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13
HARRINGTON COURT London

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Page 1: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one

h a r r i n g t o n C o U rt

London

Page 2: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one
Page 3: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one

4 5

inVEStMEnt highLightS g Rare opportunity to acquire a substantial

freehold property in one of London’s most desirable locations

g The property comprises 49 apartments and 12 retail units together with ancillary accommodation

g 33 of the apartments benefit from a short term letting planning designation, whilst 16 have a residential (C3) planning consent

g Excellent potential to generate higher income through a refurbishment of the units as serviced apartments

g Projected stabilised income from the serviced apartments based on their existing condition of £1.93 million per annum by year three

g Low retail rents offering excellent prospects for future rental growth following a strategic asset management initiative

g Potential for a change of use from serviced apartments to residential (C3), subject to the necessary consents

g Potential for an additional floor at roof level, creating further accommodation subject to the necessary consents

g Total gross internal area of the building is approximately 58,000 sq ft (5,400 sq m)

g Vacant possession of the freehold subject to the occupational tenancies

On the instructions of B Moon and J Pitt of BNP Paribas Real Estate acting as Joint Fixed Charge Receivers

Page 4: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one

6

LoCationHarrington Court is located in the heart of South Kensington, within a short distance of South Kensington Underground station. The immediate area is renowned for its affluent mix of hotels, restaurants, retail, museums and upmarket residential dwellings.

The property is situated on the southern side of Harrington Road, at the junction with Glendower Place. The immediate neighbourhood is characterised by an elegant combination of tree lined avenues, attractive white stucco villas, ornate red brick mansions and private communal gardens.

South Kensington is home to world famous cultural attractions including the Royal Albert Hall, the Natural History Museum and the Victoria & Albert Museum. A wide range of cafes, restaurants and fashionable shops add to the area’s appeal. The well regarded French Lycee school is also diagonally opposite on the northern side of Harrington Road.

The area is extremely well served by public transport with South Kensington Underground station (Circle, District and Piccadilly lines) only 50 metres east of the property. The Cromwell Road (A4), which leads to the M4 and M25 motorways, is approximately 150 metres to the north of the property and is a major thoroughfare into central London and out to London Heathrow Airport, as well as areas west of London.

Both London Paddington Station, approximately 4 km (2.5 miles) from the property and London Victoria, approximately 4.2 km (2.6 miles) from the property, operate direct express train services to London Heathrow Airport and London Gatwick Airport respectively.

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London

Page 5: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one

MAYFAIR LONDON EYE

BUCKINGHAM PALACE

THE SHARDHYDE PARK

NATURAL HISTORY MUSEUM

HARRODS KINGS ROADBROMPTON CROSS

SOUTH KENSINGTON UNDERGROUND STATION

h a r r i n g t o n C o U rt

London

Page 6: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one

11

DESCriPtion

arEa SChEDULE

Harrington Court comprises 7-19 Harrington Road and 8-14 Glendower Place and is built over basement, ground and five upper levels under a mansard tiled covered roof. The property dates from the late Victorian period and benefits from an attractive red brick facade, balconies and double glazed sash windows. Two eight person lifts serve all levels from basement to fifth floor and were both installed in 2005.

The heating and air conditioning systems are combined, with individual units in each apartment. There is no centralised heating or air conditioning system. The individual systems in the apartments are connected to a bank of condensers located on the roof.

There are a total of 49 apartments within the building, 33 of which benefit from a short term letting planning designation, whilst 16 have a residential (C3) planning use. 15 of the short let apartments benefit from the ability to be subdivided. The principal entrance and reception for the apartments is located on Harrington Road. The Net Internal Area of the 49 apartments is 31,489 sq ft (2,925.63 sq m).

All of the apartments are available with vacant possession with the exception of two. Notices seeking possession have been served in respect of apartment 501. The occupier of apartment 410 has vacated and the receivers are seeking return of the keys. Alternatively, proceedings will be instigated if this is not successful.

The retail units are located on the ground and basement levels of both Harrington Road and Glendower Place. The NIA of the 12 units is 4,856 sq ft (451.14 sq m).

The total site area is approximately 0.231 acres [0.0934 hectares].

