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Strood Retail Park | Strood


Page 02

Strood Retail Park Strood

Strood Retail Park 04 Investment Summary 06 Location 08 Socio-Ecomonic Profile 09 Situation 10 Surrounding Retail Warehouse Provision 12 Description 13 Tenure 14 Tenancies 15 Covenant Information 16 Planning 18 Asset Management Opportunities 19 Environmental Considerations 19 Estimated Rental Values 19 Proposal

Strood Retail Park provides a well secured income stream offering a low base for rental growth and asset management opportunities to drive value in the short and medium term.


Strood Retail Park Strood

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Page 04

Strood Retail Park Strood

Investment Summary n S  trood is an established commercial centre in the Medway area of Kent, situated just to the west of the River Medway, close to Rochester and Chatham. n The area currently offers excellent infrastructure and in addition there is significant regeneration underway across the Medway area, including the development of over 2,000 homes and around 15,000 sq m (161,500 sq ft) of commercial floorspace. n The subject property provides the only purpose built retail warehouse offer in the town, complimented by the presence of it’s two main foodstores and the town centre in very close proximity. n The park has an Open A1 (part food) retail consent and provides well configured, flexible retail space which undoubtedly offer asset management opportunities moving forward, in the form of downsizing and tenant re-orientation. n The park was developed in 1990 and is currently let to 5 tenants, including B&Q, Next, Argos and Brantano.

n Agreements for Lease have been signed with Matalan and Carphone Warehouse for space in the new block, opposite the main terrace. The average unexpired lease term will stand in the order of 10.5 years, following the completion of these leases. n Passing rents range between £15.25 psf and £22.50 psf offering a low base for good rental growth and we strongly believe that rental levels can be driven forward through the asset management initiatives. n W  e are instructed to seek offers in the region of £40,000,000, subject to contract and exclusive of VAT, for the Freehold interest in this property. A purchase at this level would show the following yield profile, based on our estimate of rental value and costs of 5.7625%.

Initial Yield June 2008 December 2008 Equivalent Yield True Equivalent Yield Reversionary Yield

: : : : : :

4.64% 5.05% 5.55% 5.60% 5.80% 5.63%


Strood Retail Park Strood

Page 05

The subject property provides the only purpose built retail warehouse offer in the town, complimented by the presence of it’s two main foodstores and the town centre in very close proximity.


A414Page 06

Strood Retail Park Strood

A414

Harlow A138 M11

Potters Bar

A414

M25

A12 M25

Location A130

A10 A12

M11 A406

Basildon

A127

A13

A1

M25

Southend-on-sea Strood is located in the Medway area of Kent approximately 48 km

Canvey Island

A13

London

(30 miles) south-east of Central London. Other nearby centres include Rochester and Chatham approximately 0.8 km (0.5 mile) across the

A13

A4

A205

A205

A20

River Medway to the east, Maidstone 16 km (10 miles) to the south

A282

A2

Dartford

A2

A232

New Addington

and Dartford 22.5 km (14 miles) to the west.

STROOD Retail Park

The area has excellent infrastructure and further regeneration across the Medway is well underway. The 140 hectares (354 acres) of Chatham

Strood

M25

A217

A127

A2

Swanley M25

Maritime is now a well established residential and business location and

Gillingham Rochester

there are popular tourist attractions at Chatham Historic Dockyard, the newly opened ÂŁ60m Dickens World and Rochester Castle and Cathedral. As part of the Thames Gateway initiative, Medway is in line to receive over ÂŁ1bn

M20

Sittingbourne

M2 A23

A249

referred to, should provide around 16,000 new homes and create 40,000 jobs, M2

A249

M26 A25

on approximately 900 hectares (2,223 acres) of Brownfield Land. Strood benefits from good road communications with Junction 1 of the M2,

Maidstone

Sevenoaks

of investment over the next 20 years and the new developments which we have

and the A2, situated only 3 km (1.8 miles) to the west offering access to Gravesend, Dartford and Central London. Furthermore Junction 2 of the M2

Redhill A21

M20

and the A228, situated only 3 km (1.8 miles) to the south connect with the M20, Maidstone and Ashford in the south-east. The A2 also offers a direct link east to Sittingbourne, Canterbury and Dover.

Tonbridge

Strood railway station offers a direct service to London Charing Cross and A22

Royal Tunbridge Wells

London Cannon Street with an approximate journey time of 1 hour 5 minutes A21

A229

and rail services from nearby Rochester provide regular connections to Central London with a fastest journey time of 42 minutes.


