stop prime-high-yielding-city-centre-retail-investment-inverness - Singer Vielle Sales

Prime, High Yielding City Centre Retail Investment

41-45 High Street | Inverness | IV1 1HT

£1,755,000

subject to contract

SOLD

Summary

  • A prime, multi-let retail investment opportunity

  • Prime retailing pitch in the heart of Inverness city centre

  • Fully income producing

  • Over 80% of income secured against national retailers

  • New leases to Mountain Warehouse & Isle of Skye Candle Co

  • Asset management opportunities

  • £1,755,000, subject to contract

  • 11.6% Net Initial Yield

Location

Inverness is the commercial and administrative centre for the Highlands and is known as the ‘Highland Capital’. It is the base for numerous organisations and companies, Highland Council, Highlands and Islands Enterprise and Scottish Natural Heritage. Inverness was granted City status in 2000 and has been one of the fastest growing cities in Europe with a current population of approximately 65,000.

The city benefits from good road communications with the A9 offering direct links to Edinburgh some 249 km (155 miles) to the south and Glasgow some 273 km (170 miles) to the south-west. In addition, the city is connected to the national railway network with direct services to Edinburgh and Glasgow with a fastest journey time of 3 hours 30 minutes and 3 hours 15 minutes respectively. Inverness airport operates scheduled flights throughout the UK including London.

In 2015, Inverness topped the list of happiest places to live in Scotland, and was sixth in the whole of the UK in Rightmove’s “Happy at Home” index. It is also the hub of tourism in the Highlands and Islands, attracting thousands of national and international visitors every year.

Situation

The subject property occupies a prime retailing position on the pedestrianised section of the High Street. Surrounding occupiers include WH Smith, Boots, Lush, Burton, Dorothy Perkins, Specsavers, Superdrug, McDonalds and Caffe Nero.

The Eastgate Shopping Centre, which benefits from a footfall of over 8 million people per year, is immediately to the east. The centre comprises in excess of 32,516 sq m (350,000 sq ft) over 50 stores and 13 eateries, as well as two car parks offering 1,350 spaces of covered parking. Anchor tenants include Marks & Spencer, Boots, Debenhams, Next, H&M and Topshop. Other occupiers include White Stuff, Lakeland, Superdry, Argos, O2 and New Look.

Description

The subject property is comprised of three adjoining units which are each self-contained.

Unit 1, 41 High Street (EE) provides sales accommodation on ground floor with ancillary accommodation at first and second floor.

Unit 2, 41 High Street (Mountain Warehouse) provides sales accommodation on ground and first floor, with ancillary accommodation at second floor and attic.

45 High Street (Isle of Skye Candle) provides sales accommodation on ground floor with ancillary accommodation at basement, first and second floor.

Each unit has been fitted out by the tenants in their respective corporate styles.

The Landlord has recently carried out extensive works to the façade and windows of Unit 2, 41 High Street and 45 High Street.

Accommodation

The property has been measured by Square Foot Media and provides the following Net Internal floor areas;

Unit 1, 41 High Street (EE)
Zone A 51.19 sq m 551 sq ft
Zone B 54.70 sq m 589 sq ft
Zone C 34.51 sq m 371 sq ft
ITZA   938
Total Ground Floor 140.40 sq m 1,511 sq ft
     
First Floor Ancillary 67.08 sq m 722 sq ft
Second Floor Ancillary 79.24 sq m 853 sq ft
Attic Not Measured  
     
Sub-Total 286.72 sq m 3,086 sq ft

 

Unit 2, 41 High Street (Mountain Warehouse)
Zone A 72.13 sq m 776 sq ft
Zone B 74.62 sq m 803 sq ft
Zone C 33.48 sq m 360 sq ft
ITZA   1,268
Total Ground Floor 180.23 sq m 1,268 sq ft
     
First Floor Sales 94.67 sq m 1,019 sq ft
Second Floor Ancillary 87.05 sq m 937 sq ft
Attic 75.24 sq m 810 sq ft
     
Sub-Total 437.19 sq m 4,706 sq ft

 

45 High Street (Isle of Skye Candles)
Zone A 48.77 sq m 525 sq ft
Zone B 16.45 sq m 177 sq ft
ITZA   613
Total Ground Floor 65.22 sq m 702 sq ft
     
Basement 66.80 sq m 719 sq ft
First Floor Ancillary 59.46 sq m 640 sq ft
Second Floor Ancillary 61.95 sq m 667 sq ft
     
Sub-Total 253.43 sq m 2,728 sq ft
     
TOTAL 977.34 sq m 10,520 sq ft

The measured survey report is available for assignment to a purchaser and a set of floor plans is available to download.

Planning

We understand that Unit 1 & Unit 2, 41 High Street are Category B listed and the property lies within the Inverness Riverside Conservation Area.

Rateable Value

Accommodation Rateable Value
Mountain Warehouse
41 High Street
£81,000
EE Limited
43 High Street
£65,000
Isle of Skye Candles
45 High Street
£40,500

The Uniform Business Rate is 46.6 pence per pound for rateable values below £51,000, and 49.2 pence per pound for rateable values of more than £51,000.

