loveleisure ISSUE 14
IN THIS ISSUE:
Gardening: Focus on Britain’s TOP leisure pastime
Specialities:
Water, water, everywhere: Lakes, boats and canals
Hotels
Pubs and Clubs
Pubs and dining: increasing market sophistication Leisure
Capital Allowances: Are you claiming all you can?
Restaurants
Marinas
loveleisure 2015
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Welcome to loveleisure
We are all aware of the improving economy in 2015, but the leisure sector has really bounced back with significant increases in the numbers of people enjoying a greater choice in an expanding restaurant sector and hotels showing very healthy upturns in occupancy and room rates across the UK. There are still big challenges facing leisure operators: Rising property costs, retaining customer loyalty in the face of brand proliferation, generating new concepts and ideas are all hurdles to be cleared. We are well placed to help you mitigate your exposure to some of these potential problems. We have a nationwide presence and a team of professionals with a range of skills and talents to offer on helping you to maximise your returns from your property and business. The case studies in this edition offer an insight into the breadth of knowledge our team is able to exploit to help you profit from your property.
The leisure sector has really bounced back
James Bailey Leisure Partner, Bruton Knowles
What we do best
Leisure Property
Valuations Provided for all types of leisure property for accounting purposes or raising finance to facilitate a purchase or expansion/redevelopment.
Restaurants
Agency We acquire, sell and let leisure property for private and corporate clients.
Caravan / Lodge Parks / Golf Courses Driving Ranges / Garden Centres
Professional We carry out rent reviews and lease renewals, rating assessment and appeals, dilapidations claims, dispute resolution and management agreement negotiation. Consultancy We undertake initial feasibility studies for acquisition and development. Planning Initial appraisals and negotiations with local planning authorities as well as subsequent planning applications and appeals.
Public Houses (Tenanted and Managed)
Hotels
Marinas & Waterways The above list is only a sample and, most importantly, we are always happy to talk to people about their leisure property aspirations on an informal basis. Our team is approachable and would be delighted to discuss any requirements or ideas you may have. Please feel free to call.
0845 200 9246
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Washingborough Hall, Lincoln
When Ed and Lucy Herring bought the Washingborough Hall Hotel in the autumn of 2008 they had visions of being able to take some time to work out how the place operated, where the core clientele came from and which demographic sector most patronised the hotel....
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then Lehmann Brothers collapsed; financial dominoes tumbled, guests stopped using hotels, diners stopped spending their money, the banks tightened credit and the world took a collective intake of breath.
Washingborough Hall – Washy Hall as Ed calls it – is the closest country house hotel to the centre of Lincoln and The Herrings changed careers to become hoteliers, although they had practised with some aplomb at The Red Lion at Redbourne in the north of the county. They hoped that this experience together with Lucy’s training at Tante Marie Culinary Academy would give them a seamless transition into hotel life. Whilst economic conditions have made the road much more bumpy than anticipated, Ed & Lucy have remodelled and repositioned Washy Hall into a lovely haven reminiscent of a more genteel time yet thoroughly modern where it matters. I first met them in early summer of 2008 when they viewed the hotel prior to making an offer; it’s fair to say that the elegance was rather faded and the general impression of the hotel was that it was careworn, the furniture, decoration and ambience all requiring some TLC, yet it remained a favourite with a number of Lincoln’s visitors and a group of loyal diners. Skip seven years to today and the entire place has been transformed, although not everything has changed. Head Chef Dan Wallis is one of the fixtures (although he doesn’t look old enough) and told me that Ed & Lucy taking over was like a very bright light being switched on; between them they have introduced a level of fun and flamboyance to the business whilst retaining a very English style, and the restaurant boasts 2 AA Rosettes.
The loyal patrons are delighted with the changes and new guests arrive in increasing numbers. Whilst the economy has taken a long time to improve, Lincoln has also experienced a number of positive drivers for business including the growth of its University, introduction of direct rail services to London and a very important local initiative, Lincoln BIG, which has focused business generation on local organisations. Washingborough Hall was originally a small country house built in the early 18th century and has been a hotel for many years. Previous owners had built a rather smart modern house at the back which connects with the hotel, and the whole property is set within partly-walled grounds of just over 3 acres. The front has a south-westerly aspect so the large lawns are well used in the spring and summer months. The principal driver that the Herrings have applied is to improve the quality of space and service offered at Washingborough Hall, an investment in money and time but mostly service that is now generating real rewards and has revitalised a lovely property; the next stage could see the addition of an Orangery on the south elevation. The next seven years should be interesting.
Refurbishment of the bedrooms has all but been completed and they are all individually designed and finished; a fairly moribund dining room has become a stylish bar and the reception area is home to a huge and magnificent etched map of Lincolnshire.
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DEALS
The Moss Cottage Ripley Moss Cottage has been a landmark on the A610 for many years, with an imposing frontage overlooking the road. Owners 20 years ago added a bedroom extension which included 12 en-suite bedrooms behind a function room and the resulting increase in business made it a target for PubCos. It reverted to private hands in 2007 and varied management meant that it suffered in the face of newer competition.
