BRIGHTON - Cushman & Wakefield...Brighton boasts a primary catchment of 515,000 persons and an estimated shopping population of 329,000, evidencing its dominant retail environment

BRIGHTON129 / 132 NORTH STREET & 133 QUEENS ROAD

CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

BRIGHTON129/132 NORTH STREET & 133 QUEENS ROAD


Investment Highlights

• Brighton is one of the largest retail centres in the UK, with a primary catchment of 515,000 persons and boasts an eclectic and vibrant mix of high-end, mass market and boutique retailers.

• Brighton ranks 9th on the PMA Retail Score and Fashion Score - evidencing the strength of the retail offer.

• The subject property is situated in a dominant city centre location at the busy junction of North Street and Queens Road.

• Flagship store of 71,935 sq ft, with three adjoining retail units.

• Long WAULT of 14.3 years to expiry and 9.6 years to break.

• 85% of the total income is secured against Boots UK Ltd for a further 16 years (11 years to break).

• Remaining income secured against major UK retailers Krispy Kreme and TUI.

• Freehold.

• Obvious asset management opportunities to extend the WAULT and significant long term development potential (STPP).

• Current total rental income of £1,523,000 pa.

We are instructed to seek offers in excess of £31,000,000 (Thirty One Million Pounds), subject to contract, for the freehold interest in this property.

This reflects an attractive Net Initial Yield (NIY) of 4.60%, assuming purchaser’s costs of 6.77%.

“The subject property is situated in a dominant city centre location at the busy junction of North Street and Queens Road”

Economic & Demographic Profile

Brighton boasts a primary catchment of 515,000 persons and an estimated shopping population of 329,000, evidencing its dominant retail environment. The catchment area encompasses the built up areas of Brighton, Hove, Shoreham-by-Sea and extends north to include affluent locations in the South Downs as well as Lewes, Haywards Heath and Burgess Hill.

54% of the catchment are classed as being within the most affluent ABC1 social groups; this is largely due to the city’s well established position as a business hub and its excellent connectivity with London, and subsequent commuting population (PMA).

Spending in Brighton is boosted by leisure and business tourism and the city ranks in the UK’s Top Ten tourist locations (VisitBritain.org). According to Brighton & Hove City Council, some 8.5 million tourists visit the city each year, bringing around £780 million to the local economy (2014). The city also has a significant student population of over 30,000, bringing additional spend to the catchment during term time and adding to the already relatively young population, which includes a high proportion of 15-44 year olds.

CHANNELTUNNEL

TERMINAL

LUTON

STANSTED

HEATHROW

GATWICK

SOUTHAMPTON

CITY

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Stow-on- the-Wold

Hertford

WelwynGarden

City Ware

HatfieldHoddesdon

Royston

Biggleswade

Felixstowe

SudburySa�ronWalden

Haverhill

Harwich

NewportPagnell

Sheerness

Canvey Island

Whitstable

HerneBay

Canterbury

Rayleigh

Chelmsford Maldon

Witham

Braintree

Bishop's Stortford

Faversham

Sittingbourne Ramsgate

Deal

Hythe

Ashford

Tonbridge

Uckfield

Crowborough

Bexhill-on-Sea

Newhaven

EastGrinstead

HaywardsHeath

Lewes Hailsham

Sevenoaks

OxtedRedhillReigate

Dorking

Horsham

Godalming

Chichester

Haslemere

Littlehampton

Petersfield

Sandown

Shanklin

Ryde

FawleyHythe

LymingtonNew Milton Cowes

Alton

Winchester

Romsey

Farnham

Aldershot

Leatherhead

Bracknell

Windsor

Croydon

Swanley

Andover

Ringwood

Salisbury

Christchurch

Newbury

Devizes

Cirencester

Didcot

Dartford

Stroud

Witney Kidlington

Tilbury

Chigwell

Epsom

Sutton

Kingston upon Thames

RichmondWoolwich

Barnet Enfield

Maidenhead

Beaconsfield

HarrowUxbridgeHenley-

on-Thames

Letchworth

St Albans

Hitchin

Dunstable

Berkhamsted

Tring

Marlow

HemelHempstead

LeightonBuzzard

Thame

Abingdon

Bicester

Aylesbury

BanburyEvesham

Stratfordupon Avon

Stevenage

Ipswich

Southend-on-Sea

Margate

Brentwood

Colchester

Clacton-on-Sea

Basildon

Gravesend

Dover

Folkestone

Tunbridge Wells

Maidstone

Hastings

Eastbourne

RochesterGillingham

Chatham

Crawley

Hove

WorthingBognorRegis

Havant

Eastleigh

Basingstoke

Guildford

WokingCamberley

Staines

Reading

PooleBournemouth

Swindon

Cheltenham

Harlow

Slough

Watford

Luton

Bedford

Amersham

HighWycombe

Oxford

Milton Keynes

Fareham

Gosport Portsmouth

BRIGHTON

SOUTHAMPTON

LONDON

SOUTH DOWNSNATIONAL PARK


Location

Brighton is one of the largest commercial centres in the South East of England, located 46 miles (74 km) south of London, 19 miles (30 km) west of Eastbourne and 55 miles (88 km) east of Southampton.