Page 07

Strood Retail Park Strood

S AVE GR

A228

EN DR OA

STROOD Riverside

D D

AD

RO

AT ST

YR OA

AD RO

IO

OAD

HI GH

Rochester Riverside

ST RE ET

A mixed-use waterfront development to provide around 500 – 600 new homes.

A228

A2

STROOD Retail Park

A

D

RO

Temple Waterfront T REE ST ION AT OR RP CO

CU

XT

ON

A 70 hectare (172 acre) site with development brief for around 600 new homes and 15,000 sq m (161,500 sq ft) of commercial floor space. Rochester Riverside A 28.3 hectare (70 acre) site for a new mixed use development including approximately

MAI DST ONE R

A228

2,000 homes. These initiatives should create in the region of 900 hundred jobs.

O AD

M2

Further key developments in the area include: Strood Riverside

PR

CU XT ON

LONDON R

N

NE LA

N

GU

A2

IO R

WATLI NG ST REET

Temple Waterfront

2000 ft 500 m


Page 08

Strood Retail Park Strood

Socio-Economic Profile St Mary Hoo

Tilbury

According to CACI approximately 140,295 people live within a 10 minute drive time of the subject property and this catchment

Upper Stoke

increases to around 324,625 people within a 15 minute drive time. The 2001 Census indicates that the area boasts above average figures in relation to car and property ownership. We have set out these statistics in

Gravesend

STROOD Retail Park

the table below:

Cars or vans in Household Strood

UK

1 car or van

46.4

43.8

2 cars or vans

24.6

23.1

Owner occupied property

76.7

68.3

Cobham

Rochester

Gillingham

Luddersdown

M2 Chatham

Wouldham Hoddsoll Street

The area currently offers an excellent infrastructure whilst there is further regeneration underway, and proposed, across the Medway area.

M2

Stockbury

M26 10 minute drive time

M20

Ditton

M20

15 minute drive time


Page 09

Strood Retail Park Strood

Situation Strood Retail Park is positioned just to the south of Commercial D OA DR EN ES AV GR

LONDON

ROAD CO M

I AT ST

Commercial Road (A2), which provides direct links both east and

IOR

YR

OA

D

D OA

HI GH

O

west from the town centre. There is also additional frontage to Knight Road, which forms the site’s western boundary and links with the A228, which runs south to the M2.

ST RE E

Immediately to the south of the park is a new 7,060 sq m (76,000 sq ft)

T

Morrisons foodstore, which opened in October 2006, whilst there is a

PR

CU X

TO N

R

M E R CI A L R O AD

A228

of local traders. The scheme benefits from excellent frontage to

AD

N GU

occupiers as Woolworths, Boots and Sports World as well a variety

NE LA

RO

A2

in close proximity to the in-town retail offer which comprises such

N

WATLI NG S TREET

Road (A2) which forms part of the main town centre ring road, and

A228

STROOD Retail Park

3,995 sq m (43,000 sq ft) Tesco foodstore situated around 500 metres

A2

(0.3 miles) to the west on Cuxton Road. We understand that Morrisons OR RP CO

reported the best ever opening week sales performance, of any of their stores, when this opened in 2006. These two stores combine to provide

ON ATI ET RE ST

A RO

D

M2 CU

ON XT

A228 2000 ft 500 m

the dominant food offers in Strood and the combination of these, the subject property and the town centre, means the location has a well-rounded retail offer and significant critical mass.


Page 10

Strood Retail Park Strood

Surrounding Retail Warehouse Provision Strood Retail Park provides the only out of town retail offer in Strood. The town has the 14,306 sq m (154,000 sq ft) Medway Valley leisure Park,

Strood

PIER R OAD

which is owned by PRUPIM and incorporates tenants including Cineworld,

and Chatham, situated approximately 0.8 km (0.5 miles) to the south, provide the

OA CK R

D OA

DO

We consider that Gillingham, situated approximately 7 km (4.3 miles) to the east,

AD

CU XT ON

RO

D

Esporta, Frankie & Bennys, Gala Bingo and McDonalds.

R AY DW ME

NE LSO

only competing out of town retail offer to the subject property. The map adjacent identifies the locations of the respective schemes

HI GH

CITY WAY

• Gillingham – Gillingham Retail Park, Ambley Road

M2

MR

O AD

RE E

T

Gillingham Retail Park Gillingham

such tenants as Currys, PC World, Carpetright, Toys R Us and Homebase.

HA

HOATH WAY

MAIDSTO NE R O A D

comprising MFI, Allied Carpets and Magnet.