Tenure

Heritable (Scottish equivalent of English freehold).

Tenancies

The property is let as follows:

Unit 1, 41 High Street is let to EE Limited on a Full Repairing and Insuring lease for a term of 35 years from 24th January 1983, expiring on 1st February 2018. The current passing rent is £125,250 per annum. Based on our analysis the rent equates to £127 Zone A.

Unit 2, 41 High Street is let to Mountain Warehouse Limited for a term of 10 years from 25th May 2017, expiring on 24th May 2027. There is a tenant’s break option on 25th May 2022, subject to six months’ prior written notice. The lease benefits from an upwards only rent review on the 5th anniversary of the term. The lease is subject to a Schedule of Condition.

The current passing rent is £50,000 per annum. Based on our analysis the rent equates to £31 Zone A. The tenant benefits from a 12 month rent free period expiring on 24th May 2018. In order that a purchaser does not suffer an income shortfall the vendor will top up the rent on completion by way of an adjustment to the purchase price.

The tenant has been in occupation since 2014 and was previously occupying the unit under a licence.

45 High Street is let to Isle of Skye Candle Company Limited on a Full Repairing and Insuring lease for a term of 10 years from 18th May 2017, expiring on 17th May 2027. There is a tenant’s break option on 18th May 2022, subject to six months’ prior written notice. The lease benefits from an upwards only rent review on the 5th anniversary of the term.

The current passing rent is £40,000 per annum. Based on our analysis the rent equates to £56 Zone A. The tenant benefits from a 6 month rent free period expiring on 17th November 2017. In order that a purchaser does not suffer an income shortfall the vendor will top up the rent on completion by way of an adjustment to the purchase price.

The tenant has been in occupation since 2014 and was previously occupying the unit under a licence.

Therefore, the total annual income receivable is £215,250 per annum.

Covenant

EE Limited (Co. No. 02382161), has reported the following figures;

  15 months 12 months
  31st March 2017 31st Dec 2015
Revenue £7,991 million £6,307 million
Pre-Tax Profit £651 million £631 million
Total Net Assets £2,948 million £2,840 million

EE, which was acquired by BT Group Plc in January 2016, is the largest and most advanced digital communications company in Britain, delivering mobile and fixed communication services. EE has approximately 553 retail stores, and services more than 31 million connections across its mobile, fixed and wholesale networks. For further information, please visit ee.co.uk.

Mountain Warehouse Limited (Co. No. 03417738) has reported the following figures:

  28th Feb 2016 28th Feb 2015
Turnover £141,403,000 £109,894,000
Pre-Tax Profit £16,246,000 £11,946,000
Net Assets £50,636,000 £35,469,000

Mountain Warehouse was established in 1997. The principle activity of the company is the retailer of clothing and equipment for outdoor pursuits. The company operates through two channels, namely retail outlets and the internet. During the last financial year turnover grew 28.7%. There were 232 stores at the end of the year (2015: 197). For further information, please visit www.mountainwarehouse.com.

Isle of Skye Candle Company Limited (Co. No. SC385579) has reported the following figures:

  30th Sep 2015 30th Sept 2014
Shareholders’ Funds £65,340 £62,141

Isle of Skye Candle Company was established in April 2006 and now has 5 stores in Edinburgh, Glasgow, Inverness, Skye and St Andrews. In 2012 the company won ‘Best New Scottish Company’ at the Scottish Variety Awards and in 2015 won a further award at Scottish EDGE, a competition aimed at identifying and supporting Scotland’s up-and-coming, innovative, high-growth potential entrepreneurial talent. For further information, please visit www.skyecandles.co.uk.

VAT

The property has not been registered for VAT. Therefore, VAT will not be payable by a purchaser.

Proposal

Our client is seeking offers in the region of £1,755,000 (One Million, Seven Hundred and Fifty Five Thousand Pounds), subject to contract, reflecting a net initial yield of 11.6%, after allowing for standard purchaser’s costs of 5.74%

Investment Considerations

  1. An opportunity to acquire a prime multi-let retail investment;

  2. The property occupies a prime retailing position within the pedestrianized section of the town centre;

  3. Fully income producing;

  4. Over 80% of the income is well secured against national retailers EE and Mountain Warehouse, with the remainder of the income secured against an established and expanding retailer;

  5. New lettings to Mountain Warehouse and Isle of Skye Candle Company;

  6. The investment provides short term asset management opportunities;

  7. 41 High Street is a Category B listed building, ensuring no vacant rates payable;

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

  9. The investment provides a purchaser with an attractive lot size.

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
Graham Waddell graham@singervielle.co.uk +44 (0) 203 701 1388
Faye Langoulant faye@singervielle.co.uk +44 (0) 203 478 9122
Louanne Malan louanne@singervielle.co.uk +44 (0) 203 701 1386

Vendors Solicitor

Eversheds LLP +44 (0) 207 919 4500
Margaret Coady MargaretCoady@eversheds-sutherland.com
Alisdair Jamieson AlisdairJamieson@eversheds-sutherland.com

 

 

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