Cushman & Wakefield - CITY CENTRE FREEHOLD …...Cushman & Wakefield LLP on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: (1) The

33-39 GALLOWTREE GATE& 63 MARKET PLACELEICESTER LE1 5GD

CITY CENTRE FREEHOLD RETAIL INVESTMENTWITH ASSET MANAGEMENT OPPORTUNITIES

33-39 GALLOWTREE GATE& 63 MARKET PLACELEICESTER

INVESTMENT SUMMARY

Leicester has the 9th largest primary catchment population in the UK (PMA)

Leicester was ranked 3rd in the Hot 100 Retail locations (CACI)

Prime position fronting pedestrianised Gallowtree Gate opposite M&S and Boots with rear access onto Market Place

Attractive unbroken retail parade providing 5 retail units over basement, ground and 2 upper floors

The property totals 37,620 sq ft

82% of the total income secured against the strong covenants of WH Smith and O2

Freehold

WH Smith recently committed to a new 10 year lease

Long WAULT of approximately 7.58 years to expiry (6.55 years to break)

32% of floor space vacant or let on a temporary basis providing excellent asset management opportunities

Majority of upper parts un-occupied whilst benefiting from shared access

Offers are sought in excess of £4,850,000, after purchasers costs reflecting: • 7.00% NIY • 8.22% EY • 8.81% RY

EASTMIDLANDS

BIRMINGHAM

M6

M42M6(T)

M42

M42

M40

M69M6

M6

M1

M1

M1

M5

21

22Stamford

MeltonMowbrayLoughborough

Spalding

Rushden

Kettering

Wellingborough

MarketHarborough

Wigston

Letchworth

Daventry

Banbury

Newark-on-Trent

Grantham

Matlock

Evesham

WarwickDroitwich

Stratford upon Avon

GreatMalvern

UttoxeterStone

Ashbourne

Uppingham

Corby

Redditch

NORTHAMPTON

Bedford

MILTON KEYNES

Mans�eld

Leamington Spa

Cannock

Stafford

LEICESTER

NOTTINGHAM

STOKE-ON-TRENT

WOLVERHAMPTON

BIRMINGHAM

DERBY

COVENTRY

LOCATIONLeicester is the second largest city in the East Midlands, located approximately 43 miles north-east of Birmingham, 31 miles south of Nottingham and 100 miles north-west of London.

Leicester benefits from excellent communications being adjacent to the M1 motorway (Junction 21 & 22) which in turn provides access to the M69, M6 and M42 motorways. The A6 runs though the city centre providing access to Loughborough immediately to the north and Market Harborough to the south. Leicester’s ring road, the A563, connects to towns and cities to the east, such as Peterborough, Grantham, Melton Mowbray and Uppingham via the A607 and A47.

The City’s mainline railway station provides regular high speed train services to London St Pancras with a journey time of approximately 1 hour 10 minutes. There are also frequent rail services to Birmingham, Sheffield and Nottingham and the catchment population is supported by an extensive bus network and a park and ride service into Leicester city centre.

East Midlands airport lies approximately 20 miles to the northwest of the City and provides frequent domestic and international flights.

DEMOGRAPHICSOver one third of the population living within a 20 minute drive of the property are categorised by CACI as being ‘Comfortably Off’, whilst the number of ‘Secure Families’ in this catchment is 69% higher than the national average.

The East Midlands currently contains approximately 10% of all households in England, and as a region the ‘population is projected to grow faster than any other English region over the next 25 years (ONS).

The city also forms part of an area which has been ranked the largest economic sub-region of the East Midlands; with Gross Value Added (GVA) totalling £15.3 billion for Leicester.



RETAILING IN LEICESTER

The city is classified as a Regional Centre with a substantial primary catchment population of approximately 962,000 ranked 9th (PMA) and an estimated shopping population of 495,000 ranking 12th (PMA) in the UK.

Leicester has over 2.5 million sq ft of retail accommodation ranking 7th (PMA) and a retail comparison spend of c. £871 million (CACI).

