NEW BUILD TOWN CENTRE FOODSTORE LED INVESTMENT - Catterall & Co
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NEW BUILD TOWN CENTRE FOODSTORE LED INVE STMENT
New 30 year (21.5 years certain) lease to ASDA with guaranteed growth of 3.00% per annum compounded
1 - 7 B O OT H S T R E E T, F E L L I N G , G AT E S H E A D , T Y N E & W E A R , N E 1 0 9 B F
INVESTMENT SUMMARY
“
New 30 year
(21.5 years
certain) lease
■ Prime foodstore led retail development,
forming the heart of a significant town
centre redevelopment.
■ WAULT of 27.01 years to expiry and 19.37 years
(including break penalty) to break.
to ASDA with ■ We are instructed to seek offers in excess of
guaranteed ■ Purpose built foodstore measuring £9,600,000 subject to contract and exclusive
per annum
“
growth of 3.00% approx.29,288 sq ft (GIA) together with a
6 unit retail parade totalling 6,586 sq ft
of VAT. A purchase at this price reflects a net
initial yield of 5.32% after deducting purchaser’s
compounded and a 195 space car park costs of 6.69%. This reflects approximately
5.00% NIY on the foodstore and 8.00% NIY
■ 85% of income secured to Asda Stores Ltd on the retail units.
(D&B rating of 5 A1) on a new 30 year lease
(T.O.B in 20 and 25 subject to 18 month rent A purchase at the asking price would show the
penalty) with fixed increases equivalent to following yield profile based upon the fixed increases
3% per annum compound. in the foodstore lease, but excluding any rental growth
attributable to the remaining retail units:
■ Initial rent on the foodstore of £464,000 per
annum reflecting £16.00 per sq ft. NIY 5.32%
March 2021 6.05%
■ 15% of income derived from retail parade fully let March 2026 6.88%
to Boots, Gregg’s, Subway, Barnardo’s and Dean March 2031 7.85%
Taxis, providing a further £81,380 per annum. March 2036 8.98%
March 2041 10.28%
■ Total income of £545,380 per annum March 2046 11.79%
FELLING
“ 85% of income secured to Asda Stores Ltd (D&B rating of 5 A1) with inbuilt rental growth
A 1 90
A 1 92
L O C AT I O N
A 1 1 48
A1
■ Felling forms part of the Metropolitan Borough of
A1 9 A 1 86 A 1 92 Gateshead, approximately 2 miles south of Newcastle
A 1 05 6
N E WC AS T L E
upon Tyne. Gateshead is the largest conurbation in
R A C E C OURSE B E NT O N
NE W C A ST L E
IN T E R N AT IONAL the county of Tyne and Wear with a population of
A IR P O RT A 1 88 TYNEMOUTH
G OS F O R T H
PA R K A 1 92
approximately 200,500 people (ONS MYE 2014).
A 1 91
B1318 A 1 89 NORTH
A1 SHIELDS PORT OF TY NE
REG ENT
A 696 C E NT R E A 1 93
KING S T O N
PARK A 1 86
F AW D O N G OS F O R T H
AS
TR
OAD
A 1 93
SOUTH
A 1 91 CO
A 1 88 A 1 058
SHIELDS
RIVE R T Y NE
CEN
A 1 87
MO TRAL
TOR
WA
Y
A183 PIC PIC
TYN E
T UNNE L
A 696 JARROW
A 1 67 (M)
NEWCASTLE A 1 87
UPON TYNE A 1 87 HEBBURN BOLDON
A 69 A186 NE W C A ST L E
C E NT R A L A185
S TAT IO N
TYN E
B R IDG E A 1 86
Edinburgh
A 695 A1 9
RIVE R T Y NE
A1 BRID G E
A19 4
RIVE R T Y NE RE DHEUG H A184 Newcastle Airport
A184 Callerton Parkway
Bank Foot
HEWORTH
GATESHEAD Kingston Park
Fawdon Regent Northumberland
Centre Longbenton Benton Park Monkseaton
Wansbeck Road
Four Lanes Palmersville West Whitley Bay
A184 South Gosforth Ends Monkseaton
Ilford Road
Cullercoats
TEAM A 1 94(M) West Jesmond
Jesmond
VALLEY
Haymarket Tynemouth
Chillingham Meadow
Manors Road Wallsend Howdon Well
St. James North
A692 Monument Shields
A1 Newcastle
Central Station
Byker Walkergate Hadrian
Road
Percy
Main
Gateshead
Stadium
LOWFELL
Gateshead
“
Pelaw Bede Chichester
Heworth South
Shields
Tyne Valley Hebburn Jarrow Tyne Dock
& Carlise Gateshead
Well connected
to the wider
“ Metro Centre
London
Stadium
Fellgate
South Hylton
Brockley
Whins
Pallion
East
Boldon
University
Seaburn
Stadium
of Light
St Peter’s
Sunderland
Millfield Park Lane
transport network
A 1 (M)
S I T UAT I O N
Indicative title boundary
■ The property forms the retailing heart ■ Access to the site is provided via ■ Nearby occupiers include,
of Felling town Centre sitting adjacent Holly Hill to the north which leads Heron Frozen Foods,
Victoria Square and linking to the into the carpark, and via Booth Street William Hill Bookmakers,
high street immediately to the west. to the East which gives access to a and Imperia Bingo Club.
large hard surfaced service yard.
FELLING
C AT C H M E N T A N A LY S I S
“
Total spend of
over £36 Million
per year on food
■ Population of 32,770 within a 5 minute drive time
rising to 115,998 within a 10 minute drive time.
5 minute
“
alone within ■ Combined annual household spend of
£175 million within a 5 minute drive time,
rising to £0.64 Billion within a 10 minute
drive time
drive time.
■ Total spend of over £36 Million per year
on food alone within 5 minute drive time.
■ Total Tobacco and Alcoholic drink sales of over
£19.29 Million per annum within a 5 minute
drive time. This equating to an average
spend per household of £1,298 per annum,
some 5.26% above the national average.
■ Immobile
convenience focussed shopping
population with over 55% of the households
without access to a car. (2011 Census)
■ Highly limited competition with a small Tesco
Express being the only “top five” competitor
in a 5 minute drive time.
■ Town centre location benefitting from
linked-trip spend.
Data Sources: Office of National Statistics, 2014 statistics and 2011 Census
FELLING
NEWCASTLE UPON T YNE Millenium Bridge
Sage Gateshead
Tyne Bridge Baltic Art Gallery
G AT E S H E A D River Tyne
Gateshead
A184 International
Stadium
Sunderland Road
Felling Gate
Holly Hill
Booth Street
Coldwell Lane
Chilside Road
Rectory Road
DESCRIPTION
■ The property comprises a purpose built foodstore
completed in March 2016 and measuring
approx.29,998 sq ft (GIA) together with a 6 unit
retail parade totalling 6,586 sq ft (NIA) and a 195
space car park.
■ The scheme occupies a large circa 3 acre
7 (1.21 hectare) triangular site bordered by
6 Crowhall Lane, Booth Street and Holly Hill.
LP
Prior to the recent re-development the site
5
was previously occupied by a retail parade and
DEAN TAXIS 4 open air carpark, with some tenants re-locating
BO
3 into the smaller retail units in the new scheme.
OT
Bins
HS
2 Hence several of the tenants are long term
TR
EE
T
occupiers in the location.
bench
1
bench
LP
LP
LP
T E N A N C Y S C H E D U L E & AC C OM MO D AT I O N
Size Size
Unit Tenant Rent Rent psf Comments
Next
Sq m Sq ft Commencement Expiry Term Next Break
Review
5 yearly reviews at 3% per annum compound. Break
Asda Stores
1 2,693.98 28,998 £464,000 £16.00 04/03/2016 03/03/2046 30 04/03/2021 04/03/2036 penalty equivalent of 18 months’ rent. Further
Limited break in 2041 also subject to break penalty
2 Dean Taxis Limited 41.22 449 £5,388 £12.00 25/08/2015 24/08/2027 12 25/08/2018 - 3 yearly rent review pattern
Subway 12 months’ rent free until 25.08.2016. 5 yearly rent
3 48.38 521 £7,992 £15.34 02/10/2015 01/10/2029 14 02/10/2020 01/10/2020 review and tenant break pattern.
Realty Limited
Low base rent and no rent review agreed as part of
4 Boots UK Limited 141.72 1,525 £17,500 £11.48 01/03/2016 28/02/2026 10 - - relocation deal to new scheme.
5 Gregg’s PLC 94.34 1,015 £13,000 £12.81 02/09/2015 01/09/2025 10 02/09/2020 02/09/2020 12 months half rent granted from commencement.
Sportswift Limited
6 81.95 882 £15,000 £17.00 01/09/2015 31/08/2025 10 01/09/2020 01/09/2020 12 months half rent granted from commencement.
t/a Card Factory
GF 101.91 1,097 GF £17.01 6 months’ rent free from commencement.
