stop starbucks-oxford - Singer Vielle Sales

Starbucks, Oxford

71 London Road | Headington | Oxford | OX3 9AA

£650,000

subject to contract

EXCHANGED

Summary

  • Situated in world famous University City

  • Attractive Starbucks investment

  • Secure income

  • Active Management Add Value Opportunity

  • The property benefits from valuable A3 use

  • £650,000 subject to contract

  • 5.12% net initial yield

  • 6.58% estimated reversionary yield

Location

Oxford is an internationally renowned University City in the South East of England and the administrative centre for Oxfordshire. It is approximately 95 km (59 miles) north-west of London, 120 km (75 miles) north of Birmingham and 43 km (27 miles) north of Reading.

The city benefits from good road communications, being served by the A40 dual carriageway which provides direct access to Junction 8 of the M40 Motorway some 16 km (10 miles) to the east. In addition, the A34 dual carriageway connects the city with Junction 13 of the M4 Motorway to the south.

The city is connected to the national railway network and provides regular services to London Paddington and London Marylebone with a fastest journey time of approximately 55 minutes. There are also regular services to Birmingham New Street. London Heathrow Airport is approximately 76 km (47 miles) to the south-east and Birmingham Airport is approximately 103 km (64 miles) to the north, making Oxford easily accessible from all over the world.

Oxford is one of the top visitor destinations in the UK and famous the world over for its University and place in history. For over 800 years, it has been home to royalty and scholars and nowadays the city is a bustling cosmopolitan town. There are over 23,000 students at Oxford University, which was ranked first in the world in the Times Higher Education (THE) World University Rankings 2016-2017. The University is the largest employer in Oxfordshire, supporting around 17,000 jobs and injecting more than £750 million into the regional economy (Source: www.ox.ac.uk).

Situation

Headington is a suburb of Oxford, approximately 3.2 km (2 miles) east of the city centre.
The subject property occupies a highly prominent position on London Road (A420) which is the principal retailing pitch for Headington and one of the main arterial roads into the city. Other nearby occupiers on London Road include Boots, Sainsbury’s Local, Holland & Barrett, Iceland, Greggs, WHSmith, Caffe Nero, Tesco Express and Waitrose.

Headington is also home to the main campus of Oxford Brookes University which is a mere 0.8 km (0.5 miles) from the subject property. In addition, the John Radcliffe Hospital is 0.8 km (0.5 miles) to the north. Headington’s most famous modern landmark, The Headington Shark, is located directly opposite the subject property on New High Street.

In addition to being surrounded by a number of retail, leisure and commercial uses, the property also benefits from being in a densely populated residential area and is popular with students with a number of student accommodation developments in close proximity.

Description

The subject property comprises a ground floor unit which has been fitted out to a high standard in the tenant’s corporate style.

The ground floor of 71A London Road, which has its own separate entrance, and the first floor have both been sold off on long leases.

Accommodation

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

Zone A 35.12 sq m 378 sq ft
Zone B 34.47 sq m 371 sq ft
Zone C 40.23 sq m 433 sq ft
Remainder 76.55 sq m 824 sq ft
ITZA   774.75
Total 186.36 2,006 sq ft

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

Planning

The property benefits from A3 planning consent.

Tenure

Freehold.

Tenancy

The ground floor unit at 71 London Road is let to a Starbucks franchisee, Queensway Coffee Houses Limited, guaranteed by Queensway F&B Holdings Limited, on a full repairing and insuring lease for a term of 10 years from 3rd September 2007, expiring on 2nd September 2017. The lease is inside the Landlord and Tenant Act 1954. No formal notice has been served by the tenant, but they have informally expressed an interest in renewing their lease.

The current passing rent is £35,000 per annum (£45 Zone A).

The unit was originally let to Starbucks Coffee Company (UK) Limited who assigned their lease to Queensway Coffee Houses Limited in March 2015.

The ground floor of 71A London Road has been let on a 999 year lease from 25th December 1990 at a peppercorn rent and the first floor of 71 London Road has been let on a 999 year lease from 25th December 1990 at a peppercorn rent.

Market Commentary

The current passing rent of £35,000 per annum equates to £45 Zone A. There is a distinct shortage of available retail units on London Road and the property benefits from valuable A3 use which is a rarity in Headington. Therefore, we believe the subject property offers excellent prospects for future rental growth.

We are aware of the following evidence:

  • 3 Osler Court - in very close proximity to the subject property, comprising an A3 retail unit totalling 510 sq ft on ground floor plus 448 sq ft of sales/storage accommodation on basement. Let to Jacobs and Field Inc. Limited (t/a Jacobs Chop House) for a term of 15 years from 27th November 2013 at a rent of £30,000 per annum equating to £60.00 Zone A. There were no inducements.

