Cardiff Newport Road
PRIME RETAIL WAREHOUSE PARK INVESTMENT OPPORTUNITY
Newport Road | Cardiff
2
Executive Summary Well located retail park, situated in Cardiff’s
n
Units 2 and 3 are let to DSG Retail Ltd, trading the
n
established out of town retail pitch on Newport Road, in close proximity to retailers such as M&S Simply Food, Sainsbury’s, Matalan, Homebase, Pets at Home, Carpetright, Mothercare and Argos. The property comprises a recently refurbished
n
The park is held Freehold and benefits from
n
a wide bulky goods planning consent.
on costs of 5.725%, a purchase at this level
underlet part of the unit to Multi-Tile Ltd who
would reflect the following yield profile based
trade as Topps Tiles with a lease expiry in 2013.
on our view of current market rental value
The total current income from the park
and RPI forecast figures moving forwards:
equates to £956,655 pa, reflecting passing Initial Yield
7.75%
Estimated Running Yield 2012
8.31%
Estimated Reversionary Yield 2017
8.98%
Based on historic performance together with
Estimated True Equivalent Yield
8.33%
Consensus forecast RPI figures, this should result
Estimated Nominal Equivalent Yield
7.92%
rents between £17.00 and £18.00 psf.
to around 5,118 sq m (55,097 sq ft) with facilities for 213 cars (1:258 sq ft).
subject to contract and exclusive of VAT. Based
in 2022, whilst unit 1 is let to Halfords, who have
n
linear terrace of three main units extending segregated rear servicing and forecourt parking
Offers are sought in the region of £11,680,000,
Currys and PC World fascias respectively, expiring
Both DSG Retail Ltd units are let with 5 yearly
n
reviews (2012 and 2017) geared to RPI.
in significant rental growth moving forward.
Cwmbran
A470
A4042
Pontypridd Newport
Cardiff is the administrative capital and main commercial centre of Wales. It lies on the south welsh coast, approximately 66 km (41 miles) east of Swansea, 72 km (45 miles) west of Bristol, 171 km (107 miles) south west of Birmingham and 242 km (151 miles) from London.
A449
The city benefits from excellent road communications, with the M4 providing a link east to the rest of the UK via its motorway network, and west, further into Wales. Junctions 29 and 32 of the M4 lie approximately 6 km (4 miles) north-west and 3 km (2 miles) north-east from the city centre respectively. The A48 runs from junction 29 through Cardiff and connects with Bridgend some 55 km (22 miles) to the west. The A470 provides a direct route north from the city centre, linking with junction 32 of the M4 and continuing further north to Pontypridd (17km/11 miles) and Merthyr Tydfil (38 km/24 miles).
M4
A470 M4 Llantrisant
M4 A48
M48(M)
Cardiff has a regular mainline service to London Paddington, via Reading, with a fastest journey time of approximately 2 hours 5 minutes.
A470
M4
A469 A4232 A48
NEWPORT ROAD
Cardiff
Clevedon M5
Newport Road | Cardiff
LOCATION
3
Newport Road | Cardiff
4
Socio-Economic Profile Cardiff has a resident population of some 320,000 people and approximately 1.4 million people live within UPPER BOAT a 45 minute drive time of the city. The 2001 Census estimated a 10 km (6 mile) radius of the city centre encapsulates around 369,000 people and this figure rises to around 682,000 people within 20 km (12 miles).
RHIWDERIN
PORSET
BASSALEG
MAESGLAS
A469
M4
A469
M4 M48
Educated Urbanites Aspiring Singles
PONTPRENNAU
10 minute
UK
4.8%
2.1%
11.3%
7.1%
7.0%
7.5%
14.3%
4.0%
RUMNEY
A4054
LLANDAFF NORTH GABALFA
A4119 A48
LLANDAFF
CARDIFF 5 minute
1 Car/van
44.8%
10 minute 43.5%
UK
ST MELLONS
LLANDEYRN
WHITCHURCH
A4119
B4239
A48
LLANRUMNEY
CYNCOED
A470
7.7%
PROPERTY OWNERSHIP
PENTWYN
A469
CARDIFF 5 minute
A48
THORNHILL
More detailed statistics indicate extremely positive profiles for these drivetimes and we have set some of these out below:
Prosperous Professionals
A4042
DUFFRYN
NANTGARW
Drive time figures from the property itself show a catchment of approximately 42,168 people within a 5 minute drivetime, 111,808 people within a 10 minute drive time and around 231,000 people within a 15 minute drive time.