Bruton Knowles were requested to market the property on behalf of charge-holders in 2014 and we received strong enquiries from local operators and property investors from an asking price of £350,000. Whilst various operators identified further potential a local property investor made the strongest offer for the Moss Cottage and now intends to consider his options prior to possibly dividing the asset into distinct parts. The good news is that the Moss Cottage will probably re-open in the near future.
The Moot House Bingham In 2011 Bruton Knowles was requested by Greene King to obtain planning consent for a small-scale residential scheme on a part of the site of the above pub. Consent duly obtained, the Moot Hose continued to serve its neighbourhood. It is located in a modern residential area about a mile west of the town centre, and Bingham is a satellite of Nottingham, with excellent transport links to the city.
However, Bingham is a small town and with increased competition opening in the town centre the Moot House became uneconomic to keep operational so we were asked to market the property on an unconditional basis. It was therefore unsurprising that the availability of the Moot House generated substantial interest from various potential occupiers including retailers, day nurseries, a vets’ practice and developers. This interest resulted in a range of offers. An added complication arose in the shape of a restrictive covenant, although we were
Crown Inn Gloucestershire Having been closed for a decade the Crown Inn was marketed by Bruton Knowles from January 2014. Fronting on to the A46 between Stroud and Nailsworth, the property was untouched since the last pint was poured around the turn of the century, although it had suffered from neglect over the period.
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There was an initial flurry of pub/restaurant interest, but the cost of refurbishment rendered the property unviable for renewed leisure use, and interest was predominantly received from residential developers looking to convert the pub and add new build properties on the garden and car park. The property had a lapsed 2007 planning consent for demolition and redevelopment with six flats. It was sold on an unconditional basis in August 2014 for £320,000 to a local builder/developer.
able to successfully negotiate release of this on our client’s behalf prior to exchange of contracts with the eventual purchaser. The final deal was satisfactory for all parties and demonstrates our ability to offer comprehensive advice across many property disciplines in order to extract best value for our clients.
DEALS
5 Broad Street, Nottingham Private clients new to Bruton Knowles had sought advice on the above property from agents in Nottingham and decided that they wanted some left-field thinking – over an initial coffee Sam Spencer discussed the wider potential for the opportunity with our client who instructed us there and then. Broad Street is in Hockley, recently described by The Times as ‘...one of the coolest places to live in England...’, and is the spiritual heart of Nottingham’s Cultural Quarter. We suggested to our client that getting under the skin of a wider audience may well garner better reaction than merely restricting efforts to A3 and A4 users. Whilst Broad Street is amongst the most pleasant leisure environments in Nottingham, it is considered ‘off-pitch’ by many multiple dining operators. Broad Street is home to some eclectic eateries, the Broadway Cinema, Brewdog and others and has an appealing, bohemian feel. Sam Spencer became rather animated, then, when Stephen Godfroy from Rough Trade asked to see the property. A serious music fan from an early age (another story) Sam immediately recognised the importance of their enquiry, having been a regular if recently infrequent customer of their shops in London. Rough Trade epitomise the essence of Indie Music retailing and promotion and to help persuade them into Nottingham has been deeply satisfying. Recent extensive positive comments on Twitter justify their decision to open here. 5 Broad Street was latterly used as a fitness gym and presented a somewhat run-down and unloved facade to the street. Our client had acquired the freehold and obtained planning consent for A3 use across the two main floors, subject to a substantial internal re-design, in the hope of attracting one of the emerging licensed or restaurant operators to take a new lease. However Rough Trade retail music in a format that is a hybrid of selling and entertainment, being celebrated for their often impromptu ‘in-store’ appearances from artists, and includes a cafe; the rationale is to keep customers in the store. The property has ideal space to install a small stage area, a cafe and plenty of floor space for music sales.
Sam comments: ‘For me, whilst not the biggest deal I’ve done, this is certainly the coolest. The music outlet will perfectly compliment the current profile of Broad Street and the idea that we now have the ‘label’ that signed The Smiths here in Nottingham is hugely exciting, especially given the other locations that Rough Trade were considering included bigger cities. It’s a big chapter in Nottingham’s modest but worthwhile music history which includes Ten Years After, Chic being formed at the Bentinck Hotel (true apparently) and latterly the global emergence of Jake Bugg and Indiana‘.
Whilst not the biggest deal I’ve ever done, this is certainly the coolest... Sam Spencer
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Chelsea Flower Show It is one of the most popular annual shows in the country, famous around the world and we were very lucky to attend the Chelsea Flower Show on the Tuesday RHS Members Day with Paul and Cadien Taylor of Reg Taylor’s Garden Centre.
We shared a bottle of bubbly on the train from Newark and had already decided to ‘do’ King’s Road. The first impression emerging from Sloane Square tube was the sheer amount of botanical decoration on the buildings around the square, the ‘Flower Walls’ which have become prevalent during CFS week. Some of the displays demonstrated incredible imagination and creativity.
striking factor was the volume of people; the BBC’s coverage is excellent but doesn’t properly convey the vast numbers of visitors. However once into the show you can’t help but understand why they are all there. The quality of displays, arrangements and installations is breathtaking and we have tried to capture some of that here, although we weren’t considering this article at the time.
