HAMMERSMITH, LONDON W6
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HAMMERSMITH, LONDON W6
SECURE INCOMEBUILDING WITH 19.5 YEARS
NEWLY REFURBISHED HQ OFFICE INVESTMENT SUMMARY
− Landmark trophy headquarters office building
− Located in the heart of Hammersmith opposite Hammersmith Underground Station
− Hammersmith is West London’s best-connected office sub-market
− Virtual Freehold
− Lying within the wider ‘King’s Quarter’, an area undergoing a multi-million pound repositioning project, making it the epicentre of Hammersmith’s retail, restaurant and leisure provisions
− Exceptional Stiff + Trevillion designed refurbishment at a cost of £42 million
− 103,374 sq ft NIA (9,603.6 sq m) arranged over ground and thirteen upper floors
− Let in its entirety to The Office Group (majority owned by Blackstone) with 19.5 years unexpired without break
− Highly secure institutional grade covenant with a Dun & Bradstreet rating of 5 A1
− Total passing rent of £5,355,579.62 p.a (£51.80 per sq ft)
− Rare opportunity to acquire secure long dated income
− Attractive debt terms available providing strong geared cash-on-cash returns
− Extremely valuable capital allowances of approximately £14.1 million available to a purchaser
− Offers in excess of £105,500,000
− Net initial yield - 4.75% (assuming purchaser’s costs of 6.8%).
− Capital value - £1,021 per sq ft
− The property is held in a ‘Luxco’ which can be made available by separate negotiation, thus creating a potential SDLT saving of c.£5m for a purchaser
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HAMMERSMITH BROADWAY
EVENTIM APOLLO
LYRIC THEATRE
A4
OLYMPIAWESTFIELD
KING’S MALL SHOPPING CENTRE
KING STREET
KINGS QUARTER
HAMMERSMITH ROADUNDERGROUND STATIONOPPOSITE HAMMERSMITHA LANDMARK TOWER DIRECTLY
5
OFFICE MARKETLONDON’S BEST-CONNECTEDHAMMERSMITH IS WEST
HOUSEHOLD INCOME
64%ABOVE GREATER LONDON AVERAGE
BLUE CHIP OCCUPIERS
OUTSTANDING LOCAL AMENITIES
CATCHMENT SPEND IS 10.6BN
SUBSTANSTIAL REGENERATION
EXCELLENT CONNECTIVITY LINKS
LOW OFFICE VACANCY RATE
10 MILES FROM HEATHROW
THE LOCATION
Located on an attractive public square opposite the Underground Station, Hammersmith acts as the western gateway to the core West End. Hammersmith boasts exceptional connectivity with direct access to the A4 which links Heathrow Airport (just 10 miles west) to Central London and is further complemented by four London Underground lines.
The rate of business growth in the area between 2011-2018 was 28% higher than the London average with new occupiers including blue-chip corporates, high-end restauranteurs, international retailers and independent start-up companies. Occupiers remain attracted to Hammersmith by its exceptional connectivity, relatively low occupational costs and rich amenity provision including 4.5 miles of river frontage and excellent retail / restaurant / theatre offerings.
