa)
66 Vernon Road Tesco Stores Limited Tesco 24,780 26/06/2015 26/06/2025 - 25/06/2030 £15.36 £380,688
62-64 Vernon Road Heritage Capital Limited Anytime Fitness 3,206 09/08/2018 09/08/2023 09/08/2028 08/08/2033 £18.71 £60,000
Total 27,986 £440,688
COVENANT INFORMATION
Tesco Stores Limited (Company No: 519500) Heritage Capital Limited
(Company No: 09187847)
Tesco’s is a British multinational company that was founded in Tesco Stores Limited benefit from a credit score of 73/100
1919. The corporation is the third largest retailer in the world by indicating very low risk of business failure. Tesco Stores Limited Heritage Capital Limited trades as
gross revenues and it is the market leader of groceries in the UK has a D&B Rating of 5A1 representing a minimum risk of business Anytime Fitness. Anytime Fitness is a
where it has a market share of around 27%. failure. The most recent financial information is set below. popular 24-hours health and fitness club
operating in 50 countries with over 4,000
Tesco has circa 7,000 stores across seven countries in Asia and 23/02/2019 24/02/2018 24/02/2017 franchises including 160 in the UK. The
Europe with 3,400 stores being located in the UK. (000s) (000s) (000s)
lease is subject to five yearly upwards
Turnover £42,219,000 £41,367,000 £40,134,000 only market rent reviews.
Tesco is listed on the London Stock Exchange and is a constituent
Pre-tax profits £737,000 £417,000 £266,000
of the FTSE 100 Index. The subject branch boasts approximately
Tangible net worth £5,167,000 £4,071,000 £749,000
1,000 members.
VAT
The property has been elected for VAT purposes. It is
anticipated that the investment sale will be treated
as a Transfer Of a Going Concern (TOGC).
EPC
A copy of the EPC certificates are available on request.
IDENTITY CHECKS
In order to comply with anti-money laundering
legislation, the successful purchaser will be required to
provide certain identification documents. The required
documents will be confirmed to and requested from the
successful purchaser at the relevant time.
PROPOSAL
Offers sought in excess of £5,500,000 reflecting a Net
Initial Yield of 6.20% (subject to contract and exclusive
of VAT). Yields are net of purchaser’s costs of 6.61%.
FURTHER INFORMATION
Becky Hance
020 7344 6841
becky.hance@colliers.com
Misrepresentation act: Colliers International gives notice that these particulars are set out as a general outline only for the guidance of intending purchasers
Alice Edgedale or lessees and do not constitute any part of an offer or contract. Details are given without any responsibility and any intending purchasers, lessees or third
party should not rely on them as statements or representations of fact, but must satisfy themselves by inspection or otherwise as to the correctness of each
020 7487 1738 of them. No person in the employment of colliers international has any authority to make any representation or warranty whatsoever in relation to this
property. November 2019.
alice.edgedale@colliers.com Colliers International is the licensed trading name of Colliers International Retail UK LLP which is a limited liability partnership registered in England and
Wales with registered number OC334835. Our registered office is at 50 George Street, London W1U 7GA.
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