SOLD Wellingborough London Road, Wellingborough, NN8 2DP Newly Completed Prime Retail & Leisure Freehold Investment Opportunity
Investment Summary Wellingborough is an expanding market town in, 9 miles north east of Northampton, 8 miles south of Kettering and 18 miles north of Milton Keynes. Wellingborough is projected to expand by 30% over the next 10-15 years with major residential developments set to deliver 6,200 homes and 7,500 jobs. Wellingborough comprises part of an established gateway edge of town retail development located on the A5193 London Road, the principal arterial road into the town centre from the national road network. The scheme effectively forms the last phase of an already successful retail development, immediately opposite Castlefields with surrounding occupiers including M&S Foodhall, B&Q, Dunelm Mill, Dreams, Tapi, Pets At Home, Pizza Hut, Tesco Extra Superstore, Halfords, KFC, AMF Bowling and Premier Inn. The newly developed scheme comprises a 22,484 sq ft foodstore, a 4,036 sq ft drive-thru restaurant and a terrace of 4 retail units totalling 8,638 sq ft. Open A1 / A2 / A3 / A4 and A5 planning permission. Freehold. The property produces a total income of 258,500 per annum and benefits from a weighted average unexpired term of 17.82 years to expiry and 15.76 years to breaks. We are instructed to seek offers in excess of 4,040,000 (Four Million and Forty Thousand Pounds) for this freehold interest, subject to contract. A purchase at this level would reflect a net initial yield of 6.00%, assuming purchaser s costs of 6.54%. 2
Location Wellingborough is situated in the heart of the Midlands within the Golden Triangle. The town is located approximately 9 miles north east of Northampton, 8 miles south of Kettering and 18 miles north of Milton Keynes. Connections The urban extension at Stanton Cross will increase the size of the town by 30% Borough Council of Wellingborough A47 A6003 Wellingborough benefits from excellent road communications to the main regional/national road network, being situated just off the dual carriageway which skirts the town to the south. The provides an east-west route leading directly to the M1 motorway (Junction 15), approximately 12 miles to the south west, and joins with the A14 10 miles to the north east. M6 28 J1 M1 J20 J19 A414 A6 MARKET HARBOROUGH A427 A6003 CORBY A43 A605 J17 A1(M) Wellingborough s railway station is on the East Midlands Mainline linking it to London, Nottingham, Leicester, Derby, Sheffield, Leeds and Manchester. The fastest journey time to London St. Pancras International Station is 45 minutes with trains every 30 minutes. RUGBY J18 M45 J17 DAVENTRY J16 A508 NORTHAMPTON J15a J15 A43 A428 WELLINGBOROUGH A6 A14 J14 A1 A428 A43 BEDFORD A508 M1 22 MILTON KEYNES J14 J13 A421 3
Situation Wellingborough sits prominently on the east side of the A5193 London Road, the principal thoroughfare into the town centre from the south. London Road intersects with the dual carriageway less than 600 metres to the south of the retail park. The scheme is situated in an extremely well established out of town retail and leisure location, immediately opposite Castlefields and adjacent to a Premier Inn hotel. Neighbouring occupiers include B&Q, M&S Foodhall, Tesco, B&M, Halfords, Pets at Home, Carpetright, Pizza Hut, Dreams, Dunelm Mill, KFC and Hollywood Bowl. Demographics CACI estimate that the population within a 10 minute drive time of the property is 85,943 and this figure increases to 293,488 within a 20 minute drive time. Wellingborough is forecast to see significantly above average population growth over the next 5-10 years. Drivetime from Wellingborough, Wellingborough 15 minutes 20 minutes 30 minutes GB Average 5 year Population Growth 2015 2020 2.7% 3.5% 3.9% 2.7% 10 year Population Growth 2015 2025 5.0% 6.3% 7.2% 5.0% GREAT HARROWDEN A510 WELLINGBOROUGH A5128 TOWN CENTRE A5193 A5128 FINEDON Wellingborough has an affluent catchment with 51% of households within a 20 minute drive time of the scheme falling within the two highest social grade categories, AB (Higher and Intermediate Managerial/Admin/Professional) and C1 (Supervisory, Clerical, Junior Managerial/Admin/Professional), which is in line with the national average of 52%. Furthermore, within a 20 minute drivetime 66% of the population have a household income over 30,000. This compares to a national average of 61%. Car ownership figures within the same drive time show that an average of 80% of households own at least one car, compared to the national average of 74%. IRCHESTER 4
