KENSINGTON VILLAGE, LONDON, W14

Transcription

1 THE COLLECTION VILLAGE, LONDON, W14

2 THE BEAUMONT COLLECTION ABINGDON SPUR LODGE THREE DISTINCTIVE BUILDINGS, OFFERING NUMEROUS ASSET MANAGEMENT OPPORTUNITIES WITHIN VILLAGE 02 03

3 WEST LONDON S PREMIER PRIVATE GATED OFFICE CAMPUS INVESTMENT SUMMARY Located in the heart of Kensington Village, West London s premier private gated office campus Moments from West Kensington & Kensington Olympia Underground Stations Immediate surrounding area being spearheaded by the major redevelopment of Earl s Court & Olympia London - the largest regeneration site in Central London Virtual Freehold 92,255 sq ft (8,570.8 sq m) The collection comprises a HQ warehouse style office building together with a mixed-use, stand-alone building and a smaller self-contained office situated around an attractive central courtyard Multi-let producing a total income of 3,548,682 per annum Ultra-low average passing rent (including rental guarantees) of only per sq ft Kensington Village rents stand at per sq ft a significant discount to neighbouring Hammersmith & Kensington markets which are approximately per sq ft Staggered lease expiries from late 2018 until 2022 Numerous asset management opportunities including either a phased refurbishment or a more comprehensive scheme with full vacant possession in 2022 Opportunity to add additional floor area, as evidenced at the Warwick Building, where planning was granted for two additional floors of residential use Offers are invited in excess of 65,000,000 Net initial yield: 5.11% (assuming purchasers costs of 6.8%) Net initial yield rising to 5.28% upon the documentation of the agreed rent reviews in Beaumont House Reversionary yield: 6.74% Very low capital value of only 705 per sq ft reflecting a 15% discount to the recently traded Gloucester Building 04 05

4 NATURAL HISTORY MUSEUM EARL S COURT STATION EARL S COURT REGENERATION HYDE PARK THE CITY BUCKINGHAM PALACE BATTERSEA PARK THE COLLECTION CROMWELL ROAD HIGH STREET WEST STATION 06 07

5 THE LOCATION VILLAGE IS LOCATED BETWEEN AND HAMMERSMITH, LESS THAN THREE MILES FROM KNIGHTSBRIDGE AND MAYFAIR IN THE WEST END OF LONDON VILLAGE The distinctive campus is positioned directly to the north of West Cromwell Road (A4), between North End Road to the west and Warwick Road to the east. Pedestrian access to the village is provided via two entrances from the A4 and vehicular access is via Avonmore Road through a 24/7 security gatehouse or separately from Stanwick Road and Mornington Avenue. Kensington Village has always attracted a range of major corporate and media occupiers including RDF Media, Universal Music and CACI. To the north of Kensington Village is the internationally renowned exhibition and leisure venue of Olympia London and directly to the south is the Earl s Court regeneration scheme. OLYMPIA LONDON Olympia London is the largest exhibition centre in central London and the third largest in the UK. The iconic venue is home to a range of international trade and consumer exhibitions, conferences and events. In September 2017, it was announced that Heatherwick Studio, in collaboration with SPPARC Architects, will be leading the architectural enhancement of Olympia London. The project will see the 130-year-old exhibition centre based on a 14-and-a-half-acre site, transformed into a world-leading arts, entertainment, exhibition and experiential district. Heatherwick Studio has been tasked with improving the current customer offer with enhanced communal areas and retail units whilst retaining its iconic features

6 EARL S COURT DEVELOPMENT REGENERATION SCHEME The 77-acre and 12 billion regeneration is the largest in central London and is owned by three partners involved in The Earl s Court Project; EC Properties LP (a wholly owned subsidiary of Capco), the London Borough of Hammersmith & Fulham and Transport for London. The Masterplan has been devised by Sir Terry Farrell and revolves around four new urban villages and a high street. The villages will include around 7,500 new homes as well as the creation of approximately 10,000 jobs. In addition, 7.5 acres of green space will be created. Transport benefits include substantial improvements to Earl s Court, West Brompton and West Kensington Underground stations, a new north south thoroughfare and additional bus routes. Construction works started on Phase One in January ACRES 7.5K NEW HOMES 10K NEW JOBS Two crescents, garden squares and a new public space the size of Sloane Square Computer generated image MAP OF PROPOSED SCHEMEE A creative vision for a classical landscape of crescents, squares and parks Computer generated image Map shown for illustrative purposes only. Not to scale

