PREMIER INN 1-6 Waterloo Street // Birmingham - Prime Hotel Investment Index Linked with Whitbread PLC Guarantee - MK2 Real Estate
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Prime Hotel Investment PREMIER INN 1-6 Waterloo Street // Birmingham Index Linked with Whitbread PLC Guarantee
PRIME LOCATION OFFERS IN EXCESS OF
IN THE HEART OF
THE COMMERCIAL
BUSINESS DISTRICT
£23,000,000
NET INITIAL YIELD
4.75%
REVERSION IN 2020
5.28%
INVESTMENT
SUMMARY
A rare opportunity to
purchase an exceptionally
well located prime hotel,
index linked and secured
to a FTSE 100 company.
>> Birmingham is the UK’s second city and >> Freehold. >> The rent is reviewed every 5 years to the >> For the year ending March 2016 Whitbread
attracted a record 37.2million visitors in 2016. Consumer Price Index upward only and capped reported turnover of £2.291 billion, pre-tax
>> Let to Premier Inn Hotels Limited and at 5.00% with the next review on 18th May profit of £495 million and net worth of
>> 100% prime location at the corner of Waterloo guaranteed by Whitbread Plc on an FRI lease 2020. Adopting Bank of England Forecasts for £2.655 billion.
Street and Temple Row over looking St Philips expiring on 18th May 2035 with a tenant’s CPI we estimate the reversionary rent to be
Cathedral in the heart of the Commercial break on 19th May 2030. £1,295,507 per annum. >> We are instructed to seek a offers in excess of
Business District. £23,000,000 (Twenty Three Million Pounds)
>> Current rent of £1,166,795 per annum equating >> Terms agreed to vary the lease to provide 20 subject to contract and exclusive of VAT,
>> 152 bed hotel over ground and 7 upper floors to £6,557 per bedroom after allowing for a years terms certain on purchaser’s payment of reflecting a net initial yield of 4.75% and an
together with reception, ground floor bar / rent on the ground floor bar / restaurant of tenant incentive. Further details on request. estimated reversion in 2020 to 5.28% after
restaurant and ancillary accommodation. £170,000 per annum equating to £40.00 per the deduction of purchaser’s costs of 6.75%.
sq ft GIA.
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 2
BIRMINGHAM HAS
RECENTLY BEEN
NAMED THE UK’S
MOST INVESTABLE CITY
AND THE SIXTH BEST
IN EUROPE
BIRMINGHAM // LIBRARY OF BIRMINGHAM
is the UK’s second city with // THE ICC
a population of circa 1.1 40%
OF THE UK’S
million and is considered CONFERENCE AND
EXHIBITION TRADE
one of the youngest in
Europe with under 25’s 25,000
accounting for 40% of GRADUATES
PER YEAR
the population.
UK’S LARGEST
The wider West Midlands conurbation has a Recently voted the most popular destination
REGIONAL
population of 2.5million and 4.3million people of outside of London for meetings, conferences ECONOMY
working age live within a 1 hour drive of the city. and events, Birmingham is home to the OUTSIDE
National Exhibition Centre, Barclaycard Arena, LONDON
With a GDP of £110 billion Birmingham has International Convention Centre and Symphony
the largest concentration of businesses outside Hall and accounts for 40% of the UK’s conference
of London. There are over 75,000 companies and exhibition trade.
including 1,200 international businesses located
in the area and a vibrant business and financial Over 37.2million people visited Birmingham in
services sector employing over 100,000 which is 2016 an increase of 12% since 2006 with almost
// THE BULL RING // BIRMINGHAM TOWN HALL
expected to grow by 30% by 2020. 1 million international visitors.
