P r i m e O P e n A 1 R e ta i l Pa r k I n v e s t m e n t
Strood Retail Park | Strood
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Strood Retail Park Strood
Strood Retail Park 04 Investment Summary 06 Location 08 Socio-Ecomonic Profile 09 Situation 10 Surrounding Retail Warehouse Provision 12 Description 13 Tenure 14 Tenancies 15 Covenant Information 16 Planning 18 Asset Management Opportunities 19 Environmental Considerations 19 Estimated Rental Values 19 Proposal
Strood Retail Park provides a well secured income stream offering a low base for rental growth and asset management opportunities to drive value in the short and medium term.
Strood Retail Park Strood
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Strood Retail Park Strood
Investment Summary n S trood is an established commercial centre in the Medway area of Kent, situated just to the west of the River Medway, close to Rochester and Chatham. n The area currently offers excellent infrastructure and in addition there is significant regeneration underway across the Medway area, including the development of over 2,000 homes and around 15,000 sq m (161,500 sq ft) of commercial floorspace. n The subject property provides the only purpose built retail warehouse offer in the town, complimented by the presence of it’s two main foodstores and the town centre in very close proximity. n The park has an Open A1 (part food) retail consent and provides well configured, flexible retail space which undoubtedly offer asset management opportunities moving forward, in the form of downsizing and tenant re-orientation. n The park was developed in 1990 and is currently let to 5 tenants, including B&Q, Next, Argos and Brantano.
n Agreements for Lease have been signed with Matalan and Carphone Warehouse for space in the new block, opposite the main terrace. The average unexpired lease term will stand in the order of 10.5 years, following the completion of these leases. n Passing rents range between £15.25 psf and £22.50 psf offering a low base for good rental growth and we strongly believe that rental levels can be driven forward through the asset management initiatives. n W e are instructed to seek offers in the region of £40,000,000, subject to contract and exclusive of VAT, for the Freehold interest in this property. A purchase at this level would show the following yield profile, based on our estimate of rental value and costs of 5.7625%.
Initial Yield June 2008 December 2008 Equivalent Yield True Equivalent Yield Reversionary Yield
: : : : : :
4.64% 5.05% 5.55% 5.60% 5.80% 5.63%
Strood Retail Park Strood
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The subject property provides the only purpose built retail warehouse offer in the town, complimented by the presence of it’s two main foodstores and the town centre in very close proximity.
A414Page 06
Strood Retail Park Strood
A414
Harlow A138 M11
Potters Bar
A414
M25
A12 M25
Location A130
A10 A12
M11 A406
Basildon
A127
A13
A1
M25
Southend-on-sea Strood is located in the Medway area of Kent approximately 48 km
Canvey Island
A13
London
(30 miles) south-east of Central London. Other nearby centres include Rochester and Chatham approximately 0.8 km (0.5 mile) across the
A13
A4
A205
A205
A20
River Medway to the east, Maidstone 16 km (10 miles) to the south
A282
A2
Dartford
A2
A232
New Addington
and Dartford 22.5 km (14 miles) to the west.
STROOD Retail Park
The area has excellent infrastructure and further regeneration across the Medway is well underway. The 140 hectares (354 acres) of Chatham
Strood
M25
A217
A127
A2
Swanley M25
Maritime is now a well established residential and business location and
Gillingham Rochester
there are popular tourist attractions at Chatham Historic Dockyard, the newly opened ÂŁ60m Dickens World and Rochester Castle and Cathedral. As part of the Thames Gateway initiative, Medway is in line to receive over ÂŁ1bn
M20
Sittingbourne
M2 A23
A249
referred to, should provide around 16,000 new homes and create 40,000 jobs, M2
A249
M26 A25
on approximately 900 hectares (2,223 acres) of Brownfield Land. Strood benefits from good road communications with Junction 1 of the M2,
Maidstone
Sevenoaks
of investment over the next 20 years and the new developments which we have
and the A2, situated only 3 km (1.8 miles) to the west offering access to Gravesend, Dartford and Central London. Furthermore Junction 2 of the M2
Redhill A21
M20
and the A228, situated only 3 km (1.8 miles) to the south connect with the M20, Maidstone and Ashford in the south-east. The A2 also offers a direct link east to Sittingbourne, Canterbury and Dover.
