Valentine Retail Lincoln

Prime Retail Investment Opportunity

Valentine LINCOLN

Valentine a leading retail destination

Valentine LINCOLN

Prime Retail Investment Opportunity

Investment Summary • City - Lincoln is an attractive and historic cathedral city, and is the administrative centre of the county of Lincolnshire.

• Place making - Valentine is one of the leading retail destinations in the city, with a strong furniture, convenience and comparison retail offer.

• Captive catchment - there is a captive catchment, with the nearest main shopping competition being over an hour’s drive away. Total catchment population of 582,966 people.

• Large footfall - annual footfall estimated at 2.4 million.

• Modern floor space - a resilient and continually evolving retail offer utilising the scheme’s flexible layout with a further improvement to the scheme currently on site.

• Strong trading profile - consistently robust trading performance.

• Institutional income stream - secured from strong covenants including Next, TK Maxx, Asda, DFS, Costa and Hobbycraft, with a low average rent of £22.11 per sq ft and a WAULT of 8.3 years to expiry and 6.4 years to break.

• Further potential - potential for further value enhancement with flexible store layout and scope for further units to be created.

• Price - a price is sought of £46,300,000, reflecting an attractive net initial yield of 5.96%, after allowing for purchaser’s costs of 6.78%.

Location Lincoln is a cathedral city and the commercial and administrative centre for the county of Lincolnshire.

Lincoln is located approximately 142 miles north of London and benefits from a captive and distinct catchment population lying 41 miles northeast of Nottingham, 45 miles east of Sheffield and 40 miles north of Peterborough.

Lincoln developed from the Roman town of Lindum Colonia. By 1150, Lincoln was reputed to be among the wealthiest towns in England. The city became a major trading hub, exporting to the continent and thereafter drawing from the wealthy agricultural hinterland, the city became renowned for delivering engineering solutions, which were adopted worldwide.

Lincoln’s major landmarks are Lincoln Cathedral, a famous example of English Gothic architecture, and the 11th-century Norman period Lincoln Castle. The aptly named ‘Steep Hill’ forms a northern extension of the high street and forms the historical quarter of the city, leading to the cathedral standing at the top of hill, overlooking the rest of the city. The cathedral is one of the most frequently visited in the UK and the city generates 4 million visitors per year, producing £190 million of spend in the local economy and supporting 2,500 jobs.

The city is now home to the University of Lincoln and Bishop Grosseteste University. The University of Lincoln has over 13,000 students, and has developed strongly over recent years, having had a £200 million investment in the campus, with a further £130 million spend planned over the next few years.

The university is estimated to be worth more than £300 million to the local economy, doubling local economic growth rates, and creating more than 3,000 new jobs.

The university’s award-winning business incubation centre, Sparkhouse, has supported more than 300 new and growing businesses to establish themselves in the region and created over 450 new jobs. Lincoln opened the UK’s first purpose-built engineering school in 25 years in collaboration with Siemens plc.

The service sector as a whole accounts for 53% of total employment in the city; the professional & business services and finance sectors together account for 8.6% and the retailing and leisure sectors 27.0% of total employment.

Lincoln has a strong advanced engineering sector. Siemens Industrial Turbomachinery have a large facility in the city employing some 1,300 people. The city is expanding within the high tech industries sector, with firms such as Dynex and E2V benefiting from the strong and historic links to the MOD/RAF. Lincoln’s second largest private employer is James Dawson UK; a belting and hose manufacturer.

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Mansfield A15

Newarkon-Trent

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NOTTINGHAM

25

A50 A38

A17

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Grantham

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Stamford

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Wisbech

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King's Lynn

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Spalding

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Peterborough

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‘The University of Lincoln is estimated to be worth more than £300 million to the local economy, doubling local economic growth rates and creating more than 3,000 new jobs’

‘The city benefits from a captive catchment, with the nearest main shopping competition being over an hour’s drive away’ HUDDERSFIELD SCUNTHORPE

GRIMSBY

BARNSLEY DONCASTER

Catchments Primary Secondary Tertiary

LINCOLN

CHESTERFIELD

MANSFIELD

NOTTINGHAM DERBY

BEESTON

BURTON UPON TRENT LOUGHBOROUGH

Quaternary

Valentine

Strong Demographics Valentine provides a convenient and accessible shopping environment, aligned to the daily needs of the local community. The retailer mix complements the strong demographics and this is reflected in the frequency of use by the catchment population.

LINCOLN

Prime Retail Investment Opportunity

Scheme specific indicators are: Average drive time to the scheme of 19 minutes.

30.3% of customers visit Valentine at least once a week and 80% visit Valentine at least once a month.

The city benefits from a relatively captive catchment, with the nearest main shopping competition being over an hour’s drive away. There is a total catchment population of 582,966 people.

