Slough Retail Park Bath Road, Slough, Berkshire 152,929 sq ft prime retail warehouse investment
Slough Retail Park 02
Berkshire
Slough Retail Park
4 Investment Summary 6 Location 7 Catchment, Economy and Demographics 8 Situation 9 Retail Warehousing in Slough 11 Description 12 Planning 13 Ground Conditions 13 Tenure 14 Tenancies 15 Covenant Information 16 Rental Commentary 17 Asset Management Opportunities 18 VAT 18 Proposal
04
Investment Summary
Slough Retail Park
n Slough is a major commercial centre in the South East of England and one of the principal ‘M4 corridor’ office locations, with direct access to the motorway network via Junctions 4, 5 and 6 of the M4 motorway n PROMIS estimate that the town’s ‘Primary Catchment Population’ is in excess of 225,000 persons, whilst the estimated ‘Shopping Population’ is in excess of 139,000 persons n The property lies in a highly prominent and accessible location adjacent to the A4 Bath Road, which forms the principal east-west route through the town and leads to Junctions 4, 5 and 6 of the M4 motorway, to London to the east, and Reading to the west
n It is a freehold retail park developed in two phases in 1988 and 1997, currently extending to 152,929 sq ft, let to DFS, Homebase, MFI, Emporio, Harveys, Wickes and Land of Leather n There is an average unexpired lease term of 12 years n The scheme benefits from a flexible planning consent which allows 45% of the retail floor space of Phase 1 to sell any Open A1 (non-food) goods, which is generally currently unused by the current occupiers
n Our clients are seeking an offer in the region of £68,188,000, which taking purchaser’s costs at 5.7625%, will provide a purchaser with a net initial yield of 6.25%
The property lies in a highly prominent and accessible location adjacent to the A4 Bath Road, which forms the principal east-west route through the town 05
Slough Retail Park
Location
06
Slough Retail Park
M40
1 16
M25
Slough is a major South East commercial centre and is
The town is situated adjacent to the M4 motorway with major
a unitary authority in the county of Berkshire, which
A road access to junctions 5, 6 and 7, principally provided
has an estimated population of 800,000 persons, with
by the A4 Bath/London Road which runs east-west through
the town lying approximately 20 miles west of central
the town, with the A355 Farnham Road running north-south
London and 22 miles east of Reading.
through the town and leading to junction 6. The town centre lies approximately 3 miles east of junctions 8/9 of the M4
Slough Retail Park
motorway, which in turn leads to the A404(M) and to
Yeading
junction 4 of the M40 motorway, 5 miles to the north. Slough
M4
Junction 4b of the M4 motorway and junction 15 of the M25
7
motorway lie approximately 3 miles to the east. The A412 6
Slough is a major commercial centre in the South East of England and one of the principal ‘M4 corridor’ office locations with direct access to the motorway network via junctions 4, 5 and 6 of the M4 motorway
15 4b M4
M4
5
M4
Windsor
London Heathrow Airport
14 M25
Cranbourne
Hythe End
13
Ashford
Uxbridge Road leads north east from the town centre to the A40 and junction 1 of the M40. Slough railway station is served by the First Great Western train line, with a direct train service to London Paddington with a best journey time of 17 minutes, and to Reading Central with a best journey time of 14 minutes, leading to the wider rail network and the main stations at Birmingham, Bristol and Cardiff. The town is also well located in terms of accessibility to London’s main airports, with Heathrow being only 6 miles south east of the town with an approximate journey time by road of 15 minutes. Luton Airport is located 27 miles to the north east with a journey time of approximately 50 minutes by road, whilst Gatwick lies 30 miles to the south east with
Egham
1 M3 12 2
Hampton
a journey time by road of approximately 60 minutes.
Catchment, Economy and Demographics
Class Grouping 2001
Urban Area %
District %
GB %
AB – high and intermediate managerial/administrative/professional
22.2
20.0
21.7
being ‘Happy Families – 14.81%’ (GB – 11.46%); ‘Suburban
C1 – supervisory, clerical junior/administrative/professional
29.7
29.2
29.4
Comfort – 27%’ (GB – 16.06%); and ‘Blue Collar Enterprise
C2 – skilled manual workers
15.4
16.2
15.1
– 16.22%’ (GB – 11.56%).
