house of fraser 76-86 the parade | royal leamington...

76-86 The Parade | Royal Leamington SpaHOUSE OF FRASER

100% Prime Long Income Retail Investment

HOUSE OF FRASER ROYAL LEAMINGTON SPA

Investment Summary

• Royal Leamington Spa is an attractive, affluent spa town, located in the heart of Warwickshire.

• The catchment is highly affluent, ranked 21st on the PMA Affluence Indicator, with forecasted expenditure levels due to significantly exceed the UK average.

• The town provides an attractive shopping environment and a strong retail offer including: Marks & Spencer, House of Fraser, H&M, GAP, Topshop, Joules, White Stuff, Superdry and LK Bennett.

• The town has a particularly strong A3 offer, which helps draw in shoppers from across the catchment.

• The property benefits from a 100% prime pitch on The Parade, situated diagonally opposite the entrance to the Royal Priors Shopping Centre and adjacent to Marks & Spencer.

• The property is the only department store in Leamington Spa and totals 102,411 sq ft of accommodation over four trading floors, providing well configured, flexible floorplates.

• The property is let to House of Fraser Ltd until 29 July 2039 (23 years unexpired) at a passing rent of £1,209,510 pa (£11.81 psf) and is subject to 5 yearly upward only market reviews.

• Freehold

• We have been instructed to seek offers in the region of £18,150,000 (Eighteen Million One Hundred and Fifty Thousand Pounds), subject to contract and exclusive of VAT for the freehold. This reflects an attractive Net Initial Yield of 6.25%, after allowing for purchaser’s costs of 6.74%.

Location

Royal Leamington Spa is an attractive and affluent town located in Warwickshire approximately 2 miles east of Warwick, 8 miles south of Coventry and 18 miles south east of Birmingham. Due to its strategic location, Leamington Spa benefits from excellent transport links with direct access to junction 13 (5 miles/11 minutes), giving access to the south, and junction 14 (4 miles/10 minutes), giving access to the M42 and the north, via the M40. The town is also well connected by rail with a regular, direct service to London Marylebone in 1 hour 15 minutes.

There is also a direct train service to Birmingham Moor Street and New Street in 30 minutes as well as a direct train service to Birmingham International, giving access to the airport, in 23 minutes.

Birmingham International Airport is located 16 miles to the north of the town and provides a wide range of national

and international flight options

Birmingham International in 23 minutes Birmingham New Street in 30 minutes

London Marylebone in 1 hour 15 minutes

M40 Junction 14 in 10 minutes M42 Junction 3A in 21 minutes

M6 Junction 3 in 31 minutes M1 Junction 16 in 38 minutes

M5

M5

M50

M5

M5

M6

M6

M1

M1

M1

M69

M42M42

M40

M40

M40

A449

A448

A435

A435

A4177

A4146

A6003

A456A491

A449

A422

A429

A423

A426

A425

A508

A508

A427

A509

A428

A426

A423

A422

A421

A429

A424

A449

A44

A44

A44

A46

A41

A34

A45

A45

A45

A14A14

A43

A45

A45

A5

A6

A5

A5

A5

A46

A46

A43

A43

A43

A43

A46

BirminghamBirmingham BirminghamAirport

BirminghamAirport

BirminghamInternationalTrain Station

BirminghamInternationalTrain Station

SolihullSolihull

StourbridgeStourbridge

BromsgroveBromsgrove

RedditchRedditch

WorcesterWorcester

TewkesburyTewkesbury

EveshamEvesham

ChippingNorton

ChippingNorton

MarketHarborough

MarketHarborough

BanburyBanbury

BrackleyBrackley

BicesterBicester

BuckinghamBuckingham

Milton KeynesMilton Keynes

NorthamptonNorthampton

KetteringKettering

BletchleyBletchley

Stratford-uponAvon

Stratford-uponAvon

AlcesterAlcester

WarwickWarwick

KidderminsterKidderminster

CheltenhamCheltenham

CoventryCoventry

RugbyRugby

DaventryDaventryROYALLEAMINGTON

SPA



Demographics

Leamington Spa is one the largest towns in Warwickshire with a primary catchment population of 183,000 people. Due to the strength of the town’s retail offer, there is minimal leakage to nearby towns such as: Stratford, Coventry and Warwick, with the town managing to retain 82% of its primary catchment.

The catchment is extremely affluent, being ranked 21st on the PMA Affluence Indicator. Over 38% of the population are ‘Affluent Achievers’ compared to GB Average of 22.7%, whilst 32% of the population are classed within the AB social grade compared to the GB average of 22%. Average house prices have increased 13.2% in the last year compared to a GB average of 5.7%, whilst unemployment levels stand at 0.5%, compared to a GB average of 1.5% (December 2015).

The Leamington Spa catchment also benefits from a significant number of tourists visiting Warwick Castle, The Royal Pump Rooms, which used to house the famous Victorian Spa, as well as the new Art Gallery and Museum.