We indulged in some satisfying retail therapy and had lunch at the splendid Bluebird Cafe, sitting in the courtyard and people watching on the King’s Road. The Bluebird’s history is fascinating. It was originally built in 1923 for the Bluebird Motor Company in the prevalent Art Deco inspired modernist style, and was opened as a restaurant by Sir Terence Conran in 1997. It is very impressive and an absolute must-see for those interested in architectural heritage, as the vast majority of the original design and construction elements remain.
The garden shed was a favourite – it looked like it had been there 100 years. The plethora of wonderful flowers and displays in the ‘Tent’ was a joy and the highlights for us were the Floral man, the Waitrose colourthemed combination of flowers, fruit and vegetables and the alfresco sitting room. It’s a fantastic day out and if you can get tickets then don’t hesitate.
We took a stroll to the river and along Cheyne Walk guessing house prices before going into the show. The first
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Gardening at your Leisure
One such business where the third generation of the family is now involved as Directors is Reg Taylor’s Garden Centre in Southwell, Nottinghamshire. This business was started by the eponymous owner in 1947. Reg was a rose grower in Nottingham who expanded his business to a nursery at Chilwell and a shop in Beeston. He moved to the current base in Southwell in the early 1960s remaining principally a nursery supplying flowers, shrubs and trees. His son Richard joined him and set up a retail business in 1966 when Nottingham’s Central Market was moved into a shopping centre. As the business grew it became recognised as probably one of the first ‘Garden Centres’ in the UK. Richard’s children Mark, Paul and Helen have all joined the business and his wife, Jean Ann has created a lovely Swan Sanctuary in the grounds. We discussed changes to the meaning of Nurseryman with Paul Taylor, who drives the retail side of the business and it is apparent that customers are now drawn to the garden centre because of the breadth of goods on offer. Whilst it is still quick and easy to find just about any plant or product to improve your garden, Reg Taylor’s retailing has expanded into home wares, particularly styling and ornamental furnishing goods together with greeting cards and quality giftware. ‘Candles and fragrances have become big business’ Paul told us ‘.. and our Christmas presentation and display is a big draw. However we still sell thousands of shrubs, plants, trees and garden sundries.‘
garden business as well as catering to garden customers. Paul comments that: ’...all the emerging operators have hospitality facilities and a food offering has become critical to the success of many of them so we are very pleased to have pioneered this idea’.
Gardening is the single most popular leisure activity in the UK and an entire retail industry has grown up around it. Many businesses that started as horticultural nurseries have morphed through the generations into impressive retail outlets, with even the biggest retail names getting involved.
The business also organises a bi-annual Outdoor Sculpture Exhibition, catering to another leisure pursuit, the appreciation of art. Overall then this success story shows that leisure is not a narrow sector but has many components which can all be used to create a rounded, viable business; catering to people pursuing a leisure activity also requires offering them other reasons to visit and Reg Taylor’s is a genuine destination venue. The beauty is that if you want a decorative candle, a mower, an apple tree or a scone (or all four!) you can find them all here.
We are pleased to have pioneered this idea...
Jeremy Berridge has acted successfully for owners of garden centres in the East Midlands and the Scottish Highlands with their claims for compensation for land taken and disturbance during Highway improvement schemes. Compulsory Purchase and Compensation is a core discipline of Bruton Knowles and we have been able to accurately demonstrate the overall losses and costs incurred by these businesses due to our understanding of trade-related valuation methods.
Reg Taylor’s was one of the early champions of the now ubiquitous tea shop and theirs now has its own patrons independent of the
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VALUATION
BH&HPA Bruton Knowles is very pleased to have been granted Associate Membership of the British Holiday & Home Parks Association, which is owneradministered and the principal organisation looking after the interests of Home & Holiday park owners throughout the UK.
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Our origins, history and background in rural property has resulted in Bruton Knowles offering advice on many outdoor leisure developments, businesses and proposals over the years, typically when offering consultancy services regarding farm diversity and more recently to lenders investors and owners of rural leisure businesses. During 2014 and into 2015 we have advised the owner of 4 parks in Lincolnshire regarding valuation of them for (successful) refinance, valued a static park and storage facility in Warwickshire, holiday and touring parks in Gloucestershire and Worcestershire.
Additionally we have given preliminary advice to the Welsh Government in respect of the value of a Holiday Park business affected by proposals for transport infrastructure improvements.
Changing Values Bruton Knowles Leisure team is becoming recognised as a group of experts with comprehensive forensic skills in increasing demand from professionals requiring an unbiased opinion of a historical valuation and other help and advice, particularly in the licensed and leisure sectors. During the last year we have provided comprehensively researched retrospective valuations on: A trading public house in Norfolk A proposed wedding venue development in Norfolk E ntertainment centres in Eastern England A licensed circuit venue in Bedfordshire A Listed restaurant in East Sussex T he Punchbowl, Quinton, West Midlands – a large, community public house.
More generally we have valued a significant number of hotels, pubs, restaurants and other leisure properties for private and public sector clients, lenders and other institutions. We have recently completed a quinquennial portfolio valuation for the Royal British Legion, inspecting and reporting on over 400 properties in a 10-week period, across the UK from Northumberland through London to Cornwall and into Northern Ireland. The successful delivery of this project demonstrates Bruton Knowles’ capability of planning and executing large-scale assignments professionally and with minimal fuss.