OCCUPIERS / MAJOR BUILDING OWNERS
Lyric Square
Bill’s Cafe
Byron Burger
Pret A Manger
Amoret Specialty Coffee
Tortilla
Wasabi
La Petite Bretagne
The Dartmouth Castle
Wagamama
Apollo Theatre
Lyric Theatre
Rockspring – 110,000
Land Securites – 250,000
Hermes Asset Management – 204,500
Aviva – 165,000
Schroders – 340,000
Standard Life – 15,000
Royal London Asset Managment – 66,000
National Bank of Kuwait – 90,000
EPF (Malaysian Sovereign Wealth Fund) – 68,000
Alduwaliya – 166,000
Tilad – 83,000
AMENITIES
MAJOR BUILDING OWNERS SQ FT
4
5
35
41
3
1
2
2
11
10
32
8
5
112
7 4 6
9
17
15
12
11
1
6
4
2
3
5
7
910
13
14
16
18
8
A4 (TO M4) A4
Glenthorne Road
Shep
herd
s Bu
sh R
oad
Hammersmith Road
Ham
mersmith
Bridg
e
King Street
FITNESS1
2
3
4
5
Luma Hotel
Novotel West
Best Western
Brook Green Hotel
Holiday Inn
HOTELS1
2
3
4
5
1
2
3
4
5
7
8
9
10
11
126
OCCUPIERS (SQ FT)1 10
6 15
2 11
7
16
3 12
8
17
4 13
9
5 14
18
Aberdeen Asset Management – 170,000
Legal and General/Mitsubish – 247,000
Tai United – 110,000
AXA – 220,000
Kier/Investec – 59,500
Westbrook – 78,000
L’Oreal – 110,000 Deutsche Telekom – 26,000 BOOM Cycle
Virgin Active
Fitness First
Pure Gym
Frame Gym
Neptune Fund Management – 16,000
Deltek – 13,000
A+E Networks – 20,000
Immediate Media – 54,000
Virgin Media – 90,000
Walt Disney – 142,000
GE Capital – 155,000
Harrods – 120,000
Dunnhumby – 150,000
Betfair – 51,000
Winton Capital – 60,000
Philip Morris – 34,000
Fox International Channels – 22,800 Accor Hotels – 25,000 UKTV – 29,000
Western Union – 15,000
Shazam Entertainment – 31,000
Chivas – 30,000
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KING STREET
BEADON ROAD
LEAMORE STREET
KINGS QUARTER WILL BE THE EPICENTER OF THELATEST INNOVATIONS IN RETAIL
Kings Quarter is at the epicentre of the new movement reinvigorating traditional retail. It has become home to some of the biggest and latest brands who are pushing themselves to become more original in the ways they engage with shoppers and service their needs.
Kings Quarter is shaking up West London’s retail landscape transforming the shopping centre into a home for retail incubators, innovative outlets and experimental pop-ups.
KINGS MALL SHOPPING CENTRE
LYRICSQUARE
THE MULTI-MILLION POUND REGENERATION OF KING’SMALL LIES AT THE HEART OF THE NEW KINGS QUARTER
KING STREET FOOTFALL
c.20MA N N U A L L Y
AFFLUENT SHOPPERS
80% ABOVETHE GREATER LONDON AVERAGE
PROPORTIONS OF ACORN RISING PROSPERITY ARE
KINGS QUARTER
Frame gym brings a fun and unique approach to fitness and wellbeing. The first of its kind in west London, Frame offers class-based exercise with 4 studios, supported by an on-site café and fitness-wear store.
H&M has invested £5 million in a colourful concept store to combat its usual look of long lines and cluttered clothing by capitalising on retail tech and click and collect services.
RECENT SUCCESSES INCLUDE:
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HEATHROW AIRPORTTO CENTRAL LONDON AND UNRIVALLED CONNECTIVITY
Heathrow Airport, which caters for approximately 72 million passengers per year, is located 11 miles to the west and can be easily accessed via London Underground (Piccadilly line) or the adjacent A4 / M4 motorway.
Immediate proximity to the Hammersmith Ring Road and A4 / M4, one of London’s main arterial routes which in turn provide access to the wider national motorway network.
Hammersmith Broadway bus station is one of the largest and busiest interchanges in London, with 20 bus routes passing through it - seven of which run 24 hours a day.
National and International rail services are available from Kensington Olympia, and King’s Cross St Pancras (24 minutes), Paddington (12 minutes) and Victoria (14 minutes) via the Hammersmith & City lines.
Hammersmith is one of only eight underground stations that is served by four or more lines.
Convenient access to Heathrow Airport (30 minutes), Mayfair (14 minutes), the City (28 minutes) and Eurostar links at King’s Cross St Pancras (24 minutes).
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Baker Street
Paddington
White City
Journey time in minutes
M4 Junction 1 (Via A4)
Wimbledon
Earls Court
Victoria
Piccadilly Circus
Piccadilly Line
District Line
Hammersmith & City Line
Circle Line
Victoria Line
King’s Cross St. Pancras
Green Park
M25 Junction 14
30
14
17
11
12
10
2
13
26
4
17
24
16
HAMMERSMITH
Heathrow Terminal 1-5
13
− Stiff + Trevillion designed scheme comprehensively refurbished and completed in Summer 2018
− Total landlord refurbishment costs of £35 million with an additional £7 million spent by The Office Group on the internal fit out
− 103,374 sq ft (9,603.6 sq m) NIA of striking, modern Grade A office accommodation
− Originally constructed in the mid 1970’s of reinforced concrete frame, the façade has been extensively refurbished and re-clad
− An imposing architectural presence in Hammersmith occupying a virtual island site with excellent levels of natural light and large fenestration to all elevations.
