501 DUNSTABLE ROAD � LUTON � LU4 8QN

BMW & Mini

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ProposalWe are instructed to seek offers for the freehold interest in excess of £5,550,000 subject to contract and exclusive of VAT. A purchase at this level would refl ect an attractive Net Initial Yield of 5.25% and a low capital value of £148 per sq ft, after deducting purchasers costs of 6.61%.

BMW & MINI � 501 DUNSTABLE ROAD, LUTON, LU4 8QN2

CAMBRIDGE

Luton

Bedford

Northampton

Milton Keynes

Aylesbury

Stevenage

Harlow

Watford

A6

A5

A1

A5

A41

A41

A43

A10

A14

A11

A421

A428

A418

M25M25

M11

M40

A1(M)

M1

M1

11

21 21a

A5Investment Summary.

Situated on the Madford Retail Park, 2 miles north west of Luton Town Centre, 20 miles south east of Milton Keynes

Excellently positioned fronting onto the A505, the main arterial route which leads directly from the M1 (J11), 1 mile to the west, to the centre of Luton

Two adjoining modern glazed showrooms, refurbished in 201680 display bays (293 in total)Workshops and large parking provisions

Floor Area: 37,400 sq ftSite Area: 2.3 acres (29% site coverage)

Single let to Ivor Holmes LimitedGuaranteed by Specialist Cars Holdings Limited (D&B Rating 4A1)AGA from Pendragon PLC until Dec 2031

AWULT: 17.8 yrs (to expiry)

Marketing Rent: £310,277 pa (£7.85 psf)

RPI-linked annual rent reviews capped at 2.77% pa

Tenure: Freehold Refurbished in 2016 by the tenant at a cost of £2 million

Location.

Site

Pla

n.

£

*boundary for indicative purposes only

BMW & MINI � 501 DUNSTABLE ROAD, LUTON, LU4 8QN 3

1. Currys PC World, McDonalds & Next

2. Arriva3. Tyre City 4. The Range5. Pizza Hut 6. KFC7. Hatters Way Retail Park8. SCS Sofa9. Hertz, B&Q, Trade Point10. Aldi11. SOS Direct Mail12. Screwfi x13. SH Pratt Group14. Bestway Cash & Carry15. Toyota16. Vauxhall17. London Luton Airport

Local Occupiers.

2

4

5

7 86

9

1412

1013

11

3

17

15

16

LUTON STATION

Madford Retail Park

Sovereign ParkBilton Way

Industrial Estate

M1

J11

1

TO M1 (J11)

TO LONDON

TO LONDON

A505

BMW & MINI • 501 DUNSTABLE ROAD, LUTON, LU4 8QN4

Tenancy Information.

Property Tenant Name Guarantor Total Area Sq Ft

Lease Start

Lease Expiry

Break Option

Next Review

Rent review mechanism

Contracted Rent pa

Contracted Rent psf*

BMW & Mini, 501 Dunstable Road, Luton, LU4 8QN

Ivor Holmes Limited

Specialist Cars Holdings Limited (D&B Rating 4A1)

37,400 22-Oct-2006 21-Dec-2036 - 25-Dec-2019 Annual RPI capped 2.77% £310,277 £7.85

Accommodation Sq M Sq Ft

GROUND FLOOR:

Showroom & Ancillary 1,476 15,908

Workshops, Parts & Valet 1,215 13,061

FIRST FLOOR:

Office Areas & Ancillary 783 8,431

TOTAL GIA 3,474 37,400*

Display Parking 80

Customer & Additional Parking 158

TOTAL PARKING 238 SPACES

*Including 2,259 sq ft of tenant improvement works

The building has been measured in accordance with the RICS Code of Measuring Practice (Sixth Edition) and provides the following Gross Internal Areas:

Accommodation.

Franchise Information.

Rent Review Provision.

BMW and Mini are part of the BMW Group, which also encompasses Rolls Royce. In the UK, BMW has a market share of 7.3% (Dec 2018), an increase on the 2017 figure of 6.9%. Similarly, Mini’s market share also increased in 2018 to 2.8% (Dec 2018), up from 2.7% in the previous year. BMW sold 172,048 new cars in 2018, placing them 5th in the UK by market share, and Mini sold 67,021 new cars, placing them 14th.

BMW Group have invested nearly £2 billion in its UK operations since 2000. MINI was ranked as the 7th best-selling car of 2018, with 44,904 registrations. They are ranked 5th overall in the Summer 2018 Dealer Attitude Survey with a score of 7.5 (average score 5.7), with BMW ranked 11th with a score of 6.0. BMW was an early entrant to the electric vehicle game having launched the i3 in 2017. BMW’s electric vehicle range has since been added to with two hybrid sports cars; the i8 and i8 Roadster. Mini has a growing range of new car designs and updated technology, and has created a new electric car due to go on sale in 2019.