Tonbridge
Strood railway station offers a direct service to London Charing Cross and A22
Royal Tunbridge Wells
London Cannon Street with an approximate journey time of 1 hour 5 minutes A21
A229
and rail services from nearby Rochester provide regular connections to Central London with a fastest journey time of 42 minutes.
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Strood Retail Park Strood
S AVE GR
A228
EN DR OA
STROOD Riverside
D D
AD
RO
AT ST
YR OA
AD RO
IO
OAD
HI GH
Rochester Riverside
ST RE ET
A mixed-use waterfront development to provide around 500 – 600 new homes.
A228
A2
STROOD Retail Park
A
D
RO
Temple Waterfront T REE ST ION AT OR RP CO
CU
XT
ON
A 70 hectare (172 acre) site with development brief for around 600 new homes and 15,000 sq m (161,500 sq ft) of commercial floor space. Rochester Riverside A 28.3 hectare (70 acre) site for a new mixed use development including approximately
MAI DST ONE R
A228
2,000 homes. These initiatives should create in the region of 900 hundred jobs.
O AD
M2
Further key developments in the area include: Strood Riverside
PR
CU XT ON
LONDON R
N
NE LA
N
GU
A2
IO R
WATLI NG ST REET
Temple Waterfront
2000 ft 500 m
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Strood Retail Park Strood
Socio-Economic Profile St Mary Hoo
Tilbury
According to CACI approximately 140,295 people live within a 10 minute drive time of the subject property and this catchment
Upper Stoke
increases to around 324,625 people within a 15 minute drive time. The 2001 Census indicates that the area boasts above average figures in relation to car and property ownership. We have set out these statistics in
Gravesend
STROOD Retail Park
the table below:
Cars or vans in Household Strood
UK
1 car or van
46.4
43.8
2 cars or vans
24.6
23.1
Owner occupied property
76.7
68.3
Cobham
Rochester
Gillingham
Luddersdown
M2 Chatham
Wouldham Hoddsoll Street
The area currently offers an excellent infrastructure whilst there is further regeneration underway, and proposed, across the Medway area.
M2
Stockbury
M26 10 minute drive time
M20
Ditton
M20
15 minute drive time
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Strood Retail Park Strood
Situation Strood Retail Park is positioned just to the south of Commercial D OA DR EN ES AV GR
LONDON
ROAD CO M
I AT ST
Commercial Road (A2), which provides direct links both east and
IOR
YR
OA
D
D OA
HI GH
O
west from the town centre. There is also additional frontage to Knight Road, which forms the site’s western boundary and links with the A228, which runs south to the M2.
ST RE E
Immediately to the south of the park is a new 7,060 sq m (76,000 sq ft)
T
Morrisons foodstore, which opened in October 2006, whilst there is a
PR
CU X
TO N
R
M E R CI A L R O AD
A228
of local traders. The scheme benefits from excellent frontage to
AD
N GU
occupiers as Woolworths, Boots and Sports World as well a variety
NE LA
RO
A2
in close proximity to the in-town retail offer which comprises such
N
WATLI NG S TREET
Road (A2) which forms part of the main town centre ring road, and
A228
STROOD Retail Park
3,995 sq m (43,000 sq ft) Tesco foodstore situated around 500 metres
A2
(0.3 miles) to the west on Cuxton Road. We understand that Morrisons OR RP CO
reported the best ever opening week sales performance, of any of their stores, when this opened in 2006. These two stores combine to provide
ON ATI ET RE ST
A RO
D
M2 CU
ON XT
A228 2000 ft 500 m
the dominant food offers in Strood and the combination of these, the subject property and the town centre, means the location has a well-rounded retail offer and significant critical mass.
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Strood Retail Park Strood
Surrounding Retail Warehouse Provision Strood Retail Park provides the only out of town retail offer in Strood. The town has the 14,306 sq m (154,000 sq ft) Medway Valley leisure Park,
Strood
PIER R OAD
which is owned by PRUPIM and incorporates tenants including Cineworld,
and Chatham, situated approximately 0.8 km (0.5 miles) to the south, provide the
OA CK R
D OA
DO
We consider that Gillingham, situated approximately 7 km (4.3 miles) to the east,
AD
CU XT ON
RO
D
Esporta, Frankie & Bennys, Gala Bingo and McDonalds.