D – semi skilled and unskilled manual workers
19.4
21.3
17.2
As at the 2001 Census, the Urban Area population stood at
E – on state benefits, unemployed lowest grade workers
13.3
13.4
16.6
profile which is broadly in line with the GB average, but in particular scoring highly in a number of ‘key’ groups,
141,848 persons, whilst according to ACORN, the population within a 10 mile radius as at 2006 was in excess of 1 million people. CACI estimate that the resident population within a
In terms of ‘Class Groupings’, Slough has a profile which
10 minute drive time contour of the subject property is
is generally consistent with the rest of the UK, with the
167,048 persons, rising to 311,228 persons within a 20 minute
notable exception being Class Grouping E ‘On state benefit
drive time contour of the town centre.
unemployed lowest grade workers’, where the percentage
The town’s economy has shifted from a manufacturing base over the past 30 years, to one dominated by the service sector, and with this shift and its extensive transport links, Slough has become one of the most important business centres in the South East of England. Slough is now one of the major out of town office centres in the UK; as the original Slough Trading
of the Urban Area population for the town stands at only 13.3%, as compared to the GB average of 16.6%. Not surprisingly therefore, the unemployment rate with the town’s TTWA has been consistently below the GB average for a sustained period of time and as at October 2007 stood at 1.6% as compared to the GB average of 2.2%.
Estate has continued to redevelop its industrial stock in favour
Car ownership levels are above the GB average within the
of modern office buildings. This is demonstrated by the fact
Urban Area, with 71.4% of households having 1 or 2 cars
that as at the 2001 Census, 18.1% of the total population
as compared to 66.6% for the rest of Great Britain, as at
within a 10 mile radius were employed as ‘Managers and
the 2001 Census. Owner occupation levels for the same
senior officials’, as compared to the GB average of 14.9%,
period for the Urban Area are marginally higher than the
whilst 13.9% of the same population were employed in the
GB average, standing at 68.8% as compared to 68.3%.
‘Transport, storage and communications’ sector as compared to a GB average of 7%.
Slough is now one of the major out of town office centres in the UK; as the original Slough Trading Estate has continued redevelop its industrial stock in favour of modern office buildings
Slough Retail Park
Slough’s Urban Area population has a socio-economic
07
Situation
08
Slough Retail Park
Slough Retail Park is situated in a highly prominent and accessible location adjacent to the A4 Bath Road, which is the main east-west route through the town and is approximately Wrexham Court
Stoke Road
Bath Road Retail Park
The scheme is accessed via Twinches Lane, which leads
3 Farnham Road A
directly south from the A4 to which it has an all ways traffic light controlled junction, and to the south where it joins Cippenham Lane, which leads to the immediately surrounding
55
Huntercombe Spur
A4
dA
41 2
residential area.
7 M
te
La
r
n
ne
Rag sto
e
Rd
w Ye
Tre
Glent
A335 Farnh
worth P lace
rne Ro ad
Eton
Wick Road
d A332 Woodham Roa
et
base. Consequently, the immediate locality has a varied
Slough Shopping Park Su sse xP
employment base, but principally with a bias towards office based managerial and professional jobs.
lac
e
Lo nd
Sloug h Ro ad
Lan
am R oad A355
m
Cranbou
enh a
Farn h
th Ro ad
Twi nc
he
e
an
Me re
Trading Estate has been redeveloped from an industrial Str e
Upton
A335 Farnh am Road
sL
St
Win d
o d ne R a
6 Ba
sor Roa d
Chalvey
Alb ert
Welli ngto n
eR oad
Slough
Ledgers Road
M4
A4
East’s largest out of town office locations, as the Slough
U
on
Slough Retail Park
The ‘Bath Road’ area has developed as one of the South
xb rid ge Ro a
Will iam
Ba t hR o ad
Stre et
Westgate Retail Park
Cip p
1 mile north west of junction 6 of the M4 motorway.
Poc oc
M4 ks L
ane
am Road King
Edward V II Aven ue
on Ro ad
Retail Warehousing in Slough warehouse floor space in Slough with 70% of that floor space being located on retail parks. Identified adjacent and on the map on page 8 is the main retail warehouse provision in the town.