2008 Households by ACORN Group
A467
A468
ST FAGANS
A48 A469
CARDIFF
ROATH A4161
CANTON
A4232
A48
43.8%
A470
A4119 A4232
A4160
LECKWITH
GRANGETOWN
A48
TREMORFA
SPLOTT
A4161
ELY
2001 Census
A4232
A469
BLACKWEIR
FAIRWATER
PENYLAN
NEWPORT ROAD
A4160 A4232 A4232 A4050 A4160
LLANDOUGH
A4055
Drive time contours 5 minutes 10 minutes 15 minutes
The subject property is positioned approximately 3 km (2 miles) north east of the city centre, at the south west corner of the roundabout junction of the A4161 Newport Road and Norwich Road. This location is close to the A4232 Southern Way, which forms part of the southern section of the ring road around Cardiff.
A48
Newport Road is one of the main arterial routes out of Cardiff City Centre to the north east, linking with the A48 Eastern Avenue and, further out, junctions 29 and 30 of the M4.
A48 A4132
NEWPORT ROAD A469
A470
A4161
Cardiff
The area immediately surrounding the property has established itself as the dominant retail warehouse offer within the Cardiff provision, with nearby occupiers including Pets at Home, Carpetright, The Range, KFC, M&S Simply Food, Sainsbury’s, Homebase, Matalan and Dreams.
Newport Road | Cardiff
Situation
5
Newport Road is the primary retail warehouse location in Cardiff offering approximately 61,875 sq m (666,000 sq ft) of out of town floorspace. The road itself runs south west from the junction of Newport Road and Southern Way and the provision in the vicinity of the subject property includes:
2 Seagar Retail Park
3 Citylink Retail Park
Newport Road, CF23 9AA This 3 unit scheme is situated adjacent to the subject property and provides around 3,112 sq m (33,500 sq ft) of floorspace with tenants including Pets at Home and Carpetright.
4 J Sainsbury’s/Wilkinsons
Newport Road, CF24 1PQ This is the largest retail warehouse scheme on Newport Road offering around 13,192 sq m (142,000 sq ft) of retail floorspace, together with 10 occupational tenants including Carpetright, Mothercare, Argos, Comet and Maplin Electronics.
Colchester Avenue, CF23 9AN This development comprises a circa 7,141 sq m (76,876 sq ft) Sainsbury’s foodstore and a circa 4,059 sq m (43,692 sq ft) Wilkinsons store.
A48
IPS WI CH RO AD
OA D
1
AD O RO
2
RO AD
4
TER AVE NUE
A4232
RT
HES
WP O
RLO WATE
EIM NH E L
AD RO
COL C
B
ROV
A469
ALBA NY R OA D
SO UT HE RN WA Y
) 32 42 (A
NEWPORT ROAD
NE
Newport Road, CF23 9AE This scheme extends to approximately 10,869 sq m (117,000 sq ft) comprising four occupational tenants namely M&S Simply Food, Homebase, Matalan and Magnet.
N-Y -LA NR
1 Avenue Retail Park
PE
Newport Road | Cardiff
6
Cardiff Retail Warehouse Provision
A4161 3
ER WAY
The subject property comprises a south-east facing terrace of three retail warehouse units fronting Newport Road which have recently been refurbished at a cost of around £1.6m. The units which provide a total of around 5,118 sq m (55,097 sq ft) of retail floorspace were originally built in the late 1980s. The site itself extends to approximately 1.3 hectares (3.2 acres). Parking for around 213 cars (1:258 sq ft) is arranged to the front, side and rear of the property with the main customer access routes to the eastern boundary of the site. Segregated rear
accommodation servicing facilities are from Norwich Road, which provides the northern boundary to the site. The units are of steel portal frame construction with lower elevations of brickwork and cladding above, together with glazed entrance features. Internally, the units offer minimum eaves heights of 6.5m (21 ft) and have been fitted out to the respective corporate specification including mezzanines of varying sizes in all three units. Part of the Halfords unit is occupied by Topps Tiles and has direct frontage onto Norwich Road. This space was previously occupied by the AA and so includes 9 roller doors to the side elevation.
We consider that the scheme currently comprises the following accommodation: Unit
Tenant
Description
sq m
sq ft
1
Halfords Ltd
Ground Floor
1,858.6
20,006
91.5
985
1,486
15,996
374
4,026
1,773.9
19,095
107.4
1,156
5,118.8
55,097
Mezzanine 2
DSG Retail Ltd (t/a Currys)
Ground Floor Mezzanine
3
DSG Retail Ltd (t/a PC World)
Ground Floor Mezzanine
Total 1. Part of the Halfords unit has been underlet – totalling 525.19 sq m (5,653 sq ft). 2. Mezzanines are tenant’s improvements. The DSG areas were agreed in 2007 as part of the leaseback negotiations.
Newport Road | Cardiff
DESCRIPTION
7
Newport Road | Cardiff
8
PLANNING Original Planning Consent for the scheme was granted on 12th March 1997 by the council for a 36,200 sq ft payless DIY unit and a 20,000 sq ft motor vehicle servicing and parts sales/distribution unit. Further applications widening user have since been approved in November 1988, November 1992 and August 2000, subject to the following conditions: The retail warehouse shall not be used for purposes other than for the sale of home improvement and DIY products, plumbing and hardware goods, timber and building products, paint and wallpaper, garden supplies, furniture, carpets and other floor coverings, soft furnishings, homewares, electrical goods, gas appliances, computers, office equipment and supplies, pets and pet products and motor accessories.
Notwithstanding the provisions (above), 503 Newport Road may additionally be used for the sale of cycles, cycle parts and cycle accessories, part of the unit may be used as a vehicle service area including a MOT testing bay and part of the unit may be used for the sale of new and used vehicles and associated parts and accessories. There shall be no further sub-division of the units which would result in the creation of any unit with a gross floor area of less than 850 sq m. Copies of the respective planning consents are available on request.
The property is let in accordance with the schedule below:
Property Address (Unit) 1
Tenant
Halfords Ltd
T/A
Halfords
GIA sq ft
Lease Start
Term
Lease Expiry
Next Review
Current Rent £ p. a.
Current Rent £ psf
20,006
11/07/1998
15 yrs
10/07/2013
n/a
£360,108
£18.00
Comments
5,653 sq ft of the Halfords unit has been under-let to Multi-Tile Ltd (t/a Topps
Newport Road | Cardiff
TENANCies
Tiles) for a term expiring on 7 July 2013 at a rent of £73,977 pa.
2
DSG Retail Ltd
Currys
15,996
04/04/2007
15 yrs
03/04/2022
04/04/2012
£271,932
£17.00
Subject to reviews in 2012 and 2017. Upwards only to a multiple (1.2) x RPI capped at 2.5% pa at the first review and 3% pa at the second review. Anticipated annual rents are therefore £303,467 p.a. (2012) and £341,515 p.a. (2017)
3
DSG Retail Ltd
PC World
19,095
04/04/2007
25 yrs
03/04/2022
04/04/2012
£324,615
£17.00
Subject to reviews in 2012 and 2017. Upwards only to a multiple (1.2) x RPI capped at 2.5% p.a. at the first review and 3% pa at the second review. Anticipated annual rents are therefore £362,260 p.a. (2012) and £407,678 p.a. (2017)
55,097
£956,655
By way of further explanation with regard to the rent review clauses for the two units let to DSG Retail Ltd, we would comment as follows: Each lease (Currys and PC World) will provide for an upwards only rent review after the 5th year, based on the previous rent being increased by the total increase in the monthly all prices Retail Prices Index (RPI) published by the Office of National Statistics over the preceding 5 years times by a multiple of 1.2, but limited to no more than the equivalent of 2.5% pa compounded. There will be a second increase in rent after the 10th year, calculated on the same basis as the 5th, save that the rental cap will be increased to the equivalent of 3% pa compounded.
TENURE The property is freehold.