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 3
TO MANCHESTER
& NORTH WEST
COMMUNICATIONS LEEK
STOKE-ON-TRENT
Birmingham is located 117 miles from Central London and 70 EDINBURGH
292 MILES
MARKET DRAYTON
M6
TO LEEDS
& NORTH
OSWESTRY UTTOXETER EAST
miles from Manchester. It is a highly accessible City. In particular
STAFFORD M1
BURTON-UPON-TRENT
it benefits from superb access by air, rail and road: SHREWSBURY TELFORD
M54
LICHFIELD
TAMWORTH
M6 TOLL
WOLVERHAMPTON WALSALL
M69
BRIDGNORTH NUNEATON
M1
DUDLEY
LEEDS
STOURBRIDGE M6
118 MILES BISHOPS CASTLE
MANCHESTER
86 MILES BIRMINGHAM
LIVERPOOL SOLIHULL
98 MILES
LUDLOW COVENTRY RUGBY
COPENHAGEN
KIDDERMINSTER M42
HAMBURG
PARIS
NOTTINGHAM
SHREWSBURY 51 MILES
TORONTO
GENEVA
NICE 47 MILES WARWICK
NEW YORK
MADRID
BARCELONA
BEIJING LEICESTER M5 REDDITCH
43 MILES
TOKYO BIRMINGHAM LEOMINSTER
WORCESTER
FLORIDA OSAKA
SHANGHAI
SHARM EL SHEIKH
DELHI
NORTHAMPTON M40 TO LONDON
DUBAI
HONG KONG
54 MILES STRATFORD-UPON-AVON M1
CANCUN
MONTEGO BAY GREAT MALVERN & SOUTH EAST
EVESHAM
KUALA LUMPUR BRISTOL
98 MILES
HEREFORD LEDBURY
LONDON
101 MILES
M50
TO BRISTOL TO
& SOUTH WEST LONDON
SYDNEY ROSS-ON-WYE
AIR RAIL ROAD MIDLAND METRO
Located 8 miles to the south east of the City, Developed at a cost of £650million the recently Birmingham benefits from easy access to the The Midlands Metro Light Rail
11 minutes by train, Birmingham International opened Grand Central replaces New Street A38M, M6, M5, M42 and M40 Motorways. Transport System connects Wolverhampton to
Airport (BHX) is the third largest outside station increasing capacity to 140,000 passengers Typical drive times are as follows: Birmingham’s City Centre (Snow Hill Station). At a
of London with over 50 airlines providing daily, 52million a year. At the heart of the UK rail cost of £127million the Metro has been extended
connections to 143 destinations in Europe, network the station provides direct intercity London 2 hours 32 minutes through the city centre to Grand Central Station
North America, Asia and the Middle East and is access to London Euston, Manchester, Reading, with further extensions planned for Brindleyplace,
Heathrow Airport 2 hours 11 minutes
expected to handle around 15million passengers Bristol, Nottingham, Leicester and Newcastle. Edgbaston and Digbeth.
a year by 2020. In excess of £300million has The NEC and Birmingham International Airport
Manchester 1 hour 41 minutes
been invested in the airport over the last 10 years can be reached in just 11 minutes.
including a runway extension doubling capacity Leeds 2 hours 11 minutes
and enabling it to directly compete with London Phase 1 of High Speed 2 rail (HS2)
Heathrow and Manchester for long haul flights to has now been granted Royal Assent Bristol 50 minutes
China, India and the West Coast of America. and will connect London and
Birmingham by 2026 with a new Edinburgh 5 hours 15 minutes
dedicated city centre terminus
Solihull 20 minutes
station at Birmingham Curzon Street. Phase 2 of
the project will connect Birmingham with £650m
Manchester and Leeds, placing the City at the GRAND CENTRAL
heart of the new national high speed network.
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham 4
VISITOR ECONOMY // SELFRIDGES // JOHN LEWIS
In 2016 Birmingham attracted a record 37.2 million visitors
of which nearly 1 million were from overseas making it the
UK’s 4th most visited city.
According to Marketing Birmingham this helped Birmingham stages more World and European
create an extra 2,100 jobs with visitor numbers
increasing 12% since 2006. Birmingham is the
sporting Championships than any other UK City.
The recent £20.6 million refurbishment of the FIVEMICHELIN
only city outside of London to have all six leading Barclaycard Arena and the £12.5million spent
STARRED
department stores; John Lewis, House of Fraser, improving the Alexander Stadium the home
RESTAURANTS
Debenhams, Selfridges, Harvey Nichols and M&S. of UK Athletics has further enhanced the offer.
In addition, the city has Five Michelin starred
Birmingham has been voted the most popular restaurants more than any other English city
destination outside of London for meetings, outside of London and is famous for it’s 100+
conferences and events for six successive Balti houses attracting 20,000 visitors a week.
years by the annual British Meetings & Events // GREAT WESTERN ARCADE
Industry Survey. With facilities such as the
// GERMAN MARKET, VICTORIA SQUARE
National Exhibition Centre and the International
Convention Centre the city accounts for around
40% of the UK’s conference and exhibition trade
and each year hosts over 850 events.