Slough Retail Park (The subject property)
Slough Retail Park
PROMIS estimate that there is some 674,000 sq ft of retail
09
Westgate Retail Park Situated approximately ½ mile west of Slough Retail Park, fronting the A4 Bath Road is the Westgate Retail Park, which extends to approximately 57,500 sq ft. his 3 unit small scheme was developed in 1995 and is currently occupied T by Currys, PC World and Brantano. Bath Road Retail Park Situated approximately 2/3 mile north west of Slough Retail Park, fronting the A4 Bath Road on its northern side, this scheme is owned by SEGRO (Slough Estates) and extends to approximately 196,000 sq ft. P hase 1 was originally developed in 1993, and comprises four units extending to circa 132,000 sq ft anchored by a B&Q Warehouse, whilst Comet, Argos and Carpetright occupy the remaining units. Phase 2 was developed in 1996 and extends to circa 64,000 sq ft currently arranged as five units with occupiers including Allied Carpets, JJB Sports, Mothercare World, Furniture Village and Next. Slough Shopping Park This scheme is currently under construction and is located at the junction of the A4 Bath Road and the A412 Uxbridge Road, to the east of the town centre. The scheme is being developed by Spenhill and upon completion will provide around 100,000 sq ft of retail floor space, arranged over ground and mezzanine floors. However, we understand that following referral to the Competition Commission, Tesco (Spenhill) are required to market the site (on a parallel basis) to food operators on the basis that it will seek a planning consent for a ‘single large grocery store’, therefore possibly resulting in the site effectively becoming a food store.
PROMIS estimate that the town’s ‘Primary Catchment Population’ is in excess of 225,000 persons, whilst the estimated ‘Shopping Population’ is in excess of 139,000 persons
I t is a freehold retail park developed in two phases in 1988 and 1997, currently extending to 152,929 sq ft, let to Homebase, MFI, Emporio, Harveys, Wickes, DFS and Land of Leather 10
Slough Retail Park
Description
11
originally developed in 1988, extending to a total of approximately 153,000 sq ft GIA. The park was developed (in two phases) as a single terrace of
To the rear of the terrace is a segregated concrete surfaced
eight retail units, anchored by a Wickes unit at the southern
service area accessed via a dedicated service access/egress
end of the terrace and a DFS unit at the northern end. There
route from the A4 Bath Road slip road, whilst to the rear
is a further anchor tenant in Homebase who occupy a unit of
of units 1 (Homebase) and 3 (Wickes) are located tenants’
41,455 sq ft in the middle of the terrace.
external garden centres.
The scheme benefits from separate customer and service
The total site area is approximately 9.70 acres providing site
access/egress routes, with customer access provided by
coverage of 36.19%.
Twinches Lane to the front of the scheme, and service access via the A4 slip road to the northern boundary of the scheme. Construction is by way of steel portal frame with a minimum
The retail park provides a modern purpose built scheme, which is situated immediately adjacent to the major arterial east-west route through Slough.
height to the underside of the haunch of 6.5m. Elevations are clad in a mixture of brickwork and profile metal sheeting. The roofs are of pitched construction and clad in profile metal sheeting incorporating roof lights of Perspex sheeting. There is a total gross internal area (excluding mezzanine floor space) of 152,929 sq ft, and the areas of the particular units are detailed on the Schedule of Accommodation and Tenancies. To the front of the units is situated the customer car parking area, which is surfaced in a tarmacadam finish and provides a total of 474 customer spaces, whilst to the rear of the units is a concrete surfaced staff car parking area providing approximately 72 spaces, and an overall ratio of 1 space to 280 sq ft.
The park was developed as a single terrace of eight retail units, anchored by a Wickes unit at the southern end of the terrace and a DFS unit at the northern end
Slough Retail Park
Slough Retail Park is a modern well configured scheme
12
Planning
Slough Retail Park
Planning consent was granted for Phase 1 on 29th March 1988
food or food products at the site, other than consumption of
‘Certificate’, approximately 52, 339 sq ft may be used for the
(Ref: P/06651/011) for:
food by customers on the premises’.
sale of Open A1 (non-food) goods.
‘Erection of 3 retail warehouses with ancillary parking and
On the 23rd May 2007 Slough Borough Council issued a
Planning consent was granted for Phase 2 on 31st July 1997
service vehicle facilities’.
