9-16 Empire Square & 36 Long Lane, Borough, London SE1 4AU. Virtual Freehold Mixed Use Investment

Transcription

1 9-16 Empire Square & 36 Long Lane, Borough, London SE1 4AU Virtual Freehold Mixed Use Investment February 2015

2 Contents 1. Executive Summary Location Communications Description Specification Accommodation Tenure Tenancies Covenant Information Planning VAT EPC Asset Management Opportunities Proposal Further Information... 7 Appendix 1 Tenancy Schedule Appendix 2 Location Plan Appendix 3 Ordnance Survey Extract 9-16 Empire Square & 36 Long Lane, Borough, SE1 4AU Page 1

3 1. Executive Summary Empire Square, Long Lane, Borough, SE1 4AU Empire Square is a unique investment opportunity offering a diverse mix of leisure, retail, office and D1 / D2 uses located in a vibrant area of south east London situated just off Long Lane. The property is within 150 metres of Borough underground station (Northern Line). The development was built by Berkeley Homes in 2007 and comprises the ground floor and part basement commercial elements of an award winning residential development comprising 517 apartments set around a landscaped public square. Comprises a supermarket/convenience store, private gym, day nursery and office with a total area of 25,337 sq ft (2,353.9 sq m). Tenants include Tesco Stores Ltd, Ovalhouse Ltd (trading as Soho Gyms), and Bright Horizon Family Solutions Ltd. Total current rent is 361,643 subject to further index linked reviews from 25 th December 2015 onwards. An average weighted unexpired lease term of 12 years (8.78 years to tenant break). Held on a 999 year lease from January 2003 at a peppercorn. Offers sought in excess of 7m (Seven Million Pounds). A purchase at this level reflects an attractive net initial yield of 4.9% with significant reversions anticipated from December 2015 onwards and a capital value of 276 psf Empire Square & 36 Long Lane, Borough, SE1 4AU Page 2

4 2. Location 2.1 Empire Square is located on the south side of Long Lane close to its intersection with Borough High Street and within 150m of Borough underground station. Southwark has seen high level of investment and regeneration in recent years and now provides a dynamic and vibrant working environment with a larger number of diverse occupiers attracted to the area by its excellent transport links, leisure and other amenities. 2.2 Borough High Street is immediately to the west of the property with Elephant & Castle to the south and London Bridge to the north and the City of London. Both Borough Market and London Bridge Station (Jubilee Line and Northern Line) are within a 5 minute walk to the north of the property. 3. Communications 3.1 Empire Square benefits from a diverse range of transport communications with both mainline rail networks and London Underground easily accessible. The Eurostar Terminal St Pancras is within 15 minutes via London Bridge station. 3.2 Numerous bus routes on Borough High Street and Long Lane provide access to the City and the West End. 4. Description 4.1 Empire Square comprises the ground floor commercial elements of a major award winning residential scheme of 517 apartments constructed in 2007 by Berkeley Homes. The subject property comprises a supermarket, crèche/nursery, gym and office with a total area of 25,337 sq ft arranged mainly over the ground floor. 4.2 The property has prominent and extensive frontages both to Long Lane and Tabard Street with accesses provided on both frontages. 5. Specification Generous floor to ceiling heights Aluminium double glazed windows Suspended ceilings with integral lighting Comfort cooling Basement store (supermarket) 9-16 Empire Square & 36 Long Lane, Borough, SE1 4AU Page 3

5 6. Accommodation 6.1 The property has the following internal floor areas (provided by the vendors) Unit Use Sq Ft Sq M 36 Long Lane A1 Retail 4, Empire Square D2 Leisure 12,623 1, Empire Square D1 Day Nursery 6, Empire Square B1 Office TOTAL 25,337 2, Tenure 7.1 Empire Square is held leasehold under Title No. TGL for a 999 year term less 10 days from 1 st January 2003 at a peppercorn. 8. Tenancies 8.1 The property is currently let to four tenants and produces a total current rent passing of 361, pa reflecting a low overall rental of psf. Three of the leases are subject to Index Linked reviews with the next being the Bright Horizon day nursery which is due on 25 th December The weighted average unexpired lease term is years (8.83 years to the tenant break). All leases except Design Clean incorporate the Security of Tenure provisions of Part II of the Landlord & Tenant Act Empire Square & 36 Long Lane, Borough, SE1 4AU Page 4