  • 15 Old High Street - two A3 retail units adjacent to Waitrose, let on a new 15 year lease from 31st July 2015 at a commencing rent of £68,500 per annum, subject to a reduced rent of £38,500 per annum for the first 6 months of the lease. The rent for the High Street facing unit has been analysed at £61.79 Zone A whilst the rear unit has been analysed at £56.76 Zone A.

  • 93 London Road - an A1 retail unit with an ITZA of 500 sq ft, let to Helen & Douglas House for a term of 10 years from 5th October 2016, subject to a tenant break option at year 5 and a three month rent free period. The passing rent is £27,500 per annum equating to £55.00 Zone A.

  • 102 London Road - a ground floor A1 retail unit totalling 73.96 sq m (796 sq ft), let to Card Factory for a term of 10 years from May 2016, subject to a tenant’s break option at year 5 and a four month rent free period. The passing rent is £24,000 per annum equating to £45.00 Zone A.

  • 112 London Road - a ground floor A1 retail unit totalling 1,875 sq ft plus 500 sq ft of ancillary staff/storage accommodation. Let to Savers Health & Beauty Limited on a 10 year lease from August 2016, subject to a tenant break option at year 5, and a six month rent free period. The commencing rent was £45,000 per annum equating to £49.00 Zone A.

  • 108 London Road - let to the Air Ambulance Trust for a term of 10 years from April 2017, subject to a tenant break option at year 5 and a four month rent free period, at a rent of £25,000 per annum equating to £41 Zone A.

  • 73-75 London Road - adjoining the subject property, comprising a double fronted retail unit totalling 175.8 sq m (1,893 sq ft). We are advised that the unit is currently under offer at a rent in the region of £55,000 per annum.

  • 67 London Road – an A1 unit let to Oxford Framing, the 29th September 2014 rent review was agreed at £29,500 per annum reflecting £50.00 Zone A.

  • 5 Osler Road – an A1 unit let to Gardiners Opticians, the rent at the 1st February 2014 rent review increased from £18,000 per annum to £24,000 per annum reflecting £50.00 Zone A.

Taking the above evidence into account, it is our opinion that the property has an estimated rental value in the order of £45,000 per annum, equating to £58 Zone A.

Covenant

The tenant, Queensway Coffee Houses Limited (Co. No. 08845611), is a Starbucks franchise partner. For the year ending 20th March 2016 the company reported Cash at bank and in hand of £310,357 and Shareholders’ Funds of £3,350,722.

The guarantor, Queensway F&B Holdings Limited (Co. No. 08845243), has reported the following figures;

  20th March 2016 22nd March 2015
Turnover £25,082,420 £17,295,002
Pre-Tax Profits £443,638 £409,915
Shareholders’ Funds £4,625,126 £5,220,468

Established in 1973, Queensway Group is a family-owned business operating a broad portfolio operating across the hotels, restaurants & coffee houses and property development & letting sectors. According to their website Queensway became one of the first UK franchisees of the Starbucks brand in 2015 and operates a portfolio of 19 KFC restaurants and 13 Starbucks coffee houses across the UK. The Group continues to expand and in May 2016 opened a brand new Starbucks store in First Street, Manchester and by the end of 2017 they will have a further two Starbucks Drive Thru’s in Kidderminster and Gloucester as well as a ‘Drive To’ store in Chester. For further information see www.queensway.com.

Starbucks is the world’s largest coffee company. The first Starbucks opened in 1971 and in 1998 Starbucks successfully entered the European Market through its acquisition of 65 Seattle Coffee Company stores in the UK. Today the company has more than 15,000 stores in 50 countries.

According to Starbuck’s website, the company is not recruiting any further franchisees.

For more details go to www.starbucks.co.uk.

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

We are instructed to seek offers of £650,000 (Six Hundred and Fifty Thousand Pounds), subject to contract, reflecting a net initial yield of 5.12% and an estimated reversionary yield of 6.6%, assuming purchaser’s costs of 5.18%.

Investment Considerations

  1. An opportunity to acquire an attractive Starbucks investment;

  2. The property is situated in a world famous University City and major tourist destination;

  3. The property benefits from valuable A3 planning consent;

  4. The property provides asset management opportunities;

  5. If the premises had to be re-let in the open market we suggest that there would be strong interest from various retailers including A3 operators;

  6. Attractive lot size to an investor;

  7. A purchase at the asking price will provide an investor with an attractive net initial yield with potential to significantly improve.

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

Debenhams Ottaway
Ruth Boulton rlb@debenhamsottaway.co.uk +44 (0) 192 328 9917
Kat McDonagh khm@debenhamsottaway.co.uk +44 (0) 192 328 9916
customer service