stop leisure-investment-1975-yrs-to-nuffield-health-on-assignment-from-virgin-active-cwmbran - Singer Vielle Sales

19.75 Years Undoubted Income

Cwmbran Leisure Park | Avondale Road | Cwmbran | South Wales | NP44 1TX

£3,850,000

subject to contract

EXCHANGED

Summary

  • 19.75 years unexpired lease term, no breaks

  • Undoubted Income - let to Nuffield Health, with AGA from Virgin Active

  • Nuffield Health is the UK’s largest health charity – Net Assets £102m

  • Virgin Active – Shareholders’ Funds of £517 million

  • Modern purpose built health & fitness club

  • 6.4% Net Initial Yield

Location

Cwmbran is the first and only designated new town in South Wales, located approximately 225 km (140 miles) west of London, 48 km (30 miles) north-west of Bristol, 29 km (18 miles) north-east of Cardiff and 9 km (6 miles) north of Newport.

The town benefits from good road communications being situated 8 km (5 miles) north of Junctions 25a and 26 of the M4 Motorway. The town is connected to the national railway network with a fastest journey time of 2 hours 13 minutes to London Paddington, 40 minutes to Bristol and 10 minutes to Newport. Cardiff International Airport is located approximately 48 km (30 miles) to the south-west.

Since its designation as a new town, Cwmbran has grown and developed and is now a thriving location with nearly 50,000 inhabitants. Industry and employment has prospered in the town with Cwmbran having a solid manufacturing base, with particular strengths in engineering, together with automotive and electronic component manufacture. Llantarnam Park, to the south of the town centre is one of the region’s most prestigious industrial locations, home to a number of prominent companies such as Loseley, Hempel, and Spear Europe.

Situation

The property is accessed via Blaen Bran Close and is located immediately off Avondale Road. Cwmbran town centre is less than 1.6 km (1 mile) to the south and Cwmbran Rail Station is 0.8 km (0.5 miles) to the south. The A4042 which links directly with the M4 Motorway is approximately 1.6 km (1 mile) to the east.

The property is situated in a mixed use area comprising residential and commercial use. Surrounding occupiers include Ford, ATS Euromaster and Cwmbran Rugby Club. The property benefits from being in an established residential neighbourhood, resulting in a strong catchment population for the health club.

Description

The subject property comprises a high quality purpose built detached health and fitness club constructed in 2000, arranged over ground, first and second floors. The property is of steel portal frame construction with brick facing and profile clad finishes under a curved profile roof.

The property benefits from a full range of facilities including:

• Large open plan gym area
• Fitness studio
• 25 metre heated indoor swimming pool
• Hydrotherapy spa, steam room and sauna
• Spa treatment rooms
• Plunge pool
• Changing rooms
• Creche
• Members bar and restaurant

Tenant’s works were carried out to the club in June 2012 including an upgrade of the shower rooms.

We understand the property is the only nationally operated premium health and fitness club within Cwmbran.

Accommodation

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

Ground Floor 1,452.40 sq m 15,634 sq ft
First Floor 1,009.08 sq m 10,862 sq ft
Second Floor (Plant) 144.27 sq m 1.553 sq ft
Total 2,632.97 sq m 28,342 sq ft

The property benefits from 151 surface car parking spaces.

A set of floor plans is available to download and the measured survey report can be re-addressed to a purchaser.

Site

We estimate the site area to be approximately 0.71 hectares (1.76 acres).

An Environmental Desk Study was carried out by WSP in May 2015. The report concluded that the site presents a low/medium risk for continued use for commercial purposes. A copy of this report is available to download.

Tenure

Freehold.

Tenancy

The property is let to Nuffield Health on a Full Repairing and Insuring lease for a term expiring on 19th December 2036. Therefore, there are 19.75 years unexpired lease term with no breaks.

The lease has been assigned by Virgin Active Limited (tenant), Virgin Active Holdings Limited and Virgin Active Group Limited (guarantor). The Licence to Assign is subject to an Authorised Guarantee Agreement.

The current passing rent is £263,912 per annum (£100.23 per sq m / £9.31 per sq ft). The lease benefits from 5 yearly upwards only rent reviews. The 25th December 2016 rent review is currently outstanding.

The property was originally let to Esporta Health & Fitness for a term of 25 years from 24th June 2000, expiring 23rd June 2025. Following Virgin Active’s acquisition of Esporta, the lease was assigned to Virgin Active Limited in December 2011, with surety from Virgin Active Holdings Limited and Virgin Active Group Limited, and a reversionary lease entered into from 24th June 2025, expiring 19th December 2036.

In June 2016 Virgin Active agreed to sell 35 UK clubs to Nuffield Health. As a result, on 13th July 2016 the lease was assigned to Nuffield Health.

A very minor area to the rear of the site is let by way of a co-terminus supplementary lease, dated 31st July 2012, at a peppercorn. Please refer to the supplementary lease which is available to download from the online data room.