7 COMMUNICATIONS 8 MINS TO 28 MINS TO 19 MINS TO EXCELLENT TRANSPORT LINKS VIA NUMEROUS UNDERGROUND STATIONS, BUS ROUTES AND THE ROAD NETWORK PADDINGTON District line from Earl s Court HEATHROW AIRPORT District line from Earl s Court to Paddington then Heathrow Express KING S CROSS ST PANCRAS Piccadilly line from Earl s Court Kensington Village benefits from excellent transport links, with five underground stations all within walking distance, providing direct connectivity to the District and Piccadilly lines respectively and enabling quick access across central London. In addition, Kensington Village also benefits from easy access to significant London mainline railway stations including London Paddington, London Victoria and London Waterloo, providing links beyond the capital. Kensington Village can also be reached via car directly from the A4 thoroughfare, which leads through London to the east and provides quick access to the M4 Motorway to the west. 7 MINS TO CLAPHAM JUNCTION Southern Rail from West Brompton 12 MINS TO LEICESTER SQUARE Piccadilly line from Earl s Court 10 MINS TO VICTORIA District line from Earl s Court Source: TfL Map shown for illustrative purposes only. Not to scale. Shepherd s Bush Market Shepherd s Bush SHEPHERD S BUSH Kensington Palace GARDENS HYDE PARK MAYFAIR RAVENSCOURT PARK Ravenscourt Park HAMMERSMITH M4 BARNES A4 HAMMERSMITH BRIDGE KING STREET Goldhawk Road Kings Mall Shopping Centre Eventim Apollo SHEPHERD S BUSH ROAD W12 Shopping Centre Hammersmith Broadway Shopping Centre FULHAM PALACE ROAD HAMMERSMITH ROAD TALGARTH ROAD FULHAM Kensington Olympia Olympia London Barons Court A4 The Queen s Club Neil s Jazz and Blues HOLLAND PARK WARWICK ROAD WEST CROMWELL RD West Kensington NORT H END ROAD Design Museum Earl s Court Regeneration LILLIE ROAD HIGH STREET A4 Earl s Court West Brompton KNIGHTSBRIDGE CROMWELL ROAD Gloucester Road OLD BROMPTON ROAD CHELSEA Royal Albert Hall Science Museum Natural History Museum V&A Museum South Kensington WEST VILLAGE WEST CROMWELL ROAD NORTH END VILLAGE NORTH END ROAD FULHAM A4 EARL S COURT REGENERATION LILLIE ROAD LILLIE SQUARE WARWICK ROAD EARL S COURT EARL S COURT VILLAGE WEST BROMPTON WEST BROMPTON VILLAGE 12 13

8 THE COLLECTION The Kensington Collection comprises three self-contained buildings of high quality office, restaurant and leisure accommodation. Beaumont House has a rich history and was originally constructed in 1892 as part of the former Whiteley s Furniture Depositary. It has more recently been converted into office accommodation and has benefitted from numerous rolling refurbishments that have maintained many original features and unique qualities that are highly sought after by modern occupiers. As a converted warehouse, the space is presented in a distinct and characterful style, benefitting from a Grade A specification, impressive floor to ceiling heights and excellent levels of natural light. The restaurant and gym amenities offered in Abingdon House along with the open green space and outdoor seating ensure that Kensington Village provides a high-quality working environment. Finally, Spur Lodge is a smaller self-contained office building on the western side of the village. The total area of Beaumont House, Abingdon House & Spur Lodge is 92,255 sq ft (8,570.8 sq m). BEAUMONT CACI AVONMORE ROAD SPUR LODGE ABINGDON AVON GLOUCESTER VILLAGE AVONMORE ROAD WARWICK Plan shown for illustrative purposes only. Not to scale. PEMBROKE 14 15