Certificate of Lawfulness which states:
(Ref: P/06651/020) for:
Post completion, unit 2 was sub-divided into 3 units as per the
‘Slough Borough Council hereby certify that on the development
‘Demolition of building 189 Bath Road and erection of
tenure plan on page 13.
described in the First Schedule hereto in respect of the land
non-food retail warehouse unit car parking and service
specified in the Second Schedule and edged in red on the plan
access as extension to Twinches Lane Retail Park’.
Condition 15 of that consent stated:
attached to this Certificate IS LAWFUL in accordance with Section
Condition 11 of that consent stated:
‘The site shall be used predominantly for the retail of items,
191 (as amended by Section 10 of the Planning and Compensation
which by virtue of their nature and / or size, require removal
Act 1991) of the Town and Country Planning Act 1990 (as
‘Notwithstanding the provisions of Class A1 of the Schedule of
from the premises by vehicles. There shall be no retail sales of
amended) for the following reasons:-
the Town and Country Planning Use Classes Order, this consent
1. On the balance of the evidence provided, the Local Planning Authority is satisfied to allow 55% of the floor space of Phase 1 of the Slough Retail Park to be used for the sale of non-food items, which by virtue of their nature and/or size require the removal from the premises by motor vehicles and for a maximum of 45% of any other non food retail items is indeed lawful, in accordance with Condition 15 of the Planning Permission P/06651/011, dated 29/05/1988’. The consequence of this Certificate of Lawfulness is that 45%
is for bulky goods non-food retail warehouse use only. Any other use shall be the subject of a separate application for planning permission. Particularly the premises hereby permitted shall not be used for the sale of food, drink, clothing, fashion accessories (including footwear), toys, books and stationery, jewellery, goods normally retailed from a chemist’s premises and electrical equipment’. That condition was subsequently amended in May 2003 to ‘enable the sale of bulky electrical goods’.
of the floor space of Phase 1 may be used for the retail sale
Phase 2 therefore in our opinion benefits from a traditional
of Open A1 (non-food) goods. Based upon the plan set out
‘bulky goods’ planning consent.
on page 13, which corresponds to the ‘Plan’ attached to the
Ground Conditions
Tenure
A recent environmental review undertaken by RPS is available
The property is held freehold and the extent of the site is outlined in orange on the layout plan below.
13
“RPS have not identified any significant risks, or third party Extent of Phase 1
or regulatory environmental liability that may affect the site whilst it remains in its current use and form.” They give the site an overall risk rating of “low to moderate”,
The scheme benefits from a flexible planning consent which allows 45% of the retail floor space of phase 1 to sell any Open A1 (non-food) goods which is generally unused by the current occupiers
emporio home
whilst the site remains in its current use and form.
Unit 4
Unit 5
Unit 1
Unit 2a
Unit 2b
Unit 2c
Unit 3
Slough Retail Park
to the purchaser. This concludes that:
Tenancies
14
Slough Retail Park
The property is let on effective full repairing and insuring leases, being subject to 5 yearly upward rent reviews with a current rental income of £4,511,132 per annum.
Unit Name
Floor Area (ft2)
Rent (p.a.)
Rent (ft2)
ERV (ft2)
ERV (p.a.)