As a result of the extremely affluent catchment, retail expenditure is high with the town being ranked 13th in the UK for forecast growth in comparison retail expenditure (2015-2020).

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Leamington Spa ACORN Profile

ExecutiveWealth

MatureMoney

YoungHardship

Leamington Spa

ACORN Category

StrugglingEstates

UK Average

Leamington Spa ACORN Profile

The catchment is extremely affluent, being ranked 21st on the PMA Affluence Indicator.

ROYAL PRIORSSHOPPING

CENTRE

REGENT COURTSHOPPING

CENTRE

RIVER LEAM

A452 A

452 A452

A452

A452

Archery Rd York Rd

Clarendon Ave

Leicester St

Beauchamp Hill

B4099 Warwick St

Willes Rd W

illes Rd

Church Hill Regent St

Old Warwick Rd

Parade Parade Bath St

Priory TerraceTavistock St B

edford St Bedford St

Milverton HillO

xford St

Chandos St

Guy St

Newbold Terrace

Wood St

Leamington Spa

SUBJECTPROPERTY

Situation

The House of Fraser store is situated in a 100% prime retailing position on The Parade, adjacent to Marks & Spencer and diagonally opposite the main entrance to the dominant shopping centre, Royal Priors. Other key anchor retailers situated nearby include: H&M, WH Smith, Superdrug and River Island.


Retailing in Leamington Spa

Leamington Spa provides an attractive shopping environment, providing Regency and Victorian architecture and wide high streets. The town is ranked 43rd on the basis of its Retail Score and 41st on the PMA Fashion Score. The town has an impressive provision of major national fashion retailers including: H&M, Next, River Island, GAP, New Look, Topshop/Topman and Superdry. These are supported by a good range of higher end retailers including: LK Bennett, White Stuff, Jigsaw, Jaeger, Farrow & Ball and Joules.

Leamington Spa’s prime pitch is located on The Parade, between its junctions with Warwick Street and Regent Street, on which the subject property is located. Other key occupiers located here include H&M, Marks & Spencer and WH Smith, as well as the entrance to Royal Priors Shopping Centre.

Managed floorspace in the town centre only accounts for 15% of the retail offer. Royal Priors is the dominant shopping centre in the town, providing 130,000 sq ft of accommodation over two levels and is anchored by Gap, Superdry, New Look and Sports Direct. The 70,000 sq ft Regent Court is a secondary small open air scheme which is characterised by its superb restaurant offer, with tenants including: Cote, Wagamama, Nandos, Yo Sushi, Cote, Turtle Bay, Las Iguanas and Zou Bisou.

The town’s architectural history limits the availability of larger units and House of Fraser occupy the only department store in the town, with the likes of Debenhams, TK Maxx and Primark not currently having a presence in the town centre.

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55.8m

53.9m

57.6m

56.4m

TCB

REGENT STR

Car Park

83

98

79

53

47

7977

38 3

6

64

85

44

90

67 71

15

Regent Square

68 to

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65

76 to

86

74

7585

73

40

61

87

Lower Mall

88

96

71

63

8

37

42

62

94

Bank

60

Bank

48

66

7573

38a

6564a to 64d

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(Flats 1 to 20)

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andHorses

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47

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20

Coach

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Ordnance Survey © Crown Copyright 2016. All rights reserved. Licence number 100022432. Plotted Scale - 1:946

Description

The property is an attractive department store and is one of the most prominent buildings in the town’s prime retailing pitch, providing 130 ft of frontage onto The Parade.

House of Fraser trade over the basement, ground, first and second floors, with the plant room being located at roof level. House of Fraser currently provide an extensive concession offer from the store including: French Connection, Hobbs, Ralph Lauren, Diesel and Ted Baker.

Internally, the property offers clear floorplates which are connected via two single escalators on each floor, a customer lift and a series of ancillary staircases. The size and clear configuration of the store would offer any potential landlord flexibility, should they ever wish to reconfigure the space in the future.

Accommodation Schedule

The property has the following appropriate gross internal floor areas:

Floor Use GIA Sq m GIA sq ft

Basement Retail 1,995.90 21,484

Ground Floor Retail 2,465.50 26,538

First Floor Retail 2,418.90 26,037

Second Floor Retail 2,362.50 25,430

Roof Level Plant 271.40 2,922

Total 9,514.20 102,411


House of Fraser currently provide an extensive concession offer from the

store including: French Connection, Hobbs, Ralph Lauren, Diesel

and Ted Baker.

Tenure

The property is held Freehold.

Tenancy

The property is let to House of Fraser Ltd for a term of 40 years from 30 July 1999, expiring 29 July 2039 (23 years unexpired), on full repairing and insuring terms. The current passing rent is £1,209,510 pa (£11.81 psf) and the lease is subject to 5 yearly, open market reviews.