7 Barnardo’s £22,500 30/03/2016 29/03/2026 10 30/03/2021 - Upward only rent review in year 5.
FF 101.91 1,097 FF £3.50
* All initial rent free periods to be topped up by
Total 3,305.91 35,584 £545,380 the vendor in the usual manner.
TENANTS’ COVENANT STRENGTH
Asda Stores Limited – 00464777 Boots UK Limited – 00928555
D&B Rating – 5 A1 D&B Rating – 5 A1
Asda is a national supermarket retailer wholly owned by American Boots is part of the Retail Pharmacy International Division of
multinational retail chain, Walmart. The company was founded in Walgreens Boots Alliance Inc., a global pharmacy led enterprise.
1949 in West Yorkshire and now trades from 621 stores, employing Boots operates from 2,500 stores employing approximately
180,000 people. Aside from the grocery retail offering, Asda also 60,000 people. In addition to the pharmacy, health and beauty
has its own range of clothing knows as George, Asda Mobile in stores on the high street, Boots also provide trade from
partnership with EE and Asda Money, which provides financial 40 Opticians and 480 Hearingcare stores.
services such as car insurance, credit cards and travel money. www.boots.com
www.asda.com
31.12.2014 31.12.2013 31.12.2012 31.03.2014 31.03.2013 31.03.2012
Turnover £23,156,700,000 £23,299,400,000 £22,813,900,000 Turnover £6,340,000,000 £6,204,000,000 £6,354,000,000
Pre-Tax Profit £609,900,000 £605,100,000 £483,500,000 Pre-Tax Profit £507,000,000 £452,000,000 £240,000,000
Tangible Net Worth £5,596,800,000 £5,349,000,000 £5,090,400,000 Tangible Net Worth £456,000,000 £430,000,000 £234,000,000
Greggs PLC – 00502851 Dean Taxis Limited – 04209433
D&B Rating – 5 A1 D&B Rating – N 3
Greggs, established in Newcastle in the 1930s, has over 20,000 Dean Taxis is a North East taxi firm established in 1986 with
staff with 9 regional bakeries with 1,671 shops across the UK. It is extensive coverage around Tyne and Wear, Northumberland and
renowned for its sausage rolls, chicken bakes and pasties. County Durham. They currently have a fleet of over 250 cars and
DEAN TAXIS www.greggs.co.uk specialise in airport transfers as well as providing executive and
company taxi services.
03.01.2015 28.12.2013 29.12.2012 31.12.2014 31.12.2013 31.12.2012
Turnover £803,961,000 £762,379,000 £734,502,000 Turnover - - -
Pre-Tax Profit £49,743,000 £33,152,000 £53,342,000 Pre-Tax Profit - - -
Tangible Net Worth £248,537,000 £242,193,000 £234,148,000 Tangible Net Worth -£36,366 £26,982 -£36,272
FELLINGTENANTS’ COVENANT STRENGTH
Sportswift Limited t/a Card Factory – 03493972 Subway Realty Limited - 04174473
D&B Rating – 5 A1 D&B Rating – A 3
Card Factory is a greeting card and gift company founded in 1997. Subway is an American fast food restaurant franchise with over
It now has over 800 stores nationwide and employs over 6,500 44,000 restaurants in 111 countries. Subway franchise restaurants
workers in its retail outlets. In May 2014 Card Factory was floated are handled via Subway Realty Limited who act on behalf of
on the London Stock Exchange and is part of the FTSE 250 Index. Subway and sublease properties to franchisees.
www.cardfactory.co.uk
31.01.2015 31.01.2014 31.01.2013 31.12.2014 31.12.2013 31.12.2012
Turnover £336,676,000 £313,182,000 £285,957,000 Turnover £28,613,501 £27,940,819 £28,059,353
Pre-Tax Profit £62,320,000 £69,243,000 £66,111,000 Pre-Tax Profit £1,946,179 £1,457,251 £2,020,922
Tangible Net Worth £58,862,000 £215,073,000 £180,674,000 Tangible Net Worth £655,859 £1,632,387 £2,507,234
Barnardo’s – 00061625
D&B Rating – 4 A1
Barnardo’s was founded in 1867 by Thomas Barnardo and now
works directly with 240,000 children, young people and families
every year through variety of vital services across the UK.