6 9. Covenant Information Tesco Stores Limited (Registered No ) 23/02/ /02/ /02/2011 Turnover bn bn bn Pre-tax Profit 921m n/a 2.243bn Net Worth 3.113bn 6.894bn 6.954bn Ovalhouse Limited (Registered No ) 31/ /01/ /01/2011 Turnover 6.433m 6.087m 5.935m Pre-tax Profit 0.106m n/a 0.443m Net Worth ( 0.383m) ( 2.787m) ( 0.034m) Bright Horizon Family Solutions Limited (Registered No ) 31/12// /12/ /12/2011 Turnover m m m Pre-tax Profit 6.540m n/a 1.358m Net Worth ( m) 6.345m m Design Clean Limited (Registered No ) 30/11/ /11/ /11/2011 Turnover n/a n/a n/a Pre-tax Profit n/a n/a n/a Net Worth 9,000 45,000 44, Empire Square & 36 Long Lane, Borough, SE1 4AU Page 5

7 10. Planning 10.1 Empire Square lies within the London Borough of Southwark. The property is not listed and lies within the Borough High Street conservation area. 11. VAT 11.1 The property is elected for VAT and therefore VAT will be chargeable on the purchase price. 12. EPC 12.1 To be confirmed. 13. Asset Management Opportunities 13.1 There are a number of asset management opportunities including:- Restructure existing leases to extend lease terms. Implement Index linked rent reviews Negotiate lease surrenders and relet at market rents Potential for change of use to more valuable uses including B1 offices. 14. Proposal 14.1 Offers are sought in excess of 7,000,000 (Seven Million Pounds) for the leasehold interest subject to contract and exclusive of VAT. This reflects a net initial yield of 4.9% and a low capital value of 276 psf On the assumption of an averaged increase in RPI of 2.5% pa the property has the following income and yield profiles:- December ,114 pa 5.01% June ,283 pa 5.24% September ,143 pa 5.48% 9-16 Empire Square & 36 Long Lane, Borough, SE1 4AU Page 6

8 15. Further Information 15.1 For further information or to arrange an inspection please contact:- Jonathan Gilbert MRICS T: F: E: [ Or Christopher Wright MA MRICS T: F: E: 9-16 Empire Square & 36 Long Lane, Borough, SE1 4AU Page 7

9 Appendix Appendix 1 Tenancy Schedule 9-16 Empire Square & 36 Long Lane, Borough, London SE1 4AU

10 9-16 Empire Square & 36 Long Lane, Borough SE1 4AU Tenancy Schedule Address Tenant Area Rent ( Psf) Lease Term Start Date End Date Break Clause Rent Review Next Rent Review Comments 36 Long Lane Tesco Stores Limited ,895 84, ( 17.36) 15 24/06/ /06/2022 n/a 5 yearly 24/06/2017 Rent reviews RPI linked collared & capped at 1% pa & 4% pa respectively Empire Square Ovalhouse Ltd (t/a Soho Gyms) , , ( 10.77) 25 29/09/ /09/2032 n/a 5 yearly 29/09/2017 Rent reviews RPI linked collared and capped at 1% pa and 3% pa respectively Empire Square Bright Horizon Family Solutions Ltd (guaranteed by Bright Horizons Family Solutions Inc.) , , ( 17.08) 20 25/12/ /12/ th December 2015 and 2020 on 6 months notice 5 yearly 25/12/2015 Rent reviews RPI linked capped at 2.5% pa. Tenant option to extend lease for further 5 years. Rent penalty on exercising break 34,883 (2015) and 17,442 (2020). 9 Empire Square Design Clean Limited ,000 ( 24.89) 3 28/11/ /11/2017 n/a n/a n/a Stepped rent increased 24,000 for second year 25,000 for the final year TOTAL 2, , , Hartnell Taylor Cook LLP is Regulated by the RICS Page 1 Hartnell Taylor Cook LLP is a Limited Liability Partnership registered in England and Wales OC

11 Appendix Appendix 2 Location Plan 9-16 Empire Square & 36 Long Lane, Borough, London SE1 4AU

12 Empire Square, Long Lane, Borough, London SE1 4AU Ordnance Survey Crown Copyright All rights reserved. Licence number Plotted Scale - 1:7500

13 Appendix Appendix 3 Ordnance Survey Extract 9-16 Empire Square & 36 Long Lane, Borough, London SE1 4AU

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15 MAIN CONTACT: 7-10 Chandos Street Cavendish Square London W1G 9DQ Jonathan Gilbert MRICS T: F: E: Hartnell Taylor Cook LLP is a Limited Liability Partnership registered in England and Wales OC Offices in London, Bristol, Plymouth / Hartnell Taylor Cook LLP is Regulated by RICS LONDON 7-10 Chandos Street Cavendish Square London W1G 9DQ T: F: BRISTOL Somerset House 18 Canynge Road Clifton Bristol BS8 3JX T: F: PLYMOUTH No. 1 The Crescent Plymouth PL1 3AB T: F: