Prime Cathedral City Retail Investment CHESTER NORTHGATE STREET CH1 2HA FOR SALE

Transcription

1 Prime Cathedral City Retail Investment CHESTER NORTHGATE STREET CH1 2HA FOR SALE

2 INVESTMENT SUMMARY INVESTMENT SUMMARY Prime cathedral city centre retail block; Superdrug, Gino s Gelato + kiosk; Recent leases / renewals; Freehold; 77.57% multiple income; 5.54 year WAULT Strategic location near entrance to Northgate Quarter development; OFFERS ARE SOUGHT IN EXCESS OF 4,570,000 reflecting the following yield profile, assuming full purchaser s costs of 6.58%: 7.00% Net Initial Yield; 6.00% Equivalent Yield; 5.67% Reversionary Yield

3 GLASGOW EDINBURGH CHESTER NEWCASTLE MANCHESTER Chester is the county town and administrative centre for Cheshire and is an affluent, historic city that traces its origins back to the 1st Century A.D. It is located around 35 miles south west of Manchester and 200 miles north-west of London. It benefits from excellent road and rail connections, with the M56 and M53 motorways linking it directly to the national motorway network. The city s mainline railway station provides regular services to Liverpool and Manchester and trains run hourly to London with a journey time of around 2 hours. Modern day Chester has a resident population of more than 132,000 people with PROMIS estimating that the city has a total catchment of more than 800,000 people. The city s unique quality provides a powerful lifestyle draw and financial and business services are thriving in the local economy, accounting for the largest proportion of the area s employment. Businesses based in and around Chester include Bank of America, Money Supermarket, Shell, M&S Money and Bristol-Myers Squibb. The city is still ringed by one of the most complete remaining examples of a Roman wall and is characterised today by a unique mix of historic buildings ranging from CHESTER CARDIFF BIRMINGHAM LONDON NORWICH Roman through to medieval and Victorian. This blend of unique heritage and renowned visitor attractions has seen booming tourism figures for Chester and Cheshire with the region seeing visitor numbers rising to more than 47 million in It is estimated that tourism contributes more than 2bn annually to the local economy.

4 CHESTER RETAILING Chester is renowned for its row level trading, with its main streets home to the distinctive two-level properties known as The Rows. It provides for a rare and fascinating shopping experience, encouraging a substantial dwell time in the city centre from local shoppers and tourists alike. The city s prime retail core is to be found along the four streets emanating from The Cross. These are Northgate Street, Eastgate Street, Bridge Street and Watergate Street. Eastgate and Northgate Streets are the city s prime pitches and provide a broad selection of national multiples augmented by high quality boutique brands including the likes of Jo Malone, Jack Wills, Cath Kidston, Whistles and Phase Eight. There are two covered shopping centres within the city centre, the main one being the Grosvenor Centre, accessed off both Bridge Street and Eastgate Street. This is anchored by Debenhams and other tenants include H&M, Jigsaw, Laura Ashley, LK Bennett, and Topshop/Topman. A secondary scheme, The Forum Centre, is located to the west of Northgate Street. It forms the centre of the major regeneration proposals known as Chester Northgate.

5 CHESTER N O RT H G AT E D E V E LO P M E N T N TOW Proposals are well advanced for the Chester Northgate project which will transform the north-west quarter of Chester s city centre with a major new shopping, leisure and residential development. The main entrance to the new scheme will be just north of the subject property on Northgate Street. The proposals are for a mixed-use scheme of some 500,000 sq ft, of which 350,000 sq ft will be retail (100,000 sq ft being a new House of Fraser department store). The scheme will incorporate a mix of 50 large and small shops, a Picturehouse cinema and around 15 cafes, restaurants and bars. A new 4 star Crowne Plaza hotel and spa with conference facilities will also form part of the scheme as well as parking for 800 cars and new bus stops on St Martins Way. It is anticipated that the scheme will generate around 1,000 new jobs for the city. The Chester Northgate proposals have full planning permission and in July this year the council made a Compulsory Purchase Order to acquire 70 properties in and around the development site. ARE QU LS HAL ATE THG NOR