www.barnardos.org.uk
31.03.2015 31.03.2014 31.03.2013
Turnover £295,965,000 £285,774,000 £257,141,000
Pre-Tax Profit £4,372,000 £7,353,000 £5,533,000
Tangible Net Worth £18,208,000 £21,340,000 £21,417,000
FELLINGI N C O M E A N A LY S I S
£22,500 Income by D&B Rating Income by Lease Length Income proportion by Percentage
4%
£5,388 8% 2% 3% 4%
£7,992 1% 3%
2% 7% 2%
1%
£509,500
85% 85%
93%
Asda Dean Taxi Subway Boots
N3 5A1 A2 Charity 5-10 years 10-15 years 25+ years
Greggs Card Factory Barnardo’s
Running Yield Debt Example
13.00%
11.97%
Given the location, tenant covenants and risk profile, we would expect to be
11.00% able to finance this asset at 60-65% LTV, which would give the investor a year 1
10.28% equity return of 7.90% (£350,000), if interest only.
8.98%
9.00% Indicative debt financing as follows: ■ 5 year term
7.85% ■ LTV – 60-65% ■ Interest Only (If 65% LTV,
■M argin: 220-250 bps over Amortisation to reduce risk down
6.88%
7.00% Swap Rate (1% currently) to 60% would be likely)
6.05%
5.32%
Further information can be provided upon request regarding the arrangement of finance.
5.00% Please see contact C&W Debt Advisory:
2016 2021 2026 2031 2036 2041 2046 Edward Daubeney – Director, Debt Advisory
Geared income Year 2016 2017 2018 2019 2020 Direct: +44 (0) 20 7152 5171 I Edward.daubeney@cushwake.com
return: Equity Coupon 7.90% 7.92% 7.92% 7.92% 7.91% The financing indications stated in the above are intended only as an example of the finance expected to be available.
This is not a guarantee or commitment that similar, or any, financing can or will be obtained with respect to this property.
*
Excludes additional income growth attributable to the unit shops nos. 2-7“ New build optimal size foodstore with extensive parking provision
F U R T H E R I N FO R M AT I O N
■ Tenure ■ EPC
The property is held by way of a ground lease All EPC ratings and recommendation reports are
for a period of 999 years from 3rd March 2014 (at available upon request.
a Peppercorn rent if demanded) from Gateshead
Metropolitan Council. ■ VAT
We understand the property is elected for VAT and it is
“
Open A1 Food and A2
planning consent
■ Planning anticipated the sale will be treated as a Transfer of a
The property benefits from full “Open A1 Food” Going Concern (TOGC).
and A2 planning consent granted on 4 May 2012
(ref: DC/12/00080/FUL). A copy of all planning
documentation is available within the dataroom.“
INVESTMENT MARKET
Providing long term secure income streams often with inbuilt rental growth, the foodstore property investment sector continues to maintain its position as one of the most
attractive asset classes to invest in. We set out below a number of recent relevant transactions.
GIA Price
Date Location Tenant Transaction Lease Terms Rent (psf) Purchaser
sq ft Yield
WAULT of 9.24 years. RPI linked reviews with collar and £18.97 (Aldi) £14.4m
Dec-15 New Malden Aldi & Matalan 37,538 Investment Sale Aviva
cap of 1% - 2.5% £22.48 (Matalan) 5.10%
WAULT of 24 years, rent reviewed to either market rent or £44.5m
Sep-15 Newcastle Sainsbury’s & Peugeot 67,629 Investment Sale £16.75 NFU
RPI linked with collar and cap of 1.5% - 4%. 4.98%
New 20 year lease with 5 yearly reviews linked to RPI capped £7.35m
Jul-15 Morden Asda 10,700 Investment Sale £32.71 ABF
at 1% - 3%. 4.5%
17 years unexpired. 5 yearly upward only rent reviews linked £8.268m
Jun-15 Shefford Morrison’s 27,150 Investment Sale £18.50 CLA
to OMRV. 5.43%
35 year lease from PC with fixed uplifts every five years £38.15m Lime property
Apr-15 Barking Asda 86,254 Investment Sale £20.00
equivalent to between 2.5% and 3% pa compounded. 4.27% fund
25 years, 5 yearly RPI reviews capped and collared at 4% £48.20m Osprey Equity
Nov-14 Middlesbrough Sainsbury’s 124,000 Funding £19.50
& 1%. 5.00% Partners
Morrison’s & Retail 20 years, 5 yearly RPI reviews capped & collared at 4% & £16.245m
Nov-14 Birtley 61,411 Funding £12.78 La Salle IM
parade 1%. Retail parade vacant with rental guarantee. 5.05%
Investment £35.03m Orchard Street
Apr-14 Wallington Sainsbury’s 60,400 25 years, 5 yearly OMV reviews. £26.50
Sale 4.25% IM
25 years, 5 yearly RPI reviews capped and collared at 4% £16.1m Eyre Estate
Aug-12 Sedgefield Sainsbury’s 48,922 Funding £17.00
& 1%. 5.00% Investment
£54m
Mar-12 Sheldon Morrison’s 105,977 Funding 35 years, 5 yearly reviews to RPI. £23.59 PRUPIM
