On the Instructions of Grainger Plc. Multi-Let Retail and Residential Investment

Transcription

1 On the Instructions of Grainger Plc Multi-Let Retail and Residential Investment Widdrington Shopping Centre, Widdrington Station, Northumberland, NE61 5PU Mixed Use investment in an expanding area of Northumberland. 10 retail units, a dance studio, 2 office suites, 2 garages and 4 flats. 82% of commercial income secured for around 5 years or more. 25% of commercial income secured by The Co-op Group. Current income 65,490 pa with potential reversion to 70,500 pa. Potential to split and sell off in parts. Potential to build an extension for the Co-op and improve the income. Freehold. Price 630,000 Subject to Contract. Net initial yield of 9.83% with reversion to 10.58%. Johnson Tucker LLP, The Boathouse, Newburn, Newcastle Upon Tyne, NE15 8NL Tel: Fax: Website:

2 LOCATION AND SITUATION Widdrington Station is a large village located in east Northumberland, 23 miles (37 km) to the north of Newcastle upon Tyne, 7 miles (11 km) to the north of Morpeth and 16 miles (26 km) to the south of Alnwick. Amble is 7 miles to the north and Ashington is 6 miles to the south. Widdrington Station is on the A1068 Northumberland Coastal route, which links Ashington with Alnwick. The A1 is approximately 4 miles to the east and accessed via the B1337. Widdrington Station has a population of 2,300 and is situated within an expanding area of Northumberland, with 145 new homes under construction and plans for further development of 140 units. The property is in a prominent location fronting the main road through Widdrington Station and is the main retail centre in the village. The property is within easy walking distance of nearby housing, a health centre and the railway station. DESCRIPTION The property occupies two separate sites on either side of Grangemoor Road. The southern site comprises the original Co-Op building where there is a convenience store and fish and chip shop on the ground floor. There is a dance studio and office suites on the first floor. To the rear there are 4 small retail units and some garages, which are mainly let to an Indian Restaurant. Communal parking is available to the side and rear. The building dates from the early 1900 s and is of traditional brick and slate construction with a mix of timber framed and UPVC double glazed windows. The property was re-roofed and refurbished in 2004 and is in very good condition for its age. A photograph of the first floor dance studio is below. The northern part of the site comprises a new building providing 4 retail units on the ground floor with 4 self-contained flats above. One of the retail units is let to a hairdresser and the other to an estate agent. Units C & D have been combined and recently let to a restaurant operator. The flats are let on assured shorthold tenancies. There is also a communal car park to the west of this building. This building is of traditional brick and tile construction with UPVC double glazed windows. The retail units have a shop front on the ground floor. The main tenant is the Co-Op who has agreed a 9 year lease extension from 20 May 2014 thereby expiring in The Widdy Chippy lease expires in April The hairdresser s lease expires in The leases of the Indian Takeaway and Junction Restaurant both expire in TENURE Freehold. The property is registered under Title Numbers ND53693, ND and ND

3 TENANCY SCHEDULE AND ACCOMMODATION The terms of occupation and floor areas are as follows: - Address/Occupier Lease Terms Current Rent Description Sq M Sq Ft ORIGINAL BUILDING GF - 1, Co-op Building Allen & Coxford - T/a The Widdy Chippy GF - 2, Co-op Building Co-op Convenience Store 15 years from to 6,000 pa Retail Zone A yearly reviews. Preparation Room FRI Preparation Room Total years from to yearly RR. FRI. 9 yr extension from with 3 year RR & breaks Garage 1 & 2 Included in lease for Units 2 and 3 below. FF Dance Studio 9 years from to Mr & Mrs Palmer yearly reviews. Dancers FRI 10,800 pa Retail Sales ,506 Ancillary Storage Total ,244 Store ,250 pa FF Hall ,997 FF Cellar FF Bottle Store Total ,098 FF Offices 1 and 2 Vacant FF Offices Unit 1, Rear of Co-op Units 2 and 3, Rear of Co-op. Mr Khan t/a Indian Takeaway Under offer to Mr Khan (unit 2 and 3 below) on coterminus lease 20 years from yearly reviews. Tenant break at year 5. FRI. 3,000 pa GF Sales/Store FF Storage Total ,117 7,000 pa GF Sales/Store Unit 4, Rear of Co-op Mr Marshall Tanning Studio 5 years from to RR IR 2,750 pa GF Sales/Store NEW BUILDING Unit A, No.1 Grangemoor Road Mr & Mrs Nealen Hairdresser Unit B, No.2 Grangemoor Road Miller and Wallace Estate Agent Unit C & D, No. 3/4 Grangemoor Road A Clark T/a The Junction Restaurant 20 years from to yearly reviews. 5 yearly break options. FRI 5 years from Tenant break at year 2. Rent yr 1 2,750, yr 2 3,250 Yrs 3-5 3,750 pa. FRI. 20 years from yearly reviews. 5 yearly breaks. FRI RR to CPI. 6 months rent free. 4,700 pa Retail Zone A Retail Zone B Staff Room Internal Storage Total ,250 pa Retail Zone A Retail Zone B Kitchen Total ,200 pa Retail Zone A Retail Zone B Internal Storage Internal Storage Total ,066 Total 46,950 pa ,602 Please note that the above floor areas are from the Valuation Office Agency (VOA) website. The tenancies for the residential accommodation are as follows: - Flat Type Sq m Sq ft Tenancy Rent 1a 2 bed AST holding over 5,460 2a 2 bed AST holding over 4,500 3a 1 bed Vacant under offer 4,020 4a 1 bed AST holding over 4,560 Total 220 2,368 18,540