• Chatham – New Cut

IN

WAT LING ST

Circa 3,251 sq m (35,000 sq ft) of bulky space

Circa 12,910 sq m (137,000 sq ft) park incorporating

RA

Chatham

AW AY

New Cut Chatham

UK

Circa 9,290 sq m (100,000 sq ft) B&Q Warehouse.

• Chatham – Maidstone Road

Gillingham

T

Watling Street Gillingham

• Gillingham – Watling Street

S TRE E

YO KO S

and we have provided brief details of the size, tenants etc.

STROOD Retail Park

NR OA D

Maidstone Road Chatham

Circa 2,471 sq m (26,630 sq ft) Wickes DIY store. 2000 ft 1 km


Strood Retail Park Strood

UNIT 1A

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Page 12

Strood Retail Park Strood

Description The property currently comprises five units in a linear terrace positioned to the eastern side of the site. The smaller western terrace is now being redeveloped to provide three units. At present there are approximately 312 car parking spaces, arranged in a forecourt car parking area between the existing and proposed new terrace, giving a ratio in the order of 1:21.9 sq m (235 sq ft). Customer access to the park is via a slip road from the A2, with a second principal access/egress from Knight Road, off Commercial Road, shared with the nearby Civic Centre. Segregated rear servicing is also accessed from Knight Road, with this servicing route and the adjacent railway line effectively forming the southern and eastern boundaries of the site respectively. The existing units comprise steel portal frame construction, with part brick/profiled metal clad elevations and profiled metal sheet roofs.

Elevation caption here

The park was developed in 1990 and is currently let to 5 tenants, including B&Q, Next, Argos and Brantano with agreements signed with Matalan and Carphone Warehouse.


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Strood Retail Park Strood

COMMERCIAL ROAD

Tenure The property is held Freehold. Freehold demise

UN

1A

KN

IGH

TR

OA

D

IT

This plan is published for convenience of identification only and although believed to be correct, its accuracy is not gauranteed and does not form part of any contract.


Page 14

Strood Retail Park Strood

Tenancies

The property is currently let to 6 tenants, with two further Agreements for Lease in place, in accordance with the Tenancy Schedule adjacent.

Unit Tenant Term Lease Lease Next GIA Current Current ERV ERV Start Expiry Review sq ft Rent Rent £ pa £ psf £ pa £ psf

Comments

A

B&Q Plc t /a B&Q

25

22/12/88

21/12/13

22/12/08

36,861

£562,130

£15.25

£663,498

£18.00

B1

Next Group Plc t /a Next

15

28/02/05

27/02/20

28/02/10

7,693

£173,093

£22.50

£207,711

£27.00

B2

Argos Ltd t /a Argos

15

10/11/03

09/11/18

10/11/08

10,286

£168,300

£16.36

£277,722

£27.00

B3

Brantano (UK) Ltd t /a Brantano

15

24/06/03

23/06/18

24/06/08

6,169

£102,000

£16.53

£171,190

£27.75

D

Carpetright Plc t /a Carpetright

15

24/06/03

23/06/18

24/06/08

9,514

£156,200

£16.42

£256,878

£27.00

2A

To be let

TBC

TBC

TBC

8,730**

£235,710

£27.00

£235,710

£27.00 Vendor will provide a two year rental gaurantee.

2B

Matalan Retail Ltd* 15 TBC TBC TBC 21,500** £473,000* £22.00 £473,000 £22.00 t /a Matalan

Income will be confirmed following PC

2C

The Carphone Warehouse Ltd 10 TBC TBC TBC 3,050** £88,450* £29.00 £88,450 £29.00 t /a Carphone Warehouse

Income will be confirmed following PC

Van

Mr JW Smith

3

22/04/05

21/04/08

n/a

Totals * The vendor will top-up this income until the unit becomes income producing ** To be confirmed following development of space

n/a 73,573

£7,500

n/a

£7,500

n/a

£1,966,383

£2,381,659


Page 15

Strood Retail Park Strood

Covenant Information

We have set out adjacent Dun & Bradstreet ratings for the primary tenants, which account for the majority of the income:

Tenant

D&B Rating

B&Q

5A1

32.5%

Next

5A1

10.0%

Argos

5A1

9.7%

Brantano

5A1

5.9%

Carpetright

4A1

9.0%

Matalan

5A1

27.3%

Carphone Warehouse

5A1

5.1%

% of income

99.5%

These figures are based on income following completion of the new lease – virtually all income is 5A1 rated.