Wellingborough Expansion Wellingborough benefits from a strategic location in North and has been identified as the principal town and focus of housing development for the region. The town saw a 14.4% increase in house prices in 2015, the second highest increase outside of London and the south east (Source: Halifax, 2015). FINEDON There are a number of developments and initiatives planned for Wellingborough including: Stanton Cross Situated immediately to the east of Wellingborough s railway station is Stanton Cross, a 500m major residential led development set to deliver 3,750 homes, 7,500 jobs, commercial space and community facilities. In October 2015 detailed plans for the first phase of houses received approval, with the first of the major highways infrastructure works now underway. Borough Council of Wellingborough: The urban extension at Stanton Cross will increase the size of the town by 30%. Station Island GREAT HARROWDEN WELLINGBOROUGH NORTH A510 WELLINGBOROUGH TOWN CENTRE A5128 WELLINGBOROUGH EAST STANTON CROSS Station Island is an area around the railway station and forms part of the wider Stanton Cross development. The Station Island Development Area will provide an enlarged and upgraded public transport interchange, with an expanded railway station, new bus routes and a range of other transport facilities. In addition the southern end of Station Island A5128 A5193 will provide a mixed use development of high quality business space and residential accommodation. Wellingborough North IRCHESTER A major new development of over 3,000 homes for the northern edge of Wellingborough has commenced. Construction of the first phase starting in 2016 includes 800 new homes, a new primary school, community centre and local retail centre. 5
Wellingborough Out of Town Retail & Leisure in Wellingborough The major out of town retail provision in Wellingborough is clustered on the north side of the at Junction 14, where Wellingborough is located. Castlefields Castlefields is the dominant retail park in the town and is located opposite the scheme. The park extends to 113,000 sq ft and has wide bulky goods planning permission. Tenants include B&Q, Dreams, Pets at Home, M&S Foodhall, Dunelm, Tapi and Pizza Hut. Top rents are at 19.40 per sq ft. To Town Centre Castlefields 05 A5193 Victoria Located to the south of the scheme, Victoria provides a cluster of retail and leisure properties including a Tesco superstore, a Hollywood Bowl, a KFC drive thru restaurant and retail warehouse units occupied by Halfords, B&M and Carpetright. 6 To
BUS STOP BUS STOP YG DRIVE THRU Wellingborough Property Description Wellingborough has been completed by St Modwen and comprises a new gateway development on the principal arterial road into Wellingborough. cctv cctv The development provides a 22,484 sq ft foodstore, a 4,036 sq ft drive-thru restaurant and a terrace of 4 retail units totalling 8,638 sq ft of accommodation. cctv cycles 164 Car-Parking Spaces The property benefits from its own car parking in out provision of 159 spaces, a ratio of 1:221 sq ft. Trollies Tenure Freehold. Planning The scheme benefits from a retail and leisure 1 planning permission providing for a foodstore 2 with open A1 retail use; a drive-through restaurant with A3 and A5 use; and a retailing unit of up to 8,800 sq ft with permission for use electric duct classes A1, A2, A3, A4 and/or A5. cctv Copies of the planning permission documents are available upon request. For indicative purposes only 7
Tenancies The leases at the property provide a weighted average unexpired term of 17.82 years to expiry and 15.76 years to breaks and are let on effective full repairing and insuring terms with five yearly rent reviews (with the exception of Lidl) as follows: Unit Tenant Area (Sq ft) Lease Start Rent Review Break Option Lease Expiry Rent (pa) Rent (psf) EPC 1 Comment 2 47 Lidl 22,484 27/11/2014 26/11/2139 1 7.50 A (22) Contribute towards the estate service charge 45 McDonald s Restaurants Limited 4,036 24/02/2016 24/02/2021 23/02/2041 107,000 26.51 B (40) Index linked service charge cap of 1,717 pa with 6 months rent free 49 Subway Realty Limited 2,148 27/11/2014 27/11/2020 28/11/2025 26/11/2030 37,500 17.46 A(22) 12 months rent free 49a Under offer to DP Realty Limited (t/a Domino s) 2,171 38,000 17.50 A(22) In solicitor s hands, new 20 year lease with tenant break option in year 11, subject to 9 months rent free. RR to OMV, capped at 4% pac. 51 High Seat Limited 2,171 09/12/2016 09/12/2020 08/12/2025 37,500 17.26 A(22) 9 months rent free 51a Slurps Coffee Co Ltd (t/a Starbucks) 2,148 04/01/2016 24/02/2021 28/11/2025 03/01/2036 38,500 17.92 A(22) Fixed annual uplifts for the first five years. Year 1: 32,250; Year 2: 36,500; Year 3: 38,500; Year 4: 41,000; Year 5: 43,000 Vendor to top up Year 1 and Year 2 rent Total 35,158 258,500 Under Offer 1 EPCs available upon request 2 Vendor will top up any outstanding rent free 8
