prime freehold car dealership investment€¦ · • milton keynes is recognised as one of the...

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LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN PRIME FREEHOLD CAR DEALERSHIP INVESTMENT LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

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Page 1: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

PRIME FREEHOLD CAR DEALERSHIP INVESTMENTLANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

Page 2: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

• Milton Keynes is recognised as one of the fastest growing towns in the UK with further future growth resulting from infrastructure improvements to strengthen the Cambridge – Milton Keynes – Oxford knowledge arc.

• The property is located in the established commercial district of Kingston, immediately adjoining a cluster of other car dealerships occupied by Volvo, Honda and Mercedes-Benz.

• A modern dual franchise dealership of 35,583 sq ft (3,305.8 sq m) with an excellent car parking provision of over 300 spaces.

• Volkswagen Group have their UK headquarters in Milton Keynes, hence the property is an integral part of their dealership network.

• A large site of 3.11 acres reflecting a 23% site cover.

• Let to the excellent covenant of Volkswagen Group United Kingdom Ltd until July 2025.

• A passing rent of £520,000 pa (£14.61 psf) offering the potential for a rental uplift on review in 2020.

• Freehold.

• Offers sought in excess of £8,125,000, subject to contract and exclusive of VAT, reflecting a net initial yield of 6.00%.

INVESTMENT SUMMARY

Page 3: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

MILTON KEYNESMilton Keynes is a major commercial centre located 50 miles north west of London, 19 miles south of Northampton and 70 miles south east of Birmingham. The town has excellent road communications being situated adjoining the M1 motorway with immediate access to both junctions 13 and 14. Additionally, the A5 trunk road runs a mile to the west of the town.

Milton Keynes also has a fast and regular train service to London Euston and Birmingham New Street with fastest journey times of approximately 35 and 50 minutes respectively. This connectivity is a major attraction to businesses and between 2010 and 2016 the business base in Milton Keynes grew by 34%. Major national and global employers represented in the town include Volkswagen, Santander, KPMG, Mercedes-Benz, John Lewis and River Island.

Milton Keynes has been one of the fastest growing towns in the UK over recent years with government support for further significant growth. As at 2013 the town had an estimated population of 255,700 which is forecast to grow to 302,000 by 2026.

A 2017 report by the National Infrastructure Commission, Partnering for Prosperity, highlights the need for securing the long term economic success of the Cambridge-Milton Keynes-Oxford knowledge arc, describing the project as ‘a national priority’. Consequently, Milton Keynes is a development location of national significance. Two main themes of the report are to ensure a process allowing a major increase in the rates of house building, along with infrastructure improvements with emphasis on the East West Rail project connecting Oxford, Milton Keynes and Cambridge and the Oxford to Cambridge Expressway.

The Cambridge-Milton Keynes-

Oxford knowledge arc is a national

priority

Page 4: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

M1

TO J13

TO J14

KINGSTON CENTRE

MAGNA PARK

Page 5: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

SITUATIONThe property is situated within the Kingston district of Milton Keynes, a well established commercial area. The property is situated just off the A4146 Tongwell Drive which provides dual carriageway access to junction 14 of the M1, with the A421 to the south providing access to junction 13.

Kingston is recognised as one of the leading motor trade locations in the town and other manufacturers represented in modern dealerships on Greyfriars Court are Mercedes-Benz, Honda and Volvo. Directly opposite the subject property is the Kingston Centre, a district shopping centre anchored by Tesco Extra, whilst Costco occupy the property immediately to the east.

In the last few years, Kingston has also become the leading logistics location in the town, resulting from the Magna Park development by Gazeley to the east of the subject property. A number of large distribution warehouses have been developed and occupied by DHL, Waitrose, River Island, AG Barr and John Lewis.