Leicester’s retail offer strengthened in 2008 by the opening of the 1.15m sq ft, Hammerson owned, Highcross Shopping Centre (former Shires), which is anchored by John Lewis. Highcross was re-opened following a £350m refurbishment, and provides a predominantly fashion led tenant mix, supported by the city’s main Cinema De Lux anchored leisure destination.

The city’s core shopping is focused on the pedestrianised section of Humberstone Gate and Gallowtree Gate, where the subject property is located, along with Highcross Centre and Haymarket Centre which is anchored by H&M, Sports Direct and Primark.

Prime rents in Leicester reached £245 ZA when Highcross opened in 2008 whilst rents on Gallowtree Gate were in the order of £200 ZA in 2008. Today rents along Gallowtree are now considered to be rebased at £90-£100 ZA providing an excellent opportunity for growth.

The historic 700 year old Leicester Market is situated on Market Place adjacent to the subject property. As part of a wider £9.2 million redevelopment of Leicester Market, in 2014 Leicester City Council unveiled a new market food hall which has regenerated the market area. Further information can be found at: www.leicestermarket.co.uk/market-development

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HAYMARKETTOWERS

HAYMARKET BUS STATION

LEICESTERMARKET

CURVE THEATRE CITY HALL

CORN EXCHANGE

SILVER ARCADE

TOWN HALLSQUARE

HIGHCROSS

HAYMARKETSHOPPING

CENTRE

SUBJECTPROPERTY

SITUATION

The property is situated in a prime position on the pedestrianised section of Gallowtree Gate, adjacent to Poundland and opposite Marks & Spencer and Boots. Other retailers in the immediate vicinity include HSBC, Dorothy Perkins, H Samuel, Pret a Manger and Card Factory.

The subject units are situated in close proximity to the main entrance of the extended Highcross Shopping Centre at the northern end of Gallowtree Gate. The units are well placed to benefit from the significant footfall generated by all of the city’s retail areas.

The majority of the holding fronts on to the prime Gallowtree Gate area, although to the rear of the property WH Smith, Damson Trading Corp Ltd, O2, and vacant Unit 63 all have accessible frontages onto Market Place. KENSINGTON

INTER LTD

LEICESTER MARKET& CORN EXCHANGE

REGENERATION

DAMSON

TRADING CORP LTD


DESCRIPTION

The retail parade consists of 5 retail units comprising sales accommodation at ground floor with ancillary storage on first and second floors (the only exception is WH Smith which uses first floor and basement for sales and Post Office).

The property is in part of late 19th century construction, with the rear of Unit 37 partially Grade II listed.

The upper floors of the entire property have shared access and there is a notable amount of upper floor space that is unused and which could, subject to planning and negotiation, be used for alternative purposes.



TENUREFreehold.

TENANCY SCHEDULEThe asset comprises a multi-let retail block of five units which are leased to four tenants and one vacant unit as set out in the table below:

Address Tenant Name

Accommodation Lease Start

Expiry Date

Next Rent Review

Date

Break Option

Current Rent (£ pa)

Current Rent ITZA (£ psf)

ERV (£ pa)

ERV ITZA (£ psf)

Comments

33 Gallowtree Gate Kensington Inter Ltd t/a Edge

Ground Floor Sales 795 ITZA 557 First Floor 937 Second Floor 1,006 Total 2,738

21/03/2016 20/03/2017 £24,000 £34 ZA £44,000 £70 ZA Temporary deal. Contracted outside the 1954 Act. Mutual rolling break on one months notice. £2,000 rent deposit.

35 Gallowtree Gate Telefonica UK Ltd t/a O2

Ground Floor Sales 2,445 ITZA 1,308 First Floor 2,112 Second Floor 1,900 Total 6,457

05/09/2014 04/09/2024 05/09/2019 04/09/2019 £71,000 £77 ZA £71,000 £77 ZA

37 Gallowtree Gate Damson Trading Corp Ltd

Ground Floor Sales 2,959 ITZA 1,406 First Floor 2,866 Second Floor 471 Total 6,296

14/09/2016 13/09/2017 £42,000 £26 ZA £93,500 £70 ZA Part Grade II listed - no empty rates payable. Temporary deal. Contracted outside the 1954 Act. 3 months term certain followed by monthly rolling breaks.