Tenants Covenants A summary of the occupiers most recent accounts is detailed below. 85% of the contracted income is from companies that are considered Very Low Risk or Low Risk by the Credit Safe International Score. Slurps Coffee Co Limited (t/a Starbucks) is a newly incorporated company and has not published its first financial accounts. The company is owned and run by Nadim Choudary, the selected Starbucks Coffee franchisee for, Bedfordshire, Cambridgeshire and Leicestershire trade zones. The owner was formerly the largest Pizza Hut franchisee in the UK. Further information is available upon request. Cash on Cash Returns All in Interest Costs LTV (assuming margin over 5 Year Swap Rate) 55% 1 60% 2 60% 1 2.75% 9.47% 8.04% 10.19% 3.00% 9.20% 7.72% 9.87% 3.25% 8.93% 7.40% 9.54% 1 - Interest only 2-1% amortised pa Tenant Accounts Year Ending Turnover Pre-Tax Profit Net Worth Credit safe rating McDonalds Restaurants Limted Subway Realty Limited 31/12/2014 1,432,592,000 225,428,000 931,302,000 92A 31/12/2014 28,613,501 1,946,179 655,859 66B High Seat Limited 31/12/2014 35,933,403 995,847 2,084,474 71A DP Realty Ltd 28/12/2014 18,140,534 528,628 449,547 67B Stable well capitalised lending market compounded by low interest rates - cheapest debt financing environment of all time Based on the day one NOI and the attractive unexpired lease terms, this property could comfortably support 60% LTV. Amortisation may be expected depending on loan structure Even at the conservative debt terms highlighted in the table, this property can provide gross cash-on-cash returns to an investor in excess of 9% p.a. Margin pricing and LTV assumptions may vary depending on the sponsor, their track record and debt aspirations, all of which could potentially drive even higher cash-on-cash returns VAT The property has been elected for VAT and it is anticipated the sale will be treated as a transfer of a going concern. Proposal We are instructed to seek offers in excess of 4,040,000 (Four Million and Forty Thousand Pounds) for this freehold interest, subject to contract. A purchase at this level would reflect a net initial yield of 6.00%, assuming purchaser s costs of 6.54%. 9
Debt Advisory JLL Debt Advisory provides market leading debt solutions for real estate investors. In the current liquid and competitive UK debt market this property will attract considerable interest when marketed correctly to potential lenders. Our unrivalled knowledge of over 190 active senior, mezzanine and Islamic lenders ensures we can achieve the best debt terms. JLL Debt Advisory would be delighted to discuss funding options with potential purchasers. Tim Wilmer Director-Debt Advisory T: +44 (0)207 087 5392 M: +44 (0)7817 103806 Tim.Wilmer@eu.jll.com For further information or to arrange an inspection, please contact the following Guy Harris T: 020 7399 5371 M: 07826 947227 guy.harris@eu.jll.com Will Andrews T: 020 7087 5388 M: 07970 467505 will.andrews@eu.jll.com Archie Stead T: 020 3147 1344 M: 07525 824606 archie.stead@eu.jll.com Simon Toseland T: 01933 223300 M: 07500 886177 st@prop-search.com MISREPRESENTATION CLAUSE Crown Copyright 2016. All rights reserved. MISREPRESENTATION ACT 1967 DISCLAIMER. COPYRIGHT JONES LANG LASALLE IP, INC. 2016. All rights reserved. Jones Lang LaSalle Limited and Prop-Search.com Ltd for themselves and for the vendor of this property whose agents they are given notice that: a) The particulars are set out as general outline only for the guidance of intending purchasers and do not constitute, nor constitute part of, an offer or contract. b) All descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct, but any intending purchasers should not rely on them as statements or representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them. c) No person in the employment of Jones Lang LaSalle Limited nor Prop-Search.com Ltd has any authority to make or give any representation or warranty whatever in relation to these properties. Subject to Contract Exclusive of VAT September 2016. Produced by Halogen halogenuk.com 10