− Arranged over ground and thirteen upper floors with regular, rectangular floorplates of c.7,800 sq ft
− Top floor has been remodelled providing 4m ceiling heights, full height glazing and spectacular views over London
THE BUILDING
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AMENITIES AND PANORAMIC VIEWS OVER LONDON
BUILDING WITH EXCELLENT REFURBISHED GRADE A OFFICE AN EXCEPTIONAL NEWLY
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SPECIFICATION
− Newly remodelled top floor with 4m ceiling height and full height glazing
− Fully accessible metal tiled raised floors with void ranges from 75mm to 100 mm
− New double-glazed fenestration
− Typical cleared floor to ceiling heights of 2.6m
− VRV air conditioning with fan coil units
− Fully refurbished feature double height reception with feature central atrium and roof light
− Four 16-person passenger lifts with full disabled access operating a ‘Destination Hall Call System’
− Dedicated male and female WCs on each floor
− 93 secure bike stores at basement level
− 10 showers plus further DDA shower & WC with changing facilities providing 93 lockers
− Building management system
− Dedicated service entrance and bike storage from Beadon Road
− BREEAM ‘Very Good’
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STRIKING REMODELLEDRECEPTION
21
OFFICE GROUP TRANSFORMINGONE LYRIC SQUARE’
£7 MILLION SPENT BY THEBY SCHRODERS AND A FURTHER‘£35 MILLION HAS BEEN SPENT
23
BEADON ROAD
KING STREET
ACCOMMODATION
13
12
11
10
9
8
7
6
5
4
3
2
1
13 8,725 810.6
7,833 727.7
7,846 728.9
7,848 729.1
7,845 728.8
12
11
10
9
7,854 729.78
7,846 728.97
7,836 728.06
7,838 728.25
7,829 727.34
7,818 726.33
7,830 727.42
6,671 619.71
G1,755 163.0Ground Reception
TYPICAL UPPER FLOOR
GROUND
KING’S MALL(NOT PART OF DEMISE)
TERRACE
FIRST
TOTAL
FLOOR
103,374 9,603.6
NIA SQ FT NIA SQ M
Not to scale and for indicative purposes only
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27
GLENTHORNE ROAD
BEADON ROAD
KING STREET
TENUREVirtual Freehold – 991 years and 10 months remaining at a fixed peppercorn rent.
Not to scale. For identification purposes only. This plan is based upon the Ordnance Survey Map with the sanction of the controller of H.M. Stationery Office. Crown Copyright reserved.
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TENANCY
LET IN ITS ENTIRETY TO THE OFFICE GROUP PROPERTIES LIMITED (GUARANTOR THE OFFICE GROUP MIDCO LIMITED) ON 5 SEPARATE 20 YEAR FRI LEASES, WITHOUT BREAK, AT A RENT OF £5,355,579.62 PER ANNUM.
All rent free periods will be topped-up by the vendor.
TOG FINANCIAL INFORMATION
Founded in 2003, The Office Group (TOG) is one of the most creative, exciting and forward-thinking working communities in the UK. The flexible office space market continues to grow and is now an established investment sector in its own right. This was further evidenced by Blackstone’s 2017 acquisition of a majority interest in TOG valuing the company at c.£500m.
TOG currently has over 15,000 members working across 34 buildings with 5 more set to open this year. What sets TOG apart from their competitors is their strong balance sheet and existing assets which include freehold & long leasehold properties as well as occupational leases and management agreements.
For the year ending 31st December 2017, revenue grew by 34% (£19m).
The Office Group Properties Limited has a Dun & Bradstreet rating of 5 A1 indicating a minimum risk of business failure. Further information can be found at: www.theofficegroup.co.uk/office/one-lyric-square
Summary financial information is provided below:
THE OFFICE GROUP PROPERTIES LIMITED (THE TENANT)
31-DEC-17 31-DEC-16 31-DEC-15
Sales Turnover £75,288,000 £56,256,000 £31,889,000
Pre Tax Profit £36,130,000 £3,108,000 £13,911,000
Net Assets £65,096,000 £33,576,000 £30,756,000
The Office Group Midco Limited acts as guarantor for The Office Group Properties Limited across all leases at One Lyric Square.