4 COVENANT INFORMATION North Eastern Co-op The North Eastern Co-Op is part of the Co-operative group and is an industrial and provident society. There is no financial information available due to the type of business. However, the market perceives the group to be a very attractive and strong covenant. More information about the Co-operative Group can be found at RENTAL VALUE The passing rent for the Co-Op equates to 8.19 per sq ft Zone A. The rent of Shop 1 (The Widdy Chippy) equates to per sq ft Zone A. If a 20% quantum allowance is assumed and a Zone A rate of per sq ft applied to the Co-op, the resultant ERV is 15,150 per annum. This equates to just over 6.00 per sq ft and is a low rate for a convenience store. The rents for the remaining retail units all analyse to less than per sq ft Zone A, which is competitive with similar parades elsewhere in the north east. In arriving at our opinion of ERV we have applied a nominal rate of 1.50 per sq ft to the vacant office accommodation and 3.50 per sq ft on the vacant retail unit. With regard to the new building, the retail units are all let at Zone A rates of around 8.50 per sq ft with 3 of the units having over 15 years un-expired on the leases. The flats are let on AST s at rents of between 4,020 and 5,460 per annum with the vacant flat currently under offer. The letting history of the flats is very good and there have rarely been any voids. On completion of the letting of the units, which are under offer the income from the property will be 65,490 per annum. Following the Co-op review and the letting of the vacant accommodation, the income will increase to approximately 70,500 per annum. INVESTMENT CONSIDERATIONS Widdrington Station is an expanding village and the property is the only retail parade in the village centre. The premises provide a good range of shops and a convenience store anchored by the Co-Op. The buildings are in good condition having been refurbished and recently built. The investment offers potential for rental growth due to the low rental levels currently being paid. The rent will also increase when the vacant space is let. There is also potential to split and sell off parts. Co-Op has expressed interest in taking more space so there is also the possibility of building an extension to the rear of their store, which will also increase the income. In terms of tenure, 82% of the current commercial income is guaranteed for around 5 years or more. 25% of the commercial income is also secured by The Co-op who have agreed to a 9 year lease extension. Of the remaining income, whilst the tenants are local covenants, the rents are at an affordable level for both commercial and residential tenants. Our price reflects a net yield of 9% on the Co-op income and 12% on the remaining commercial income. We have also factored in a 2 year rental void on the vacant accommodation. The residential income has been valued at a yield of 9%, which reflects a capital value of approximately 50,000 per unit. PRICE 630,000 - Subject to Contract. YIELD PROFILE At purchase, the above price would reflect the following net yield profile based on purchasers costs of 5.8%:

5 VAT Initial yield 9.83% Reversionary yield 10.58% The property on the south side of the road is elected for VAT. The property on the north side of the road is not elected for VAT. An apportionment of the price will have to be agreed for VAT purposes. LEGAL COSTS Each party is to bear their own legal costs incurred in the transaction. VIEWING By appointment through sole agents, Johnson Tucker LLP, please contact: - Douglas Cranston Tel: Mob: douglasc@johnsontucker.co.uk

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7 Conditions under which these particulars are issued All details in these particulars are given in good faith, but Johnson Tucker LLP for themselves and the Vendors/Lessors of this property for whom they act give notice that: - 1. These particulars do not and shall not constitute, in whole or in part, an offer or a contract or part thereof, and Johnson Tucker LLP have no authority to make or enter into any such offer or contract. 2. All statements contained in these particulars are made without acceptance of any liability in negligence or otherwise by Johnson Tucker LLP, for themselves or for the Vendors/Lessors. 3. None of the statements contained in these particulars is to be relied on as a statement or representation of fact or warranty on any matter whatsoever, and intending purchasers must satisfy themselves by whatever means as to the correctness of any statements made within these particulars. 4. The Vendors/Lessors do not make, give or imply, nor do Johnson Tucker LLP or any person in their employment have any authority to make, give or imply, whether in these particulars or otherwise, any representation or warranty whatsoever in relation to the property. The statement does not affect any potential liability under the Property Misdescriptions Act 1991.