We have also provided detailed commentary to the LPA on The Goldhawk, Goldhawk Road, Hammersmith in response to a viability report prepared to support an application for change of use of the pub.
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Anyone who spends any time on our High streets cannot have failed to notice the huge number of new casual dining outlets opening across the country.
Restaurants & Dining This expansion is good for diners creating a more vibrant feel in town centres and it is underpinned by the reported statistic that shows the ‘eating-out’ segment has grown by 4.6% on a compound basis since 2000 compared with 0.9% for the ‘drinking-out’ segment.
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We are all familiar with the names which have become ubiquitous such as Pizza Express, Ask and Wagamama but the rapid growth into the regions of the likes of Carluccio’s, Cote, Five Guys, Ed’s Easy Diner and Bill’s is almost breathtaking, given that the High Street was on its knees just a few years ago. There is also a strong recent trend towards barbeque steak and burger outlets. Much of this growth is fuelled by private equity and foreign investment, the latter particularly from the Middle and Far East. A recent newspaper report suggested that Asian investors had invested close to £4.5 billion into British food and drink companies during the last 2 years or so, a fact underlined by the fact that Chinese capital underwrote the £900 million acquisition of Pizza Express earlier this year. Recent research from ALMR suggests that casual dining and food-led venues are growing their business ahead of market average rates and with big increases in like-for-like turnover during the last 5 years. This interest in the dining segment carries over into pubs where the vast majority of new developments are of dining pubs, sometimes with rooms. Greene King, Marstons and M&B are particularly active with brands such as Hungry Horse, Toby Carvery, Eating Inn and Miller & Carter. They are by no means the only participants though with regional brewers and PubCos such as Adnams, Thwaites, JW Lees and Fullers all emphasising food as much as beer, the latter also offering smart small hotels. Reportedly there are 12 new openings for every closure in this segment of the market. Out of town McDonalds and KFC continue to expand and the likes of Nandos, Frankie & Benny’s and Chiquitos are actively pursuing and developing sites on retail and leisure parks. Thankfully the inventive chef/owner still prevails, sometimes alongside the brands above but more often in individual premises, creating excellent individual dishes which cater to the demand driven by the plethora of food and drink programmes on TV.
Norwich Acting for Greene King Bruton Knowles recently completed the acquisition of a greenfield site at Broadland Business Park, Norwich for development of a new dining pub. Nottingham We have negotiated the sale of premises in Carlton to KFC UK Ltd which allows them to develop a new drive-through venue at Colwick Retail Park, Nottingham.
Investors have invested close to £4.5 billion into British food and drink companies during the last 2 years or so.
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Restaurants & Dining - Pubs There continues to be significant mention in the press of the rate of pub closures, which whilst regrettable is a symptom of market forces and changing cultural and social trends.
Planning authorities are now able to place an ‘Asset of Community Value’ order on a pub earmarked for redevelopment to allow an interested group time to raise funds to buy the asset. Interest from developers in pubs for sale in smaller communities tends to cause a furore, although the simple fact is that if these pubs were economically viable they would probably not be for sale for alternative use. In the case of larger properties in large villages and small towns pubs have been a rich source of assets for food retailers expanding into the convenience market and Bruton Knowles have acquired a number of sites for such clients in eastern England. In these cases the communities still enjoy a considerable choice of alternative pubs to visit. In the case of many smaller properties and communities the lack of a customer base often means that the pub in question is not really viable; notwithstanding this many LPAs remain strongly resistant to allowing changeof-use even to a dwelling house. In one case in the East Midlands clients of Bruton Knowles simply closed the pub and lived there but there was still huge resistance to their COU application 2 years after closure, even with another trading pub opposite their property. A robust assessment of the local pub market examining supply and choice by Bruton Knowles finally helped them convince the planners that their proposals were acceptable. In another case in London Bruton Knowles were asked by the LPA to comment on a viability report commissioned by owners of a pub, which suggested that the pub was no longer viable. Our expertise allowed us to forensically analyse the viability report and determine that the projections suggested and the assumptions made in it regarding prospective future trade were fair and reasonable.
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Our case study in this edition regarding the Moot House also demonstrates how a new opening in a town, in that case JD Wetherspoon which has a highly competitive trading model, can have a noticeable detrimental effect on its competition particularly in a shrinking market place.
The market is now divided quite starkly between the closed, redundant properties and those properties which trade well and have a good offering. We have valued a significant number of pubs in the last year and the market is now divided quite starkly between the closed, redundant properties which have a ceiling value across the country (excepting London) but where a change of use consent can make a significant difference to perception in the market, and those properties which trade well and have a good offering. We have also noted that many leasehold interests are now offered at nil premium, in a sub-sector where traditionally good publicans have been able to add value. This has left many leaseholders in limbo, where they have paid a capital sum for their business but the available competition may be marketed for a simple in-going rather than a significant premium, so the leaseholder is unable to recoup their investment.
