EXE BRIDGES RETAIL PARK A unique prime investment opportunity Exeter EX4 1AH
INVESTMENT SUMMARY LOCATION Exeter is the regional capital of Devon. The city dominates its affluent catchment area which comprises some 508,000 people. SITUATION This retail park lies approximately half a mile south of the city centre, fronting the A377 (Alphington Street), which is the principal route into the city from the south. DESCRIPTION A terrace of four retail warehouse units, together with a restaurant unit completed in 2000 and an additional standalone retail warehouse unit constructed in 2013. The park comprises 67,810 sq ft GIA. PLANNING The only retail warehouse park in Exeter permitting occupation by fashion, footwear, pharmaceutical products and other retailers usually requiring an open planning consent. TENURE The site is held long leasehold, under 2 leases, at a peppercorn rent with the majority held for a further 133 years. STRONG TENANT LINE UP The scheme is fully let to Next, M&S Foodhall, TK Maxx, Boots, Poundland and Pizza Hut and produces a rent of 2,042,198 per annum. Attractive WAULT of 7.7 years and 100% of the income is secured against A1 strength covenants. Boots have re-geared their lease for 10 years at a rent of 30.27 per sq ft. RATEABLE VALUE The 2017 rateable values for the retail units show a reduction of between 15.2% and 17.7% from their previous values. The restaurant has an A3 consent. PROPOSITION We are instructed to seek offers in excess of 33,265,000 (Thirty Three Million, Two Hundred and Sixty Five Thousand Pounds), subject to contract and exclusive of VAT, which would reflect a net initial yield of 5.75% (assuming purchaser s costs at 6.77%). 2
LOCATION & DEMOGRAPHICS The historic university city of Exeter is the administrative centre for Devon and is situated approximately 42 miles north east of Plymouth, 41 miles south east of Barnstaple and 34 miles south west of Taunton. The city benefits from good road communications situated at the foot of the M5 motorway, which provides direct access to the West Midlands and to the South East of England and Wales via the M4 motorway. The city is also well connected by rail via Exeter St Davids, Exeter Central and Exeter St Thomas railways stations. The city has an urban area population of circa 120,000 people. PROMIS estimates the city has an estimated shopping population of 337,000 people and a total primary catchment of 508,000 people, ranking the town 26 out of the PROMIS centres. The Exeter catchment population is relatively affluent. The city ranks 31 in terms of the volume of comparison retail spend available in the catchment area and is forecast to see significantly above average percentage growth in the available pool of comparison spending over the forecast period, 2016-21. The closest major towns and cities to Exeter are Plymouth (42 miles), Bristol (75 miles) and Bath (80 miles), providing a large captive geographical catchment. A selection of catchment statistics are provided below: BODMIN A39 A38 A388 ILFRACOMBE BIDEFORD A30 A386 BARNSTAPLE PORT TALBOT PORTHCAWL A361 A377 NEATH 36 37 BRIDGEND EXETER A38 31 PONTYPRIDD 35 TIVERTON 29 30 28 27 34 MINEHEAD M5 EXMOUTH DAWLISH TEIGNMOUTH NEWTON ABBOT TORQUAY 33 A4232 32 BARRY CAERPHILLY CARDIFF BURNHAM-ON-SEA TAUNTON 25 26 SIDMOUTH 24 CWMBRAN CHEPSTOW CLEVEDON WESTON- SUPER-MARE 23 22 BRIDGWATER M5 A30 NEWPORT 21 20 A39 M4 TOLL 19 A38 BRISTOL BRIDPORT YEOVIL A35 A37 A37 M4 A303 18 BATH A4 FROME DORCHESTER A36 WEYMOUTH A433 A350 A EXETER PMA CENTRE: REGIONAL CENTRE FOWEY SALTASH TORPOINT PLYMOUTH PLYMPTON PAIGNTON BRIXHAM Per capita in-store comparison expenditure, 2016 2,938 2,771 Forecast growth in comparison retail expenditure, 2016-21 3.5% 3.0% Car Ownership 2011 (households with 1 car) 44% 43% Car Ownership 2011 (households with 2+ cars) 38% 36% Home Ownership 2011 (% of households) 71% 67% THE NEAREST MAJOR CITIES TO EXETER ARE PLYMOUTH (42 MILES), BRISTOL (75 MILES) AND BATH (80 MILES) Unemployment as % population aged 16-64, Sept 2016 0.7% 1.3% 3 Source: PROMIS
