Unfettered RPI Linked Rent Reviews Tesco Extra Foodstore Highfield Road, Craigavon, BT64 1AG
Investment Summary The dominant foodstore within the catchment and one of the largest Tesco Stores in Northern Ireland. The property occupies a prominent location in Central Craigavon adjacent to Marlborough Retail Park and Rushmere Shopping Centre & Retail Park. Freehold. A purpose built food store totalling 121,102 sq ft with the benefit of 789 car park spaces. The property is let to Tesco Stores Ltd on a 25 year full repairing and insuring lease from 1st November 2010 (tenant break clauses at years 15 & 20). Current rent passing is 1,393,290.50 per annum equating to a comparatively low rate of 11.50 per sq ft. The lease benefits from annual unfettered Retail Price Index linked upwards only rent reviews compounded 5 yearly. Our client is seeking offers in excess of 22,900,000 (Twenty Two Million, Nine Hundred Thousand Pounds) reflecting an attractive net initial yield of 5.75% exclusive of VAT and assuming full purchasers costs of 5.80%. Assuming average RPI growth of 3% per annum the purchase price reflects a reversionary yield of 6.66% at next rent review in 2015.
Newcastle Middelsbrough York Hull Derry Belfast Leeds Lisburn Craigavon Newry Bolton Liverpool Manchester Nottingham Dublin Birmingham Cambridge Luton London Oxford Reading Permit ID:130039 Crown Copyright 2013 The subject property is located in Craigavon, County Armagh and lies in between the towns of Portadown and Lurgan. Craigavon is located approximately 28 miles (45 km) South-West of Belfast and 23 miles (37 km) North of Newry. Craigavon enjoys excellent transport infrastructure and is well connected to the rest of Ireland and to mainland UK. Craigavon has good road networks being positioned within close proximity to the M1 motorway which links Belfast, approximately 30 minutes drive time to the North and Dublin via the A1 is approximately 1 hour 30 minutes drive time to the South. In addition the direct Belfast to Dublin train service stops in Portadown some 3.5 miles (5 km) to the South-West of the town. George Best Belfast City Airport is located approximately 30 miles (48 km) to the North-East with Belfast International Airport some 28 miles (45 km) to the North. Craigavon Borough has the third largest population in Northern Ireland and performs a strong sub-regional role offering a wide range of services and facilities, including an acute hospital. The Borough has a catchment population of 180,000, second only to Belfast and has the highest birth rate in the country of 2.3%, Craigavon s population of 93,023 is forecast to continue to grow to 100,000 by 2015 and to 112,000 by 2023. Additionally there is a population of 805,390 within a 45 minute drive time. (Source: NISRA 2011) Craigavon is ranked 20th in CACI s ranking of over 400 Irish Retail Footprint Centres and 7th in Northern Ireland Retail Footprint ranking. Furthermore the surrounding retail area has the greatest retail footprint attractiveness score outside of the shopping centres in Belfast.
Description LAKEVIEW ROAD BALTEAGH ROAD HOMEBASE POUND STRETCHER CURRYS B&M BARGAINS PETS AT HOME HARRY CORRY MATALAN ARGOS NEXT MENARYS SAINSBURYS DUNNES STORES HOME BARGAINS TK MAXX MARKET LANE DEBENHAMS TESCO PFS HALFORDS HIGHFIELD ROAD HIGHFIELD ROAD MANDEVILLE ROAD B&Q TESCO E ROAD The property was purpose built in 2010 and comprises a 121,102 sq ft foodstore arranged over 2 levels. The majority of the ground floor (undercroft) is not enclosed and provides covered customer parking with unimpeded access between the perimeter open car park and the covered car park area. The remainder of the ground floor comprises enclosed entrance atria and emergency escape stairwells. The main retail and back of house areas are located at first floor level. A steel superstructure supports a double low dual pitched roof over the majority of the property and an ostensibly flat roof over the rear of the building. The feature areas at the front of the building and the escape stairwells comprise polyester coated Tenancy and Accommodation The property is let to Tesco Stores Ltd on a 25 year full repairing and insuring lease from 1st November 2010 with lease expiry due on 31st October 2035. The tenant has the option to determine the lease on the anniversary of the 15th and 20th years. aluminium curtain walling complete with sealed double glazed units while the majority of the elevations are clad with horizontal birch boards. Internally the main retail area is largely open plan. The suspended reinforced concrete floors are finished with ceramic tiles in most areas. The retail area includes ladies, gents and accessible toilet accommodation for the public. Within the back of house area the staff welfare and office accommodation is enclosed within hollow stud partitions and the accommodation has exposed grid suspended ceilings and natural wood veneered doors. Conditioned air is provided within the main retail area via a constant volume system. A series of gas fired burners provide the energy for a combined The lease benefits from annual unfettered Retail Price Index linked upwards only rent reviews compounded 5 yearly. heat and power plant that provides space heating and feeds power back to the NIE grid. Due to the undercroft parking there is a total of 789 car park spaces, which leads to an attractive ratio of 1:154 sq.ft. The majority of parking spaces are in the undercroft of the store and customers access the shop by escalator and lifts. A building survey and condition report has been undertaken by the Watts Group Plc which is assignable to the purchaser and is available in the secure document library. A measured