stop high-yielding-city-centre-retail-investment-newport - Singer Vielle Sales

High Yielding Prime City Centre Retail Investment

151 Commercial Street | Newport | Gwent | NP20 1JT

£245,000

subject to contract

FOR SALE

Summary

  • High yielding prime city centre retail investment

  • Established tenant in occupation since 1990

  • New lease from February 2015 at re-based rent

  • Freehold

  • £245,000, subject to contract

  • 12.0% net initial yield

Location

Newport is located approximately 22 km (14 miles) north east of Cardiff, 40 km (25 miles) north west of Bristol and 217 km (135 miles) west of London.

The city benefits from good road communications via Junctions 24 to 28 of the M4 Motorway, which provide easy access to Cardiff and Swansea to the west and Bristol and London to the east. The M4 Motorway also links to the M5 Motorway, which provides access to the Midlands and Northern England.

There are regular train services to London’s Paddington with a fastest journey time of 1 hour 46 minutes. In addition, Cardiff International Airport is approximately 42 km (26 miles) to the south west and Bristol International Airport is some 48 km (30 miles) to the south east.

Situation

Commercial Street is Newport’s principal pedestrianised retail thoroughfare. The subject property is situated in the prime section of Commercial Street, close to its junction with Llanarth Street. Surrounding occupiers include Boots, TSB, Poundland, Iceland, WH Smith, Santander, Costa, Burger King, Halifax, RBS, Nationwide and Caffe Nero.

The Friars Walk Shopping Centre is in close proximity. The newly developed 36,232 sq m (390,000 sq ft) scheme was sold in June 2017 to Canadian investment company Talisker Corporation for a multi-million pound sum. The scheme benefits from from strong footfall, reportedly averaging over 10 million visitors per year with tennants including Debenhams, Topshop / Topman, Marks  & Spencer, JD and River Island trading well.

Description

The property comprises a ground floor retail unit with ancillary accommodation on two upper floors. Internally, the unit has been fitted out by the tenant to their usual corporate style. A loading yard is provided to the rear of the property.

Accommodation

We have been advised the property provides the following net internal floor areas;

    Sq M Sq Ft
Ground Floor  Sales 149.85 1,613 
  ITZA 70.05 754
  Office 3.72 40
First Floor Ancillary/Storage 120.40 1,296
Second Floor Ancillary  51.09 550
Total   325.06 3,499

 

Tenure

Freehold.

Tenancy

The property is let to AG Retail Cards Limited t/a Clintons on a Full Repairing and Insuring lease for a term of 5 years from 25th December 2015 expiring on 25th December 2020 at a current passing rent of £30,000 per annum. Based on our analysis the passing rent equates to approximately £30 Zone A.

The lease includes a break option on 7th January 2019, subject to 6 months’ prior formal notice. If the break option is not exercised the tenant benefits from a rent reduction of £15,000 from the break date to 6th July 2019; hence 6 months’ rent free.

The tenant has been in occupation since 1990. The passing rent was re-based at lease renewal from £110,000 per annum (£125 Zone A).

Covenant

AG Retail Cards Limited (Co. No. 08087453) has reported the following figures;

  28th January 2017 28th January 2016
Turnover £201,222,000 £207,750,000
Pre-Tax Loss £ 19,442,000 £ 9,276,000
Total Deficit £ 37,707,000 £ 18,265,000

Known by its trading name of Clintons the company was established in 1968 and is a leading retailer of greeting cards, gifts and accessories. There are currently more than 400 Clintons on high streets and in shopping centres all over the United Kingdom including Scotland, Wales and Northern Ireland. For further information please visit www.clintonsretail.com.

The company is managed by American company Schurman Retail Group which operates over 300 stores in North America. The company has been recognised as the leading, privately-held speciality retailer of personal expression products in North America. Schurman has managed the Clintons business since 2009. For further information please visit www.srgretail.com.

VAT

The property has been registered for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

Proposal

Asking price £245,000 (Two Hundred and Forty Five Thousand Pounds), subject to contract, reflecting a net initial yield of 12.0%, assuming purchaser’s costs of 2.51%.

Investment Considerations

  1. An opportunity to acquire a city centre freehold retail investment;

  2. The property occupies a 100% prime retailing pitch;

  3. Lease renewal of a 25 year term in 2015 demonstrating the tenants desire to remain in the property;

  4. Rent re-based at lease renewal from £110,000 per annum to £30,000 per annum;

  5. Attractive lot size to an investor;

  6. A purchase at the asking price reflects an attractive net initial yield.

Contact Us

Singer Vielle   +44 (0) 207 935 7200
Neil Singer neil@singervielle.co.uk +44 (0) 203 478 9120
Dale Henry dale@singervielle.co.uk +44 (0) 203 701 1356
Richard Wolfryd richard@singervielle.co.uk +44 (0) 203 701 1353
Faye Langoulant faye@singervielle.co.uk +44 (0) 203 478 9122
Louanne Malan louanne@singervielle.co.uk +44 (0) 203 701 1386

Vendors Solicitor

Ingram Winter Green LLP +44 (0) 207 7845 7400
Nick Green nickgreen@iwg.co.uk 
customer service