Hermiston Gait Retail Park Edinburgh
Prime Open A1 Retail Park and Foodstore Investment
Investment Summary ■■ Edinburgh has the 10th largest shopping population in the UK. ■■ Hermiston Gait Retail Park has exceptional transport links. ■■ A 300,000 sq ft (27,870 sq m) retail park anchored by a new 75,000 sq ft (6,970 sq m) Tesco foodstore and 102,415 sq ft (9,515 sq m) B&Q Warehouse which account for over 62% of the income. ■■ The scheme benefits from a flexible Open A1 (including food) consented retail warehouse terrace along with Tesco and B&Q. ■■ The average rent on the 120,000 sq ft (11,150 sq m) retail terrace is a low £14.71 per sq ft. ■■ Current net income of £4,687,619 p.a. with a highly reversionary ERV of £4,990,169 p.a. ■■ The weighted average unexpired lease term is 15.70 years. ■■ Planning applications have been submitted to increase the total floorspace, develop a new retail and A3 terrace and refurbish the retail frontages.
■■ We are instructed to seek offers in the region of £63,340,000 subject to contract and exclusive of VAT for our client’s interest. A purchase at this level will reflect the following yield profile, based on purchaser’s costs of 5.725%.
Initial Yield
7.00%
Reversionary Yield – Sep-12 (B&Q guaranteed Uplift)
7.32%
Reversionary Yield – May-13 (Tesco projected Uplift*)
7.48%
Reversionary Yield – Oct-13 (On completion of the 2013 reviews)
8.03%
* 5 year RPI forecast of 1.6% p.a. (Source: CBRE)
Hermiston Gait retail Park Edinburgh
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Asset management With two new key anchor retailers and low average rents, Hermiston Gait is now uniquely placed to finally unlock its latent rental growth potential. Planning Applications Currently there are a number of planning applications
Ongoing Initiatives
submitted that will fundamentally alter the park’s already
5. Consent was recently granted to erect a signage board at
significant reversion. A final decision is expected by the end of
the entrance of the scheme to increase shopper awareness.
the year on these applications that includes the following: 6. Surrender and split Unit 7 into two 7,500 sq ft units. 1. Permitting up to 50% mezzanine floors across units 1-8, suiting modern retailer’s requirements.
7. Develop the ‘teardrop’ site into a pod / retail unit which offers retailers a busy and prominent site (A profit share
2. Refurbishment of existing retail fronts including
agreement with New Edinburgh would be required).
removal of dated canopy, new tenant signage and over cladding of the brick frontages.
8. Work with Tesco to locate and fund a PFS near to the scheme allowing them to offer their complete
3. Construct a terrace of units to accommodate restaurants and
service while further driving the parks footfall.
retail uses that are aimed at increasing the customer dwell time. More detailed information on asset management is 4. Alter existing car park layout to provide increased disabled parking in front of the units while creating new staff parking to the rear of the units.
available on request.
4
Hermiston Gait retail Park Edinburgh
5
1 6
2
3
5
7 Bulk store
GArden centre
8
Planning Applications 1 Mezzanine Floors 2 Upgrade Retail Frontages 3 New retail and A3 terrace 4 New carpark layout Ongoing Initiatives 5 New Park Signage 6 Split and relet of Unit 7 7 Teardrop Site 8 Potential PFS Site
Location Edinburgh is the Capital of Scotland and a major European city with a diverse economic base. The City benefits from excellent transport links and communications. To the west the M8 and M9 motorways link with Glasgow 42 km
Social Grade
AB
15 minutes 29.77%
24.89%
UK Index 120
C1
31.52%
29.56%
107
C2
13.70%
18.29%
75
D/E
25.00%
27.26%
92
(Source – Pitney Bowes MapInfo)
(67 miles) west and Falkirk to the north west while the A1, to the
Furthermore the property ownership statistics are above the UK
east, connects to Newcastle with the A720 forming the Edinburgh
average.
City Bypass.