The Office Group Midco Limited has a Dun & Bradstreet rating of 5 A1 indicating a minimum risk of business failure.
Summary financial information is provided below:
THE OFFICE GROUP MIDCO LIMITED (THE GUARANTOR)
31-DEC-17 31-DEC-16 31-DEC-15
Sales Turnover £90,091,000 £69,924,000 £43,160,000
Pre Tax Profit £32,271,000 £3,444,000 £20,959,000
Net Assets £92,898,000 £60,627,000 £57,183,000
FLOOR AREA SQ FT
AREA SQ M
TENANT LEASE TERM
RENT £PA
RENT £PSF
RENT REVIEW
COMMENTS
13 8,725 810.6
The Office Group
Properties Limited
18/9/2018 - 17/9/2038
£545,312.50 £62.50
18/09/2023
• Guarantor: The Office Group Midco Limited
• 36 month rent free period - Rent commencement 18/09/2021
12 7,833 727.7 £430,815.00 £55.00
11 7,846 728.9 £431,530.00 £55.00
10 7,848 729.1 £431,640.00 £55.00
9 7,845 728.8 £431,475.00 £55.00
8 7,854 729.7The Office
Group Properties
Limited
06/06/2018 - 05/06/2038 £1,568,700 £50.00 06/06/2023
• Guarantor: The Office Group Midco Limited
• 22.5 month rent free period - Rent commencement date 20/04/2020
7 7,846 728.9
6 7,836 728.0
5 7,838 728.2
4 7,829 727.3The Office
Group Properties
Limited
06/06/2018 - 05/06/2038 £1,244,800 £50.00 06/06/2023
• Guarantor: The Office Group Midco Limited
• 22.5 month rent free period - Rent commencement date 20/04/2020
3 7,818 726.3
2 7,830 727.4
Part 1 1,420 131.9
Part 1 5,251 487.8
The Office Group
Properties Limited
06/06/2018 - 05/06/2038 £262,550 £50.00 06/06/2023
• Guarantor: The Office Group Midco Limited
• 22.5 month rent free period - Rent commencement date 20/04/2020
Ground reception 1,755 163.0
The Office Group
Properties Limited
18/09/2018 - 17/09/2038 Peppercorn - -
• Structural lease - building structure and common parts. Please see the dataroom
Part rooftop N/A N/A
Arqiva Services Limited
29/9/2006 - 28/09/2020 £8,757.12 - -
• Licence to Occupy part of the roof space for the installation of a TV Broadcast antenna. The licenced area is outside of the lease of the building and common parts
TOTAL 103,374 9,603.6 £5,355,579.62 £51.80
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KENSINGTON
£70HAMMERSMITH
£60HAMMERSMITH
£60
PADDINGTON
£70
KNIGHTSBRIDGE
£70VICTORIA
£85
MARYLEBONE
£90
FITZROVIA
£90
MAYFAIR
£130ST JAMES’S
£150
COVENTGARDEN
£85SOHO
£90
DATE ADDRESS FLOORS AREA (SQ FT) TENANT RENT
£ PSF
Q4, 2018 77 Fulham Palace Road, W6 Multiple 46,077 Spaces £54.50
Q4, 2018 Metro Building, 1 Butterwick, W6 9th 5,523 Tarsus Group £56.00
Q3, 2018 174 Hammersmith Road, W6 6th 3,257 Sail GP £55.00
Q1, 2018 Metro Building, 1 Butterwick, W6 P 3rd 5,800 ASALA Energy £56.00
Q1, 2018 12 Hammersmith Grove, W6 Pt 4th 6,479 All Nippon Airways Ltd £55.00
Below we set out details of some recent local leasing transactions.
OCCUPATIONAL MARKET
DATE PROPERTY TENURE TENANCY WAULT (YEARS TO BREAK) PRICE NIY CV (PSF)
Q4, 2018 14 Tothill Street, SW1 FH House of Commons 12 £87.0m 3.7% £1,453
Q4, 2018 202 Hammersmith Grove, W6 FH Victoria Beckham Ltd 9.25 £16.85m 4.42% £1,143
Q4, 2018 125 Shaftesbury Avenue, WC2 FH WeWork 20 £226.7m 4.5% £1,502
Q3, 2018 Cooper & Southwark Building, 61 Southwark Street, SE1 FH CBRE 15 £107.10m 4.4% £1,439
Q1, 2018 151 Wardour Street, W1 FH WeWork 20 £49.0m 4.00% £1,785
Q1, 2018 North West House, 119-127 Marylebone Road, NW1 FH WeWork 20 £58.5m 4.40% £1,258
THE CORE WEST ENDSEEKING A DISCOUNT FROMTO ATTRACT OCCUPIERSHAMMERSMITH CONTINUES
Below we set out details of some recent local investment transactions.