The property was sub-let to House of Fraser (Stores) Limited for a term of 40 years less 7 days from 30 July 1999, on the same terms as the head lease and the landlord is able to rely on both covenants, the latter being the stronger.

Estimated Rental Value

The passing rent reflects £11.81psf. The property comprises the only department store in Leamington Spa and one of the few stores providing significant and flexible floorplates. Currently the likes of Primark, TK Maxx and Debenhams are un-represented in the town centre and therefore we would expect significant tenant demand if the store ever became available.

We are aware of the following comparable rental evidence:

Address Occupier Transaction type Date GIA (sq ft) Rent (pa) Rate psf

Lion Walk, Colchester Primark OML 02/2016 56,000 £700,000 £12.50

Lemon Quay, Truro Primark OML 11/2014 51,000 £700,000 £13.73

Monks Cross Shopping Centre, York Primark OML 11/2014 49,000 £674,000 £13.75

48 Queen Street, Cardiff BHS OML 06/2014 77,803 £1,000,000 £12.85

Based off the above evidence, we are of the opinion the property is broadly rack rented.


Covenant

House of Fraser can trace its history back to over 160 years ago and since then the Group has evolved to become one of the leading premium, multi-branded, multi-channel retailers trading from 59 locations throughout the UK and Ireland. House of Fraser (Stores) Limited has a D&B rating of 5A1 based on a Tangible Net Worth of £47,600,000 and produced the below accounts:

Turnover Profit Tangible Net Worth

31/01/2015 £772,000,000 £23,100,000 £47,600,000

25/01/2014 £717,200,000 £25,700,000 £60,900,000

26/01/2013 £680,500,000 £18,600,000 £59,000,000

HoF was formerly a public company but was taken private in November 2006 by a consortium of investors through Highland Group Holdings Limited. In April 2014 the consortium sold

an 89% stake to Chinese conglomerate Sanpower via the acquisition vehicle Nanjing Xinjiekou Department Store Co Ltd (Nanjing Cenbest) - a leading chain of Chinese department stores. The stake sold for an enterprise value of approximately £480 million, representing the largest acquisition of a foreign retailer by a Chinese listed company.

The group has annual sales of £1.3bn and employs approximately 4,950 House of Fraser staff (FTE) and 12,550 Concession staff (FTE) and operates over 4 million sq ft across its retail estate. Customers can shop at House of Fraser from www.houseoffraser.co.uk. Financial highlights from the full year 2015/2016 trading update for Highland Group Holdings Limited are set out below:

• Sales increased by 4.2% on a like-for-like 52 week basis (excluding VAT and the impact of the 53rd week in the prior year), with total GTV of 1.3bn.

• Continued growth of online sales (excluding VAT), increased 26.8% on a like-for-like 52 week basis, representing 18.9% of total sales.

• Gross Profit of £484.1 million, up £23.9 million representing a 5.2% increase on the prior year.

• Continued investment in enhancing the Group’s store portfolio including six extensive store refurbishments completed in the year (Huddersfield, Lincoln, Metro Centre, City, Bluewater and Leeds).

• Committed to anchor a new shopping centre development in Rushden Lakes in Northamptonshire, due to open in spring 2017 with 64,000 sq ft of retail space.


VAT

The property has been elected for VAT and any disposal will be treated a Transfer of a Going Concern (TOGC).

EPCs

The current EPC rating is C (63). Full details can be provided on request.

Proposal

We have been instructed to seek offers in the region of £18,150,000 (Eighteen Million One Hundred and Fifty Thousand Pounds), subject to contract and exclusive of VAT. This reflects an attractive Net Initial Yield of 6.25%, after allowing for purchaser’s costs of 6.74%.

Contacts

For further information or to arrange an inspection please contact:

Alastair Bird [email protected] T 020 7861 1232 M 07768 257 316

Charlie Barke [email protected] T 020 7861 1233 M 07793 808 027

Sam Beldam [email protected] T 020 7861 5447

Jonathan Devaney [email protected] T 0121 233 6490


MISREPRESENTATION ACT: 1. No description or information given by Knight Frank whether or not in these Particulars and whether written or verbal (“information”) about the property or its condition or its value may be relied upon as a statement or representation of fact. Knight Frank have no authority to make any representations and accordingly any information given is entirely without responsibility on the part of the agents or the seller(s) or lessor(s). 2. These particulars do not constitute, nor constitute part of, an offer or contract,nor shall they merge in any offer or contract which may hereafter be made between the sellers or lessors and the recipient of the information. 3. The photographs show only certain parts of the property at the time they were taken. Any areas measurements or distances given are approximate only. 4. Any reference to alterations to, or use of any part of the property is not a statement that any necessary planning, building regulations or other consent has been obtained. These matters must be verified by any intending buyer or lessee. 5. Any buyer or lessee must satisfy himself by inspection or otherwise as to the correctness of any information given. June 2016. Designed & Produced by Creativeworld. Tel: 01282 858200.

house of fraser 76-86 the parade | royal leamington...

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