Property Ownership
Edinburgh’s railway stations provide regular services to Glasgow
and London with approximate journey times of 50 minutes and 4½
hours respectively. Edinburgh Airport is approximately 11 km (7 miles) west of the city centre and offers a wide range of both domestic and international
15 minutes
UK
Index
% Owned
73.80%
62.59%
118
% Owns outright
38.06%
37.43%
102
(Source – Pitney Bowes MapInfo)
The overall Edinburgh shopping population spends above average on shopping as shown below.
flights. It is also earmarked for substantial expansion over the
Expenditure Estimates Edinburgh Index
next decade.
Total goods
2,338.97m
103
Convenience goods
848.18m
102
Comparison goods
1,490.80m
104
10th in the UK (Source: PROMIS NSLSP). The shopping population
Food
566.82m
102
has above average socio economic characteristics as illustrated by
Clothing & footware
369.35m
104
comparison of the 15 minute drivetime against the UK average in
Furniture, floor coverings & h’hold textiles 181.24m
103
the following tables:
Audio-visual equipment & other durables
247.24m
103
Hardware and DIY supplies
126.69m
103
Other goods
475.23m
103
DEMOGRAPHICS Edinburgh has a large shopping population of 502,000 ranking it
(Source – CBRE NSLSP)
Demographics A92
A92
Blairhall
Dunmore
Kincardine
Oakley
A985
A876 A823
A985
Dirleton
M9
Grangemouth North Queensferry
Blackness
Falkirk Polmont
Champany
Drem
Queensferry
M9
M9
Aberlady
A90
Shieldhill
A8000 A199
A90
M9
A902
A1
Edinburgh
Musselburgh
A1
Tranent
A8
Haddington
Gladsmuir
Broxburn Binnehill
M8
A720
A1
Hermiston
Whitecraig
A71
Bathgate Livingston
Armadale
A1
East Calder
Dalkeith
A68
A720
A71 A702
Oxenford Castle
Bonnyrigg
Whitburn
M8
M8
Longridge
A68 A71
Gorbridge A702
Stane
10 minutes Penicuik
Fauldhouse
Shotts
Drive time contours Fala Dam
15 minutes
A71
20 minutes A702
Falahill
A68
Leeburn Oxton Forth
Hermiston Gait retail Park Edinburgh
7
A8
s Toward rgh airport Edinbu
Situation
4
The park is strategically located at the junction of the Edinburgh City Bypass (A720) and the M8, 8 km (5 miles) west of the city centre. It is fully accessible from either road with recently installed signage over the City Bypass in 2008. Access is also now available via Cultins Road direct from the A71 that leads directly into the heart of the city.
5
1
s Toward rgh Edinbuentre C y Cit
A720 3 2
Located on the northern edge of the park is Edinburgh Park railway station, opened in 2003, which provides regular services to the city centre. The Edinburgh Tram project which was started in 2008, with the first phase due to complete in 2011 is being routed through this station. The 362,000 sq ft (33,600 sq m) Gyle Shopping Centre is situated 1.5 km (1 mile) north and is anchored by Mark & Spencer and a Morrison’s foodstore along with River Island, Next and Boots.
M8
Directly north of the park is Edinburgh Park which is Scotland’s largest business park that has been developed since 1990. To date around 2.5 million sq ft (232,250 sq m) of the development has been built out with a further 2.2 million sq ft (204,390 sq m) still to be developed. It is owned by New Edinburgh Limited which is a joint venture between The Miller Group and CEC Holdings Ltd that is a wholly owned subsidiary of the City of Edinburgh Council.
1 New Park Signage 2 Edinburgh Park Railway Station 3 The Proposed Edinburgh West Tram Line 4 The Gyle Shopping Centre 5 Edinburgh Park
A71 A720
Retail warehouse provision in edinburgh
Hermiston Gait retail Park Edinburgh
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The total retail warehouse supply in Edinburgh is estimated to be in excess of 2.1 million sq ft (195,000 sq m) of which 75% is located on retail parks. The subject property is the second largest classified retail park within the city. Fort Kinnaird Shopping Park
The Craigleith (Quarry) Shopping Park
580,000 sq ft (53,400 sq m)
182,500 sq ft (17,000 sq m)
Fort Kinnaird is the largest shopping park in
This park is located 3 km (2 miles) west of
Edinburgh. It comprises three distinct phases
the city centre adjacent to a Sainsbury’s A90
and has attracted the likes of M&S, Arcadia,
foodstore on the A90 Queensferry Road.