26% 42%

Estimated annual footfall of 2.4 million people, with an average dwell time of 50 minutes.

CACI state that ‘Affluent Achievers’ comprise 26.0% of the catchment, in comparison to the 21.5% UK average.

Catering spend potential of £29.3 million. £8 average catering spend.

‘Comfortable Communities’ make up 41.5% of the catchment, as compared to the 26.6% UK average.

Over £51 average retail spend per shopper.

Within the CACI 20 minute drive time, there are just over 74.419 households, of which 46,249 are owner-occupied.

Comparison goods spend potential of £106.2 million. 16.9% of core catchment market share of comparison goods.

79.2% of the drive time catchment have access to a car, as compared to the UK national average of 75.5%.

£1,336.7 million of total catchment comparison goods expenditure.

33 visits per year on average per person.

45%

45% of customers live within a 10 minute drive from Valentine.

SA

Ideal Situation for a Retail Scheme

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The scheme forms the premier location for large format retailing in the city and is anchored by a 30,000 sq ft Next, a 20,000 sq ft TK Maxx, Asda Living, Hobbycraft and DFS. Lying adjacent are Wren Kitchens and The Range, and to the north is a B&Q Warehouse totalling 100,000 sq ft. On the opposite side of the road, just to the north, is the 124,000 sq ft Tritton Retail Park, with occupiers including Currys PC World, HomeSense, Carpetright, Home Bargains, ScS and Pets at Home.

West Common

Between Valentine and the city centre is St Marks, which is anchored by Debenhams, Argos Extra, Sports Direct, Mothercare, Homebase, and Gap Outlet. Lidl (17,000 sq ft) and BHS (30,000 sq ft) were previously represented here until the former found a larger standalone site and the receivership of the latter. This scheme has paid parking and has struggled, with the owners, Aberdeen Standard, having gained planning permission to demolish the existing retail park to the west of the canal and replace it with a mall style arrangement and multi storey parking with 1,100 spaces. Also planned are 150 new residential units, up to 1,100 new student residences, and a hotel with 130 rooms. According to the scheme’s website, construction is likely to begin in 2020, with the development taking 3 years to complete and Aberdeen Standard investing over £150 million.

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Tritton Road is a dual carriageway and forms one of the main routes to the south, linking up with the A46 Newark Road. There is all ways access and egress to the development to and from Tritton Road via a traffic light controlled junction. This gives access to Valentine Road, which forms a slip road off the dual carriageway, and onto the scheme.

Limited Retailing Competition Lincoln faces below average competition from surrounding regional retail centres, due to its distance from them, with the nearest main shopping competition being over an hour’s drive away.

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Units to be redeveloped.

Maplin, Sofology, Toys R Us. Other retailers include: Gap, JD, Argos, Debenhams, Boots, PureGym

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Tenants include: Home Bargains, Home Sense, Halfords, Currys PC World, Pets at Home

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Contemporary Retailing Valentine provides a modern, high quality shopping environment, in-line with current retailer requirements and consumer needs.

Following completion of a pre-let redevelopment and additions to the scheme, Valentine will comprise 133,177 sq ft, generally arranged in 2 facing terraces.

The 531 surface level and free car parking spaces (1 : 250 sq ft) provided, combined with the ease of accessibility via Tritton Road, allow frequent visits here from the catchment population.

The tenant mix here, combined with the retailing environment, means that Valentine

has a higher than average proportion of shoppers using click and collect alongside shopping in stores; 4.1% compared with the average of 1.9%. The majority of retailers on the scheme provide an omni-channel service allowing the customer to take full advantage of the benefits this provides.

This results in frequent visits, with 80% of shoppers visiting at least once a month and 36% being on a ‘single item pick up mission’ when shopping.

Leading fashion and general merchandise retailers Next, TK Maxx and Asda Living anchor the scheme and there is a strong home and furniture range offered by DFS,

Harveys, Dreams and AHF Furniture, with the line-up completed by Hobbycraft (to open in spring 2018), American Golf, Carphone Warehouse and Costa.

The existing scheme has been refurbished over the last 7 years to provide new frontages and entrance features, with all the larger units having sufficient headroom within which to install mezzanine floors.

The new unit for Hobbycraft is being built to a high specification, being fully glazed with an attractive and inviting frontage. The modern and attractive design creates a contemporary, high quality retailing experience.

‘The existing scheme has been refurbished over the last 7 years to provide new frontages and entrance features with all the larger units having sufficient headroom within which to install mezzanine floors’

Valentine LINCOLN

Prime Retail Investment Opportunity

Tenure The scheme is held freehold with the demise outlined in red on the plan below. A full title plan is available on request.

Planning Consent The units occupied by Next, Asda Living, Carphone Warehouse, Costa, TK Maxx and the new Hobbycraft benefit from an open non-food consent; unusual for the city. The new American Golf unit has a wide bulky goods consent, but allows the sale of golfing clothing and footwear.