THE CITY ACCOUNTS
FOR AROUND 40% OF
THE UK’S CONFERENCE
AND EXHIBITION TRADE
AND EACH YEAR HOSTS
OVER 850 EVENTS.
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 5
SELFRIDGES BULL RING EXCHANGE GRAND JOHN RADISON THE THE
SHOPPING BUILDINGS CENTRAL/ LEWIS BLU HOTEL MAILBOX CUBE/
CENTRE NEW ST HOTEL
STATION INDIGO
PREMIER INN
BIRMINGHAM
55
STAYBRIDGE SNOW HILL GRAND ST PHILLIPS HOTEL COLMORE VICTORIA BIRMINGHAM PARADISE
SUITES STATION HOTEL CATHEDRAL DU VIN ROW SQUARE TOWN HALL DEVELOPMENT
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 6
83
to ST PHILLIPS
79 CATHERDRAL
SITUATION 85
to
89 78
TE
to
M
90
PL
ER
Very prominently located at
OW
3
W
the corner of Waterloo Street
ES
98
T
and Temple Row overlooking
41
St Philips Place, in the heart of
o7
5t
1
the Central Business District. 10
2
BE
38
2 55
NN
10 to
3
TEMPLE ROW
4 59
ET
4
Less than 5 minutes walk from both Grand o4
37
t
T
42
’S
4
Central and Birmingham Snow Hill train
HIL
CAVENDISH 2 1
5
HOUSE
48
L
67 to 71
stations and close to New Street the centre
36
65 63
of Birmingham prime retail zone. Surrounded 5
45
35
6
BENNETTS T
by high quality office developments nearby EE
TR
6
COURT 38 OS
occupiers include Natwest / RBS, Eversheds, O
34
RL
N
43
TE
EW
Lloyds Bank, Government Office for West WA
7
7
CA
42 41
UNION
4
8
EET
Midlands, together with high quality bars and
N
CHAMBERS
N
O
LE STR
restaurants including Gusto, Alchemist, Botanist, ST PHILLIPS
N
a
LLEY
37
PA
POINT
40
San Carlo, Pure Bar, Ask, Viva Brazil and Nosh
SS
37
33
AG
SS A
TEMP
8
and Quaff.
E
39
35
DLE
IN THE HEART
NEE
SOMERSET
HOUSE
OF THE CENTRAL
2
10 to 1
11
BUSINESS DISTRICT
34
8
12
32
14
25
9 to 10
13
IMPERIAL
HOUSE
24
25
11 to 12
14
23
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 7
DESCRIPTION
Fully refurbished in 2010, the property extends over
basement, lower ground, ground and 7 upper floors to
provide 152 high quality bedrooms together with a ground
floor bar / restaurant. The adjacent Fumo restaurant is held
on a long leasehold interest.
The hotel is accessed from a prominent ground Street together with separate entrance adjacent
floor reception off Waterloo Street comprising a to the hotel reception. Internally the property has
reception desk, automated check in machines a clear floor to ceiling height of 3.5 metres with a
and managers office. Two 13 person lifts and a part tiled, part wood floor with exposed ceiling
central staircase provide access to the hotel rooms. and air conditioning around a central bar area.
Seating provides for 80 covers and to the rear is a
The 7 upper floors are of similar design with a kitchen and food preparation area with a lift
central corridor, laundry chute, linen rooms and providing access to the lower ground floor
two additional fire escape staircases serving the storage areas. There is a second access door from
hotel rooms. All of the rooms are on-suite, air Waterloo Street (not used) together with a
conditioned, with secondary glazing providing a staircase to the lower ground floor to access the
mixture of double, single rooms and fitted out to male and female customer toilets.
Premier Inn’s brand standards. There are 7
disabled access rooms, one on each floor. A full suite of building warranties relating to the
original refurbishment can be made available to
The large basement area provides basic storage the purchaser.
accommodation. Lower ground floor has access
from Temple Passage via concertina metal doors
to a loading / bin store area which has one
disabled car parking space. This floor serves both
the hotel and bar / restaurant providing linen
wash room, staff room, staff lockers, janitors
cleaning room, beer store/cellar, dry store, freezer
and chiller rooms, additional managers offices
FULLY REFURBISHED IN
and customer toilets for the bar / restaurant.
2010, THE PROPERTY
The Beefeater Block restaurant and bar has EXTENDS OVER BASEMENT,
recently been refurbished and provides an LOWER GROUND, GROUND
extensive glazed frontage with canopy to Waterloo
AND 7 UPPER FLOORS.