INVESTMENT MARKETJanuary 2019 saw space under offer in the West End at 1.2m sq ft, a figure well above the long-term average despite Brexit insecurities. Pre-lets accounted for 42% of the total with vacancy rates remaining at 3.9%.
Occupying a strategic location between the West End and Heathrow Airport, Hammersmith has directly benefited from severe supply constraints
in central West End submarkets attracting footloose occupiers keen to exploit its exceptional connectivity, comparatively low total occupational costs and ever-improving amenity provisions. Strong occupational fundamentals have seen large scale regeneration and development in Hammersmith with the recent arrival of exceptional mixed-use schemes from Aberdeen Asset Management, U&I, AXA, Kier and Investec.
2018 saw UK investment volumes hit £54.4bn, £6.2bn above the 10 year average, with London still the primary target for domestic and international capital driven by low inflation, weak sterling, low interest rates and increased credit availability. Far Eastern investors continued to dominate foreign investment accounting for c.£9bn of total investment in 2018.
Hammersmith is still widely classed as one of the most affordable Central London sub-markets with quality transport infrastructure, multi-million pound regeneration and strong occupational conditions drawing investors. Global uncertainty and a growing shift towards shorter, more flexible leases has driven increased appetite and seen yields contract for secure, long dated income streams which remain extremely scarce
HEADLINE RENT PER SQ FT
*The above information has been provided by 3rd parties and cannot be relied on *The above information has been provided by 3rd parties and cannot be relied on
33
− Extremely rare unbroken income of c.20 years
− Hammersmith is a growth location currently experiencing exceptional occupier demand
− Hammersmith has attracted numerous blue-chip occupiers making it West London’s most established sub-market
− Large scale regeneration and investment into King’s Mall continues to improve the locality and amenity provision
− Comprehensively refurbished building requiring no capital expenditure
− Approximately £14.1 million of capital allowances available to a purchaser
− Attractive yield for secure long dated income
− Strong cash on cash return opportunities
Indicative debt terms from a variety of lenders suggest a 5 year debt package would be available for up to 60% LTV on an interest only basis at an all-in rate of 2.75% (275 bps) - 3.00% (300 bps) per annum.
INVESTMENT RATIONALE
DEBT ANALYSIS
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FURTHER INFORMATION
Capital allowances to the sum of approximately £14.1 million can be made available to a purchaser
CAPITAL ALLOWANCESFurther information is available on request
DATAROOM
PROPOSALOffers in excess of £105,500,000 (One Hundred and Five Million Five Hundred Thousand Pounds), reflecting a net initial yield of 4.75% (assuming purchaser’s costs of 6.8%) and a capital value of £1,021 per sq ft.
LUXCOThe property is held in a ‘Luxco’ which can be made available by separate negotiation, thus creating a potential SDLT saving of c.£5m for a purchaser
VAT elected - It is anticipated that the transaction will be conducted as a Transfer of Going Concern (TOGC)
VAT EPCOne Lyric Square has an EPC rating of B (44).
020 7529 [email protected]
TOBY LARMAN 020 7529 [email protected]
SCOTT LISTER
020 7529 [email protected]
HARRY COX+65 6733 [email protected]
PETER NG
CONTACT
Declaration: Michael Elliott for themselves and for the vendors of this property whose agents they are, give notice that: a) the particulars are set out as general outline only for the guidance of intending purchasers and do not constitute, nor constitute part of, an offer or contract; b) all descriptions, dimensions, references to condition and necessary permissions for use and occupation and other details are given in good faith and are believed to be correct, but any intending purchaser should not rely on them as statements or representations of fact but should satisfy themselves by inspection or otherwise as to the correctness of each of them; c) no person in the employment of Michael Elliott has any authority to make or give any representations or warranty whatever in relation to this property. March 2019 www.cube-design.co.uk (Q4264)
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