The remaining units generally have a bulky goods only restriction. Full details can be supplied on request.

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Indicative plan

Valentine LINCOLN

Prime Retail Investment Opportunity

Tenancy Schedule GIA (sq ft)

Lease Start Date

Lease Term (years)

Lease Expiry Date

Break Date

Next Rent Review

Next Holdings Limited t/a Next

29,730

27/09/2010

15

26/09/2025

N/A

27/09/2020

Unit 2A

The Carphone Warehouse Limited

2,740

07/08/2013

10

06/08/2023

Unit 2B

Costa Limited

2,025

19/08/2013

10

18/08/2023

N/A

19/08/2018

Unit 3

Dreams Limited

5,597

10/06/2016

10

09/06/2026

N/A

10/06/2021

Unit 4

Steinhoff UK Group Properties Limited t/a Harveys

11,409

30/05/2017

10

29/05/2027

N/A

30/05/2022

Unit 5

DFS Trading Limited

20,290

30/09/2011

15

29/09/2026

30/09/2022 30/09/2021

Unit 6

Hobbycraft Trading Limited

7,522

19/02/2018

15

18/02/2023

18/02/2029 19/02/2023

Unit 7

Anglia Home Furnishing Limited

10,050

10/10/2011

15

09/10/2026

10/10/2021 10/10/2021

Unit 8&9

Asda Stores Limited t/a Asda Living

19,977

16/08/2007

15

15/08/2022

Unit 10

TJX UK t/a TK Maxx

20,258

09/01/2015

14

23/06/2029

Unit 11

American Golf Discount Centre Limited

3,579

14/07/2017

10

13/07/2027

Unit

Tenant Name

Unit 1&2

TOTAL

133,177

07/08/2018 07/08/2018

N/A

16/08/2017

24/09/2024 24/06/2019 N/A

14/07/2022

‘Institutional income stream - secured from strong covenants including Next, TK Maxx, Asda, DFS, Costa and Hobbycraft, with a low average rent of £22.11 per sq ft and a WAULT of 8.3 years to expiry and 6.4 years to break’

Current Rent (per annum)

Current Rent Comments (per sq ft)

£565,500

£19.02

£68,265

£24.91

Tenant only break subject to 6 months’ notice. 3 month penalty on break.

£96,788

£47.80

Turnover rent - 14% of turnover above base rent of £65,812.50 which is calculated at 1/14% x base rent. Estimated turnover rent of £30,975 pa based on annual turnover of £691,338. No other coffee pod on the scheme before 6th anniversary or Costa have the right to break.

£151,119

£27.00

Area of 5,585 sq ft assumed in lease.

£256,703

£22.50

Rent reviews capped at 2.5% per annum compound.

£356,000

£17.55

2016 rent review agreed at this level, with previous rent at £304,185 pa, and memorandum out for signature. Tenant only break clause, subject to 3 months’ notice.

£198,750

£26.42

Rent reviews capped at 2.5% per annum compound. Break date at year 11 subject to 6 months’ notice. Rent based on £26.50 per sq ft, not to exceed £198,750 per annum.

£211,100

£21.00

Rent increased at 2016 review from £190,000 per annum (£19.00 per sq ft).

£542,447

£27.15

£417,339

£20.60

Rent review cap of 115%. Tenant only break, subject to 6 months’ notice.

£80,527

£22.37

New relocated unit.

£2,944,538

£22.11

Potential for Further Value Enhancement Valentine has benefited from significant investment with the creation of additional units, and refurbishment of the existing units. However, we believe more can be achieved to enhance the retailing offer and tenant mix over the medium term, satisfying retailer requests from customers and further underpinning Valentine’s position at the top of the retail hierarchy.

Furthermore, the redevelopment of St Marks should present opportunities, as some of the retailers there will be required to relocate elsewhere in the city. These tenants could include:

Furthermore, there should be demand from Smyths Toys, as with Toys R Us’ demise, the city would lack a volume toys retailer, and this was a top category 1 store for Toys R Us.

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Further asset management opportunities are as follows:

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Scheme Opportunity

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Valentine LINCOLN

Prime Retail Investment Opportunity

ERV New lettings have been undertaken to Dreams, Harveys and Hobbycraft, which help to underpin the rental tone across the scheme, and provide evidence for uplifts for some of the other forthcoming reviews. Dreams took their 5,597 sq ft at a headline rent of £27.00 per sq ft in exchange for 12 months’ rent free. The Harveys letting is at £22.50 per sq ft, also with 12 months’ rent free.

Hobbycraft are taking a 7,500 sq ft new build unit at £26.50 per sq ft.

