South East Retail Investment - Waterstones - 7.0% NIY
Waterstones, 37 London Road | East Grinstead | RH19 1AW
subject to contract
South East retail investment opportunity
Affluent Sussex market town
Let to expanding retailer Waterstones
September 2017 lease renewal
Attractive lot size - £540,000, subject to contract
7.0% net initial yield
To be sold by clicktopurchase Best Offers by 3.00pm Thursday 1st February 2018, unless sold prior
East Grinstead is an affluent and attractive market town in West Sussex located approximately 43 km (27 miles) south of London, 34 km (21 miles) north-east of Brighton and 61 km (38 miles) north east of Chichester.
The town is well connected with strong transportation links being situated on the A22 which provides direct access to London and Brighton to the north and south respectively. The M23 Motorway is accessed via Junction 10 which is approximately 15.5 km (10 miles) to the west which provides direct access to the M25 Motorway at Junction 7.
There is a direct rail service between East Grinstead and London Victoria with an average journey time of less than 1 hour and numerous daily bus services connect the town to the surrounding areas including Brighton, Crawley and Horsham. London Gatwick Airport is located approximately 8 km (13 miles) to the west.
The property is situated in a prime retailing pitch on London Road, East Grinstead’s main retail thoroughfare. London Road is the centre of activity for the town and national retailers trading alongside the tenant include EE, The Carphone Warehouse, Shoe Zone, M&Co as well as The Edinburgh Woollen Mill, Costa Coffee, Boots, O2, Clarks and Poundland.
The town is set to benefit from the redevelopment of Queens Walk. Sitting alongside London Road works are underway to redevelop the site into a mixed-use scheme to provide approximately 130 new homes plus commercial accommodation and associated public realm. As part of the scheme Martells Department Store relocated from Queens Walk to new premises on Whitehall Parade and the new store opened in May 2017.
The property comprises a retail unit arranged on ground floor only. Internally, the retail floor area is predominately open plan with ancillary areas and has been fitted out by the tenant to their usual corporate style.
The upper parts are being converted into residential flats which will enhance the quality of the overall property. Copies of the plans are available to download for information.
We have been advised the property provides the following accommodation;
|Sq M||Sq Ft|
|Ground Floor GIA||225.94||2,432|
A term of 999 years less 3 days from 21st March 2017 at a peppercorn.
The property is let to Waterstones Booksellers Limited on a Full Repairing and Insuring lease for a term of 10 years from 26th September 2017 expiring on 25th September 2027 at a passing rent of £40,000 per annum which equates to £48.19 Zone A.
The tenant benefits from a 6 month rent free period until 26th March 2018; an adjustment will be made to the purchase price on completion in order that a purchaser does not incur an income shortfall.
In addition, the tenant may terminate the lease on 26th September 2022 by serving no less than 6 month’s written notice and the lease benefits from a rent review at the same juncture if the option to break is not exercised.
The tenant has been in occupation since at least 2012 and entered into a new lease as above demonstrating its desire to remain in this property and this location. The rent under the previous lease was £58,000 per annum.
A service charge is in place for repair, maintenance and insuring the common parts which is fully recoverable from the tenant.
Waterstones Booksellers Limited (Co. No 00610095) has reported the following figures;
|30th April 2016||25th April 2015|
|Pre-Tax Profit||£ 10,873,000||(£ 1,890,000)|
|Total Equity||(£ 15,602,000)||(£ 34,547,000)|
Waterstones is a chain of high street bookshops owned by businessman Alexander Mamut who acquired the company for a reported £53m in 2011 from HMV. James Daunt was appointed as managing director and under his leadership the company’s performance has significantly improved, in part by granting each branch the autonomy to order its own books. It has been reported in the press that the company could be worth £250 million today.
It was reported on 27th November 2017 that Waterstones is to open five new bookshops before Christmas and plans further expansion in 2018, click here to see the article and for more information visit www.waterstones.com.
VAT will be payable on the purchase price due to the sale not being treated as a Transfer of a Going Concern (TOGC).
We are instructed to seek offers in the region of £540,000 (Five hundred and forty thousand pounds), subject to contract, reflecting a net initial yield of 7.0%, assuming purchaser’s costs of 4.88%.
An opportunity to acquire a prime South East town centre retail investment;
The property is let to national retailer, Waterstones Booksellers Limited, who have demonstrated their desire to remain in this property and in this location by entering into a new lease from September 2017
The property occupies a prime retailing pitch on London Road – the focal point for activity in the town;
New 10 year lease with 5 years term certain;
The rent has been re-based from £58,000 per annum to £40,000 per annum;
Attractive lot size for an investor;
A purchase at the asking price reflects an attractive net initial yield.
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