10.0% investment with retail rent below market rental value

82 Abington Street | Northampton | NN1 2AP

£760,000

subject to contract

EXCHANGED

Summary

  • Prominent location in the heart of Northampton town centre

  • Secure income

  • Retail rent re-based in 2018 below market rental value, providing opportunity should the unit fall vacant

  • Multi-let with low passing rents

  • Active management and add value opportunities

  • £760,000, subject to contract

  • 10.0% Net Initial Yield

  • 14.4% Estimated Reversionary Yield

Northampton-office-retail-property-investment-NN1-2AP

Location

Northampton is located approximately 106 km (66 miles) north west of Central London, 88 km (55 miles) south east of Birmingham, 59 km (37 miles) south of Leicester and 88 km (55 miles) west of Cambridge.

The town benefits from good road communications with Junction 15 of the M1 Motorway approximately 6.4 km (4 miles) to the south, accessed via the A45, Junction 15a some 6.4 km (4 miles) to the south-west and Junction 16 approximately 8 km (5 miles) to the west, accessed via the A4500. The M1/M6 Motorway Interchange is approximately 29 km (18 miles) to the north-west.

In addition, the town is connected to the national railway network with a fastest journey time to London Euston of 49 minutes. Direct rail connections are also provided to other regional centres including Birmingham, Nottingham and Milton Keynes. London Luton Airport is approximately 61 km (38 miles) to the south-east and Birmingham International Airport is approximately 72 km (45 miles) to the north-west.
Northampton is located at the heart of the UK, with unrivalled national and international transport links. The town has been identified by Government as a key area for economic growth and was singled out in an Experian report as the best place in the UK to do business, the only place in the country to score 19 out of a possible 20 points across four critera: Number of start-ups, rate of insolvencies, level of financial health and business turnover. Northampton has also been rated in the UK’s top ten places to work based on factors including average house price, wage and available jobs. (Source: www.northamptonez.co.uk).

Situation

Abington Street is Northampton’s principal retail thoroughfare. The subject property occupies a prominent retailing pitch on the southern side of Abington Street. Nearby occupiers include H&M, Boots Opticians, KFC and Sports Direct.

The Grosvenor Centre totals approximately 29,729 sq m (320,000 sq ft) and is the town’s main shopping centre, benefiting from over 60 shops and eateries plus over 800 car parking spaces. The Centre underwent a significant refurbishment programme throughout 2015 to provide a more modern and stylish shopping environment. The scheme is anchored by Primark, Next and Boots with other notable brands including Topshop, Superdry, Apple iStore, Lush, Pandora amongst others. The centre’s principal entrance on Abington Street is in close proximity to subject property.

Northampton-office-retail-property-investment-NN1-2AP
Northampton-office-retail-property-investment-NN1-2AP

Description

The property comprises a mixed-use building of concrete frame construction providing a retail unit on ground floor and basement, together with self-contained offices on first and second floor which are accessed via Abington Street.

The retail unit has been fitted out by the tenant to their usual corporate style. The offices are accessed via a generous entrance to Abington Street. The marble clad common areas are in good order and the offices provide regular accommodation with perimeter trunking. The second floor was fully refurbished in 2013/14.

The property benefits from rear loading and a surface car park to the rear providing a total 22 spaces, accessed via The Ridings.

Accommodation

The property has been measured by BKR Floor Plans and provides the following Net Internal Areas;

Ground Floor & Basement (BrightHouse)
Zone A 48.40 sq m 521 sq ft
Zone B 54.16 sq m 583 sq ft
Zone C 62.80 sq m 676 sq ft
Remainder 40.41 sq m 435 sq ft
ITZA   1,036
Total Ground Floor Sales 205.77 sq m 2,215 sq ft
     
Basement 182.64 sq m 1,966 sq ft
     
First Floor
(Pertemps) 178.37 sq m 1,920 sq ft
     
Second Floor
(Interaction Recruitment) 191.56 sq m 2,062 sq ft
     
TOTAL 758.34 sq m 8,163 sq ft

A set of floor plans is available to download and the measured survey report will be assigned to a purchaser at a cost of £455 + VAT.

Northampton-office-retail-property-investment-NN1-2AP
Northampton-office-retail-property-investment-NN1-2AP

Rateable Value

Accommodation Rateable Value
1st Floor £14,000
2nd Floor £10,750

The Uniform Business Rate is 48.0 pence per pound.

Tenure

Freehold.

Northampton-office-retail-property-investment-NN1-2AP
Northampton-office-retail-property-investment-NN1-2AP

Tenancies

The ground floor and basement are let to Caversham Trading Limited (t/a BrightHouse) on a Full Repairing and Insuring lease for a term of 5 years from and including 20th December 2018, expiring on 19th December 2023. There is a tenant’s break option on 20th December 2021, subject to 6 months’ written notice. The current passing rent is £40,000 per annum, equating to £32.50 Zone A. The tenant has a right to use 2 car parking spaces.

The tenant entered into a lease renewal in 2018 having occupied the property under a previous lease for a term of 5 years from 19th August 2013, demonstrating their desire to remain in the property. The annual rent under the previous lease was £82,500 per annum (£67 Zone A).

The first floor is let to Pertemps PLC on a full repairing and insuring lease for a term of 5 years from 5th April 2017, expiring 4th April 2022 at a rent of £22,328 per annum (£125.18 per sq m / £11.63 per sq ft). The tenant has a right to use 9 car parking spaces.

The second floor is let to Interaction Recruitment PLC on a full repairing and insuring lease for a term of 10 years from 30th January 2015, expiring on 29th January 2025. There is a tenant’s break option on 30th January 2020 on not less than 6 months’ prior written notice. The current passing rent is £17,500 per annum (£91.35 per sq m / £8.49 per sq ft) and the lease benefits from an upwards only rent review on 30th January 2020. The tenant has a right to use 9 car parking spaces.