The city enjoys excellent road communications with the A23 dual carriageway providing access to the M23 which leads to London, the M25 and the national motorway network beyond. In addition, the A27 skirts the north of the city and runs east / west from Portsmouth to Eastbourne.

In the year to 31st March 2016, Brighton railway station was the seventh busiest station outside of London with 17.3m entries/exits (ORR). The station offers fast and regular services to London Victoria and London Bridge, with a fastest journey time of approximately 50 minutes, as well as local services to Portsmouth, Seaford and Lewes.

Gatwick Airport is located 23 miles (37 km) to the north and Heathrow Airport is located 48 miles (77 km) to the north west; both airports provide domestic and international services and are ranked the first and second largest in the UK respectively. Brighton is further served by Southampton International Airport located 54 miles (86 km) to the west.


Retailing in Brighton

Brighton has an estimated 1.58m sq ft of in-town retail floorspace, ranking 27th of the PMA centres on this measure; however, it ranks 9th on its PMA Retail Score and Fashion Score, making the retail provision tight and in high demand. There is a particular undersupply of large format stores within the city.

Retail demand for Brighton is exceptionally high with it being one of the key locations within which both UK and European retailers seek representation, having first established in London. The city’s retail offer is extensive and continues to provide one of the most exciting UK shopping experiences outside Central London.

The retail core is principally linear, running in an east/west direction along Western Road and North Street. These prominent high streets form part of the prime retail pitch, along with Churchill Square Shopping Centre, Brighton’s primary covered shopping centre. ‘The Lanes’ and East Street merge to create a unique shopping experience of historic passageways and streets occupied by aspirational and independent retailers. ‘The Lanes’ link directly with the city’s retail core via North Street and combine to create one of the UK’s top retailing destinations.

Due to the city’s geography and historic nature, substantial in-town retail development is limited and in recent years developers have been forced to reposition existing stock as opposed to build afresh. An obvious example is, The Hanningtons Estate, which predominantly fronts North Street. The asset was acquired in June 2015 and is being substantially redeveloped to create a landmark mixed-use scheme, which will significantly enhance the eastern end of North Street.



Situation

The subject property occupies a highly prominent corner position, situated at the junction of North Street, West Street and Queens Road. The pitch benefits from significant footfall, being situated equidistant between Churchill Square, Brighton’s only shopping centre to the west and the city’s famous ‘Lanes’ to the east. The aforementioned redevelopment of The Hanningtons Estate is anticipated to strengthen the eastern end of North Street and in turn bolster footfall at the subject property.

The property’s exceptional position within Brighton’s retailing core is further enhanced by the proximity of Brighton railway station which is situated a short distance north, along Queens Road. Also in close proximity are an array of well-known national multiple retailers including Superdry, Holland & Barrett, Sainsbury’s Local, ITSU, Metro Bank and TK Maxx.

AVAILABLE

THE LANES

Description

The property comprises an extremely prominent corner retail building arranged over ground and four upper floors. The building has been split to provide the main modern retail store and a further three well configured shop units, totalling approximately 77,647 sq ft. The building is built around a steel frame with brick walls and highly distinctive glazed curtain walling on the front elevations.

The bulk of the building (129 North Street) has been occupied by Boots since 1979 and was substantially redeveloped in 1998 specifically for them. The improvements included two new escalators and a 20 person passenger lift between the ground and first floors and internal works; these floors provide large open retailing floorplates whilst the second and third floors are used for storage and staff accommodation.

129 North Street benefits from a double rear docking station on Windsor Street making rear servicing simple. Due to the topography of Brighton the building is built on a hill and consequently the unit benefits from large entrances for both retail floors. The ground floor is accessed from the primary North Street entrance and the first floor is accessed from Queens Road.

130 North Street comprises an attractive regularly configured shop unit with a prominent frontage to North Street and ancillary accommodation on first floor. 131/132 North Street comprises a double fronted store which benefits from a return frontage and first sales accommodation. 133 Queens Road is arranged over ground and first floor and we understand benefits from an A2 Use Class. All three of the units have rear access and the North Street units have undercover servicing from Windsor Street, which the tenants use for car parking and deliveries.

“The building has been split to provide the main modern retail store and a further three well configured shop units, totalling approximately 77,647 sq ft.”



Tenure

The property is held Freehold.