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Floor Accommodation

Area Schedule

Building GIA

Sq ft Sq m

5th 2 x three bedroom apartments, 4 x two bedroom apartments 6,612 615

4th 4 x two bedroom apartments, 2 x one bedroom apartments, 4 x Studios 7,978 741

3rd 4 x two bedroom apartments, 2 x one bedroom apartments, 4 x Studios 7,980 741

2nd 3 x two bedroom apartments, 3 x one bedroom apartments, 4 x Studios 7,883 732

1st 3 x two bedroom apartments, 3 x one bedroom apartments, 5 x Studios 8,142 756

Ground 12 retail units, 1 x two bedroom apartment 8,886 826

Basement 1 x two bedroom apartment, commercial and ancillary acommodation 10,607 985

Total 58,088 5,397

NOTE:- Reproduced from the O rdnance Sur vey M ap with the permis s ion of the Controller of H . M . Stationer y Of f ice. © Crown copyright l icence number 1 0 0 02424 4 Savil ls (U K) Ltd .

NOTE:- Publis hed for the purposes of identif ication only and although believed to be correct accuracy is not guaranteed .

A full measured survey has been undertaken by Engineering Land & Building Surveys Ltd. This survey will be assigned to the purchaser.

Page 7: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one

13

SErViCED aPartMEntSLondon is one of the world’s leading leisure and business destinations and with a huge diversity of demand drivers, attracts in the region of 30 million overnight visitors every year. However, in spite of the city’s global importance, the supply of serviced apartments is limited compared to its global counterparts. For example, New York and Hong Kong have 5.7 and 5.3 serviced apartment units per 1,000 business visitors respectively whereas London has only 1.6 units per 1,000 overseas business visitors.

Average apartment rates continue to increase with a 3.6% year-on-year growth reported in Q213 with RevPAA (Revenue per Available Apartment) up 4.8% over the same period. With future supply to remain constrained and the continuing improvement in overseas business visitor numbers, this upward trend in rates and occupancy is expected to continue.

Harrington Court benefits from close proximity to many of London’s premier tourist attractions, whilst also being easily accessible from the city’s centres of business.

Within the South Kensington submarket, there is a relatively limited number of serviced apartments providing accommodation at the 4* or above standard. There is therefore strong potential to improve Harrington Court’s existing standard of accommodation and provide a higher quality of product to a market with limited competition.

Go Native were appointed in June 2013 and have prepared the projected future trading performance below based on a unit count of 49. For the projections it is assumed that the condition of the apartments is ‘as is’ and have not benefited from any major refurbishment works.

On completion of the sale, Go Native’s interim management contract can be terminated with one month’s notice.

*Go Native have prepared these numbers on the basis of a fee of 15% of Total Revenue achieved through a combination of base fee and profit share.

Year 1 Year 2 Year 3 Year 4

Occupancy 83% 85% 87% 87%

Average Room Rate (£) 174 183 192 202

Total Revenue (£) 2,589,038 2,783,988 2,991,867 3,150,161

Operating Costs (£) 465,295 478,718 495,976 510,855

Gross Operating Profit (£) 2,123,743 2,305,270 2,495,891 2,639,306

Total Management Costs (£)* 401,484 437,118 474,379 502,318

Sinking Fund (£) 51,781 55,680 59,837 63,003

Insurance (£) 25,890 27,840 29,919 31,502

Total Deductions (£) 479,155 520,638 564,135 596,823

EBITDA (£) 1,644,588 1,784,632 1,931,756 2,042,483

Room Type Number of Units % of total

Studio 17 35%

1 Bed 10 20%

2 Bed 20 41%

3 Bed 2 4%

Total 49 100%

Page 8: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one

14

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13

SOUTH KENSINGTONrEtaiLThe Central London retail occupational and investment markets have continued to show remarkable resilience to the global downturn and, over the last four years, have been one of the best performing asset classes in the property industry. This performance has primarily been driven by the strength of London’s West End where the diverse mix of retail offerings has continued to attract a wealthy mix of international shoppers. Many of the highest spenders come from the Gulf States, Russia, China and Brazil where import duties on luxury goods are high. Combined with a favourable currency exchange rate, this makes shopping in London a cost effective option.

The success of the core West End retail market has also been replicated in the affluent locations of Knightsbridge. Streets such as Brompton Road, Sloane Street and the area around Brompton Cross benefit from strong occupational demand from high end retailers looking to position themselves in these affluent catchment areas.