6 S I T UAT I O N The subject units offer well configured accommodation without the overhang or immediate level change and are therefore among the most desirable shops in Chester. The subject units occupy a prime location on Northgate Street adjacent to Molton Brown, opposite The White Company. Other retailers located in immediate proximity include Zara, Lakeland, Ellis Brigham and Oasis. This is the favoured east side of the street, away from the overhanging architecture that obscures many of the frontages on the west side. Further south along Northgate Street, many of the shops suffer from an immediate change of level, with steps leading down into the shops from the pavement. A side alley, Music Hall Passage, runs along the southern flank of the building and the freehold of one of the subject shops, number 30 Northgate Street flies over this passage on the Northgate Street frontage (shown hatched on the plan below). Music Hall Passage provides a busy cut through to Chester s fine 13th Century Gothic cathedral which is directly to the rear of the property. N TOW ARE QU LS HAL TO ED R E B E D E OP L E V TE R S E CH TE A G TH R O N The main entrance to the Chester Northgate development will be off Town Hall Square, immediately to the north of the subject property. The property therefore sits on the main pedestrian route between the entrance to Chester Northgate and the city s existing prime pitch.

7 DESCRIPTION The property comprises two prime shop units with their main frontages to Northgate Street and an additional kiosk in Music Hall Passage. 30 Northgate Street (Gino s Gelato) is a three storey late Georgian building with a large return frontage to Music Hall Passage; its upper parts over-sailing the latter. The property has been recently fitted out as a high quality gelateria trading from ground and first floors with staff and WC accommodation at 2nd floor Northgate Street (Superdrug) is formed of two distinct parts. Its front portion is a modern three storey construction with a sandstone effect frontage, providing a wellproportioned retail unit at ground floor. Its rear portion extends into a renowned local landmark: St Nicholas s Chapel. Dating back to 1300, this building has had various uses over the centuries. Originally a medieval chapel, it was Chester s Commonhall in the 16th Century and later became its wool hall. It was licensed as the Theatre Royal in 1777 and converted into a music hall in the 19th Century. The property trades from ground floor with the remaining areas utilised as staff and storage. PLANNING The subject property is Grade II listed and sits within Chester s conservation area. In addition to this, the rear of Northgate Street (St Nicholas s Chapel) is a Scheduled Monument. In the United Kingdom, a scheduled monument is a nationally important archaeological site or historic building and is given protection against unauthorised change. The 1979 Ancient Monuments and Archaeological Areas Act makes it a criminal offence to: destroy or damage a scheduled monument or do any works which would demolish, damage, remove, repair, add or alter it (including agriculture, forestry, flooding and tipping) without previous permission from the Secretary of State or devolved equivalent, given through formal written Scheduled Monument Consent. No historic or archaeological object may be removed from the site without prior consent.

8 TENANCIES & INCOME Property ACCOMMODATION The property comprises the following approximate floor areas: Ground NIA (sq ft) Ground ITZA (sq ft) First (sq ft) Second (sq ft) Total NIA 30 Northgate Street , Northgate Street 4,461 1,196 3, ,528 Kiosk (not measured) Total 10, Northgate Street is let to Gino s Fresh Gelato Limited (COMPANY NUMBER ) with a guarantee from Gino s Italian Ice Cream Limited (Ireland company number ) on a 10 year lease from 17th may 2017, expiring 16th May 2027 at a current rent of 68,000 per annum. The lease is held on effectively full repairing and insuring terms and there is an upward only rent review in year 5. There is a tenant s option to break at year 5 subject to the service of at least 6 months written notice and a penalty payment of 17, Northgate Street is let to Superdrug Stores Plc (COMPANY NUMBER ) on a 7 year term from 24th June 2016, expiring 23rd June 2023 at a current rent of 264,500 per annum. As part of the recent re-gear negotiations, this rent reverts to 250,000 per annum on 24th June The lease is held on effectively full repairing and insuring terms and there is an upward only rent review on 24th June The Music Hall Passage kiosk is let to Mr Thomas Hughes on a 10 year lease from 13th February 2009 expiring 12th February 2019 at a current rent of 8,500 per annum. The lease is held on effectively full repairing and insuring terms subject to an exclusion regarding the roof of the kiosk and a schedule of condition. A rent deposit of 2,550 is held. THE PROPERTY THEREFORE PRODUCES A TOTAL INCOME OF 341,000 per annum 5.54 years WAULT

