stop well-secured-car-showroom-investment-liverpool - Singer Vielle Sales

Fiat Car Showroom Investment let to £63 Million Company

Stoneacre Fiat | Sefton Street | Liverpool | L8 5SN

£2,300,000

subject to contract

UNDER OFFER

Summary

  • Freehold car showroom investment opportunity

  • In excess of 11.25 years unexpired lease term

  • 5 yearly rent reviews to RPI

  • Secure income – Net Assets £63 million

  • £2,300,000, subject to contract

  • 6.0% net initial yield

Location

The Principal commercial centre of Merseyside, Liverpool is located 55 km (34 miles) west of Manchester at the end of the M62, and 31 km (19 miles) north of Chester. London is 331 km (206 miles) to the south. As the second largest city in North West England, and the sixth largest city in the UK, Liverpool has a population of 470,000 (2012).

Liverpool benefits from excellent road links to the rest of the UK and is situated at the Western end of the M62 which links with the M6. The M56 & M53 Motorways give access from the South, while the M58 and M57 Motorways provide access to and from the Northern part of the city.

Liverpool John Lennon Airport offers over 70 inbound UK and European routes with around 5 million passengers a year, a 25% increase in passenger numbers since 2014. The airport plans to service more destinations including long haul, with passenger numbers forecast to grow to 7.8 million by 2030.

Liverpool has been named the third best rated destination in the UK in the Travellers’ Choice awards for Destinations, announced by TripAdvisor.

Situation

The subject property occupies a prominent position fronting the A5036 (Sefton Street), approximately 1.6 km (1 mile) south of Liverpool City Centre. The A5036 is one of Liverpool's established “motor alleys” with other dealerships in the immediate vicinity including Jaguar Land Rover, Kia, Renault and Nissan. Other occupiers on the A5036 include Pure Gym, Costa and Subway.

The property is located immediately adjacent to the Brunswick station bus and train interchange to the south. The River Mersey lies approximately 100 metres to the west.

Description

The property comprises a modern purpose built car dealership constructed in 2004, of steel frame construction with metal cladding. The roof is metal sheeted and mono pitched slopping from the front to back.

The showroom is of full height with 6 meter glazing to the external walls. Internally the showroom has a 6 car display, with a high standard finish, in line with the Fiat corporate finish. The first floor comprises offices with balcony accommodation.

A workshop to the North of the site has an eaves height of 7.5 meters at the front and 6.5 meters at the rear. There are 6 ramps and an MOT bay, along with 6 folding up and over doors. There is a wet valet bay area next to the workshop with roller door shutters.

Accommodation

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

Showroom & Offices 293.84 sq m 3,163 sq ft
Stairwell 10.31 sq m 111 sq ft
Parts 46.26 sq m 498 sq ft
Workshop 265.23 sq m 2,855 sq ft
Valet 48.12 sq m 518 sq ft
     
First Floor Parts 58.16 sq m 626 sq ft
First Floor Offices 118.35 sq m 1,274 sq ft
Total 840.28 sq m 9,045 sq ft
     
Display Spaces 56  
Front Parking Spaces 32  
Side Parking Spaces 24  
Total 112  


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 0.37 hectares (0.92 acres), providing a low site density of 22%.

A Phase I Environmental Assessment was carried out by Delta Simons in May 2018 which concluded that “with regard to potential land contamination issues and associated environmental liabilities, in its current use, the Site represents an overall investment opportunity with a Low risk.   A copy of the report is available to download and is available for assignment to a purchaser.

Tenure

Freehold.

Tenancy

The property is entirely let to Decidebloom Limited (t/a Stoneacre) on an effectively full repairing and insuring lease for a term of 25 years from 29th September 2004, expiring 28th September 2029 (in excess of 11.25 years unexpired term). The current passing rent is £146,535 per annum (£16.20 per sq ft).

The lease benefits from 5 yearly rent reviews which provide for the rent to be agreed in line with the Retail Price Index (RPI) subject to a minimum rental increase of 9.06% and a maximum increase of 27.63%. This is equivalent to a collar of 1.75% and a cap of 5% per annum compound. The next rent review is on 29th September 2019.

Covenant

Decidebloom Limited (Co. No. 03003995) has reported the following figures;

  30th April 2017 30th April 2016
Turnover £721,242,983  £560,865,674
Pre-Tax Profits £7,886,810 £6,070,368
Net Assets £62,624,989 £56,619,187


Decidebloom Limited trades as Stoneacre Motor Group and operates from over 45 dealerships nationwide, representing over 20 of the world’s leading manufacturers and employing over 2,000 people. Stonecare is ranked 23 in the Motor Trader Top 200 by turnover. For further information see www.stoneacre.co.uk.