A90
River Island, New Look and Monsoon with
The park has an Open A1 (non food)
headline rents reaching £55.00 per sq ft.
planning consent with a highest rent of
The retail cluster also contains the only other B&Q Warehouse in the city along with a Tesco Home Store and additional solus units.
Straiton Retail Park Cluster 298,000 sq ft (21,925 sq m) Straiton Retail Park is a large cluster of retail warehousing in Edinburgh located to the south of the A720 and is in split ownership. These open A1 (non food) retail parks are arranged in three phases with the most recent phase let to M&S Simply Food, Boots, Argos, Brantano and Next. The top rent reflects
A902
A8000
A90
£37.00 per sq ft. Tenants on the park
The craigleith (quarry) shopping park
A900 Meadowbank retail park
A90
A902
A1
include M&S, Next, New Look, Argos, M9 Arcadia, TK Maxx, Boots and Homebase.
A8
A8
A8
Fort kinnaird shopping park
Meadowbank Retail Park 149,200 sq ft (13,800 sq m)
A7 M8
A720 A71
The park is situated 1.5 km (1 mile) east of
A70
A1
A702
the city centre on the A1 London Road. This
A7
Open A1 park was recently purchased and
A772
A71
Direct, Halfords and Homebase.
A68
is anchored by a Sainsbury’s foodstore with other tenants including TK Maxx Home, M&S Outlet, Peacocks and Gala. The highest rent achieved is £23.00 per sq ft.
A701 A70
Straiton retail park cluster A720
£28.00 per sq ft while the remaining line up on the earlier phases includes Comet, Sports
A199
A702
A1
Description The retail park comprises two anchor units let to Tesco and B&Q along with eight Open A1 (inc food) retail units. The park is well configured with the retail terrace and Tesco located opposite the B&Q Warehouse across a central car park. The main retail warehouse units were constructed in 1995 and are
CAR PARKING
Tenant Demand
of steel portal frame construction with brick and block cavity walls
The scheme benefits from an extensive onsite car park providing a
The latest lettings on the scheme have been Tesco and B&Q which
incorporating brick and glazed retail fronts.
total of 1,117 spaces, giving a ratio of 1:266 sq ft (1:24.7 sq m).
opened in September 2008 and October 2007 respectively. We
In 2007, the 102,415 sq ft (9,515 sq m) B&Q Warehouse was
TENURE
completed providing a steel portal frame unit with brick cladding
75,000 sq ft (6,970 sq m) Tesco foodstore to anchor the southern end of the scheme.
The car count numbers have risen from an average of 15,000 per
PLANNING
week in early 2007, improving on the B&Q opening to 27,500 per
The park was granted consent in March 1994 which allows for Open
week, before settling to around 37,000 per week since the Tesco
A1 (including food) retail uses without minimum or maximum unit
store opened.
sizes except for a condition within the reserved matters restricting
The service access for the Tesco and retail terrace is off Cultins
the total gross internal floor area of the park to 200,000 sq ft
Road while the B&Q is serviced via a road from the main customer
(18,580 sq m). The unrestricted consent was upheld by the City of
access. The remainder of the site comprises soft landscaping,
Edinburgh Council in 2008 prior to Tesco’s occupation.
substantial tarmac surface car parking areas and concrete surfaced service yards and compound areas.
SITE The site is regular in shape and extends to approximately 24 acres (9.7 ha) providing a site cover of approximately 28%.
significant improvements in customer footfall numbers.
Outright Ownership (Scottish equivalent to English Freehold).
and profile metal cladding under a pitched roof. In 2008, units 9, 10 & 11 were combined to create a new
understand that both are trading above expectations, delivering
Consent was granted in January 2006 for the B&Q that states that the unit must not be subdivided and limits 90% of the floorspace to be used for the sale of bulky goods categories including DIY, home maintenance, building / construction materials, garden supplies, furnishing and fittings, floor coverings and bulky electrical goods.
We believe that the 120,000 sq ft (11,150 sq m) retail terrace has the potential to deliver superlative rental growth, particularly given the low current average passing rent of £14.72 per sq ft.