Annual rent reviews on 25 December which are calculated as the lesser of the rent payable immediately before the review date (“the Rent”) subject to RPI linked increases and the Rent multiplied by 102.77%. The reversionary lease, commencing December 2031 has a day one rent review and no further reviews.

*Rent psf apportioned on the basis that external car display bays and compounds are rentalised separately. Rental breakdown available on request.

Covenant.The property was assigned in to Ivor Holmes Limited (N2) in 2017. Pendragon PLC (D&B Rating 5A1) are providing an AGA for the remainder of the original lease to December 2031. A reversionary lease has been agreed to extend the term by 5 years to December 2036. The reversionary lease is guaranteed by Specialist Cars Holdings Limited (D&B Rating 4A1), and are one of the largest privately owned BMW and MINI dealers in the UK.

Financial Summaries are set out below.

IVOR HOLMES LTD 31-Dec-15 31-Dec-16 31-Dec-17

TURNOVER £36,029,404 £37,689,599 £37,483,646

PROFIT /(LOSS) BEFORE TAX -£356,240 -£502,648 -£462,377

TANGIBLE NET WORTH - - -

SEPCIALIST CARS HOLDINGS LTD 31-Dec-15 31-Dec-16 31-Dec-17

TURNOVER £196,946,253 £196,210,755 £178,175,906

PROFIT /(LOSS) BEFORE TAX £2,162,267 £1,911,892 £926,184

TANGIBLE NET WORTH £17,597,585 £17,884,855 £19,514,398

London Luton Airport

LUTON

Luton & SundownIndustrial Estate

North LutonIndustrial Estate

CradockIndustrial Estate

CosgroveIndustrial Estate

Royal LondonMall

Firbank & DalroadIndustrial Estates

Capability GreenBusiness Park

The Business Centre& Barratt Industrial

Park

SovereignPark

M1

M1

M1

M1

M1

A505

A5

A5183

Industrial Estate

A505

Nearby Dealerships.

1. Citroen & Subaru - Slip End Garages

2. Ford - Hartwell

3. Hyundai - Perrys

4. Mazda & Kia - Brayley

5. Kia - Grovebury Cars

6. Toyota - Steven Eagell

7. Vauxhall - Thurlow Nunn

8. Vauxhall - Thurlow Nunn

FRANCHISE - DEALER

ADULT CATCHMENT POPULATION

TOTAL POPULATION EARNING £20,000+ PA (AGE 18+ YEARS)

5 MILES

5 MILES

10 MILES

10 MILES

400,000

84,000

675,000

202,000

2

1

3

5

6

4

7

8

DRIVE TIME TO NEAREST TOWNS / CITIES

MILTON KEYNES 25 MINUTES(18 MILES)

WATFORD 30 MINUTES(17 MILES)

STEVENAGE 35 MINUTES(16 MILES)

AYLESBURY 45 MINUTES(20 MILES)

CAMBRIDGE 45 MINUTES(42 MILES)

LONDON 55 MINUTES(36 MILES)

Automotive Market Commentary.

0%

Less than 3 years old

4-6 years old

7 years old +

30%10% 40%20% 60%

The UK used car market remains strong with 7.61 million vehicles sold in 2018. Although the number of used car sales showed a small decline of 2.2% year-on-year, the used car market remains approximately 3.2 times the size of the new car market.

New car sales were marginally down in 2018 as a result of the lack of supply from manufacturers which were hindered by the introduction of Worldwide Harmonised Light Vehicle Test Procedure. Despite the prevailing supply constraints, there were still 2.37 million new vehicle registrations in 2018 which is above the 10 year average of 2.35 million.

The recent strong sales figures have been driven by increased petrol car sales (up 9% y-o-y), and Alternative Fuel Vehicle (AFV) sales (up 21% y-o-y). Registrations of AFVs have increased by 290% since 2015, highlighting their popularity amongst consumers which is pushing manufacturers to continually advance their technologies. There are 40 plug-in electric vehicles (EVs) now available in the UK market, with a further 20 due in 2019 alone.

The drive for greener vehicles alongside regulatory change has instigated a structural shift in the automotive market. The majority of manufacturers now expect that a quarter of sales will be from EVs by 2023, as emphasised by average waiting times with orders for a new factory ordered cars now taking 10-12 weeks, whilst wait times for EVs are often reported to be in excess of 6 months.

Some dealerships are looking to reposition their properties by proactively rolling out enhanced and consumer focussed aftersales services. The main determinant of this market is the number of vehicles on the road, which has risen 0.9% over 2018 to 34.6 million vehicles.