In 2016/17 the Aftersales division achieved 7.41% growth and the Group’s network of 11 Accident Repair Centres saw 11.5% growth. Parts turnover increased by 11.9% to over £40 million and the company now provides an overnight service to all sites which further enhances customer service across all the brands represented. Stoneacre won the Automotive Management Award 2017 for best training programme and Academy in the UK and was awarded the prestigious Ford Chairman’s Award 2017 for providing excellent customer service.

Market Commentary

Parties are invited to refer to the following recent investment transactions:

Date Property Tenant Price Yield Reviews UXLT
Jan-18 Harrogate Volkswagen Volkswagen Group (UK) Limited £5,750,000 5.55% OMRR 10
Jan-18 Milton Keynes Volvo Marshalls Motor Group £3,100,000 5.46% OMRR 9
Dec-17 Huddersfield Audi Volkswagen Group (UK) Limited £6,290,000 5.90% OMRR 8
Dec-17 The Benz Portfolio Pendragon PLC £20,560,000 5.70% Annual RPI
capped at 2.77%
14
Dec-17 Ayr Audi Volkswagen Group (UK) Limited £4,160,000 5.80% OMRR 10
Oct-17 Chichester Vauxhall Frosts (cars) Limited £2,555,000 5.75% 5 Yearly RPI
capped at 2.25%
9
Sep-17 Swindon Mercedes Sytner £8,800,000 5.65% OMRR 7
Jul-17 Stirling Audi Volkswagen Group (UK) Limited £3,440,000 6.01% OMRR 9
Mar 17 Huddersfield Volkswagen Volkswagen Group (UK) Limited £6,330,000 6.00% OMRR 8
Mar-17 Knutsford Bentley Sytner Group Limited £7,000,000 4.93% 5 yearly RPI
capped at 2.5%
11


As 2018 progresses we are going to see further evidence of evolution in the motoring world, increasingly fast-paced technological innovation and reshaping consumer sentiment, influenced by government policy, are combining to move the sector forward. This gradual paradigm shift brings with it an opportunity for Investors, alert to the potential value of new income streams. The gradual re-orientation of the motor retail sector means it is a good time to invest in the sector.

Amidst all this activity the car dealership remains central to the delivery of this evolving product package. This is because, far from being a threat, new technologies such as Electric Vehicles (EVs) are an opportunity for dealers. Just as the Motor Retail sector represents a chance for investors to diversify their income, the new technology and ownership structures offer a unique chance for dealers to innovate, diversify and incrementally increase revenue.

Personal mobility will remain of upmost importance to people, and the car will remain the principle way in which people move. Whether it be new cars, used cars, electric cars, car sharing, subscription services, ride hailing, or indeed autonomous driving vehicles, someone has to own them, service them, insure them, and replace them. Manufacturers will need a dealer network to supply their vehicles, premises are needed to service them, and property is needed to serve the used car market. Other retailing models will support this core market footprint.

New car sales have been easing, down 8.8% year to date, denoting a return to a more natural long-term equilibrium after a record high in Q1 2017. Though dealers remain optimistic about profitability for 2018, as market commentators expect the gradual re-alignment that began in April, with new car sales up 10.4% on April 2017, to continue for the remainder of the year.

Meanwhile, the nationwide nature of Motor Retail Investment offers Investors exposure to the burgeoning Alternatives sector, risk divergence and the benefit of enhanced dealer profitability from lower cost areas. A distinctive trend has been the recognition by investors of the worth of a strong dealer covenant supported by a top-rated brand.

At the start of 2018 the market is cautiously optimistic. Used cars are likely to grow in volume, diesels will continue their fade from popularity, and Electric Vehicles will arrive in greater numbers. All these factors offer asset enhancement opportunity for automotive real estate and will drive continued investment in the sector.

Thus, the Motor Retail Investment sector remains dynamic and offers Investors sustaining long term income and capital growth fundamentals.

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 in the region of £2,300,000 (Two Million, Three Hundred Thousand Pounds), subject to contract, reflecting a net initial yield of 6.0%, assuming purchaser’s costs of 6.04%.

Investment Considerations

  1. An opportunity to acquire a freehold car showroom investment;

  2. The investment provides secure income, being let to Decidebloom Ltd (Net Assets £62.6m).

  3. In excess of 11.25 years unexpired lease term;

  4. The property benefits from 5 yearly rent reviews to RPI;

  5. The property occupies a prominent pitch fronting the A5036, one of Liverpool's established “motor alleys”;

  6. The investment provides a purchaser with an attractive lot size;

  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
Ed Jeffs ed@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

Gowling WLG +44 (0) 121 393 0479
Helen Monro helen.monro@gowlingwlg.com

Joint Agent


Bill Bexson  bbexson@automotive-property.com
Eddie Highnam  ehighnam@automotive-property.com
+44 (0) 203 588 7200

customer service