9 BEAUMONT 16 17

10 DESCRIPTION Beaumont House provides 81,352 sq ft (7,557.9 sq m) of office accommodation arranged over ground and four upper floors. Access is afforded via a central core and lobby area, making the building highly flexible in its configuration and allowing for subdivision. The Property benefits from the use of 33 undercroft car parking spaces that are currently let to Universal Music Limited. BEAUMONT VILLAGE TENANCY Universal Music Limited occupies 59% of the space within Beaumont House. The vacant areas on part fourth and part third, formerly occupied by Universal Music, are offered with the benefit of a twelve month rental guarantee. Beaumont House generates an annual topped up rental income of 3,284,537, reflecting a low overall rent of per sq ft. TYPICAL UPPER FLOOR PLAN GROUND FLOOR PLAN Plans shown for illustrative purposes only. Not to scale

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12 DESCRIPTION Abingdon House provides 9,562 sq ft (888.3 sq m) of office, restaurant and leisure accommodation arranged over ground and first floors. The ground floor comprises a large, open plan restaurant, offering both counter and table service. A fully fitted gym and studio, along with shower and changing facilities, is provided with direct access from the courtyard. The first floor provides self-contained office accommodation benefitting from exceptional floor to ceiling heights and large levels of natural light from its dual frontage and excellent fenestration. Abingdon House benefits from the use of three surface car parking spaces. ABINGDON VILLAGE ABINGDON TENANCY Plan shown for illustrative purposes only. Not to scale. The Property is let to Universal Music Limited and Village Fayre Limited, whilst Kensington Village Management Limited also operates a gym for the benefit of occupiers in the Village. Abingdon House generates an annual rental income of 224,500 per annum

13 SPUR LODGE DESCRIPTION The smallest of the three buildings, Spur Lodge totals 1,341 sq ft (124.6 sq m) and provides office space over ground and first floors. SPUR LODGE TENANCY VILLAGE The Property is occupied by Kensington Village Management Limited, from which the Estate Office operates, and Spur Lodge Limited over the separately accessed first floor. The Property generates an annual rental income of 39,645. Plan shown for illustrative purposes only. Not to scale

14 FLOOR AREAS TENURE The Property has been measured by Armada Surveys in accordance with the RICS Code of Measuring Practice (6th Edition) to provide the following net internal and gross internal areas: Beaumont House, Abingdon House and Spur Lodge are all held by way of a virtual freehold interest for a term of 999 years from 22 February 2000 (981 years unexpired) at a peppercorn. FLOOR USE SQ FT NIA SQ M SQ FT GIA SQ M BEAUMONT The freehold is held by Kensington Village Management Limited ( KVML ), a non-profit making corporate entity that represents the interest of each of the virtual freeholders within the Village. KVML is a current tenant within Spur Lodge and has reported neither a profit or a loss for the last three years. Each virtual freeholder shares a proportion of the shares in KVML based on the extent of its ownership. As such, the Vendor holds a stake of 31%. 16,967 1, ,232 1, rd Floor Office 16,860 1, ,205 1, nd Floor Office 16,649 1, ,896 1, st Floor Office 16,654 1, ,896 1,848.4 Ground Floor Office 14,222 1, ,968 1, ,352 7, ,197 9,308.5 N O Office AV 4th Floor NM RO AD E US HO RE CI O CA BEAUMONT TOTAL ABINGDON Office 4, , Ground Floor Restaurant 4, , ABINGDON TOTAL 9, ,902 SPUR LODGE TOTAL THE COLLECTION TOTAL K RO AD 1, , , , ,255 8, ,722 10,472.1 G LO BU UC ILD ES IN TER G VILLAGE G ILDIN K BU Facilities Management Office IC C RWI Ground Floor W WA Office AN 1,012.8 SPUR LODGE 1st Floor ST ON AV SE U HO 1st Floor USE KE HO O PEMBR WEST C ELL ROMW ROAD This plan is published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds

15 TENANCY SCHEDULE FLOOR USE TENANT AREA AREA LEASE START LEASE EXPIRY RENT REVIEW NEXT RENT RENT COMMENTS SQ FT SQ M DATE DATE DATE BREAK PER ANNUM PER SQ FT BEAUMONT Part Fourth Floor North Office ADM Promotions UK Limited 6, /07/ /07/ , Lease outside of the Landlord and Tenant Act Part Fourth Floor South Office Vacant 10, , month rental guarantee to be provided by the Vendor. Part Third Floor North Office Universal Music Operations Limited 9, /08/ /08/ /08/ , Lease outside of the Landlord and Tenant Act Lease includes 10 car parkings spaces & awaiting documentation. Rent review agreed at 406,120 per annum. Part Third Floor South Office Vacant 6, , month rental guarantee to be provided by the Vendor. Part Second Floor North Office Universal Music Operations Limited 5, /06/ /06/ /06/ , Lease outside of the Landlord and Tenant Act Lease includes 6 car parkings spaces & awaiting documentation. Rent review agreed at 238,280 per annum. Part Second Floor South Office Universal Music Operations Limited 10, /08/ /11/ , Lease outside of the Landlord and Tenant Act Part First Floor North Office Eaglemoss Limited 9, /01/ /01/ /01/ , Lease outside of the Landlord and Tenant Act Part First Floor South Office Universal Music Operations Limited 6, /11/ /11/ /11/ , Lease outside of the Landlord and Tenant Act Part Ground Floor North Office Universal Music Operations Limited 7, /07/ /07/ /07/ , Lease outside of the Landlord and Tenant Act Lease includes 7 car parkings spaces & awaiting documentation. Rent review agreed at 282,320 per annum. Part Ground Floor South Office Universal Music Operations Limited 6, /11/ /11/ /11/ , Lease outside of the Landlord and Tenant Act Part Ground Floor Office Universal Music Operations Limited /12/ /11/ , Lease outside of the Landlord and Tenant Act Car Parking Spaces Car Parking Universal Music Operations Limited /10/ /10/ months notice 8,750 1,750 Licence to use 5 car parking spaces. Mutual option to determine the licence, subject to a two month notice period. 5 Car Parking Spaces Car Parking Universal Music Operations Limited /10/ /10/ months notice 8,750 1,750 Licence to use 5 car parking spaces. Mutual option to determine the licence, subject to a two month notice period. Subtotal - Beaumont House 81,209 7, ,284,537 ABINGDON First Floor Office Universal Music Operations Limited 4, /02/ /09/ /04/ , Current rent of 125,000 per annum subject to a fixed uplift to 156,000 per annum from and including 8 Feb 2018 (to be topped up by the Vendor). Rolling tenant break option from 30 Apr 2018, subject to a three month notice period. Lease outside of the Landlord and Tenant Act Lease includes 5 car parking spaces. Part Ground Restaurant Village Fayre Limited 2, /04/2013 N/A , Tenancy at will in place. Part Ground Gym Kensington Village Management Limited 1, N/A N/A , No formal agreement in place. 1 Car Parking Space Car Parking Village Fayre Limited /06/2005 N/A - - 1,500 - Licence to use 1 car parking space. 2 Car Parking Spaces Car Parking Vacant Subtotal - Abingdon House 9, ,500 SPUR LODGE First Floor Office Spur Lodge Limited 1, /03/ /03/ , Lease outside of the Landlord and Tenant Act Management Suite Office Kensington Village Management Limited /12/ /11/ , Lease outside of the Landlord and Tenant Act Subtotal - Spur Lodge 1, ,645 Total - The Kensington Collection 92,078 8, ,548,682 *Areas stated within the tenancy schedule refer to demised tenants only