Tenancy

The property is let on effective FRI terms to three national retailers with 133 Queens Road currently vacant. The tenancies produce an attractive WAULT of 14.3 years to expiry, 9.6 years to break and are described further in the tenancy schedule below.

Unit Tenant Lease Start (Rent Review)

Expiry Date(Break) Rent (£pa) GIA

(sq ft)

GroundSales (sq ft)

ITZA(units)

GroundAncillary

(sq ft)

FirstSales (sq ft)

First Ancillary

(sq ft)

Total(sq ft) Comments

129North Street

Boots UK Ltd 25/03/1998 (24/06/2023)

23/06/2033(24/06/2028) £1,300,000 71,395 71,935

Current passing rent of £831,300 pa. Reversionary lease signed and starting on 24/06/2018 at £1,300,000 pa. Vendor to top-up to new rent upon completion. Tenant only break on not less than 9 months notice.

130 NorthStreet

Krispy Kreme UK Ltd 01/02/2016 17/10/2020

(01/11/2017) £68,000 809 524 492 1,301

Mutual rolling break after 01/11/2017 on not less than 6 months notice and subject to a £50,000 landlord payment. Contracted outside of S24-28 of the Landlord & Tenant Act 1954.

131-132 NorthStreet

TUI UK Retail Ltd 08/11/2016 07/11/2021(23/06/2018) £105,000 1,630 1,051 1,002 2,632

Mutual rolling break after 23/06/2018 on 12 months notice. 2.5% addition for return frontage.

133 Queens Road

Vacant (Rent and Rates Guarantee)

£50,000 894 674 87 798 1,779Left vacant due to redevelopment. 12 months rent and rates guarantee to be provided by the vendor.

Electricity Substation

The Southern Electricity Board 12/12/1978 11/12/2058 Peppercorn

Totals £1,523,000 77,647



Market Commentary

Unlike most retail centres nationally, prime rents in Brighton remained resilient throughout the recent recession at approximately £200 Zone A, highlighting the strength and depth of occupational demand for the city. Post-recession rents in the Standard Life owned Churchill Square have grown steadily to approximately £245 Zone A (net effective) and strong rental pressure remains. Rents along the traditional prime section of Western Road directly opposite the Churchill Square currently stand at approximately £180 Zone A, with similar rents being achieved on East Street within ‘The Lanes’ in the smaller aspirational retail units.

The rental tone on North Street where the subject property sits, equidistant between Western Road and East Street, currently stand at £125 Zone A, lower than neighbouring retail pitches and consequently offering strong potential for rental growth going forwards. Furthermore, each of the tenancies within the subject premises have been agreed within the last 15 months due to landlord redevelopment negotiations and therefore provide a low base from which to grow rents in the short to medium term.

129 North StreetBoots are currently passing off £18.07 per sq ft. Looking at the rental evidence below, £18.07 per sq ft provides a low passing rent for a large format flagship store within Brighton.

Town Occupier Transaction Date GIA (sq ft) Rent Net Rent psf Comments

Southampton H&M Lease Renewal Apr-16 32,868 £1,125,000 £34.25

Bluewater Boots Regear Jan-15 44,642 £2,455,310 £55.00

Brighton WH Smith Lease Renewal Jun-13 22,563 £713,800 £27.42 Headline rentof £33.20

Brighton Topshop / Topman

Open Market Letting May-13 33,400 £921,402 Headline rent

of £27.60

Brighton Bershka / Zara Open Market Letting Mar-13 14,931 £465,000 £29.60

130 & 131-132 North StreetPassing rents equate to a low £124 Zone A (Krispy Kreme) and £92.50 Zone A (TUI), applying A/15 and A/20 to the first floor sales and first floor ancillary accommodation respectively. We highlight below two recent zoned transactions within the vicinity of the subject premises, evidencing the low passing rents within the subject property.

Address Tenant Transaction Date NIA (sq ft) Rent Zone A Comments

82 North Street Metro Bank Open Market

Letting Mar-15 8,209 Stepped rent – Average £345,000 £134.00 25 year lease.

No breaks.

143 North Street

99p Stores (now Poundland) Lease Renewal Dec-13 10,750 £200,000 £118.50 10 year lease.

No breaks.

“85% of the total income is secured against Boots UK Ltd for a further 16 years”



Asset Management

The leases with Tui and Krispy Kreme were recently regeared and 133 Queens Road left empty to provide the landlord with flexibility to redevelop the block. Any purchaser will have the ability to further secure the asset’s income by renegotiating/reletting these units on more favourable terms, should they wish to do so.

130 North Street - Krispy Kreme UK LtdKrispy Kreme originally occupied their unit on a 10 year lease expiring October 2020 at £68,000 pa (the current passing rent). This lease was surrendered and regranted in 2016 with the landlord paying a £280,000 premium to add break clauses. A further £50,000 landlord payment is payable if the break is actioned.