The area around South Kensington / Brompton Cross has been one of the top performing sub markets in Central London over the past 24 months. In particular, there have been a number of recent deals which reflect a specific demand from upmarket fashion boutiques, including the following:g ACNE letting at Brompton Cross. Following a surrender and

re-grant of a new lease, the Zone A was increased from £125 psf to £265 psf.

g Carolina Herrara (previously Cluttons). The lease on this property was surrendered when it reflected a rent of £200 ZA. The lease was subsequently openly marketed and received a total of 15 bids from luxury retailers, finally achieving £400 ZA, together with a £400,000 premium.

Whilst the luxury retail market is fuelling the growth of Brompton Cross , the area around South Kensington Underground Station and the subject property is benefitting from a natural knock on effect with many retailers looking for representation in this pitch.

Harrington Court’s current average Zone A rent is £55 per sq ft. This is a substantial discount to the local vicinity and offers excellent rental growth prospects . It is our belief, that through achieving vacant possession of the property’s retail units, there is significant potential upside from improving the tenant mix and generating higher rents.

Prime rents in the imediate area are being achieved on Old Brompton Road, directly opposite the Underground station. The block known as Melton Court is currently achieving Zone A rents in excess of £200 per sq ft Zone A.

Recent evidence includes:g 21 Old Brompton Road - This is a recent open market letting

where Wasabi agreed a new rent in excess of £200 per sq ft Zone A.

g 72 Old Brompton Road - Vini Italiani agreed an open market letting in April 2011 at £141 per sq ft Zone A.

An overview of the current retail tenancy schedule is provided overleaf. The receivers have not marketed any of the vacant units, thereby allowing the purchaser to implement an immediate asset management strategy.

Reproduced by permission of Experian Goad - licence no. PU100017316. Not to Scale - For Identification Purposes Only.

Page 9: harrington CoUrt - Savillspdf.savills.com/documents/HarringtonCourtLondonSW7.pdf · 4 5 inVEStMEnt highLightS g Rare opportunity to acquire a substantial freehold property in one

16 17

rEtaiL tEnanCY SChEDULE

Address Tenant AccommodationFloor Area Lease Terms Current Rent

CommentsSq Ft Total ITZA Lease Start Lease Term Lease Expiry Total ITZA psf

7 Harrington Road Ronald Shepping t/a Librairie La Page

Ground Floor (Retail) Basement (Retail)

515 322 837 342 Sep-03 15 years Sep-18 £17,000 £50.00 Protected by the LTA 1954 Act

Outstanding rent review 29/09/13

7a Harrington Road Keiko Sushi Ground Floor Basement

444 534 978 330 Sep-00 10 years Sep-10 £21,000 £64.00 Suspected illegal occupation*

9 Harrington Road Kensington Chimes Limited t/a Kensington Music

Ground Floor Basement

684 641 1325 444 Mar-03 15 years Sep-18 £25,285 £57.00 Protected by the LTA 1954 Act

Outstanding rent review 25/03/13

11 Harrington Road Vacant Ground Floor Basement

269 276 545 243 - - - - - Vacant Possession order obtained*

11a Harrington Road Vacant Ground Floor Basement

744 355 1099 405 - - - - - Vacant Possession

15 Harrington Road Harrington Jewellers Ground Floor Basement

273 320 593 259 Oct-99 10 years Oct-09 £12,690 £49.00 Suspected illegal occupation*

15a Harrington Road Francois Bellas t/a Fresh Hairdressers

Ground Floor Basement

546 306 852 346 Dec-01 - Nov-10 £23,750 £69.00 Tenant holding over

17 Harrington Road Elza Gonzales Diaz t/a Kopla

Ground Floor Basement 298 - 238 Sep-05 10 years Sep-15 £15,000 £63.00 Protected by the LTA 1954 Act

Outstanding rent review 02/09/10

17a Harrington Road Reamex Enterprises Limited Ground Floor Basement

216 1,374 1590 - Jun-06 15 years Jun-21 £15,000 £9.00 (overall) Protected by the LTA 1954 Act

19 Harrington Road Vacant Ground Floor Basement Storage

211 212 423 232 - - - - - Vacant Possession

19a Harrington Road D Mckay (Frulterers) ltd Ground Floor Basement

238 185 423 257 Dec-87 21 years Dec-08 £14,000 £55.00 Tenant holding over

12/14 Glendower Place Nasim Ahmed t/a Renzacci

Ground Floor Basement

418 627 1045 462 Jan-02 10 years Jan-12 £20,000 £43.00 Tenant holding over

Renewal negotiations ongoing

O2 Telephone Mast O2 (UK) Limited Roof Space - - - Feb-01 5 years Feb-16 £7,000 - Outside the LTA 1954 Act

Total 10,008 3,558 £170,725

*Full details on the data room

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PLanning anD rEDEVELoPMEnt PotEntiaL The property is located within the Royal Borough of Kensington and Chelsea but is neither listed nor located within a designated Conservation Area. The building presently consists of 33 serviced apartments and 16 C3 residential units.