On the basis of these lettings, the AHF rent increased at the October 2016 review to a rent reflecting £21.00 per sq ft from £19.00 per sq ft. Following this, the DFS September 2016 review was settled at a rent reflecting £17.55 per sq ft, on increase from £15.00 per sq ft, demonstrating significant rental growth.

Valentine LINCOLN

Prime Retail Investment Opportunity

Tenants’ Covenants Valentine provides a secure income, with 75% of the rent attributable to tenants with 5A1 D&B rated covenants.

The overall income weighted average unexpired lease term is over 6.4 years to break and 8.3 years to expiry.

Lease Expiry Profile by Income 7% 10 Years +

D&B Rating by Income

10% >4 Years

15% Other 75% 5A1 9% 4A1 47% 4-7 Years

36% 7-10 Years

British Land is one of Europe’s largest publicly listed real estate companies with £19 billion of retail, office and residential assets under management.

Their properties cover 28.8 million sq ft and are home to 1,200 organisations. 64,000 people work across their Office Portfolio and 322 million visit their Retail Sites.

Their Offices and Residential Portfolio is focused on London. They provide a range of working and living space across their campuses and distinctive standalone properties, which combine with retail and leisure to create attractive, well-located and well-managed environments.

Their Retail & Leisure Portfolio is focused on large, retail-led, multi-let assets. They provide high quality retail alongside a growing leisure offer and best in class services to deliver environments for modern consumer lifestyles.

Their strategy is focused on 2 types of retail destinations – Locals and Regionals.

They are based on the different shopping missions of their customers and align with their retailers’ strategies. Whilst the assets are shopped differently, the basics of a high quality and engaging environment are consistent, and are essential to both of their success.

People interact and visit their assets for many different reasons, reflecting modern consumer lifestyles, which are full of choices. Physical retail is an essential part of shopping for planned trips to experience led destinations, as well as convenient and accessible regular trips to centres at the heart of the local community British Land, through the redevelopment of Valentine, have created a ‘place people prefer’, with customer orientation being the main focus here. Being a local centre, it attracts a high frequency of local shoppers, Click & Collect usage and convenient leisure and grocery trips, due to its convenient and accessible location.

Valentine

Environmental Report and Building Survey

LINCOLN

Prime Retail Investment Opportunity

RPS have undertaken a Phase 1 Environmental Report for the property and Martin Bates Consultancy has undertaken a building survey. Both surveys are assignable to the purchaser and are available on request.

Service Charge

Contact

The current service charge is low at £ 1.02 per sq ft.

Further details are available on request.

Ellie Kirkby T: 020 7317 3790 M: 07764 241898 E: e.kirkby@avisonyoung.com

EPC EPC’s for the individual properties are available on request.

Proposal A price is sought of £46,300,000, reflecting an attractive net initial yield of 5.96%, after allowing for purchaser’s costs of 6.78%. A top up will be sought on settlement of the outstanding rent review.

Tim Bradford T: 01522 518591 M: 07788 587939 E: tim.bradford@bankslong.com

Paul Wilkinson T: 020 7317 3799 M: 07770 585313 E: p.wilkinson@avisonyoung.com Avison Young Heathcoat House 20 Savile Row London W1S 3PR

Banks Long & Co 26 Westgate Lincoln LN1 3BD

www.avisonyoung.co.uk

www.bankslong.com

VAT The property is elected for VAT and we would expect the transaction to be treated as a Transfer of a Going Concern.

MISREPRESENTATION NOTICE. Avison Young and Banks Long & Co give notice to anyone who may read these particulars as follows: 1. These particulars are prepared for the guidance only of prospective purchasers. They are intended to give a fair overall description of the property but are not intended to constitute part of an offer or contract. 2. Any information contained herein (whether in the text, plans or photographs) is given in good faith but should not be relied upon as being a statement of representation or fact. 3. Nothing in these particulars shall be deemed to be a statement that the property is in good condition or otherwise nor that any services or facilities are in good working order. 4. The photographs appearing in this brochure show only certain parts of the property at the time when the photographs were taken. Certain aspects may have changed since the photographs were taken and it should not be assumed that the property remains precisely as displayed in the photographs. Furthermore, no assumptions should be made in respect of parts of the property which are not shown in the photographs. 5. Any areas, measurements or distances referred to herein are approximate only. 6. Where there is reference in the particulars to the fact that alterations have been carried out or that a particular use is made of any part of the property, this is not intended to be a statement that any necessary planning, building regulations or other consents have been obtained and these matters must be verified by an intending purchaser. 7. Descriptions of the property are inevitably subjective and the descriptions contained herein are given in good faith as an opinion and not by way of statement of fact. Plans are published for convenience of identification only and although believed to be correct, their accuracy is not guaranteed and they do not form part of any contract. August 2018. Designed and produced by Creativeworld Tel: 01282 858200