At the top end of the market a number of portfolio deals have completed, particularly in London, where groups are changing hands regularly. Youngs recently agreed a takeover of 580 Ltd and in the largest reported deal Spirit will become part of Greene King, a deal which will create the UK’s biggest group by sales. This type of deal highlights the significant growth and development in the pub sector, particularly from the larger players whilst a number of smaller regional companies are now expanding in partnership with PubCos or with the help of private capital, many in the dining segment.
As far as drink sales go there has been a surge of development and interest in craft beers and ciders, resulting in a niche market growing for providers and retailers like Brewdog. CAMRA has been one of the most successful consumer campaign groups in the UK over the last 40 years and the provision of real ale by traditional and micro brewers is now widespread and welcome. The growth of the craft ale and cider market has exacerbated this success, which we celebrate in our ‘Beer Monsters’ piece on page 30.
Some of our recent valuations The Beridge Arms
The Goldhawk
The Deaf Institute
Sutterton, Lincs
Hammersmith, London
Manchester
The Cross Keys
The Ship Inn
The Cartwheel, Maltby
Burton Joyce, Nottingham
Saxilby, Lincs
South Yorkshire
The Station Hotel
The Wobbly Wheel
The New Inn
Habrough, Lincs
Banbury, Oxon
Tutbury, Derbyshire
The Copper Kettle
The Punchbowl
Ye Old Flying Horse
Hastings, East Sussex
Quinton, West Midlands
Kegworth, Debyshire
The Barley Mow
Crown and Anchor
Uckfield, Kent
Beverley
The Star Inn
3 Tuns
Edenbridge, Kent
Suffolk
There has been a surge of interest in craft beers and ciders.
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FOR SALE
The Bingham Bingham Bruton Knowles have been instructed to sell the freehold of The Bingham, a grade 2 listed public house in the centre of Bingham. Bingham was recently voted one of the ‘Top 10 Towns to live in England’ in the Sunday Times. The Bingham has been completely refurbished through its trading areas in the last year and now offers excellent lounge bar, snug and restaurant space which is well-specified throughout. It has first floor accommodation which could partly convert to letting rooms and is currently living space. Outside at the rear there is a good car park and a terrace with seating, and lots of potential to create better public areas. The Bingham is on the market at £495,000 freehold and free of tie.
Restaurant Beamont Fee, Lincoln We are inviting offers for the freehold or a new lease on the above property, situated in Lincoln city centre. Originally a school the property was a ‘rave’ club in the mid 1990s when it was converted into a pizza and pasta restaurant by local brothers of Italian origin. They sold out to a multiple operator and the unit was latterly operated as Big Wok until the brand withdrew from the UK. The building offers a spacious public area with ground and mezzanine seating areas; at the rear there is extensive kitchen, prep and storage space with further rooms and offices at first floor level. It requires some refurbishment and is available for early occupation. Enquiries to Sam Spencer 07855 247373
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TO LET
3-5 High Pavement
UN
DE R
Nottingham
OF F
ER
We have been asked to find a tenant for substantial premises in Nottingham’s Lace Market, opposite the Nottingham Contemporary, in a long-established leisure location. The proposed leisure part includes approximately 6,000 square feet of bar and dining space including ground first and second floors with a fully adapted basement. The property fascinatingly includes an original lace-making machine, which can become a unique feature of any business. Other parts of the building, a former textile factory, will be used for complimentary uses including art gallery and studios
21 Priestgate Peterborough We are seeking rental bids for this handsome property in Peterborough city centre. The property has traded as a pub and bar for many years although the extensive accommodation will suit a restaurant operator. Situated immediately south of Cathedral Square the property is ideally placed to exploit shoppers and lunch customers during the day and then morph into an excellent night-time venue. The trading space includes extensive ground floor bars, basement area and could be expanded into two unused squash courts at the side. Rental offers are invited for a new lease – contact Sam Spencer on 07855 247373
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Hotels The hotel market was hit hard during the recession. Commercial demand for accommodation dissipated as commerce drew in its horns and spending was curtailed, leisure demand followed the same pattern as consumers played safe and cut discretionary spending and this was coupled by banks rapidly restructuring their loan books with the hospitality sector being the first target.
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This resulted in a torrid time for many organisations where high gearing left them vulnerable to covenant breaches, which became a reason for lenders to withdraw their support; as a result the market was characterised by sales of ‘distressed’ stock. Some groups were acquired by newcos making acquisitions at values considerably lower than the peak of 2007 and the market seemed to be stabilising. However, business took longer than expected to recover and some of the more recent entrants suffered the same fate as their predecessors. However predictions of an upturn by various commentators, both within the industry and from outside observers, have proved to be accurate. Whilst confidence remains a touch fragile there is strong evidence to support the assertion that hotels across the UK are enjoying increasingly robust levels of business, with like-for-like increases in occupancy, Average Room Rate, Average Daily Rate and REVPAR. An equally good indicator of faith in the sector is gained by analysis of investment deals in the sector. Over the course of the last year a significant number of Premier Inn and Travelodge investments have been sold and the yield trend over the period is gradually falling. Premier Inn have been serial developers throughout the recession and are now the pre-eminent brand in the UK in terms of unit numbers, bedroom numbers and spread of locations. See the adjoining piece about Cirencester lorry park. Travelodge suffered briefly from the CVA in 2012 that allowed them to withdraw from some smaller, marginal units, the principal problem it caused being a hiatus in their development pipeline. However during the last 18 months the re-geared leases and comprehensive refurbishment programme have made the hotels much more attractive to investors and Travelodge’s development pipeline is way ahead of where it was. The company has very recently announced an ambitious development programme in the UK. Whilst the yield on a Travelodge will not be quite as keen as that on a Premier Inn, both operators are now highly sought-after, returning between 5 and 7% on capital invested.