Lease Start
Lease Expiry
Next RR
1
Homebase Limited
41,455
£1,068,295
£25.77
£25.77
£1,068,295
25/12/2005
24/12/2025
25/12/2010
2a
MFI Properties Limited (i)
22,781
£684,720
£30.06
£30.06
£684,720
24/06/2003
24/03/2014
25/03/2009
2b
Sofas UK Plc
10,056
£357,500
£35.55
£35.55
£357,500
29/11/2005
28/11/2023
29/11/2010
2c
Homestyle Operations Limited
9,055
£321,571
£35.51
£35.51
£321,571
12/06/1992
03/03/2014
25/03/2008
3
Wickes Building Supplies Limited (ii)
33,073
£889,839
£26.91
£26.91
£889,839
25/03/1989
24/03/2014
25/03/2009
4
DFS Furniture Company Limited
24,973
£775,000
£31.03
£31.03
£775,000
24/06/1998
23/06/2023
24/06/2008
5
Land of Leather Limited (iii)
11,536
£410,400
£35.58
£35.58
£410,400
25/03/1998
24/03/2023
25/03/2008
-
£3,807.36
£3,807.37
Annual Licence
-
-
£4,511,132
£4,511,132
Catering Van Danny Scarrotte Property Total
152,929
(i) Lease guaranteed by Galiform Plc (formerly MFI Furniture Group Plc) (ii) Lease guaranteed by Wickes Holdings Limited (iii) On assignment from Carpetright Plc
Covenant Information Unit
Tenant Name
Accounts Year Ending
adjacent their most
1
Homebase Limited
03/03/07
£1,508.55
£30.60
£552.95
recent accounts:
28/02/06
£1,458.98
(£17.34)
£545.70
5A1
2a
24/12/05
£9.22
£19.54
£117.26
5A4
25/12/04
£10.44
£4.93
£173.17
2b
30/04/07
£10.87
(£2.02)
-£4.60
30/04/06
£11.82
(£1.39)
-£2.60
N3
2c
21/07/06
£507.29
(£43.32)
£27.33
4A2
01/05/05
£464.97
(£21.21)
£202.16
3
30/12/06
£847.47
£40.16
£82.82
31/12/05
£964.41
£18.52
£24.13
5A1
4
29/07/06
–
(£6.10)
£207.30
5A3
(£29.30)
£220.60 £10.46
leading UK out of town
Turnover (000’s)
PreTax Profit (000’s)
Net Worth (000’s)
D&B Rating
retailers. We summarise
MFI Properties Limited (i)
Sofas UK Plc
Homestyle Operations Limited
Wickes Building Supplies Limited (ii)
DFS Furniture Company Limited
30/07/05
£3.40
5
29/07/07
£239.98
£16.13
30/07/06
–
(£1.04)
£6.30
3A2
i
Galiform Plc
29/12/07
£976.50
£44.40
£74.60
4A1
ii
Wickes Holding Limited
30/12/06
–
£19.00
£21.28
4A3
iii
Carpetright Plc
28/04/07
£475.90
£67.00
£29.10
4A1
Land of Leather Limited (iii)
Slough Retail Park
The property is let to
15
Rental Commentary
16
Slough Retail Park
The last letting on the scheme was to Emporio (Sofa UK Plc) in Unit 2b extending to 10,056 sq ft. This unit was let at a rent of £35.55 per sq ft, being effective from 29 November
Occupier
Property
Homebase
Manor Road, Richmond
Wickes
Area sq ft
Rent psf
Transaction
Date
Comments
44,213
£25.00
Rent Review
12/05
Good quality larger DIY store. Historic review date.
Edmonton
61,000
£25.00
Letting
06/06
Good quality DIY unit.
B&Q
West Five Centre, Acton
58,377
£28.50
Letting
08/05
DIY store with open non food consent.
Klaussner
Solartron Retail Park, Farnborough
5,500
£40.00
Letting
09/06
Furniture orientated bulky goods park.
Allied Carpets
Colne Valley Retail Park, Watford
10,881
£40.00
Letting
08/06
Retail park with restricted consent.
Toys “R” Us
Century Retail Park, Watford
19,920
£36.00
Letting
06/06
Retail park with restricted consent.
Paul Simon
South Aylesford Retail Park
6,000
£40.00
Letting
07/06
Retail park with restricted consent.
2005. This followed the rent reviews of the units let to Harveys (9,055 sq ft) and Land of Leather (11,536 sq ft), which were agreed at £35.50 per sq ft in March and June 2003. This is in line with the tone of rents for the smaller units and appropriate discounts are evident in respect of the larger units being between £27.00 per sq ft and £31.00 per sq ft. We would refer you to the evidence adjacent which has been established on similar dominant parks in strong locations in the South East of England, which support the current level of passing rents on the subject property.
In addition to the above, we believe it will be possible to capitalise on the recently confirmed “non bulky” planning use (in respect of Phase 1 units) to establish higher levels of rent both at open market lettings and at rent review.
Asset Management Opportunities planning section of this brochure where we summarise the advantageous Certificate of Lawful Use, which has been obtained in respect of Phase I. The result of this is that it is estimated that approximately 52,385 sq ft of Phase I can be used for the sale of Open A1 (non food) items. This should provide opportunities to attract new “softer” retailers to the scheme and increase rental values.