The graph highlights that in 2018, 79% of cars on the road in the UK were over 4 years old. This underpins the strong demand for servicing, maintenance and repair, which continues to remain robust for safety, economic and performance reasons. Furthermore, this provides an opportunity for dealerships to expand and innovate their aftersales offering, and it is widely anticipated that automotive retailers will need to adopt these changers in order to maintain their respective market share.

There is a distinction between the manufacturer and distributor sides of the UK motor industry which is particularly important in light of some recent notable manufacturing relocations and Brexit related noise. Not all the recent UK manufacturing relocations are Brexit related, with Honda’s recently relocating to Japan in order to better serve the larger Asian and US markets that account for 95% of their global sales. This is unsurprising as 80% of cars made in the UK are exported to over 160 different markets.

In comparison, the UK car dealer market is in robust health. Car pricing will be influenced by trade tariffs but to a large extent this impact will be softened by the prevailing low interest rate environment which funds up to 90% of new car and 50% of used cars purchases. Amidst all this activity the car dealership remains central to the delivery of the evolving product and represents the key point of contact with customers with 79% of motorists buying their most recent car from a dealership.

BMW & MINI • 501 DUNSTABLE ROAD, LUTON, LU4 8QN6

THE BREAKDOWN OF UK CARS ON THE ROAD BY CAR AGE (2018)

2013 2018

Average Rent £ psf £13.55 psf £14.14 psf

Average Rent Overall £310,609 pa £335,415 pa

Average Yield 6.46% 5.55%

Prime Yield 4.98% 3.98%

Average Unexpired Lease Term 17.1 yrs 12.5 yrs

Average Lot Size £4,764,109 £6,221,200

Average SQ FT 23,279 sq ft 24,297 sqft

Average Site Density 26% 34%

% of RPI Transactions 77% 62%

The Automotive Investment Market.

Automotive property has been an ever-growing and attractive asset class for investors who are often attracted by prominent, well connected real estate with substantial unexpired lease terms to robust covenants who have incurred considerable expenditure on the assets.

The automotive market has consolidated over the past 10 years following a flurry of M&A activity. Simultaneously, brands have continued to demand bigger facilities and dealerships to house their widening range of vehicles and to support the growing aftersales revenue streams.

The growing investor interest in the automotive sector has resulted in the car dealership market achieving investment volumes of £311 million in 2018, which is the second highest annual figure on record behind the £494 million recorded in 2014. Excluding 2014, investment volumes in 2018 represent almost a fifth of total investment into car dealerships over the past 10 years.

In recent years the market has been buoyed by increasing numbers of specialist investment funds and property companies focusing on automotive investment opportunities. As the weight of money being drawn to car dealership investments has increased, yields have compressed over the past 5 years (see table), with both average and prime yields decreasing by c. 100 bps. This has pushed average lot sizes up, reinforcing the attraction of the sector to institutional investors.

PROPERTY FLOOR AREA (SQ FT) ACRES TENANT(S)

UNEXPIRED LEASE TERM

(YRS)RENTAL RENTAL

(PSF) PRICE NIY COMMENTS DATE

Bristol (Cribbs Causeway) Jaguar Land Rover 73,196 - Guy Salmon Limited 20 £1,136,000 £15.52 £24,000,000 4.43% Off market forward funding,

5 yearly RPI Reviews Dec-18

Camberley Volkswagen 8,048 0.81 Volkswagen Group (UK) Ltd 7 £288,019 £35.79 £5,150,000 5.25% 5 Yearly Open Market Dec-18

Yeovil Volkswagen 22,221 1.87 Heritage Automotive Limited 20 £250,000 £11.25 £4,500,000 5.17% 5 Yearly RPI Reviews Nov-18

Huddersfield Jaguar Land Rover 58,000 -  Rybrook Vehicles Ltd 20 £700,000 £12.07 £13,000,000 5.00% Forward funding,

5 yearly RPI Reviews Aug-18

Newcastle Upon Tyne Vauxhall 30,282 3.26 Vertu Motors (VMC) Limited 15 £416,514 £13.75 £7,000,000 5.58% 5 yearly Fixed uplifts Aug-18

Wolverhampton BMW & MINI 60,582 3.49 Rybrook Vehicles Ltd 20 £750,000 £12.38 £15,000,000 4.64% 5 Yearly RPI Reviews Jun-18

Crawley Mercedes 44,360 2.75 Boiling Investments Limited 20 £700,000 £15.78 £15,150,000 4.33% 5 Yearly RPI Reviews Mar-18

Watford Fiat 9,720 0.25 Palmers (St Albans) Limited 8 £115,000 £11.83 £2,440,000 4.41% 5 Yearly Open Market Jan-18

THE EVOLUTION OF CAR SHOWROOM INVESTMENTS

INVESTMENT COMPARABLES

BMW & MINI • 501 DUNSTABLE ROAD, LUTON, LU4 8QN 7

Two adjoining prominent, modern car showrooms, with double height glazing, offices, ancillary space and a large workshop with 6m eaves. Tenant refurbishment works of £2 million in 2016, displaying their commitment to the location.