16 COVENANT INFORMATION 17 UNIVERSAL MUSIC OPERATIONS LIMITED (55% OF THE INCOME) Universal Music is the UK s leading music company and a subsidiary of the French media conglomerate Vivendi. Home to artists including Take That, Mumford & Sons and The Rolling Stones, Universal Music is an umbrella corporation which owns and ecompasses major world-renowned record labels including Capital Records, Island Records and Virgin EMI Records, amongst others. Traditionally based in Kensington, Universal Music has offices in both Kensington Village and on Kensington High Street. Universal Music Operations Limited have a D&B rating of 5A 1 indicating a minimum risk of business failure. For the financial year ending 31st Dec 2016 Universal had a reported turnover of 316,443,000 and Net Current Assets of 113,721,000. Further information can be found at ADM PROMOTIONS UK LTD (8% OF THE INCOME) ADM is one of the largest independent marketing services firms in the world. They have process experts who consult, re-engineer and execute global supply chain solutions working with clients under long term contracts to deliver marketing campaigns that build brands and add value. ADM have interconnected businesses consisting of over 350 people across 22 offices in 19 countries. The company has a D&B rating of 3A 1 indicating a minimum risk of business failure. For the financial year ending 31 Dec 2016 ADM reported a Turnover of 41,768,000 and Net Current Assets of 10,472,000. Further information can be found at EAGLEMOSS LIMITED (9% OF THE INCOME) Eaglemoss is a creative and innovative company who specialise in Partworks, a specialist form of publishing aimed at mass markets allowing large entertainment brands to increase their brand awareness through a non-traditional business channel. Eaglemoss is owned by Eaglemoss Capital Ltd, a holding company comprising private investors based in London and Paris. Further information can be found at Beaumont House part 3rd floor occupied by Universal Music 30 31

17 BEAUMONT, ABINGDON AND SPUR LODGE OFFER A RANGE OF ASSET MANAGEMENT OPPORTUNITIES, IN ADDITION TO THE NATURAL BENEFITS ARISING FROM THE PROXIMITY TO THE EARL S COURT REGENERATION SCHEME COMPREHENSIVE REFURBISHMENT Potential for a comprehensive refurbishment of the existing office accommodation upon vacant possession in There is also the option of carrying out a rolling refurbishment upon lease expiries. Over 50,000 sq ft will become vacant in 2018, including 17,000 sq ft which is currently vacant. ASSET MANAGEMENT OPPORTUNITES INCREASE MASSING Increased massing potential for Beaumont House. The Warwick Building (directly to the south in Kensington Village) which currently is the same height as Beaumont House, gained planning consent to add a new, two-storey barrel roof extension on top of the existing structure, setting a precedent for Kensington Village. Abingdon House also has massing potential. ALTERNATIVE USES Explore alternative uses including residential. The planning consent for the Warwick Building is to provide 25 private apartments as part of the two-storey roof extension and there is certainly potential to improve the restaurant and leisure provision. RE-BRANDING Opportunity to re-brand the collection of buildings under one dedicated campus. There is the potential to dramatically improve the existing leisure and restaurant provision through place-making at Abingdon House and create an inclusive co-working style environment. IMPROVING RENT ROLL Numerous opportunities exist to drive the current rent roll via either refurbishment of the existing accommodation, re-gearing current occupational leases, setting new headline rents through open market lettings and increasing the rental income derived from the restaurant and gym provision. Computer generated image 32 33