RETAIL WAREHOUSING IN EXETER Retail warehouse supply in the city is estimated at 1.138 million sq ft. Overall, provision per household of retail warehousing floor space is below the PROMIS average. Retail warehouse floor space with open planning consent is significantly under represented with the subject property being the only park to benefit from an open consent. We set out details of the bulky consented schemes below, together with the cluster at Sowton Industrial Estate: 1 2 RYDON LANE RETAIL PARK The park totals circa 116,000 sq ft let to Currys PC World, Pets at Home, B&M Bargains, Halfords, Carpetright, Sports Direct and DFS. Rents range between 24.00 and 28.00 per sq ft. Owned by Royal London. EXETER RETAIL PARK The park totals circa 112,000 sq ft let to Currys, Pets at Home, Harveys, Carpetright, Argos, Oak Furnitureland, Matalan, McDonalds, Carphone Warehouse and Costa. Rents range between 16.00 and 29.50 per sq ft. Owned by AVIVA Investors. 3 4 ALPHINGTON ROAD RETAIL PARK The park comprises a 15,000 sq ft Aldi, a 5,000 sq ft Iceland and a 40,000 sq ft unit occupied by The Range. Owned by L&G Property. SOWTON INDUSTRIAL ESTATE A retail warehouse cluster that lies close to Junction 29 of the M5 motorway. Occupiers include B&Q Warehouse, Dunelm Mill, Homebase, Furniture Village, Wickes and Toys R Us. LN BUNDLE CORWICK ST CORWICK ST WLEY BRIDGE RD RD OKEHAMPTON CORWICK LN UNIVERSITY OF EXETER EXETER CATHEDRAL 2 A377 ALPHINGTON WAY WESTERN EXETER EXE BRIDGES RETAIL PARK SITUATION 3 A3015 HEAVITREE A379 WHIPTON B3183 COUNTESS WEAR A3015 1 HONIT ON ROAD A379 M5 WAY CUMBERLAND 4 SOWTON INDUSTRIAL ESTATE M5 STRONG RETAILER DEMAND Due to the limited amount of good quality retail warehousing in Exeter, we believe there are a considerable number of national retailers who are seeking representation in the city. The subject property lies half a mile south of Exeter city centre, fronting the A377 (Alphington Road), which is the principal route into the city from the south, linking to the A30, dual carriageway, and thereafter to the M5 motorway. Access into the scheme is via Cowick Street, which connects a short distance to the north with Alphington Street and the Exe Bridge roundabout. Egress is to Alphington Street, which is traffic light controlled, and also via a one-way exit from Cowick Street. Adjoining the site to the east and sharing the access and egress arrangements is the Riverside Leisure Centre. 4
DESCRIPTION The development comprises some 67,810 sq ft GIA of purpose built retail warehouse accommodation arranged in a terrace of four units, together with a standalone retail unit and self-contained restaurant. There is surface car parking in front of the retail units for 219 vehicles, giving a ratio of 1 space per 309 sq ft. The original four unit terrace was completed in 2000, on a site that formerly housed a Sainsbury s supermarket. The standalone retail unit, currently occupied by Poundland, was constructed in 2013 and sits on the old library site. Construction is by way of a traditional steel portal frame under a pitched plastisol coated steel panel roof. Elevations are brick clad and to the front of the retail warehouse units there are separate tenants entrance features with full length walkway canopy. The newer standalone unit has been constructed to be in keeping with the original terrace. The standalone restaurant is an architectural design feature providing an attractive frontage to the main road. The unit is predominantly clad in full height glazing and there is a 3 stage wing style roof. All floors are of power floated concrete and externally the car parking areas are tarmacadam surfaced. There is a dedicated, concrete surfaced loading area, to the rear, using similar access and egress arrangement as per customer traffic. The retail warehousing accommodation has a height to eaves of over 6 metres, thereby permitting the installation of mezzanine floors. The development lies on a site of approximately 4.84 acres (1.96 hectares). The area of the individual units are set out in the Tenancy Schedule. THE PROPERTY PROVIDES 67,810 SQ FT GIA OF PURPOSE BUILT RETAIL WAREHOUSE ACCOMMODATION 5
PLANNING The main retail warehouse terrace benefits from an open A1 retail use with up to 1,500 sq m/16,145 sq ft of the floorspace permitting the sale of food. The standalone retail warehouse unit occupied by Poundland also benefits from an open retail use. The standalone restaurant is subject to an A3 planning consent. OPEN A1 (PART FOOD) PLANNING CONSENT 6
TENURE The majority of the site, save the railway arches, is held on the residue of a 150 year lease from 24 June 2000 at a peppercorn rent from Exeter City Council (outlined in red). ALPHINGTON STREET The railway arches are held on the residue of a 125 year lease (less 5 days) from 25 March 1986 at a peppercorn rent from Exeter City Council (outlined in orange). The arches are solely used to pass under to the additional staff car parking to the south of the railway line. A377 The ownership boundary lines are provided for indicative purposes only. COWICK STREET HAVEN ROAD 7