Bulk store
GArden centre
Tenure This plan is published for the convenience of identification only. Any site boundaries are indicative only and should be checked against Title Deeds.
Hermiston Gait retail Park Edinburgh
Specialist Computer Holdings (UK) Plc
11
Covenant / income INCOME ANALYSIS The park is well let with a weighted average unexpired lease term of over 15.70 years (17.00 years without Tesco break clause). The chart sets out the lease expiry profile for the park:
Lease Expiries
0%
0–10 years 10–15 years: Retail Terrace
37.7%
15–20 years: B&Q
35.0%
20+ years: Tesco 0
10
27.2% 20
30
40
% of Park Income
TENANT INFORMATION Tesco PLC Tesco remains the undisputed leader in UK grocery and the largest retailer in the UK. It has a market share of over 30% of the UK grocery market significantly ahead of its nearest rivals. In recent years the company has also expanded abroad, making the company a truly global player. The company now has significant
Tenant Date of Account
Turnover Net Worth (£,000) (£,000)
Total Assets (£,000)
Tesco Stores Limited
23 Feb 2008 24 Feb 2007 25 Feb 2006
£34,786,000 £32,687,000 £30,087,000
£4,506,000 £4,752,000 £3,399,000
£18,130,000 £16,871,000 £13,257,000
B&Q Plc
02 Feb 2008 03 Feb 2007 28 Jan 2006
£3,854,900 £3,817,900 £3,753,600
£1,761,800 £1,602,900 £1,343,200
£2,805,800 £2,632,200 £2,341,800
Halfords Limited
28 Mar 2008 30 Mar 2007 31 Mar 2006
£797,400 £744,000 £670,700
£194,700 £185,500 £154,100
£413,300 £393,200 £291,000
Staples UK Retail Limited
02 Feb 2008 03 Feb 2007 28 Jan 2006
£359,707 £361,129 £354,579
£2,149 £(16,550) £(4,181)
£165,601 £145,176 £200,714
Specialist Computer Holdings (UK) Plc
31 Mar 2008 31 Mar 2007 31 Mar 2006
– – –
£15,290 £14,240 £12,911
£131,201 £134,098 £156,529
DSG Retail Limited
03 May 2008 28 Apr 2007 29 Apr 2006
£4,657,189 £4,500,903 £4,203,295
£785,314 £861,108 £732,420
£2,125,259 £2,119,762 £2,019,243
Carpetright Plc
03 May 2008 28 Apr 2007 29 Apr 2006
£521,500 £475,900 £451,400
£12,100 £29,100 £21,700
£336,100 £268,200 £248,000
Blane Leisure Limited
27 Jan 2008 28 Jan 2007 29 Jan 2006
£164,268 £177,407 £173,308
£171,967 £164,172 £153,704
£201,678 £189,754 £177,752
Childrens World Limited
29 Mar 2008 31 Mar 2007 01 Apr 2006
– – –
£63,700 £63,700 £63,700
£63,700 £63,700 £63,700
Harveys Furnishing Group Limited
28 Jun 2008 30 Jun 2007 01 Jul 2006
– – –
£(46,746) £(46,746) £(46,746)
– – –
operations in 14 countries with 60% of Tesco floorspace now being outside of the UK market (Source: Verdict).
B&Q PLC B&Q is number one in the UK home improvement market, with a market share of 14.8%, while being the third largest in the world. B&Q is a wholly owned subsidiary of Kingfisher plc and currently operates from a total of 330 trading stores in the UK. We have set out to the right the recent account information for the primary tenants:
Tenancy
Hermiston Gait retail Park Edinburgh
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The property is let in accordance with the schedule below. The current contracted rent is £4,687,619 p.a. with a number of units still having outstanding reviews from October 2008. The leases are all drawn on FRI terms, subject to five yearly upwards only reviews (unless stated below): Unit Tenant Trading as Size Lease Tenant Expiry sq ft Start Break Date
Passing Rent Next p.a. per sq ft Rent Review
p.a.
ERV Comments per sq ft
Unit 1 DSG Retail Limited
Currys
22,267
16/10/95
–
15/10/20
£337,500
£15.16
16/10/08
£356,272
£16.00
Rent review outstanding.