R AY DW ME
NE LSO
only competing out of town retail offer to the subject property. The map adjacent identifies the locations of the respective schemes
HI GH
CITY WAY
• Gillingham – Gillingham Retail Park, Ambley Road
M2
MR
O AD
RE E
T
Gillingham Retail Park Gillingham
such tenants as Currys, PC World, Carpetright, Toys R Us and Homebase.
HA
HOATH WAY
MAIDSTO NE R O A D
comprising MFI, Allied Carpets and Magnet.
• Chatham – New Cut
IN
WAT LING ST
Circa 3,251 sq m (35,000 sq ft) of bulky space
Circa 12,910 sq m (137,000 sq ft) park incorporating
RA
Chatham
AW AY
New Cut Chatham
UK
Circa 9,290 sq m (100,000 sq ft) B&Q Warehouse.
• Chatham – Maidstone Road
Gillingham
T
Watling Street Gillingham
• Gillingham – Watling Street
S TRE E
YO KO S
and we have provided brief details of the size, tenants etc.
STROOD Retail Park
NR OA D
Maidstone Road Chatham
Circa 2,471 sq m (26,630 sq ft) Wickes DIY store. 2000 ft 1 km
Strood Retail Park Strood
UNIT 1A
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Strood Retail Park Strood
Description The property currently comprises five units in a linear terrace positioned to the eastern side of the site. The smaller western terrace is now being redeveloped to provide three units. At present there are approximately 312 car parking spaces, arranged in a forecourt car parking area between the existing and proposed new terrace, giving a ratio in the order of 1:21.9 sq m (235 sq ft). Customer access to the park is via a slip road from the A2, with a second principal access/egress from Knight Road, off Commercial Road, shared with the nearby Civic Centre. Segregated rear servicing is also accessed from Knight Road, with this servicing route and the adjacent railway line effectively forming the southern and eastern boundaries of the site respectively. The existing units comprise steel portal frame construction, with part brick/profiled metal clad elevations and profiled metal sheet roofs.
Elevation caption here
The park was developed in 1990 and is currently let to 5 tenants, including B&Q, Next, Argos and Brantano with agreements signed with Matalan and Carphone Warehouse.
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Strood Retail Park Strood
COMMERCIAL ROAD
Tenure The property is held Freehold. Freehold demise
UN
1A
KN
IGH
TR
OA
D
IT
This plan is published for convenience of identification only and although believed to be correct, its accuracy is not gauranteed and does not form part of any contract.
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Strood Retail Park Strood
Tenancies
The property is currently let to 6 tenants, with two further Agreements for Lease in place, in accordance with the Tenancy Schedule adjacent.
Unit Tenant Term Lease Lease Next GIA Current Current ERV ERV Start Expiry Review sq ft Rent Rent £ pa £ psf £ pa £ psf
Comments
A
B&Q Plc t /a B&Q
25
22/12/88
21/12/13
22/12/08
36,861
£562,130
£15.25
£663,498
£18.00
B1
Next Group Plc t /a Next
15
28/02/05
27/02/20
28/02/10
7,693
£173,093
£22.50
£207,711
£27.00
B2
Argos Ltd t /a Argos
15
10/11/03
09/11/18
10/11/08
10,286
£168,300
£16.36
£277,722
£27.00
B3
Brantano (UK) Ltd t /a Brantano
15
24/06/03
23/06/18
24/06/08
6,169
£102,000
£16.53
£171,190
£27.75
D
Carpetright Plc t /a Carpetright
15
24/06/03
23/06/18
24/06/08
9,514
£156,200
£16.42
£256,878
£27.00
2A
To be let
–
TBC
TBC
TBC
8,730**
£235,710
£27.00
£235,710
£27.00 Vendor will provide a two year rental gaurantee.
2B
Matalan Retail Ltd* 15 TBC TBC TBC 21,500** £473,000* £22.00 £473,000 £22.00 t /a Matalan
Income will be confirmed following PC
2C
The Carphone Warehouse Ltd 10 TBC TBC TBC 3,050** £88,450* £29.00 £88,450 £29.00 t /a Carphone Warehouse
Income will be confirmed following PC
Van
Mr JW Smith
3
22/04/05
21/04/08
n/a
Totals * The vendor will top-up this income until the unit becomes income producing ** To be confirmed following development of space
n/a 73,573
£7,500
n/a
£7,500
n/a
£1,966,383
£2,381,659
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Strood Retail Park Strood
Covenant Information
We have set out adjacent Dun & Bradstreet ratings for the primary tenants, which account for the majority of the income:
Tenant
D&B Rating
B&Q
5A1
32.5%
Next
5A1
10.0%
Argos
5A1
9.7%
Brantano
5A1
5.9%
Carpetright
4A1
9.0%
Matalan
5A1
27.3%
Carphone Warehouse
5A1
5.1%
% of income
99.5%
These figures are based on income following completion of the new lease – virtually all income is 5A1 rated.