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 8
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 9
ACCOMMODATION
BASEMENT
LEVEL
LOWER
GROUND
FLOOR
GROUND
FLOOR
TYPICAL
UPPER
FLOORS
The property comprises the following areas;
Basement Basic storage space Floor 1 21 Rooms (1 DDA)
Lower Loading area / Bin store / Floor 2 21 Rooms (1 DDA)
Ground Disabled car parking space /
Floor 3 22 Rooms (1 DDA)
Linen wash room / Staff room /
Janitors cleaning room / Floor 4 23 Rooms (1 DDA)
Beer store / Dry store /
Freezer/ Chiller / Managers Floor 5 23 Rooms (1 DDA)
offices / Customer toilets
Floor 6 23 Rooms (1 DDA)
Ground Hotel Reception / The ground floor bar and restaurant has
Floor 7 19 Rooms (1 DDA)
Beefeater Block been measured on a gross internal area (GIA)
– Bar & Restaurant Total 152 rooms basis and provides 4,234 sq ft (393.3 sq m) of
accommodation.
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 10TENANCY Let on full repairing and insuring terms for 25 years to Premier Inn Hotels Limited with a Whitbread PLC guarantee from 19th May 2010 at a current rent of £1,116,795 per annum. The rent is reviewed every 5 years upward only to The current rent of £1,166,795 per annum the Consumer Price Index (CPI) subject to a cap equates to £6,557 per bedroom after allowing of 5.00% per annum compounded. There is a for a rent on the ground floor bar / restaurant of tenant’s break clause on 19th May 2030 on giving £170,000 per annum equating to £40.00 per sq. 12 months written notice. ft. GIA. Terms have been agreed with the tenant to vary The ground floor Fumo restaurant is let on a 999 the lease to provide a 20 years term certain. In years long leasehold interest from 3rd April 2009 return the purchaser will pay a tenant incentive at a peppercorn rent. and reduce the CPI cap from 5.00% to 4.00% per annum compounded. Further details on request. TENANT INFORMATION TENANT INFORMATION PREMIER INN WHITBREAD PLC Premier Inn is the UK’s largest hotel chain with Premier Inn Hotels Limited has an Experian Whitbread Plc is the UKs largest hotel, Costa Coffee, Hub by Premier Inn, Beefeater 730 hotels and over 64,000 bedrooms trading credit rating of 100 described as very low risk restaurant and coffee shop operator in the Grill, Table and Table and Brewers Fayre. Also across the UK and Ireland and a further 10,000 and a credit limit of £9,500,000. Their most UK employing 50,000 people and is a FTSE enjoining an Experian Credit rating of 100 and new rooms planned by 2018. Like for like sales recent accounts are summarised as; 100 company. Incorporating some of the best a credit limit of £10,00,000 their accounts are increased 9% in 2016. known brands in hospitality the group includes summarized as; £000S 3 MARCH 2016 26 FEB 2015 27 FEB 2014 £MILLIONS 3 MARCH 2016 26 FEB 2015 27 FEB 2014 Turnover 743,195 374,540 288,681 Turnover 2,921.8 2,608.1 2,294.3 Pre-tax Profit 255,471 149,056 75,494 Pre-tax Profit 495 463.2 342.8 Net Worth 931,147 717,374 636,984 Net Worth 2,655.4 2,071.4 1,695 www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 11
BARS & RESTAURANTS HOTEL INVESTMENT MARKET
The Birmingham CBD has seen significant numbers of Investor demand for well let index linked prime hotel investments remains very strong with a lack of
good quality product reaching the market, particularly up and built stock. This has resulted in yield
high profile bar / restaurant openings in recent years. compression over the last 12 months. Deals of note include;
Major new brands including Gusto, Alchemist, Cosy Club, Botanist, Viva Brazil, Pure Bar, Adams are
now established with Gaucho and Los Iguinos due to start trading in the next few months. Demand
BRIDLE PATH, Under offer at circa
has resulted in strong rental growth and deals of note include;
WATFORD
MARCH
£13.8 4.70%
MARCH FORMER AUSTIN REED UNIT
Under offer to a major 2017 124 Beds. Full Forward Funding on a
25 years lease with break at 20 to
million
initial yield
2017
restaurant brand at a rumoured Premier Inn Hotels Limited.
TEMPLE ROW WEST £55.00 per sq ft.