39 Gallowtree Gate WH Smith Retail Holdings Ltd

Ground Floor Sales 2,846 ITZA 1,196 Basement 7,464 First Floor Sales 3,091 Second Floor Sales 2,854 Total 16,255

25/03/2016 24/03/2026 25/03/2021 £225,000 £101 ZA £225,000 £101 ZA

63 Market Place Vacant Ground Floor Sales 802 ITZA 638 First Floor 986 Second Floor 616 Total 2,404

£22,000 £35 ZA Vendor to provide 12 months’ empty rates guarantee. Benefits from A3 planning consent.

TOTAL 34,150 £362,000 £455,500

ESTIMATED RENTAL VALUE

We are aware of the following recent market lettings evidence within the vicinity of the subject property:

Address Tenant Transaction Date Net Effective Zone A Rent

39 Gallowtree Gate WH Smith Lease Regear March 2016 £85 ZA

36 Gallowtree Gate O2 Lease Renewal September 2014 £75 ZA

41 - 43 Gallowtree Gate Poundland OML June 2014 £90 ZA

8 Humberstone Gate Select OML May 2013 £100 ZA

25-27 Gallowtree Gate Pret a Manger OML April 2013 £95 ZA

29 Gallowtree Gate Sk:n Beauty Salon OML September 2011 £116 ZA

3 Gallowtree Gate Great Northern OML August 2011 £136 ZA

COVENANT

82% of total income is derived from lettings to the undoubted covenants of WH Smith and O2.

Tenant % of Income Experian Rating Date of Latest Accounts

Turnover Pre-tax Profit / Loss

Net Worth

WH Smith Retail Holdings Ltd

62.50% 100 31/08/2015 £169,626,000 £62,392,000 £472,209,000

Telefonica UK Ltd 19.72% 100 31/12/2014 £5,485,000,000 £496,000,000 £10,896,000,000

ASSET MANAGEMENT OPPORTUNITIES

There are a number of potential opportunities that could further enhance the value of the property in the short to medium term:

• Let Unit 63 Market Place to a national A3 operator - ERV of £22,000 per annum

• Convert units 33 & 37 temporary lettings into permanent deals to improve income profile (Current interest from Catering Operator (more information available on request)

• Engage with O2 to negotiate removal of their break clause in 2019 to extend WAULT

• Consider an alternative use strategy for the upper floors such as gym possibly combining Unit 63 (floor plans available upon request)

• Opportunity to generate significant rate savings when the revaluation of the rateable values is undertaken in 2017

• Improve signage and prominence of the retail units


EPC

Certificates and Recommendation Reports are available upon request.

VAT

The property has been elected for VAT and therefore it is intended that the sale will be treated as a Transfer of a Going Concern (TOGC).

PROPOSAL

Offers sought in excess of £4,850,000 (Four Million, Eight Hundred and Fifty Thousand Pounds) for the Freehold interest in the property subject to contract and exclusive of VAT. A purchase at this level will reflect the following yield profile, after purchaser’s costs of 6.58%: • 7.00% NIY• 8.22% EY• 8.81% RY

FURTHER INFORMATION

For further information please contact:


Cushman & Wakefield LLP on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: (1) The particulars are produced in good faith, but are a general guide only and do not constitute any part of a contract. (2) No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatsoever in relation to this property. (3) The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. (4) Nothing in these particulars should be deemed a statement that the property is in good condition, or that any services or facilities are in working order. (5) Unless otherwise stated, no investigations have been made regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required. November 2016. Designed and produced by Creativeworld: 01282 858200.

Pierre KunklerT: 020 7152 5565E: [email protected]

Libby MitchellT: 020 7152 5961E: [email protected]

Sam WaterworthT: 020 7152 5149E: [email protected]

Cushman & Wakefield - CITY CENTRE FREEHOLD …...Cushman & Wakefield LLP on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: (1) The

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