18 INVESTMENT MARKET COMMENTARY OCCUPATIONAL MARKET COMMENTARY Investor sentiment for the West End remains very strong with turnover to the end of Q3, 2017 reaching 5.29bn, a 16% increase on the 10-year average. Global equity has once again proved particularly diverse with buyers from Continental Europe accounting for 25%, Middle East 22%, UK 19%, Asia Pacific 12% and North America 16%. With yields in both the West End and City of London reaching all-time lows, investors are pursuing opportunities outside of these core markets in the search for higher returns. The Hammersmith & Kensington markets in particular offer robust occupational and investment credentials, underpinned by a severe lack of supply, attractive rents relative to the West End, strong rental growth prospects and excellent transport links. Investors have further been attracted to London due to its compelling yield arbitrage over interest rates and UK bonds whilst the continued devaluation of the UK Sterling has further reinforced its status as a safe haven for global capital. Set out below are some comparable transactions: The central London office market as a whole has continued to perform well throughout This year, West End take-up has already surpassed the 2016 total with September recording the second highest monthly take up figure on record. The TMT sector remains the most active accounting for approximately 32% of the market with headline rents holding firm as total supply fell 3.7% against a back drop of falling vacancy rates to just 3.9%. Kensington Village is ideally located between the well-established office markets of Kensington and Hammersmith. Hammersmith has benefitted from significant regeneration and companies continue to be attracted by its low comparable total occupation costs, excellent transport links, diverse amenities and proximity to both central London and Heathrow Airport. Major occupiers include GE, Dunnhumby, Medidata and Philip Morris. Kensington has a long-standing association with the music industry but more recently has begun to attract occupiers from the established TMT and fashion sectors. Meanwhile stringent planning controls in both Hammersmith and Kensington have restricted office supply and the area remains characterised by a distinct lack of highly quality, well specified offices. Set out below are some comparable transactions: DATE ADDRESS TENURE AREA CAPITAL NIY CAPITAL TENANCY (SQ FT) VALUE VALUE ( PSF) Sep Hammersmith LLH 122, m 4.91% 912 Multi-let Grove, W6 Sep 17 Gloucester Building, VFH 22, m 5.05% 818 Single-let Kensington Village, W14 Jun Brook Green, W6 FH 85, m 4.00% 787 Single-let Mar 17 Warwick Building, VFH 79, m 5.20% 712 Single-let Kensington Village, W14 May 17 One Queen Caroline LLH 83, m 5.67% 931 Multi-let Street, W6 Apr Shepherds Bush FH 115, m 4.60% 837 Single-let Road, W6 DATE ADDRESS AREA TENANT RENT (SQ FT) (PSF) Sep Hammersmith Grove, W6 52,837 WeWork Mar Hammersmith Grove, W6 29,020 Medidata Mar 17 Pembroke Building, Kensington Village, W14 17,800 National Citizens Service Jan Hammersmith Road, W6 8,862 Gambit Research LLP Dec 16 The Aircraft Factory, 100 Cambridge Grove, W6 3,102 Kwiff Dec 16 One Queen Caroline Street, W6 9,090 BTS Sep 16 One King Street, W6 8,816 Orion Health *the above information has been provided by 3rd parties and is subject to verification *the above information has been provided by 3rd parties and is subject to verification 34 35

19 PLANNING The Properties are located in the London Borough of Hammersmith and Fulham. They are not listed but do sit within the Olympia and Avonmore Conservation Area. VAT The Property has been elected for VAT. It is anticipated that the transaction will be treated as a Transfer of a Going Concern. DATA SITE Further information is available upon request. EPC Energy performance certificates are available upon request. PROPOSAL Offers are invited in excess of 65,000,000 (Sixty Five Million Pounds), subject to contract and exclusive of VAT. A purchase at this level reflects a net initial yield of 5.11%, a potential reversionary yield of 6.74% and a capital value of 705 per sq ft, assuming purchaser s costs of 6.8%. Beaumont House part 4th floor occupied by ADM 36 37

20 CONTACTS Oliver Sprackling +44 (0) Toby Larman +44 (0) Alex Fryer +44 (0) Scott Lister +44 (0) James Harris +44 (0) Peter Ng Henrietta House, Henrietta Place, London, W1G 0NB 3 Hanover Square, London, W1S 1HD Misrepresentation Act: Misrepresentation Act 1967: (i) Although maximum care has been taken to ensure the accuracy of the information contained within this report, such information is subject to change and confirmation. (ii) No liability will be accepted by CBRE or Michael Elliott for any loss arising from information contained within this report as it may have been provided by a third party source and will require verification. (iii) This report provides a general outline only for the guidance of prospective purchasers and does not constitute the whole or any part of an offer or contract. (iv) No employee of CBRE or Michael Elliott has the authority to make or give any representation or warranty or enter into any contract whatever in the relation to the property. (v) Rents and prices stated within this report may be subject to VAT. Designed and produced by The Looking Glass Design November 2017.

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