131-132 North Street - TUI UK Retail LtdTui (formerly First Choice) have been in occupation since 1988. A lease renewal was agreed in 2016 at £124,750 pa on a 5 year lease (without break) but a £19,750 (16%) discount was agreed for the landlord flexibility. We consider this unit to be highly reversionary.

133 Queens Road - Vacant Left vacant with a view to future redevelopment by the vendor.

Investment Comparables

Date Address Tenant Years to Expiry Price NIY Purchaser

Jan-17 13-15 Sidney Street, Cambridge Next 11 £21,815,000 3.65% Overseas Private

Dec-16 38-42 East Street, Brighton

Lush, Estée Lauder,Maje, Pret a Manger - £14,375,000 4.10% Redevco

Jun-16 31-37 High Street, Islington Boots 14.5 £21,900,000 4.06% Aberdeen Asset

Management

Feb-16 181-185 Western Road, Brighton H&M 10.5 £17,100,000 4.50% Overseas Private

Jun-15 The Hanningtons Estate, Brighton

Multi-Let - Development Opportunity - £57,100,000 2.30% Redevco

May-15 132-134 North Street, Brighton

Sainsbury’s,Sports Direct, Poundland WAULT 4.75 £15,150,000 4.20% Merseyside

Pension Fund

Jan-14 71-78 North Street & 40-44 West Street, Brighton

Waterstones,Pret a Manger, Eat WAULT 12 £8,000,000 4.86% Private

“Long attractive WAULT of 14.3 years to expiry and 9.6 years to break”



Rear Servicing

Covenant Status

Boots UK Limited (00928555)Founded in 1849, Boots is the UK’s largest pharmacy chain and operates over 2,500 stores throughout the country, employing over 70,000 staff. Their primary business is the sale of medicines, health and beauty products and a range of food and drink. They have an Experian Credit Score of 100/100.

Fin. Year End Turnover Pre-Tax Profit Net Worth

31-Aug-15 £9,198,000,000 £542,000,000 £367,000,000

31-Mar-14 £6,340,000,000 £507,000,000 £456,000,000

31-Mar-13 £6,204,000,000 £452,000,000 £430,000,000

Krispy Kreme UK Limited (04532445)Krispy Kreme UK Limited is the UK retail arm of the world renowned Krispy Kreme Doughnuts. They opened their first UK store in 2003 and have now grown to over 35 locations. The brand offer 16 different varieties of doughnuts and are considered a market leader. They have an Experian Credit Score of 100/100.


31-Jan-16 £61,700,000 £11,759,000 £17,745,000

01-Feb-15 £52,192,000 £7,274,000 £8,135,000

29-Dec-13 £52,393,271 £3,166,379 £2,326,822

TUI UK Retail Limited (01456086)TUI UK Retail Limited forms part of the multi-national travel company TUI Group, which can date its roots back to 1923. 131-132 North Street was previously occupied by First Choice with whom TUI merged in 2007 to form TUI Group. The store trades as Thomson, the UK brand of TUI, and is expected to be rebranded to the TUI branding by 2018, when the Thomson name is phased out. They have an Experian Credit Score of 85/100.


30-Sep-15 £199,000,000 £8,000,000 £8,000,000

30-Sep-14 £203,488,000 £1,007,000 -£108,878,000

30-Sep-13 £206,661,000 -£5,330,000 -£111,185,000



EPCs

The Energy Performance Certificates and Recommendation Reports for the property are available upon request:

• 129 North Street - Boots – C71• 130 North Street – Krispy Kreme – E111• 131-132 North Street – TUI – D81• 133 Queens Road – Vacant – D77

VAT

The property is elected for VAT.

Proposal

We are instructed to seek offers in excess of £31,000,000 (Thirty One Million Pounds), subject to contract, for the freehold interest in this property. This reflects an attractive Net Initial Yield (NIY) of 4.60%, assuming purchaser’s costs at 6.77%.

Cushman & Wakefield LLP (and any joint agent appointed) on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: (1) The particulars are produced in good faith, but are 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 whatsoever in relation to this property. (3) The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. (4) Nothing in these particulars should be deemed 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. Publication Date: May 2017. Designed and Produced by Creativeworld. T 01282 858200.

Further InformationFor further information on this property please contact:

Chris LewisTel: 020 7152 5991E-mail: [email protected]

Sam WaterworthTel: 020 7152 5149E-mail: [email protected]

Pierre KunklerTel: 020 7152 5565E-mail: [email protected]



Documents

BRIGHTON - Cushman & Wakefield...Brighton boasts a primary catchment of 515,000 persons and an estimated shopping population of 329,000, evidencing its dominant retail environment