2 to 3 years ago Group activity was characterised by distressed sales with Von Essen and Menzies Hotels both being sold, the first principally individually and the second as a group to new entrant Topland, which has made further strategic acquisitions during 2014 into 2015 including Feathers Hotels in the north-west. The difference in 2014 has been strong competition for groups and ‘star’ assets such as the Queens Moat House portfolio, 17 Holiday Inns sold to Kew Green Hotels, the successful sale of Village Urban Resorts and latterly the sale of Jurys Inn for £680m to US group Lone Star; sales of individual assets include the Lowry Hotel in Manchester, Oakley Court near Windsor and The Randolph in Oxford. As consumers begin to feel the benefits of an improving economy hotels are experiencing significantly increased demand, particularly in major commercial and tourist centres. No doubt the market watchers will pay close attention to London; however other centres such as Birmingham, Manchester, York and Nottingham have posted noticeable deals in recent times on the back of significant improvements in business. What remains apparent is the continuing caution in the overall market for unbranded, privately-owned hotels. Two factors prevail which have the greatest influence; the first is the major banks’ reticence in funding new clients and acquisitions, the second being the owners’ perception that current values do not adequately represent the worth of their businesses to them. The result is that supply is constrained and demand is improving so, other things being equal, average values should continue improve steadily as they have during 2014.
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Valuations
Stone Manor Hotel
Kidderminster
SO LD
Bruton Knowles valued this 3 star Best Western branded hotel on behalf of the Directors and lender in support of funding for a refurbishment programme following re-branding to Best Western. Stone Manor is an elegant country house built in Edwardian times and extended more recently, set in lovely parkland and formal gardens. It has since been sold.
IBIS Hotel Whitechapel, London We valued this hotel and motor dealership investment on behalf of Islamic Bank of Britain to support funding for their customer. It comprises a 169 bedroom budget hotel let to ACCOR and a 20,000 sq ft car dealership. Bruton
Knowles were able to use their detailed knowledge of the hospitality and motortrade sectors to offer comprehensive and pertinent advice to the Bank.
Olde Barn Hotel Grantham We recently valued this impressive 110 bedroom hotel, which is situated just off the A1 near Grantham. The hotel has recently been rebranded as a Wyndham Garden, the first in the UK, and significant refurbishment is underway. The hotel includes a major meeting and function area, stylish public areas and a separate leisure club and pool.
Hotel Group Lincolnshire Bruton Knowles valued a group of two high-quality hotels in Lincolnshire for the Company Directors. The hotels are patronised by different segments of the market and compliment each other well because of that.
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The Directors were keen to receive accurate advice, specifying that they did not wish the valuations to be over-stated, so enabling the amount of any third-party investment to be accurately proportioned.
Valuations and Deals
Plas Dinas Snowdonia We valued this award winning B&B on the periphery of Snowdonia National Park for private buyers. The owners had acquired the leasehold business when it was run-down and required significant input. The former hunting box which has historically ‘entertained royalty’ offers very stylish accommodation and food, set in a delightful private woodland environment and retains the majority of its original features
Premier Inn Cirencester Bruton Knowles have recently sold the Cirencester Lorry Park on behalf of Gloucestershire County Council. The buyers are Whitbread who intend to build a new Premier Inn and Beefeater Restaurant.
Richard Pearson, Acquisition Manager for Whitbread Hotels and Restaurants, said: “We are delighted to be investing in a new Premier Inn for Cirencester and to have completed this deal with Cotswold District Council. We are proposing a new 60-bedroom hotel and Beefeater Grill restaurant which, as well as
regenerating the former Lorry Park site, will create approximately 50 new jobs in the local area, around half of which will be offered to those who have been long-term unemployed. This is an ideal location for us and we look forward to preparing and submitting a planning application in the coming months.”
Other Hotels The Promenade Hotel, Minehead, Somerset
Russell Hotel, Bognor Regis
We successfully negotiated the sale of this early 20th century resort hotel on behalf of institutional clients for whom it had become non-core estate.
We provided strategic acquisition advice to clients in respect of this hotel which has been specially adapted for people with disabilities.
The hotel is well-situated on the sea-front in the popular north Somerset town and was sold following plentiful interest and enquiries.
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Water, water, everywhere Following our ‘Messing about on the river..’ piece last time, we have continued to be very busy with waterworks (sic)..