Rental Value

The current passing rent of £263,912 per annum reflects a rate of £100.23 per sq m (£9.31 per sq ft) overall. From our enquiries it would appear that this rent compares favourably to other health and fitness clubs across the United Kingdom:

Address Sq M Sq Ft Passing Rent
Nuffield Health, Finnieston Street
Glasgow
3,744 40,305 £143.46 per sq m / £13.33 per sq ft
Nuffield Health, Ware Road,
Hertford
2,322 25,000 £139.96 per sq m / £13.00 per sq ft
Nuffield Health, Stevenage Road
Fulham
2,142 23,056 £210.00 per sq m / £19.51 per sq ft
Nuffield Health, Peaches Close,
Cheam
2,031 21,863 £162.98 per sq m / £15.14 per sq ft
Nuffield Health, Braidholm Road,
Giffnock, Scotland
3,498 37,652 £134.12 per sq m / £12.46 per sq ft
Nuffield Heath, The Pentagon,
Derby
4,294 46,221 £119.31 per sq m / £11.08 per sq ft
Nuffield Health, Stafford Road,
Wolverhampton
3,036 32,675 £112.53 per sq m / £10.45 per sq ft
Virgin Active, Minverva Way,
Glasgow
4,325 46,553 £174.37 per sq m / £16.20 per sq ft

Covenant

Assignee – Nuffield Health (Co. No. 00576970) is the largest health charity in the United Kingdom with:

• 14,000 employees
• 31 Hospitals, comprising 1,300 hospital beds
• Over 110 Fitness and Wellbeing Gyms
• 5 Medical Centres
• 212 Corporate Fitness and Wellbeing Gyms
• 6 Hospital Sterile Services Units
• 1 Diagnostic Suite

Nuffield Health has a D&B Rating of 5A1 and has reported the following figures:

  31st December 2015 31st December 2014
Turnover £767,500,000 £711,000,000
Net Assets £101,900,000 £80,200,000


2015 saw Nuffield Health deliver its highest ever EBITDA of £86 million, with hospitals seeing an increase of 4% and fitness and wellbeing seeing a 52% increase.

Nuffield Health is a not-for-profit organisation, reinvesting all profit in their gyms, medical centres, hospitals and staff. Their charitable purpose is to advance, promote and maintain health and healthcare of all descriptions and to prevent, relieve and cure sickness and ill health of any kind, all for the public. For further information visit www.nuffieldhealth.com.


Tenant – Virgin Active Limited (Co. No. 03448441) has reported the following figures:

  31st December 2015 31st December 2014
Turnover £310,590,000 £322,548,000
Pre-Tax Profits (Loss) (£41,800,000) (£8,271,000)
Total Assets £599,527,000 £1,415,211,000


Tenant’s Guarantor – Virgin Active Holdings Limited (Co. No. 03613370) has reported the following figures:

  31st December 2015 31st December 2014
Pre-Tax Profits (Loss) (£12,635,000) (£62,941,000)
Total Assets £525,044,000 £1,498,738,000
Shareholders’ Funds £87,812,000 £100,447,000


Tenant’s Guarantor – Virgin Active Group Limited (Co. No. 2664542) has reported the following figures:

  31st December 2015 31st December 2014
Pre-Tax Profits £42,486,000 £31,791,000
Total Assets £765,551,000 £690,739,000
Shareholders’ Funds £517,412,000 £474,926,000


Virgin Active is the leading international global health club operator. The first club opened in 1999 and there are now 267 clubs spanning nine countries and four continents with 1.3 million adult members. It is the number one health club operator by revenue in the UK and Italy.

In April 2015 South African investment firm Brait SE acquired an 80% stake in Virgin Active in a transaction that put an enterprise value on the business of circa £1.3 billion. Virgin Group has retained a 20% holding in the chain whilst private equity firm CVC Capital, which jointly owned the health club with Virgin Group, sold its stake entirely. Brait SE, which is part-owned by South African billionaire Christo Wiese, is listed in Johannesburg and on the MTF market in Luxembourg. It also has an approximate 20% stake in the UK’s Iceland Foods and an 86% holding in leading South African food group, Premier.

Virgin Active has a consistently strong track record of delivering profitable growth. Over the ten years between 2004 and 2014 (which included the acquisitions of Esporta clubs in the UK and Spain and Holmes Place clubs in the UK), Virgin Active grew its revenue at a compound annual growth rate of 22 per cent and its underlying EBITDA at a compound annual growth rate of 20 per cent on a constant currency basis. For further information visit www.virginactive.com.

In June 2016 Virgin Active agreed to sell 35 UK clubs to Nuffield Health, creating a more focused estate of clubs around London and other major towns and cities.

Virgin Active is part of The Virgin Group, a leading international investment group and one of the world's most recognised and respected brands. Conceived in 1970 by Sir Richard Branson, the Virgin Group has gone on to grow successful businesses in sectors ranging from mobile telephony, travel, financial services, leisure, music, holidays and health & wellness. Virgin employs more than 71,000 people around the world, operating in 35 countries. For further information visit www.virgin.com.



The Health & Fitness Sector

The UK health and fitness industry has more clubs, more members and a greater market value than ever before:

• There are now 6,435 fitness facilities in the UK, up from 6,312 last year

• Total industry membership is up 5.3% to 9.2 million

• Total market value is estimated at £4.4 billion, up 3.2% on 2015

• The UK penetration rate is 14.3%, compared to 13.7% in the previous year

• 224 new public and private fitness facilities opened in the last 12 months, up from 191 in 2015

(Source: The Leisure Database Company, May 2016)

Value Added Tax

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

Proposal

Our client is seeking offers in the region of £3,850,000 (Three Million, Eight Hundred and Fifty Thousand Pounds), subject to contract, reflecting a net initial yield of 6.4%, assuming purchasers’ costs of 6.53%.

Investment Considerations

  1. An opportunity to acquire a freehold health and fitness club investment;

  2. Long unexpired lease term of 19.75 years with no breaks;

  3. Undoubted income – let to Nuffield Health, the largest health charity in the UK, with an AGA from Virgin Active, the number one health club operator by revenue in the UK;

  4. Low base rent of £263,912 per annum (£9.31 per sq ft);

  5. Modern purpose built health & fitness club on a 1.76 acre site with 151 car parking spaces;

  6. The only nationally operated premium health & fitness club in Cwmbran;

  7. 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

Candey  +44 (0) 20 3463 3001
Richard Morris rmorris@candey.com  
customer service