One of the best positioned car showrooms in Luton. Situated on a roundabout of the A505, the dealership offers excellent visibility fronting the main route between Junction 11 of the M1 motorway, 1 mile to the west and Luton Town Centre, 2.5 miles to the south east.

The M1 was recently widened in a £230 million project between Luton and Milton Keynes. This will significantly increase the capacity of the road, improving access and connectivity of Luton, and will support further regeneration in the local area.

Luton is situated 30 miles north of London, with easy access to the UK’s major cities being adjacent to the M11, and only minutes from the M25 and A1, along with excellent rail and air connectivity.

Strong retail destination being located on the Madford Retail Park, with a good mix of surrounding occupiers including Currys PC World, The Range, Team Knowhow and Eurocell. To the south is Hatters Way Retail Park, where occupiers include Dreams, DFS, Harveys, ScS, B&Q, ALDI, TradePoint, Kwik Fit and Hertz.

Let to Ivor Holmes Limited with a low passing rent of £7.85 psf. The tenant has signed a 5 year extension from December 2031, guaranteed by Specialist Cars Holdings Limited (D&B Rating 4A1), displaying their commitment to the location. Pendragon Plc (D&B Rating 5A1) have on AGA on the original lease to December 2031.

Lease expiry in December 2036, with 17.8 years unexpired. Annual upwards only rent reviews calculated to the lesser of RPI linked increases and 2.77%, offering a secure income stream.

BMW & MINI • 501 DUNSTABLE ROAD, LUTON, LU4 8QN8

Investment Rationale. Tenure.

Rateable Value.

EPC.

Freehold.

We are advised that the property is assessed in the 2017 Valuation List as “Car Showroom & Premises”. Rateable Value £390,000.

To be provided.

8

The property is elected for VAT and it is anticipated that the transaction will be treated as a Transfer of Going Concern (TOGC).

Vat & TOGC.

Data room access can be provided upon request.

Data Room.

Freehold

Tenure.

Proposal.

We are instructed to seek offers for the freehold

interest in excess of £5,550,000 subject to contract

and exclusive of VAT.

A purchase at this level would reflect an attractive Net Initial Yield of 5.25% and a low capital value of £148 per sq ft, after deducting purchasers costs of 6.6%.

Key Contacts.+44 (0)203 486 3468+44 (0)7980 809031lzielinski@geraldeve.com

T:M:E:

Leo Zielinski+44 (0)203 486 3476+44 (0)7740 862 511vsmith@geraldeve.com

T:M:E:

Vicky Smith+44 (0)203 486 3460+44 (0)7342 051 757pscott@geraldeve.com

T:M:E:

Phil Scott

+44 (0)203 588 7200+44 (0)7831 827 442bbexson@automotive-property.com

T:M:E:

Bill Bexson+44(0)203 588 7200+44 (0)7733 535 952ehighnam@automotive-property.com

T:M:E:

Eddie Highnam

Conditions under which these particulars are issuedAll details in these particulars are given in good faith, but Gerald Eve LLP and Automotive Property Consultancy Ltd ( APC) for themselves and the Vendors/Lessors of this property for whom they act give notice that:-1. These particulars do not and shall not constitute, in whole or in part, an offer or a contract or part thereof, and Gerald Eve LLP and Automotive Property Consultancy Ltd ( APC) have no authority to make or enter into any such offer or contract.2. All statements contained in these particulars are made without acceptance of any liability in negligence or otherwise by Gerald Eve LLP and Automotive Property Consultancy Ltd ( APC), for themselves or for the Vendors/Lessors.3. None of the statements contained in these particulars is to be relied on as a statement or representation of fact or warranty on any matter whatsoever, and intending purchasers must satisfy themselves by whatever means as to the correctness of any statements made within these particulars.4. The Vendors/Lessors do not make, give or imply, nor do Gerald Eve LLP and Automotive Property Consultancy Ltd ( APC) or any person in their employment have any authority to make, give or imply, whether in these particulars or otherwise, any representation or warranty whatsoever in relation to the property.

The statement does not affect any potential liability under the Property Misdescriptions Act 1991. Particulars issued March 2019.

© 2019 Gerald Eve LLP. All rights reserved.Gerald Eve LLP is a limited liability partnership registered in England and Wales with registered number OC339470 and its registered office at 72 Welbeck Street, London, WIG 0AY

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