In terms of more specific opportunities, we would comment as follows: Unit 3, Wickes Wickes have taken an assignment of the former Focus unit on Farnham Road. We understand they did this to keep a competing retailer out of the town, and as a potential relocation site. This is likely to mean that their existing store could be made available to occupiers who would benefit from the non bulky planning consent on the unit. Previous discussions have taken place with Marks & Spencer on the whole of this unit, subject to obtaining mezzanine and part food planning consent. Remaining Retail Units We understand that tenants generally trade very well on this scheme and in particular, furniture retailers who benefit from the massing on the park, and particularly the existence of DFS. The strength of this as a retail destination should create interest from a range of furniture retailers.
We understand that tenants generally trade very well on this scheme and in particular, furniture retailers who benefit from the massing on the park, and the existence of DFS
In addition to potential possession of the existing Wickes unit, we believe that MFI would consider “downsizing” their unit which currently extends to 22,781 sq ft. Solus Small Unit Development Subway has previously indicated interest for a standalone unit of circa 1,000 sq ft, which could be accommodated within the car park subject to the necessary consents from the Local Planning Authority and other tenants on the park. In summary, this is a scheme which trades extremely well, however, we believe that as a result of the effective open planning consent on a significant part of the scheme, and the strong furniture bias of the remainder, there are existing opportunities on the scheme.
Slough Retail Park
We would refer you to the comments made in the
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18
Slough Retail Park
VAT
Proposal
The vendor has elected to waive exemption of VAT in
Our clients are seeking offers of £68,188,000.
respect of the subject property and therefore VAT will
This would reflect a net initial yield of 6.25%,
be payable on the purchase price.
assuming purchaser’s costs of 5.7625%, subject to contract and exclusive of VAT.
Our clients are seeking offers of £68,188,000, which taking purchaser’s costs at 5.7625% will provide a purchaser with a net initial yield of 6.25%
he scheme benefits from a flexible planning T consent which allows 45% of the retail floor space of Phase 1 to sell any Open A1 (non-food) goods 19
Slough Retail Park
MISREPRESENTATION NOTICE Wilkinson Williams LLP and Franc Warwick give notice to anyone who may read these particulars as follows: 1. These particulars are prepared for the guidance only of prospective purchasers. They are intended to give a fair overall description of the property but are not intended to constitute part of an offer or contract. 2. Any information contained herein (whether in the text, plans, artist impressions, photographs or digitally enhanced imagery) is given in good faith but should not be relied upon as being a statement of representation or fact. 3. Nothing in these particulars shall be deemed to be a statement that the property is in good condition or otherwise nor that any services or facilities are in good working order. 4. The plans, artist impressions, photographs or digitally enhanced imagery appearing in this brochure show only certain parts of the property and certain aspects may have changed since they were produced and it should not be assumed that the property remains precisely as displayed within these particulars. Furthermore, no assumptions should be made in respect of parts of the property which are not shown. 5. Any areas, measurements or distances referred to herein are approximate only. 6. Where there is reference in the particulars to the fact that alterations have been carried out, or are proposed, or that a particular use is made of any part of the property this is not intended to be a statement that any necessary planning, building regulations or other consents have been obtained and these matters must be verified by an intending purchaser. 7. Descriptions of the property are inevitably subjective and the descriptions contained herein are given in good faith as an opinion and not by way of statement of fact. 8. Plans are published for convenience of identification only and although believed to be correct, their accuracy is not guaranteed and they do not form part of any contract.
Wilkinson Williams Mellier House 26a Albemarle Street London W1S 4HY
Miles Marten Tel: 020 7317 3777 Fax: 020 7495 5432 m.marten@wilkinsonwilliams.co.uk
Drew Moore Tel: 020 7317 3789 Fax: 020 7495 5432 d.moore@wilkinsonwilliams co.uk
Franc Warwick Coin House 2nd Floor, 2 Gees Court St Christopher’s Place London W1U 1JA
James Harrison-Topham Tel: 020 7408 0970 Fax: 020 7629 2937 jamesht@franc-warwick.co.uk
Franco Sidoli Tel: 020 7408 0970 Fax: 020 7629 2937 franco@franc-warwick.co.uk
Slough | May 08 | Ref: 104459
www.wilkinsonwilliams.co.uk
www.franc-warwick.co.uk