Morrisons Supermarket

Transcription

1 LONDON INVESTMENT OPPORTUNITY Morrisons Supermarket Cavendish Parade, Bath Road, Hounslow West, TW4 7DJ

2 INVESTMENT SUMMARY Freehold Supermarket Investment London Zone 5 - Opposite Hounslow West tube station with 3.24m journeys made per annum Local population of 41,935 within a 5 minute drive Let to WM Morrison Supermarkets PLC Over 11 years unexpired term Passing rent of 563,088 pa with an ERV of 621,000 pa 5 yearly upward only rent reviews to open market rent Offers invited in excess of 8,870,000 exclusive of VAT A purchase at this level would represent a Net Initial Yield of 6.00% after purchaser s costs of 5.8% The next rent review on 30 th August 2015 would produce a reversionary yield of 6.60% after costs 2

3 LOCATION Hounslow West is located approximately 12 miles west of central London, and 3 miles east of Heathrow airport. Hounslow West is well connected close to the junction of the A30 and A4 main roads and close to J3 of the M4 to the north. Tube connections are via the Piccadilly line from Hounslow West (Zone 5) running to central London in under 45 minutes and only two stops from Heathrow. Mainline rail services are found approximately 1.5 miles away at Hounslow. SITUATION The property is located off Bath Road (A3006), 1.5 miles west of the centre of Hounslow. Hounslow West tube station is located directly opposite the property generating significant local footfall with the latest passenger data indicating approximately 3.24m entry or exits for the station in This has been a steadily increasing volume of commuters over the last 5 years with the figure for 2008 being 2.95m. Within 5 minutes the only supermarket competition is from Asda on Prince Regent Street and Iceland on Bath Road, suggesting an under provision from major food operators. Bath Road provides a mixed retail shopping parade with a large local catchment from the surrounding residential areas. 3

4 POPULATION The population within a 5 minute drive of the store is 41,935, whilst within a 10 minute drive the figure is approximately 171,973. The London Borough of Hounslow has a population density of 47.2 people per hectare, which is higher than the average figure for Outer London boroughs of 39.4 per hectare. It is also higher than boroughs such as Sutton, Croydon and Kingston. The mosaic group for the area show a large proportion of Suburban Mindsets at 51.42%, compared to the UK average of 10.98%. Similarly a higher than average New Homemakers, 12.6% compared to 4.92% nationally. Statistics from the Department for Communities and Local Government show annualised new build housing starts in London rose to 19,840 in 2013, up from 16,240 in Whilst population growth in Greater London continues, grocery provision has lagged behind and is only 60% of national levels per capita. DESCRIPTION The property consists of a purpose built food store, with car parking for up to 159 cars, a ratio of 1 space per 229 sq ft GIA. The accommodation is principally over the ground floor with a small mezzanine and ancillary first floor. The site extends to approximately 2.42 acres (0.98 hectares). 4

5 ACCOMODATION The property extends to the following areas: ACCOMMMODATION GIA sq ft GIA sq m Ground Floor 31,034 2, st Floor Ancillary 4, Mezzanine 1, Total 36,416 3, TENANCY The entire property is let to WM Morrison Supermarkets PLC for a term of 35 years from 30 th August The passing rent is 563,088 per annum ( % fixtures and fittings), exclusive of business rates and insurance contributions. The rent is subject to 5 yearly upward only open market reviews, the passing rent having been set as of 30 th August 2010, the next review is on 30 th August ESTIMATED RENTAL VALUE As a condition of the assignment of the lease from Somerfield to Morrisons, the tenant s fixtures and fittings were vested in the landlord s freehold title. Therefore on review we have allowed for a 10% uplift on the base rent to take these into account: ERV = 621,000 per annum, approximately equating to per sq ft + 10% for Landlord s fixtures and fittings. 5

6 COVENANT STRENGTH WM Morrison Supermarkets PLC is the UK s 4 th largest food retailer. For the year ended 3 rd February 2013, WM Morrison Supermarkets PLC reported a turnover of bn, a pre-tax profit of 879m and a net worth of 4.815bn TENURE Freehold 03/02/ s ENERGY PERFORMANCE CERTIFICATE C rating further details available on request 31/01/ s 30/01/ s Turnover 18,116,000 17,663,000 16,479,000 Pre-tax profit 879, , ,000 Net Worth 4,815,000 5,094,000 5,236,000 VAT The property has been elected for VAT purposes LEGAL COSTS Each party to be responsible for their own legal costs 6

7 INVESTMENT RATIONALE This provides an opportunity to acquire a foodstore in a densely populated London borough. With an area extending to approximately 2.42 acres (0.98 hectares), within close proximity of the tube station and other amenities, the site may be suitable for significant redevelopment in the future. PROPOSAL We are instructed to seek unconditional offers excess of 8,870,000 (Eight Million Eight Hundred Seventy Thousand Pounds) for the freehold interest in the above property, excluding standard purchaser s costs at 5.8%. A purchase at this level reflects a Net Initial Yield of 6.00% and a reversionary yield of 6.60% allowing for purchaser s costs at 5.8% Disclaimer 1.