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For Sale
Esthwaite Water Cumbria We have been asked to find a buyer for the leasehold interest in Esthwaite Water in the Lake District National Park. Esthwaite Water is one of the smaller lakes, beautiful and tranquil, and a recognised Osprey nesting site. The lake is situated between the major venues of Ambleside on Windermere and Hawkshead, with Coniston Water to the west. The business includes 237 acres of lake and foreshore, with a boathouse and boat hire business, angling, osprey safari and an art studio and cafe/gift shop with a Beatrix Potter licence. This is a most unusual opportunity to acquire a lifestyle business in the true sense of the term. The park and business attract visitors at all times of the year and makes a healthy profit. Further details are available from Sam Spencer on 0115 934 7094
Boston Marina Lincoln SO LD
We featured this property in our last edition and are pleased to confirm that it has been sold. The new owners are Paul and Rowena Thompson and they have renamed the business Boston Gateway Marina. We wish them every success.
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Valuations
Buckden Marina Cambridgeshire We have provided comprehensive valuation advice to the Directors of the company which owns the freehold interest in Buckden Marina near St Neots and owns and operates Waterside Leisure at the development. Buckden Marina includes 240 fixed pontoon berths separately operated and 74 privately-owned lodges separately managed. Waterside Leisure is a purpose-built bar and restaurant overlooking the marina and incorporating a leisure suite with gym, pool and sauna. There is a separate larger gym, dance studio and treatment rooms in a second building. The site also includes 2 potential areas for further lodge development, plans for which are being prepared.
Lowestoft East Anglia We have just completed a valuation of Lowestoft Marina for the current owner. The marina comprises 35 moorings in the Lake Lothing estuary together with a modern industrial unit divided into nursery units, an office and storage building, boat and caravan storage area and extensive parking.
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Valuations
Oxford Canal Mooring Rugby We have provided advice to private buyers of a rarely available plot of land with a narrowboat mooring on the Oxford Canal near Rugby. These types of plots in open country with direct frontage to a navigable waterway are generally not capable of development, principally due to planning constraints. However there is a small but competitive market for them from boat owners (usually narrowboats) and anglers, particularly through the Midlands and South, where there is access to extensive stretches of the waterways network. The difference in value between a plot with water frontage and one without is demonstrable.
Staffordshire We provided an expert report on a company controlling moorings on the Shropshire Union Canal, where considerations included rights-of-access to the moorings, the status of the Mooring Licence and obligations regarding repair and maintenance.
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ChandlerKBS Capital Allowances Consulting provides innovative and proactive services in relation to property taxation and depreciation.
Capital Allowances in the Leisure Industry Over the past twenty years, our dedicated department has provided advice on a diverse range of projects covering new build, renovation and acquisitions across all sectors and on some of the largest property investments in the UK.
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What are Capital Allowances? ChandlerKBS has extensive experience of developing capital allowances claims within the leisure sector, including hotels, pubs, leisure parks and restaurants. The following article is designed to provide you with a brief overview of the capital allowances regime and highlights the benefits to the leisure industry. Capital allowances are a form of tax relief that can provide significant tax savings for an individual or business that has incurred capital expenditure on constructing, refurbishing or acquiring a commercial property. The main qualifying elements are the inherent plant and machinery such as HVAC systems, electrical and lighting systems, security and fire alarm systems, hot and cold water installations as well as most fixtures and fittings. Most commercial properties will contain assets that qualify for capital allowances. These allowances can equate to a considerable reduction in the tax liability for owners, investors or occupiers of commercial property. In some instances, clients have achieved considerable tax rebates on their portfolios.
How do Capital Allowances work? In calculating capital allowances claims, a broad range of skills and knowledge are required including cost segregation, estimating and accountancy along with an understanding of the ever changing tax law. It is therefore imperative to seek advice from a professional capital allowances advisor to identify any inherent tax relief within your commercial property. Once the capital allowances within a commercial property have been valued, they are then added to the relevant capital allowances ‘pool’ in your tax computations and then written down and claimed year on a year at the relevant writing down allowance percentage.
According to the Property Data Report, in 2013 Commercial property totalled a combined value of £569bn of which £65bn related to the leisure industry. Given the high level of capital costs incurred on the acquisition and fit-out of hotels, restaurants, bars, clubs and cinema complexes, the value of those inherent allowances will be significant. Considering the recent recession, any potential tax rebate would be a welcome benefit for the leisure industry.
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Capital Allowances The table below demonstrates the different types of allowances and writing down allowances obtainable:
Type of Allowances
WDA’s
Criterion
18%pa
Available on general items of plant and machinery
Integral Features (IF’s)
8%pa
Items integral to the building, includes hot & cold water systems, HVAC systems etc
Enhanced Capital Allowances (ECA’s)
100%
Items of energy or water saving plant & machinery
Deferred Revenue Expenditure
Same as account treatment
Revenue that has been capitalized written down in line with accounting treatment
Business Premises Renovation Allowances (BPRA’s)
100%
100% of all expenditure in Specified assisted areas where property vacant for more than 1yr
Land Remediation Relief (LRR)
150%
Relief for expenditure on remediating contaminated land (including removal of asbestos)
Annual Investment Allowance (AIA’s)
£500k
First year writing down allowance of £500k for expenditure incurred from April 2014 – Dec 2015
Plant and Machinery Allowances (PMA’s)
Two examples of recent instructions are provided below: Development of Leisure Complex, Holiday Park A new leisure complex development including swimming pools, Jacuzzi, sauna, steam room, gym and a ten-pin bowling alley as well as a café-bar; achieved allowances of £2.3m. This equated to 54% of the development costs. Total Development Expenditure
£4,198,165
Total Capital Allowances
£2,259,303
Total Tax Saving (@24% CT)
£542,232
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Redevelopment of Hotel On the redevelopment of a hotel comprising 22 guest rooms with restaurant, lounge and bar; we achieved allowances of £1.9m. This equates to 54% of the development costs. Total Development Expenditure
£3,482,589
Total Capital Allowances
£1,881,695
Total Tax Saving (@24% CT)
£451,607
The new legislation has turned the approach to capital allowances on its head when it comes to the transactional stage of acquiring or selling a commercial property.