Unit 2
Halfords Limited
Halfords
10,080
16/10/95
–
15/10/20
£130,117
£12.91
16/10/08
£176,400
£17.50
Rent review outstanding.
Unit 3
Harveys Furnishing Group Limited
Harveys
7,529
16/10/95
–
15/10/20
£97,396
£12.94
16/10/08
£135,522
£18.00
Rent review outstanding.
Unit 4
Carpetright Plc
Carpetright
9,897
16/10/95
–
15/10/20
£130,078
£13.14
16/10/08
£178,146
£18.00
Rent review outstanding.
Unit 5
Staples UK Retail Limited
Staples
15,096
10/01/96
–
15/10/20
£330,396
£21.89
16/10/13
£271,728
£18.00
Unit 6
Childrens World Limited
Mothercare
14,948
16/10/95
–
15/10/20
£189,277
£12.66
16/10/08
£269,064
£18.00
Rent review outstanding.
Unit 7
Specialist Computer Holdings (UK) Plc –
15,015
16/10/95
–
15/10/20
£255,255
£17.00
16/10/08
£270,270
£18.00
Rent review outstanding.
Unit 8
Blane Leisure Limited
25,101
16/10/95
–
15/10/20
£299,000
£11.91
16/10/10
£414,167
£16.50
JJB Sports
Units 9,10,11 Tesco Stores Limited* Tesco 75,000 19/05/08 19/05/28 18/05/33 £1,275,000 £17.00 19/05/13 £1,275,000 £17.00
Reviewed 5 yearly to RPI capped at 3.5% p.a. Tenant’s option to extend the term for a further 10 years.
– B&Q Plc* B&Q 102,415 03/09/07 – 02/09/27 £1,638,400 £16.00 03/09/12 £1,638,400 £16.00
Rent to be reviewed to higher of OMRV or £1,853,713 pa (£18.10 per sq ft).
Burger Van
Ewan Wisniewska
TOTAL
* Stated lease floorarea.
–
–
20/12/07
–
–
297,348
£5,200
–
–
£4,687,619
£5,200 £4,990,169
– Licence
Proposal VAT The subject property is elected for VAT. The vendor would expect to treat the sale as a transfer of a going concern (TOGC), with the intention that no VAT would be payable on the purchase price.
PROPOSAL We are instructed to seek offers in the region of £63,340,000 subject to contract and exclusive of VAT for our client’s interest. A purchase at this level will reflect the following yield profile, based on purchaser’s costs of 5.725%.
Initial Yield
7.00%
Reversionary Yield – Sep-12 (B&Q guaranteed Uplift)
7.32%
Reversionary Yield – May-13 (Tesco projected Uplift*)
7.48%
Reversionary Yield – Oct-13 (On completion of the 2013 reviews)
8.03%
* 5 year RPI forecast of 1.6% (Source: CBRE)
Hermiston Gait retail Park Edinburgh
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Contacts For further information please contact: James Gulliford T: 020 7182 2216 F: 020 7491 4921 E: james.gulliford@cbre.com
Will Atkinson
Miller Mathieson
T: 020 7182 2401 F: 020 7491 4921 E: william.atkinson@cbre.com
T: 0131 243 4168 F: 0131 469 0131 E: miller.mathieson@cbre.com
CB Richard Ellis Limited
CB Richard Ellis Limited
Kingsley House Wimpole Street London W1G 0RE T: 020 7182 2000 F: 020 7182 2001
7 Castle Street Edinburgh EH2 3AH T: 0131 469 7666 F: 0131 469 0131
www.cbre.com Disclaimer: CB Richard Ellis 2009 CB Richard Ellis on its behalf and for the Vendors or Lessors of this property whose Agents they are, give notice that: 1. These particulars are set out as a general outline only for guidance to intending Purchasers or Lessees, and do not constitute any part of an offer or contract. 2. Details are given without any responsibility and any intending Purchasers, Lessees or Third Parties 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 CB Richard Ellis has any authority to make any representation or warranty whatsoever in relation to this property. 4. Unless otherwise stated, all priced and rents are quoted exclusive of VAT.
Edinburgh | Hermiston Gait Retail Park | July 09 | Ref: 105906