9
Newport Road | Cardiff
10
COVENANT INFORMATION We have set out below Dun & Bradstreet Ratings for the occupational tenants, together with some key financial figures from recent accounts: Halfords Ltd – D&B Rating 5A1 Key Financials
March 2008
March 2007
March 2006
Sales Turnover
£797,400,000
£744,000,000
£681,700,000
Profit (Loss) before Tax
£111,300,000
£101,200,000
£77,000,000
Tangible Net Worth
£194,700,000
£185,500,000
(£56,300,000)
Total Current Assets
£304,100,000
£292,100,000
£159,300,000
Profit (Loss) after Tax
£79,200,000
£69,200,000
£53,600,000
May 2008
April 2007
April 2006
£4,567,189,000
£4,500,903,000
£4,203,295,000
Profit (Loss) before Tax
£140,141,000
£219,527,000
£77,222,000
Tangible Net Worth
£763,720,000
£861,108,000
£732,420,000
Total Current Assets
£1,581,627,000
£1,506,367,000
£1,332,478,000
Profit (Loss) after Tax
£141,566,000
£218,862,000
£46,395,000
DSG Retail Ltd – D&B Rating 5A1 Key Financials Sales Turnover
ASSET MANaGEMENT INITIATIVES
A significant proportion of the current income (c. 62.5%) is geared to the Retail Price Index and based on historic price movement since 2007, together with the Consensus Forecast figures for 2009 and 2010, we consider the likely cumulative uplift in 2012 to be in the order of £69,180 pa.
The approaching Halfords lease expiry in 2013 offers an excellent opportunity to re-gear to a ‘direct lease’ with Topps Tiles and consequently downsize the Halfords rentalised floorspace. Subject to tenant demand and planning it may be feasible to create a further floorplate allowing the introduction of another trading fascia, widening the retail offer on the scheme.
Retail Price Index (RPI) All Items
We consider that the recent refurbishment of the scheme has only strengthened its position in the local hierarchy. It has made it an attractive location for retailers with requirements in the area or indeed those who have existing representation but may also be approaching lease expiry.
YEAR
ANNUAL CHANGE
2005
2.80
2006
3.20
2007
4.30
2008
4.00
2009
1.00*
2010
2.20*
Environmental Considerations
Source: Office of National Statistics * Denotes Consensus forecast figures
For the purposes of the 2017 rent review we have assumed 2% as a longer term annual RPI figure. Consequently we believe the respective incomes from units 2 and 3 will move as follows: current rent
2012
2017
Unit 2 (Currys)
£271,932 pa
£303,467 pa
£341,515 pa
Unit 3 (PC World)
£324,615pa
£362,260 pa
£407,678 pa
RPS Environmental have produced a Phase 1 Environmental Risk Assessment dated December 2006, the key findings of which are as follows: RPS has not identified a significant risk of third party liability or regulatory action, which could affect the site whilst it remains in its current use and form. The site is unlikely to be classed as ‘contaminated’ under Part IIA of the EPA 1990 whilst it remains in its current use and form. The site should be considered as acceptable security from an environmental risk perspective for normal lending purposes. A copy of this report is available on request.
Newport Road | Cardiff
ESTIMATED RENTAL VALUE
11
Proposal Offers are sought in the region of ÂŁ11,680,000, subject to contract and exclusive of VAT for the Freehold interest in this property. Based on costs of 5.725%, a purchase at this level would reflect the following yield profile based on our view of current market rental value and RPI forecast figures moving forwards:
Initial Yield
7.75%
Estimated Running Yield 2012
8.31%
Estimated Reversionary Yield 2017
8.98%
Estimated True Equivalent Yield
8.33%
Estimated Nominal Equivalent Yield
7.92%
Contacts For further information please contact: Justin Houlihan
Duncan Westbrook
T: 020 7152 5670 F: 020 7152 5381 E: justin.houlihan@eur.cushwake.com
T: 020 7152 5826 F: 020 7152 5381 E: duncan.westbrook@eur.cushwake.com
Patrick Knapman T: 020 7152 5019 F: 020 7152 5381 E: patrick.knapman@eur.cushwake.com
www.cushmanwakefield.com 43/45 Portman Square London WIA 3BG
Misrepresentation Act 1967 and Property Misdescriptions Act Cushman & Wakefield LLP for themselves and for vendors or lessors of this property whose agents they are, give notice that : 1 The particulars are produced in good faith, are set out as 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 whatever in relation to this property.
3 This property is offered subject to contract and, floor areas, measurements or distances given are approximate and unless otherwise stated, all rents are quoted exclusive of VAT.
4 Nothing in these particulars should be deemed to be 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.
Cardiff | Newport Road | November 09 | Ref: 106027