The average unexpired term of the primary income will stand in the order of 10.5 years, following completion of these leases.


Page 16

Planning Planning Permission was granted on the 6th December 1989 by Rochester Upon Medway City Council, for the ‘demolition of existing buildings and erection of non-food retail warehouse and ancillary works, including parking area for customer’s use. Conditions included, stated that: ‘The building shall be used as a non-food retail warehouse and for no other purpose (including any other purposes in Class A1 of the Schedule to the Town and Country Planning (Use Classes) Order 1987.’ Following significant Fire damage to the stand-alone Matalan unit (A), Planning Permission was granted by Medway Council for the ‘Construction of a block of three retail units with associated parking spaces.’ Copies of these documents are available on request.

The park has an open A1 non food planning consent offering excellent flexibility moving forwards.

Strood Retail Park Strood


Strood Retail Park Strood

Page 17


Page 18

Strood Retail Park Strood

Environmental Considerations

Asset Management Opportunities

WSP Environmental undertook a review of various documents relating to the Environmental condition of

We consider that there are a number of asset management opportunities

the subject property, and concluded as follows:

available to drive future performance:

It is our opinion, subject to further recommendations below, that the site represents a low risk of environmental liability

• The letting of the 811 sq m (8,730 sq ft) to set an improved tone of rents across the scheme.

for the freehold owner. A full copy of the report, together with the recommendations referred to above, is available on request.

• Pursue a surrender of Carpetright and re-let to another ‘open’ retailer such as New Look, Sportsworld, Boots, Mothercare etc. • In the short to medium term a downsize and carve up of the B&Q unit (lease expiry 21.12.2013). B&Q have another warehouse format in Gillingham and would most likely consider reducing their exposure in the area. The creation of smaller units would offer the opportunity to lift rental levels and improve tenant mix further, exploiting the

Estimated Rental Values

open A1 consent. There is also the potential of developing residential space above. • Exploit the existing food consent to introduce a food offer into the scheme. This would unquestionably improve the tenant mix and offer on the park. • Given the close proximity of the scheme to the town centre, there may well be an opportunity to introduce car parking charges and therefore benefit from another income stream.

Now that the new terrace is being reconstructed, negotiations can be pursued seriously in respect of the remaining 811 sq m (8,730 sq ft) of ‘new space’ (the rest being let to Matalan & Carphone Warehouse). Based on the indications of interest received to date, we consider an achievable level of rent on this space stands in the order of £27.00 psf. Further information is available on request. We have based our views of estaimated rental value on £27.00 psf for a unit of 7,500 – 10,000 sq ft, and have set these out in the Tenancy Schedule on page 14.

• Advertising signage on Priory Road and Commercial Road to be investigated.


Page 19

Strood Retail Park Strood

Proposal

We strongly believe that rental values can be driven forward through asset management initiatives.

We are instructed to seek offers in the region of ÂŁ40,000,000, subject to contract and exclusive of VAT, for the Freehold interest in this property. A purchase at this level would show the following yield profile, based on our estimate of rental value and costs of 5.7625%.

UNIT 1A UNDER OFFER

Initial Yield June 2008 December 2008 Equivalent Yield True Equivalent Yield Reversionary Yield

: : : : : :

4.64% 5.05% 5.55% 5.60% 5.80% 5.63%


Contacts For more information please contact: Patrick Knapman T: 020 7152 5019 F: 020 7152 5381 E: patrick.knapman@eur.cushwake.com

Justin Houlihan T: 020 7152 5670 F: 020 7152 5381 E: justin.houlihan@eur.cushwake.com

www.cushmanwakefield.com Misrepresentation Act 1967 and Property Misdesrciptions Act Cushman & Wakefield for themselves and for vendors or lessors of this property whose agents they are, give notice that : 1 The particulars are produced in good faith, are set out as a general guide only and do not constitute any part of a contract. 2 No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatever in relation to this property. 3 This property is offered subject to contract and, Floor areas, measurements or distances given are approximate and unless otherwise stated, all rents are quoted exclusive of VAT. 4 Nothing in these particulars should be deemed to be a statement that the property is in good condition or that any services or facilities are in working order. 5 Unless otherwise stated, no investigations have been made regarding pollution or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required. 6 Any plans are published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds. The plans are based upon Ordnance Survey Map with the permission of the Controller of H. M. Stationery Office Crown Copyright, Cushman & Wakefield Licence No. ES753998.

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Strood | Strood Retail Park | January 08 | Ref: 104544


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