Therefore, the total current income is £79,828 per annum.

Service Charge

The service charge budget for the year ending 31st July 2019 is £12,402. The service charge for the year ending 31st July 2018 was £9,938.85. The second floor office is subject to a service charge cap of £2,600. Copies of the accounts and budget are available to download.

Northampton-office-retail-property-investment-NN1-2AP
Northampton-office-retail-property-investment-NN1-2AP

Covenant

Caversham Trading Ltd (Co No. 05396147) has reported the following figures:

  31 March 2018 31 March 2017
Revenue £53,519,000 £63,362,000
Pre-Tax Profits (Loss) (£1,721,000) (£817,000)
Net Assets £73,485,000 £74,694,000

Established in 1994, BrightHouse offers customers’ access to high-quality branded household goods with affordable weekly payments, professional in-store attention and a comprehensive after sales service via 283 stores across the UK. The company stocks a wide range of household appliances and electronic products, from washing machines to TV’s and tablet computers. Brands sold include Acer, ASUS, Beko, Hoover and Samsung. For further information visit www.brighthousegroup.co.uk.

Pertemps Limited (Co No. 04881571) has reported the following figures:

  31 December 2017 31 December 2016
Revenue £636,673,000 £560,002,000
Pre-Tax Profits £6,653,000 £13,086,000
Net Assets £49,612,000 £50,636,000

Pertemps Limited established itself as a family run business in 1961 and has now grown into one of the largest providers of staffing solutions in the UK. The company’s network of over 100 branches regularly places tens of thousands of people into work across all kinds of industry. For further information visit www.pertemps.co.uk

Interaction Recruitment PLC (Co No. 02408326) has reported the following figures:

  31 December 2017 31 December 2016
Revenue £73,558,081 £63,561,649
Pre-Tax Profits £2,707,029 £5,591,956
Net Assets £5,241,129 £3,044,538

Established in 1986, Interaction Recruitment is now one of the UK’s fastest growing privately owned independent recruitment businesses, operating through a growing network of 25 locations nationwide. For Further Information visit www.interactionrecruitment.co.uk.

VAT

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

Northampton-office-retail-property-investment-NN1-2AP
Northampton-office-retail-property-investment-NN1-2AP

Rental Value & Asset Management Opportunities

The retail rent was re-based in 2018 and devalues to £32.50 Zone A which is significantly below the market rental value.

Generally speaking top retail rents in the prime pitch for Abington Street at the intersection of Abington Street and Fish Street / Grosvenor Centre entrance are circa £90 – £115 Zone A down from an historic high of £130 Zone A.

Zone A’s decrease in both directions away from this point to circa £60.00 at the Market Square (West) end and £40.00-£50.00 at the Abington Square (East) end.

With regard to Abington Street, we are aware of the following recent transactions in the vicinity:

Address Tenant ITZA Date Comments
25 Abington Street Holland & Barrett £85.00 Mar 2017 Rent Review
36 Abington Street Ladbrokes £93.85 Dec 2017 Rent Review
24 Abington Street Nationwide £112.00 Q3 2017 Open Market Letting
27 Abington Street Metro Bank £115.00 Q3 2017 Open Market Letting
53 Abington Street Blue Inc £65.00 Q1 2017 Lease Regear
71-77 Abington Street EZ Trade £42.69 Q3 2018 Open Market Letting


The current office rents reflect:

1st floor  £11.63 per sq ft
2nd Floor £8.49 per sq ft

Over the last few years a significant number of office premises have been converted to residential within the town centre which has created a shortfall of good quality available office space. Due to this shortfall there is a strong demand for good quality office space.

Applying a conservative rental value of £12 per sq ft for the offices and £55 Zone A for the ground floor, we believe the property has an Estimated Rental Value of approximately £115,000 per annum.

Alternatively, an investor could seek to convert / extend the property to residential use in the future, subject to the necessary consents.

Proposal

We are instructed to seek offers in the region of £760,000 (Seven Hundred and Sixty Thousand Pounds), subject to contract, reflecting a net initial yield of 10.0% and an estimated reversionary yield of 14.4%, assuming standard purchaser’s costs of 5.42%.

Please note that a purchaser will be re-charged the costs of surveys and searches which are provided in the data room.

Please note a purchaser will be charged a transaction fee of £3,750 + VAT.

Northampton-office-retail-property-investment-NN1-2AP
Northampton-office-retail-property-investment-NN1-2AP

Investment Considerations

  1. An opportunity to acquire a freehold, multi-let mixed use investment;

  2. The property occupies a prominent position in the heart of Northampton town centre;

  3. The property provides secure income;

  4. The retail rent was re-based in 2018 below market rental value, providing an investor with an opportunity should the unit fall vacant;

  5. The property benefits from car parking to the rear;

  6. BrightHouse has been in occupation since the 1990’s and entered into a new lease for a term commencing in December 2018, demonstrating their desire to remain in occupation of this property;

  7. Opportunities for rental growth and asset management;

  8. A purchase at the asking price will provide an investor with an attractive net initial yield of 10% and a potential reversionary yield of 14.4%;

  9. Attractive lot size for investors.

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
Faye Langoulant faye@singervielle.co.uk +44 (0) 203 478 9122
Louanne Malan louanne@singervielle.co.uk +44 (0) 203 701 1386

Vendors Solicitor

Fieldfisher +44 (0) 207 861 4000
Razwana Ali Razwana.Ali@fieldfisher.com

Joint Agent

Simon Chown spc@chowncommercial.co.uk
Hannah Bunting hb@chowncommercial.co.uk
+44 (0) 1604 604 050

customer service