New Fixtures Legislation The introduction of new legislation regarding fixtures in April 2014 makes it a good time for individuals and businesses to review the tax position on their commercial properties.
The new legislation was introduced in April 2014 and requires the seller to pool any unclaimed allowances, otherwise the allowances are lost forever. The new legislation has turned the approach to capital allowances on its head when it comes to the transactional stage of acquiring or selling a commercial property. Before the new legislation, it would be in the purchaser’s best interests to remain silent on capital allowances as they could then carry out a valuation of the available allowances as an apportionment of their purchase price (thereby obtaining higher value of allowances). Now however, if the purchaser remains silent and the seller has not claimed, then valuable allowances will be lost forever. This change to the fixtures legislation has now put pressure on commercial property advisors including solicitors, agents and accountants to ensure they get the treatment of capital allowances right at the time of transaction.
If you are selling a property post April 2014 and you have claimed allowances, you need to ensure that you have entered into an election to safeguard the allowances going forward and to optimise your position. If you have not claimed allowances, it would still be imperative to claim the allowances and to pass them over to the buyer via an election. This will ensure that the value of the property is not diminished through the loss of valuable allowances. In light of the recent changes to the fixtures legislation, coupled with the substantial tax savings available, now is the optimum time to secure those allowances before they become an issue at the transactional stage. For any advice on the capital allowances position on your commercial property please contact either Mark Holmes or Dylan Davies from ChandlerKBS .
If you are acquiring a commercial property post April 2014, it is imperative to establish the tax position on that property during the initial enquiries to ensure that any available allowances are claimed by the seller and the value passing over to the buyer is agreed via a s.198 election.
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Beer Monsters We took a (barley?) straw poll for a bit of fun and the following tipples came out as favourites amongst the Leisure team – for amusement you may wish to try and match them up to their patrons but we are not offering any prizes.
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2
5
6
3
7
More interesting is a tour of some of the places where they might be available which include The Ferry Inn in Salcombe, The Globe Inn in Wells-next-the-Sea, Twickenham Stadium and the Farmers Arms in Muker. Now that would be a pub crawl of real commitment! 4
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James Bailey
Sam Spencer
Partner, Nottingham
Associate, Nottingham
james.bailey@ brutonknowles.co.uk
sam.spencer@ brutonknowles.co.uk
mobile: 07715 540019
mobile: 07855 247373
Steven Tasker
Nicola Hudyba
Associate, Manchester
Associate, Birmingham
steven.tasker@ brutonknowles.co.uk
nicola.hudyba@ brutonknowles.co.uk
mobile: 07718 155832
mobile: 07967 824558
Angus Jackson
Jeremy Berridge
Associate, Cardiff
Head of Professional, Nottingham
angus.jackson@ brutonknowles.co.uk
jeremy.berridge@ brutonknowles.co.uk
mobile: 07974 155676
mobile: 07808 635673
James Pullin
May Dudley
Senior Surveyor, Gloucester
Surveyor, Birmingham
james.pullin@ brutonknowles.co.uk
may.dudley@ brutonknowles.co.uk
mobile: 07500 826268
mobile: 07717 343331
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An approach you will value
Valuations
Agency
We have the experience and local market knowledge to value all types of property for accounting purposes, sales and purchases or for raising finance for expansion and development.
Even in difficult economic conditions our passion for selling, leasing or acquiring leisure related property has resulted in successful results for both our private and corporate clients.
Contact: Nicole Hudyba, Sam Spencer, Steve Tasker
Contact: Sam Spencer, James Bailey
Planning
Building Consultancy
We can help at every stage of the planning process from initial appraisals and negotiations with local planning authorities and stakeholders through to planning applications and dealing with appeals.
From undertaking building surveys to planned preventative maintenance programmes, we take care of every aspect of your property lifecycle so you can focus on doing what you do best.
Contact: James Bailey, Angus Jackson
Contact: Angus Taylor (07889 180550) Adrian Walsh (07768 258362)
Business Rates
Landlord and Tenant
We can ensure that you don’t end up paying too much, understand your rateable value and advise you on how to minimise and manage your business rates.
When entering into a lease you need to understand the terms and conditions negotiated at the outset to help ensure the best conditions for you and your business during the life of the lease. 
Contact: Adam Rock (07980 637677), Angus Jackson
Contact: Jeremy Berridge
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ISSUE 14
0845 200 9246
www.brutonknowles.co.uk This publication is intended as a general guide, and although every effort has been made to ensure accuracy, liability cannot be accepted for any errors of fact or opinion.