TOTHILL STREET,
JANUARY Ground floor with basement,
7-8 DECEMBER WESTMINSTER £101.925 3.96%
2017
under offer to a Tai Restaurant
WATERLOO STREET at £41.50 per sq ft. 2016 339 Beds Hub by Premier Inn.
Forward commitment on a 25 years million initial yield
lease guaranteed by Whitbread Plc.
SEPTEMBER 5-7 Let to Damascena at £44.50
2016 TEMPLE ROW WEST per sq ft.
ROYAL ARSENAL GARDENS,
MARCH WOOLWICH £21.2 4.05%
SEPTEMBER 92-93 Let to Byron Burgers ar £72
2016 128 rooms. Full forward funding on a
million initial yield
2016 NEW STREET per sq ft.
25 years lease with a break at 20 to
Premier Inn Hotels Limited .
JUNE THE GRAND HOTEL Let to Gusto at £35.00 EXCHANGE BUILDINGS,
2016 COLMORE ROW per sq ft. JANUARY BIRMINGHAM £42.75 4.50%
Based on the above
2016 140 rooms part of a larger mixed use
scheme. Let to Premier Inn Hotels Limited million initial yield
evidence we are of on a 25 years lease with break at 20.
the view that the
Beefeater Block bar
and restaurant has WINDSOR ROAD,
an estimated rental JANUARY
SLOUGH £13.2 4.50%
value of £170,000 per
annum equating to
2016 131 rooms. 25 years with a break at 20
to Premier Inn Hotels Limited.
million initial yield
£40.00 per sq ft GIA.
www.mk2.co.uk Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG 12FINANCIALS
We are instructed to seek a offers in excess of £23,000,000
(Twenty Three Million Pounds) subject to contract and
exclusive of VAT, reflecting a net initial yield of 4.75%
and an estimated reversion in 2020 to 5.28% after the
deduction of purchaser’s costs of 6.75%.
CONSUMER PRICE INDEX ENERGY PERFOMANCE
FORECAST CERTIFICATE
According to the latest Bank of England inflation The property has an EPC rating of C-53. A copy
report, Consumer Price Index growth has of the EPC is available upon request.
increased substantially in the last three quarters
and is currently running at 2.4% pa. The fall in the TENURE
value of sterling and the associated pressures on
Freehold.
import costs, food and fuel prices is leading to an
upward trend in inflationary pressure in the UK
economy. The Bank of England has a target of CAPITAL ALLOWANCES
2.00% per annum CPI, however, their actual The property was original funded utilising OFFERS IN EXCESS OF NET INITIAL YIELD REVERSION IN 2020
£23,000,000 4.75% 5.28%
forecast for the next few years is as follows; Business Premises Renovation Allowances
(BPRA) and therefore there are no remaining
capital allowances available on the property.
2018 2019 2020
2.70% 2.60% 2.40% VAT
For further information or to arrange a viewing please contact;
MK2 Real Estate Limited Mark Johnson Mark Rooke
The property is elected for VAT and therefore
Maddox House T: 0121 2141977 T: 0121 2141972
Based on these figures we estimate that the rent VAT will be payable on the purchase price
117 Edmund Street M: 07748 105812 M: 07985 877578
at review in May 2020 will increase to £1,295,507 however we anticipate that the transaction will
Birmingham B3 2HJ E: mjohnson@mk2.co.uk E: mrooke@mk2.co.uk
per annum. be structured by way of a TOGC.
IMPORTANT INFORMATION
1. No description or information given by MK2 Real Estate Ltd whether or not in these Particulars and whether written or verbal (“information”) about the property or its condition or its value may be relied upon as a statement or representation of fact. MK2 Real Estate Ltd do not
have any authority to make any representations and accordingly any information given is entirely without responsibility on the part of the agent or the seller. 2.These particulars do not constitute, nor constitute part of, an offer or contract, nor shall they merge in any offer or contract
which may hereafter be made between the sellers or lessors and the recipient of the information. 3.The photographs show only certain parts of the property at the time they were taken. Any areas measurements or distances given are approximate only. 4. Any reference to alterations
to or use of any part of the property is not a statement that any necessary planning, building regulations or other consent has been obtained.These matters must be verified by any intending buyer. 5. Any buyer must satisfy themselves by inspection or otherwise as to the correctness
of any information given.
Designed and produced by Diablo: www.diablodesign.co.uk May 2017
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