4.00%
£35m Osprey Equity
Feb-12 Sunderland Sainsbury’s 98,679 Funding 25 years, 5 yearly OMV reviews. £18.90
5.00% PartnersP U R C H A S E R AT I O N A L E
■ An opportunity to acquire a prime foodstore led ■ An optimal size foodstore at 28,998 sq ft GIA well
development with guaranteed rental growth suited to modern occupier requirements
■ Dominant in-town location in densely populated ■ Non-foodstore income let off very low base rents
area with strong transport links and considered reversionary based upon recent
letting evidence
■ Immobile convenience focussed shopping
population with over 55% of the households ■ A brand new scheme with full warranty package
without access to a car available to the purchaser
■ Highly secure long term income stream with 93% ■ Flexible Open A1 planning consent
of the income secured to D&B 5A1 tenants and
85% of the income secured for a minimum of 21.5
years to Asda Stores LtdPROPOSAL
■ We are instructed to seek offers in excess of £9,600,000 ■ A purchase at the asking price would show the
subject to contract and exclusive of VAT. A purchase following yield profile based upon the fixed increases
at this price reflects a net initial yield of 5.32% after in the foodstore lease, but excluding any rental growth
deducting purchaser’s costs of 6.69%. This reflects attributable to the remaining retail units:
approximately 5.00% NIY on the foodstore and 8.00% NIY
on the retail units. NIY 5.32%
March 2021 6.05%
March 2026 6.88%
March 2031 7.85%
March 2036 8.98%
March 2041 10.28%
March 2046 11.79%
D ATA R O OM A Data Room is available to named interested parties.
Information therein includes:
■ All legal documentation ■ Full warranty package
■ Copy Planning Consents ■ Financial information relating
■ Architect’s Drawings & Specifications to Tenants CovenantsC O N TAC T
LOGO PETER ATKINSON KATY PAXTON MAX WILSON
Direct: +44(0) 191 223 5715 Direct: +44 (0)191 223 5752 Direct: +44 (0) 20 7152 5745
Mobile: +44(0) 7718251493 Mobile: +44 (0)7885 258201 Mobile+ 44 (0) 7584 885 013
peter.atkinson@cushwake.com katy.paxton@cushwake.com maxwell.wilson@cushwake.com
TIM CATTERALL ROBIN CATTERALL
Direct: +44(0) 1325 722109 Direct: +44(0) 1325 722109
Mobile: +44(0) 7702287097 Mobile: +44(0) 7740876760
tim@cattco.eu robin@cattco.eu
DTZ Debenham Tie Leung Limited and Catterall & Co (the “Agents”) give notice to anyone who may the photographs were taken and it should not be assumed that the property remains precisely as warranty whatsoever in relation to this property.
read these particulars as follows: displayed in the photographs. Furthermore no assumptions should be made in respect of parts of the 6. This property is offered subject to contract and unless otherwise stated all rents are quoted
1. These particulars are prepared for the guidance only of prospective purchasers. They are intended to property which are not shown in the photographs. Any areas, measurements or distances referred to exclusive of VAT.
give a fair overall description of the property only and do not constitute any part of an offer or contract. herein are approximate only. 7. Unless otherwise stated, no investigations have been made by or on behalf of the Agents regarding
2. Any information contained in these particulars (whether in the text, plans or photographs) is given 4. Where there is reference in these particulars to the fact that alterations have been carried out or pollution, or potential land, air or water contamination. Interested parties are advised to carry out
in good faith but should not be relied upon as being a statement or representation of fact or that the that a particular use is made of any part of the property this is not intended to be a statement that their own investigations as required.
property is in good condition or otherwise nor that any services or facilities are in good working order. any necessary planning, building regulations or other consents have been obtained and these matters
3. The photographs appearing in these particulars show only certain parts and aspects of the must be verified by any intending purchaser. April 2016
property at the time when the photographs were taken. Certain aspects may have changed since 5. No person in the employment of the Agents has any authority to make or give any representation orYou can also read