The average unexpired term of the primary income will stand in the order of 10.5 years, following completion of these leases.
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Planning Planning Permission was granted on the 6th December 1989 by Rochester Upon Medway City Council, for the ‘demolition of existing buildings and erection of non-food retail warehouse and ancillary works, including parking area for customer’s use. Conditions included, stated that: ‘The building shall be used as a non-food retail warehouse and for no other purpose (including any other purposes in Class A1 of the Schedule to the Town and Country Planning (Use Classes) Order 1987.’ Following significant Fire damage to the stand-alone Matalan unit (A), Planning Permission was granted by Medway Council for the ‘Construction of a block of three retail units with associated parking spaces.’ Copies of these documents are available on request.
The park has an open A1 non food planning consent offering excellent flexibility moving forwards.
Strood Retail Park Strood
Strood Retail Park Strood
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Strood Retail Park Strood
Environmental Considerations
Asset Management Opportunities
WSP Environmental undertook a review of various documents relating to the Environmental condition of
We consider that there are a number of asset management opportunities
the subject property, and concluded as follows:
available to drive future performance:
It is our opinion, subject to further recommendations below, that the site represents a low risk of environmental liability
• The letting of the 811 sq m (8,730 sq ft) to set an improved tone of rents across the scheme.
for the freehold owner. A full copy of the report, together with the recommendations referred to above, is available on request.
• Pursue a surrender of Carpetright and re-let to another ‘open’ retailer such as New Look, Sportsworld, Boots, Mothercare etc. • In the short to medium term a downsize and carve up of the B&Q unit (lease expiry 21.12.2013). B&Q have another warehouse format in Gillingham and would most likely consider reducing their exposure in the area. The creation of smaller units would offer the opportunity to lift rental levels and improve tenant mix further, exploiting the
Estimated Rental Values
open A1 consent. There is also the potential of developing residential space above. • Exploit the existing food consent to introduce a food offer into the scheme. This would unquestionably improve the tenant mix and offer on the park. • Given the close proximity of the scheme to the town centre, there may well be an opportunity to introduce car parking charges and therefore benefit from another income stream.
Now that the new terrace is being reconstructed, negotiations can be pursued seriously in respect of the remaining 811 sq m (8,730 sq ft) of ‘new space’ (the rest being let to Matalan & Carphone Warehouse). Based on the indications of interest received to date, we consider an achievable level of rent on this space stands in the order of £27.00 psf. Further information is available on request. We have based our views of estaimated rental value on £27.00 psf for a unit of 7,500 – 10,000 sq ft, and have set these out in the Tenancy Schedule on page 14.
• Advertising signage on Priory Road and Commercial Road to be investigated.
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Strood Retail Park Strood
Proposal
We strongly believe that rental values can be driven forward through asset management initiatives.
We are instructed to seek offers in the region of ÂŁ40,000,000, subject to contract and exclusive of VAT, for the Freehold interest in this property. A purchase at this level would show the following yield profile, based on our estimate of rental value and costs of 5.7625%.
UNIT 1A UNDER OFFER
Initial Yield June 2008 December 2008 Equivalent Yield True Equivalent Yield Reversionary Yield
: : : : : :
4.64% 5.05% 5.55% 5.60% 5.80% 5.63%
Contacts For more information please contact: Patrick Knapman T: 020 7152 5019 F: 020 7152 5381 E: patrick.knapman@eur.cushwake.com
Justin Houlihan T: 020 7152 5670 F: 020 7152 5381 E: justin.houlihan@eur.cushwake.com
www.cushmanwakefield.com Misrepresentation Act 1967 and Property Misdesrciptions Act Cushman & Wakefield 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. 6 Any plans are published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds. The plans are based upon Ordnance Survey Map with the permission of the Controller of H. M. Stationery Office Crown Copyright, Cushman & Wakefield Licence No. ES753998.
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Strood | Strood Retail Park | January 08 | Ref: 104544