The Borough planning policy does not seek to protect short lets and temporary sleeping accommodation. The property has historically benefited from a C3 residential use and accordingly, there is the potential to change the use of the serviced apartments back to residential, subject to achieving the necessary consents.

In addition to the change of use and refurbishment of the 33 serviced apartments, there is also scope to increase the building height through an additional floor of residential. Any such extension would need to be sensitively designed; however, the principle is considered to be acceptable as the building is

not located within a Conservation Area or an area designated as being unsuitable for roof extensions. This extension is proposed in lieu of the extensive amounts of plant and machinery, which is presently accommodated at roof level and could be rationalised as part of any redevelopment. A planning appraisal has been prepared by Savills and a conceptual scheme by Brimelow McSweeney Architects to demonstrate this opportunity. Both documents can be either downloaded from the data room or obtained directly from the Selling Agents.

MEthoD oF SaLEThe property is for sale by private treaty. The upper parts are being sold with the benefit of vacant possession, aside from one apartment, with the retail element being sold subject to the occupational tenancies where applicable.

tEnUrEFreehold.

VatWhere VAT is applicable, it is envisaged that the sale will be transacted as a TOGC.

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SELECtED FLoor PLanS

APRT406 APRT

404

APRT407

APRT409

APRT410

APRT408

APRT406

APRT405

APRT403

APRT401

APRT102

APRT104

APRT106 APRT

108

APRT110

APRT111

APRT109

APRT107

APRT105

APRT103

APRT101 APRT

501APRT502

APRT504

APRT506

APRT505

APRT503

GROUND FLOOR FOURTH FLOOR

FIRST FLOOR

HARRINGTON ROAD HARRINGTON ROAD

GLENDO

WER PLACE

GLENDO

WER PLACE

GLENDO

WER PLACE

GLENDO

WER PLACE

HARRINGTON ROAD HARRINGTON ROAD

FIFTH FLOOR

Full floorplans are available on the data room. Full floorplans are available on the data room. Not to scale: for identif ication purposes onlyNot to scale: for identif ication purposes only

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Important NoticeSavills and BNP Paribas Real Estate and their clients give notice that: 1. They are not authorised to make or give any representations or warranties in

relation to the property either here or elsewhere, either on their own behalf or on behalf of their client or otherwise. They assume no responsibility for any statement that may be made in these particulars. These particulars do not form part of any offer or contract and must not be relied upon as statements or representations of fact.

2. Any areas, measurements or distances are approximate. The text, images and plans are for guidance only and are not necessarily comprehensive. It should not be assumed that the property has all necessary planning, building regula-tion or other consents and Savills have not tested any services, equipment or facilities. Purchasers must satisfy themselves by inspection or otherwise.

Brochure designed and produced by Savills MarketingOctober 2013

FUrthEr inForMationThe following supporting information can be found at:

www.savills.com/hc g Title plansg Tenancy scheduleg Floor plans and area scheduleg Commercial leasesg Building Surveyg EPCsg Planning appraisalg Conceptual redevelopment scheme

EPCEnergy performance certificates are available for the complete property and can be found on the data room.

PriCingOn the instructions of B Moon and J Pitt of BNP Paribas Real Estate acting as Joint Fixed Charge Receivers, offers are sought for the freehold interest.

ViEWingSAll viewings are by appointment only through the joint agents.

ContaCtSMichelle WebbHotel Investment +44 (0) 20 7409 [email protected]

Jonathan O’Regan Central London Investment +44 (0) 20 7409 [email protected]

Andrew Boyd Residential Development +44 (0) 20 7409 [email protected]

Archie HunterHotel Investment +44 (0) 20 7409 [email protected]

Steven Cooper Residential +44 (0) 20 7338 [email protected]

Adam Renn West End Investment+44 (0) 20 7338 [email protected]

Tim Hugill West End Investment +44 (0) 20 7338 [email protected]

Gregor Wallace West End Investment +44 (0) 20 7338 [email protected]

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h a r r i n g t o n C o U rt

London