TENANCIES The property is fully let on full repairing and insuring leases, benefitting from a WAULT of 7.7 years. A tenancy schedule is set out below: UNIT TENANT TRADING AS AREA (SQ FT) TERM (YEARS) LEASE START LEASE EXPIRY NEXT RENT REVIEW RENT (PA) RENT (PSF) 1 Boots UK Limited Boots 9,580 10 24/06/16 23/06/26 24/06/21 290,000 30.27 2 Next Holdings Limited Next 15,685 15 25/12/04 24/12/19 N/A 467,040 29.78 3 TJX UK TK Maxx 15,621 10 12/09/12 11/09/22 12/09/17 460,000 29.45 4 Marks and Spencer Simply Food Limited M&S Foodhall 15,627 20 22/08/11 21/08/31 22/08/21 517,372 32.88 5 Pizza Hut (UK) Ltd Pizza Hut 4,741 20 25/03/01 24/03/21 25/03/16 104,240 21.99 6 Poundland Limited Poundland 6,556 10 27/08/13 26/08/23 27/08/18 203,546 31.00 TOTAL 67,810 2,042,198 8
TENANTS FINANCIAL INFORMATION TENANT ACCOUNTS YEAR ENDING TURNOVER 000 PRE-TAX PROFIT 000 NET WORTH 000 D&B RATING Boots UK Limited 31/08/15 31/03/14 9,198,000 6,340,000 542,000 507,000 367,000 456,000 5A 1 Next Holdings Limited 30/01/16 24/01/15 204,200 202,200 992,200 139,400 1,062,700 772,700 5A 1 TJX UK 30/01/16 31/01/15 2,434,000 2,195,400 142,300 134,300 599,400 583,400 5A 1 Marks and Spencer Simply Foods Limited 02/04/16 28/03/15 764,548 724,466 87,730 94,037 367,528 296,683 5A 1 Pizza Hut (UK) Ltd 30/11/14 01/12/13 225,464 230,106 9,008-968 50,196 42,085 5A 1 Poundland Limited 27/03/16 29/03/15 1,214,818 1,111,526 34,653 45,922 20,520 93,866 4A 1 9
RATEABLE VALUE RENTAL TRANSACTIONS The Valuation Office Agency state that the most recent business rates revaluation came into effect in England and Wales on 1 April 2017. The subject property has benefited from a significant reduction in its rateable value, as shown below: UNIT TENANT PREVIOUS RV CURRENT RV DIFFERENCE 1 Boots 300,000 247,000 2 Next 510,000 432,500 3 TK Maxx 487,500 407,500-53,000-17.7% - 77,500-15.2% - 80,000-16.4% The most recent rental evidence at the park is provided by: Boots lease re-gear in June 2016 at passing rent of 30.27 per sq ft; 99p Stores (now Poundland) letting in August 2013 at 31.00 per sq ft; TK Maxx lease re-gear in September 2012 at 29.45 per sq ft; and M&S Foodhall letting in August 2011 at 29.50 per sq ft and subject to an RPI linked rent review in 2016. From our discussions with the occupiers we understand that they all trade well from the scheme as demonstrated by the fact that Boots have recently re-geared their lease. Whilst there is no evidence to justify a reversion, we believe that given the scarcity of supply and the strength of trade this park generates, there are good rental growth prospects in the medium term. 4 M&S Foodhall 467,500 387,500 5 Pizza Hut 116,000 117,000 6 Poundland 211,000 174,000 TOTAL 2,092,000 1,765,500-80,000-17.1% 1,000 +0.9% - 37,000-17.5% - 326,500-15.6% THE RETAILERS TRADE WELL FROM THE SCHEME AS DEMONSTRATED BY THE RECENT BOOTS LEASE RE-GEAR 10
EPC S UNIT RATING UNIT RATING 1 C 73 4 B 48 2 D 83 5 D 93 3 C 74 6 B 48 ENVIRONMENTAL A Phase I Environmental Assessment has been produced by WSP and can be provided upon request. EXETER FLOOD DEFENCE WORKS There are significant flood defence works being undertaken in Exeter. The city s flood defence scheme is being undertaken in phases with Phase 1 having recently been completed and Phase 2 due for completion in mid-2018. WSP have produced a Phase I Flood Risk Appraisal and Mitigation Report for Exe Bridges Retail Park and conclude that following the completion of the Phase 2 works, the subject property will have a Low flood risk rating. A copy of the WSP report is available upon request. VAT The property has been elected for VAT, however, we anticipate the transaction will be treated as a Transfer of Going Concern (TOGC). PROPOSITION We are instructed to seek offers in excess of 33,265,000 (Thirty Three Million, Two Hundred and Sixty Five Thousand Pounds), subject to contract and exclusive of VAT, which would reflect a net initial yield of 5.75% (assuming purchaser s costs at 6.77%). 11
FURTHER INFORMATION Wilkinson Williams Heathcoat House 20 Savile Row London W1S 3PR MILES MARTEN T: 020 7317 3777 M: 07770 748290 E: m.marten@wilkinsonwilliams.co.uk JACK LLOYD T: 020 7317 3796 M: 07747 883231 E: j.lloyd@wilkinsonwilliams.co.uk Property Misrepresentation Act Wilkinson Williams LLP give notice to anyone who may read these particulars as follows: 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. 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. 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. 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 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. Any areas, measurements or distances referred to herein are approximate only. 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. 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. April 2017 Designed and produced by THE GROUP www.completelygroup.com JN: 13313.002