Costa Coffee, London
363-365 Kingston Road | Wimbledon Chase | London | SW20 8JX
subject to contract
Attractive London Investment
New 15 year lease
£550,000, subject to contract
Net initial yield 6.0%
Wimbledon is situated in south west London in the London Borough of Merton approximately 14 km (9 miles) south west of Central London. The South Circular (A205) is located approximately 4 km (2.5 miles) to the north which connects to all of the surrounding south London Boroughs including Croydon and Kingston-upon-Thames. The M25 Motorway at Junction 10 is located approximately 22km (14 miles) to the south west. Wimbledon benefits from first class communications lying 5 km (3 miles) east of the A3 which provides direct access to Junction 10 of the M25 Motorway.
Wimbledon is well served by public transport. Wimbledon mainline railway station provides regular fast trains to London Waterloo in under 20 minutes. The area is also connected to the London Underground via the District Line, which provides regular trains to Central London. Heathrow Airport and Gatwick Airport are also easily accessible.
Wimbledon will be a major station on the Crossrail 2 line which is the proposed new high-frequency high-capacity rail line for the South-East, running through London and into Surrey and Hertfordshire.
The property is situated in a prominent location on the northern side of Kingston Road between the junctions of Rothesay Avenue and Sandringham Avenue adjacent to a Tesco Express and Wimbledon Chase railway station. The station is served by Thameslink trains on Sutton Loop Line within Zone 3.
The surrounding area is a blend of high density residential houses and apartments plus commercial uses providing a range of local amenities.
The interest for sale comprises a ground floor unit within a new contemporary commercial and residential development.
The unit also benefits from 2 car parking spaces within a private garage at the rear behind automated roller shutters included in the tenants lease. At the time of the letting these were not rentalised. There are two other spaces which have recently been sold for £25,000 each. Therefore, based upon this evidence there is underlying value of £50,000 for the benefit of a purchaser.
The tenant has spent in the order of £245,000 fitting out the unit to Costa's latest corporate style.
We understand the property comprises the following areas and dimensions;
|Net Frontage||10.3 m||33 ft 9 inches|
|Depth||17.5 m||57 ft 5 inches|
|Ground Floor Retail||172 sq m||1,851 sq ft|
The ground floor retail unit benefits from permission for Mixed Use Class A1/A3. A copy of the planning permission is available to download in the legal data room.
The interest for sale is a new 999 year lease at an annual ground rent of £150 with rent reviews during the term.
The unit is let to a Costa Coffee franchisee, Yasir & Eamon Limited, on a full repairing and insuring lease for a term of 15 years from 29th June 2016, expiring 28th June 2031. There is a tenant’s break option on the expiration of the 6th and 10th years, subject to 6 months’ written notice. Should the 6th year break option be exercised then the tenant will pay a penalty equivalent to 6 months’ rent.
The current passing rent is £35,000 per annum and the lease benefits from an upward only rent reviews in the 5th and 10th years.
There is a guarantee for the first 3 years of the lease from Tala & Maya Limited.
The tenant was granted 12 months’ rent free from the date of the lease; the vendor will cover any remaining shortfall by way of an adjustment to the purchase price on completion.
The tenant, Yasir & Eamon Limited (Co. No. 08651539), is a Costa coffee franchise partner with shops in North Cheam, Sunbury Cross and South Wimbledon plus this unit. For the year ending 31st October 2015 the company reported Cash at bank and in hand of £116,648 and negative Shareholders’ Funds of £29,882.
The guarantor, Tala & Maya Limited (Co. No. 06369760), is also a Costa coffee franchise partner which has reported the following figures;
|30th September 2015||30th September 2014|
According to Costa’s website due to the popularity of their Costa Full Store Franchise offer they are only working with large businesses that have an opportunity for a minimum of 10 store locations or more. In addition, the company is not recruiting any new UK Individual Franchise’s and nor are there any ‘new’ franchise regions currently available anywhere in the United Kingdom.
Costa was founded in 1971 and is now the largest and fastest growing coffee chain in the UK, currently with over 1,900 coffee shops in the UK, over 1,100 stores in 29 international markets and over 4,200 Costa Express self-serve units. Costa created 1,900 new UK jobs during the last financial year and opened 176 net new UK stores. The Costa Coffee Club has around 2.5 million active card holders.
Since 2007/08 Costa has grown its total system sales from £0.3 billion to £1.4 billion and aims to grow this to around £2.5 billion by 2020.
For more details go to www.costa.co.uk.
Value Added Tax
VAT will be payable on the purchase price. However, it is envisaged the transaction will be treated as a Transfer of a Going Concern (TOGC).
Our client is seeking offers in the region of £550,000 (Five Hundred and Fifty Thousand Pounds), subject to contract, reflecting a net initial yield of 6.0% (assuming standard purchasing costs of 4.89%).
An opportunity to acquire an attractive London Costa Coffee investment;
The unit is situated within a new residential and commercial development adjacent to a Tesco Express and Wimbledon Chase train station;
The property occupies a highly visible position fronting a busy road;
Underlying value in the car parking spaces to the benefit of a purchaser;
A purchase at the asking price will provide an investor with an attractive net initial yield;
Attractive lot size for an investor.
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