areas survey has been undertaken by Plowman Craven Ltd which is assignable to the purchaser and is available in the secure document library. Total Food Store Unit Tenant Area (sq ft) Area (sq m) Rent (inc. PFS) Rent (psf) Lease Start Rent Review Tenant Break Option Foodstore & PFS Tesco Stores Ltd 121,102 11,250.8 1,393,290.50 11.50 01/11/2010 01/11/2015 31/10/2025 31/10/2030 Tenant Covenant Tenure Situation YE 25/02/2012 YE 26/02/2011 YE 27/02/2010 Tesco Stores Ltd GBP(000 s) GBP(000 s) GBP(000 s) Freehold The subject property is situated adjacent to Marlborough Retail Park, home to B&Q and Halfords. The subject property and Marlborough Retail Park together with the 490,000 sq ft Rushmere Shopping Centre and Retail Park form Craigavon Town Centre as set out in the Boundaries and Retail Designations Plan 2010. Rushmere Shopping Centre & Retail Park is home to circa 70 retailers and is anchored by Sainsbury s, Debenhams, Homebase and TK Maxx. Recently planning approval has been granted for an Omniplex Cinema in close proximity to Tesco which will add a late night leisure element to the retail offer. Sales Turnover 41,981,000 40,149,000 38,742,000 Profit / (Loss) Before Taxes 2,126,000 2,243,000 2,419,000 Tangible Net Worth 6,894,000 6,954,000 6,515,000 Net Current Assets (Liabilities) -3,749,000-3,022,000-2,990,000
Tenure Planning Freehold Planning consent granted by the Department of Environment for a superstore with associated car parking and petrol filing station (Application No. N/2008/08358/RM, 1st June 2009) The subject site and adjoining lands were designated Town Centre as part of the Craigavon Town Centre, Boundaries and Retail Designations Plan 2010. As a result the surrounding lands are proposed for additional Open A1 retail and leisure users. Any retail development in the Craigavon Area will be focused within the new town centre development limit. Investment Comparables Property Price Yield Date Comments Sainsbury s, Braidwater Retail Park, Ballymena 17.85 million 5.16% Feb-13 Size - 60,777 sqft Initial Rent- 975,000 p.a. Rent Review - 25 Year lease, RPI linked rental growth capped and collared at 1% and 4%. Sainsbury s, Strand Road, Londonderry 18.2 million 5.71% Jul-12 Size - 71,000 Rent- 1,136,000 p.a. Rent Review - Open Market Value Unexpired Term - 12.5 years Tesco s, Bentrim Road 30.4 million 4.97% Feb-12 Tesco Sale & Leaseback Comparable Rental Evidence Property Size Rent Rent psf Lease Start Lease Expiry Rent Review Sainsbury s, Rushmere Shopping Centre, Craigavon 51,154 784,575 14.75 03/03/1998 02/03/2023 03/03/2018 Sainsbury s, Braidwater Retail Park, Ballymena 60,777 977,000 16.07 Tesco, Belfast Road, Newry 86,854 1,563,372 18.00 23/05/2013 22/05/2038 23/05/2018 For indicative purposes only
Estimated Rental Value EPC The current rent equates to 11.50 per sq.ft and on the basis of the comparable evidence we are of the opinion that the subject property is significantly reversionary. Regardless, the lease allows for annual unrestricted RPI linked rent reviews compounded 5 yearly which should provide healthy rental growth performance. Assuming an average annual RPI level of 3% over the course of the lease we have set out the relevant growth in the yield below; Reversionary Rent Review Rent Yield 01/11/2015 1,615,206 6.66% 01/11/2020 1,872,466 7.73% 01/11/2025 2,170,701 8.96% 01/11/2030 2,516,437 10.39% VAT The property has been elected for VAT purposes and therefore it is expected that the investment sale will be treated as a Transfer of a Going Concern (TOGC). Proposal Our client is seeking offers in excess of 22,900,000 (Twenty Two Million, Nine Hundred Thousand Pounds) reflecting an attractive net initial yield of 5.75% exclusive of VAT and assuming full purchasers costs of 5.80%. Assuming average RPI growth of 3% per annum the purchase price reflects a reversionary yield of 6.66% at next rent review in 2015.
Further Information Secure Document Library If you require access to the secure document library online or for further information please contact; www.savills.com/tescocraigavon Ben Turtle Director 1st Floor, Lesley Studios 32-36 May Street, Belfast BT1 4NZ Tel: 028 9026 8006 Email: ben.turtle@savills.ie James Gulliford Director 33 Margaret Street London W1G 0JD Tel: 020 7409 9934 Email: jgulliford@savills.com Dervla Daly Surveyor 1st Floor, Lesley Studios 32-36 May Street, Belfast BT1 4NZ Tel: 028 9026 8009 Email: dervla.daly@savills.ie Savills (NI) Limited for themselves and for the Vendors or Lessors of the property whose agents they are give notice that; i) these particulars are given without responsibility of Savills (NI) Limited or the Vendors or Lessors as a general outline only, for the guidance of prospective purchasers or tenants, and do not constitute the whole or any part of an offer or contract; ii) Savills (NI) Limited cannot guarantee the accuracy of any description, dimensions, references to condition, necessary permissions for use and occupation and other details contained herein and any prospective purchasers or tenants should not rely on them as statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy of each of them; iii) no employee of Savills (NI) Limited has any authority to make or give any representation or warranty or enter into any contract whatsoever in relation to the property; iv) VAT may be payable on the purchase price and/or rent, all figures are quoted exclusive of VAT, intending purchasers or lessees must satisfy themselves as to the applicable VAT position, if necessary by taking appropriate professional advice; v) Savills (NI) Limited will not be liable, in negligence or otherwise, for any loss arising from the use of these particulars. June 2013.