9 RENT ANALYSIS AND MARKET RENT 30 Northgate Street (Gino s Gelato) This unit has a (3 step) change in level at the start of Zone B and part of this zone is masked behind a structural wall. We have therefore applied a discounted rate of A/3 to Zone B, reflecting the change in level. We have additionally made a 10% reduction to the Zone B to take account of the masking. Applying A/20 to the first floor and A/40 to the second floor, we calculate that the recent letting reflects a headline rent of approximately 148 psf ITZA, netting down to 140 psf ITZA net effective after 3 months of the 6 months rent free period is taken account of Northgate Street (Superdrug) This unit has the benefit of an additional frontage and customer entrance to the rear off St Werburgh s Street. We have applied a 5% addition to the ground floor ITZA area to take account of this. We understand that the current tenants previously retailed part of the first floor of the unit and staircases remain. We have therefore applied a hybrid rate of A/15 to the first floor and A/40 to the second floor. In doing so, we calculate that the future rent (from 24th June 2018) reflects 172 psf ITZA. Given the recent nature of the open market letting to Gino s Fresh Gelato Limited of 30 Northgate Street we are of the opinion that 140 psf ITZA (net effective) reflects the current Market Rent of this location. Applying 140psf ITZA, we calculate that the property has a current Market Rent of approximately 270,000 per annum. TENURE Freehold. We understand that a conveyance of land dated 11th November 1921 made between a number of parties, including The Dean and Chapter of the Cathedral Church of Christ and the Blessed Virgin Mary created some restrictive covenants of which the most significant was that the subject property is not to be used or open for use on any Sunday, Good Friday or Christmas Day. We understand that this covenant is not currently actively enforced and that the shops open for trade on Sundays. TENANT COVENANTS Superdrug Stores Plc Superdrug is the second largest health and beauty retailer in the United Kingdom, Trading from nearly 800 stores across the United Kingdom and Ireland, the company employs over 14,000 people. 31st Dec 2016 ( 000 s) 26th Dec 2015 ( 000 s) 27th Dec 2014 ( 000 s) Sales Turnover 1,213,600 1,105,002 1,058,047 Profit Before Tax 80,385 56,842 38,044 Tangible Net Worth 86,291 50, ,513 Net Current Assets 154, ,485 74,581 Superdrug Stores Plc have a 5A1 D&B rating, implying a minimum risk of business failure. Gino s Gelato Limited With 12 premises in Ireland already, the recent move into Chester heralds the beginning of the UK expansion for Gino s Gelato. The third generation ice cream business unveiled the contemporary Gino s brand in 2008, specialising in gourmet, authentic, Italian gelato. Kiosk Thomas Hughes is co-owner of the highly successful Chef s Table restaurant located at 4 Music Hall Passage, opposite the property. The kiosk is used as for additional ancillary purposes associated with the main restaurant. The Chef s Table is a multi-award winning restaurant and is currently listed as one of Open Table s Top 100 restaurants in the UK. No further financial information is available on Thomas Hughes. VAT The property has been elected for VAT and it is assumed the sale will be conducted via a Transfer of a Going Concern (TOGC). EPC Given the listed status of the property we are advised that this exempts it from the requirement to have an EPC on its sale or rent.

10 PROPOSAL OFFERS ARE SOUGHT IN EXCESS OF 4,570,000 Subject to contract. Assuming full purchaser s costs of 6.58% a purchase at this price would reflect the following yield profile ( 140 psf ITZA net effective Market Rent): 7.00% Net Initial Yield; 6.00% Equivalent Yield; 5.67% Reversionary Yield VIEWINGS Viewings are to be by strict arrangement with the vendor s sole selling agents. JOHN MILES DDL: Mob: jhm@cwm.co.uk DAN KEATINGS DDL: Mob: dk@cwm.co.uk Misrepresentation Act: CWM & Partners LLP for themselves and for the vendors/lessors of the property whose agents they are, give notice that: 1. These particulars are set out as a general outline for the guidance of the intended purchasers or lessees, and do not constitute part of, an offer or contract; 2. All descriptions, dimensions, reference to condition and necessary permissions for the use and occupation, and other details are given without responsibility and any intending purchaser or tenant should not rely on them as statements or representations of fact but must satisfy themselves by inspection or otherwise as to the correctness of each of them; 3. No person in the employment of CWM & Partners LLP has any authority to make or give any representations or warranty in relation to this property. August 2017