MAPVolkswagen Milton Keynes Brochure

14

13

LONDON

BIRMINGHAM

MAIDSTONE ROAD

CHIPPENHAM DRIVE

CENTRALMILTON KEYNES

A421 STANDING WAY A421 STANDING WAY

A4146 TONGWELL STREET

A4146

TONG

WELL STREET

CHAFFRON WAY

NEWPORT RO

AD

FEN STREET

NEWPORT ROAD

BROU

GHTON ROAD

M1

BIRMINGHAM

MILTON KEYNES

LONDON

M1

M40

M40

M42

M6

M5

M1

M25M25

KetteringCoventry

Stratford-upon-Avon Bedford

Luton

Aylesbury

OxfordWitney

Banbury

Northhampton

M4

MAPVolkswagen Milton Keynes Brochure

14

13

LONDON

BIRMINGHAM

MAIDSTONE ROAD

CHIPPENHAM DRIVE

CENTRALMILTON KEYNES

A421 STANDING WAY A421 STANDING WAY

A4146 TONGWELL STREET

A4146

TONG

WELL STREET

CHAFFRON WAY

NEWPORT RO

AD

FEN STREET

NEWPORT ROAD

BROU

GHTON ROAD

M1

BIRMINGHAM

MILTON KEYNES

LONDON

M1

M40

M40

M42

M6

M5

M1

M25M25

KetteringCoventry

Stratford-upon-Avon Bedford

Luton

Aylesbury

OxfordWitney

Banbury

Northhampton

M4

Page 6: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

DESCRIPTIONThe property comprises a purpose built car dealership facility currently operated by Lancaster for the Volkswagen and Skoda brands.

The front of the building comprises the Volkswagen showroom which has full height glazed elevations and can accommodate approximately 20 display vehicles. This showroom area also incorporates a handover bay, a customer lounge, sales offices and toilet facilities. Overlooking the showroom are first floor galleried offices with ancillary staff and storage areas to the rear. Adjoining the Volkswagen showroom is the refurbished Skoda showroom with internal space for 6 display vehicles, together with a handover bay and ancillary offices.

To the rear of the showrooms is the extensive workshop which supports the facility’s dual franchise operation. It comprises eighteen work ramps and two MOT inspection bays. The workshop has ten access doors onto the rear service road (within the demise) which ensures ease of vehicular movement to assist the service operation.

Externally, the property benefits from an excellent car parking provision. To the front and side of the Volkswagen showroom are 69 prime car display spaces with approximately a further 53 display spaces alongside and beyond the Skoda showroom. Also, in front of the showroom accommodation are 38 marked customer spaces and 4 MOT parking bays. To the north of the dealership building is further extensive car parking for approximately 140 vehicles, along with a self contained valet building.

Page 7: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

ACCOMMODATIONThe property provides the following approximate gross internal areas.

Car Parking Prime Display 69 spaces

Further Display 53 spaces

Customer/MOT 42 spaces

Further Parking 140 spaces

Total Parking 304 spaces

Description Sq Ft Sq M

Ground Floor Volkswagen Showroom 13,352 1,240.4

Skoda Showroom 4,185 388.8

Workshop 10,048 933.5

Oil Store 457 42.5

First Floor Offices 2,381 221.2

Ancillary 2,111 196.1

Valet Building 3,049 283.3

Total 35,583 3,305.8

SITEThe estimated site area is 3.11 acres (1.26 hectares) with a site cover of only 23%.

Page 8: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

Page 9: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

RENTAL VALUEThe passing rent of £520,000pa was agreed at rent review in 2015 on an open market basis and reflects £14.61 psf overall. This level of passing rent is appropriate for a dual franchise facility of this size in the South East and the evidence below confirms the potential for negotiating an uplift at rent review next year.

TENUREFreehold.

The property is not to be used for retail or Class A2 use, although motor showroom and associated uses are permitted.

TENANCYThe entire property is let to Volkswagen Group United Kingdom Ltd (company number 514809) for a term of 20 years from 7th July 2005 (6.5 years unexpired) on full repairing and insuring terms at a current rent of £520,000pa. The rent is subject to upward only open market rent reviews on 29 September 2020 and the last day of the contractual term. The tenant has the Option to take a further lease for a term of 15 or 20 years by giving notice prior to 7th July 2023.

The entire property is underlet to Lancaster Motor Company Ltd, trading as Lancaster, for a term of 20 years less 3 days from 7th July 2005. It is understood the passing rent is also £520,000pa. This lease is excluded from the provisions of sections 24 to 28 of the Landlord and Tenant Act 1954.

Address Date Tenant Rent

Jaguar Land Rover, Bristol Letting Dec 2018 Guy Salmon Ltd£1,207,000 pa

(£16.50 psf)

Mercedes-Benz, Guildford Rent review Sept 2016 Sandown Motors£432,000 pa

(£16.08 psf)

Volvo, Milton Keynes Rent review June 2016 Marshall Motor Group Ltd£180,000 pa

(£15.43 psf)

Mercedes-Benz, Milton Keynes Rent review Nov 2013 Sytner Group Ltd£730,587 pa

(£17.39 psf)

Page 10: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

COVENANTThe Volkswagen brand is world renowned as one of the leading global motor manufacturers with their UK headquarters located in Milton Keynes.

The principal activity of the tenant company, Volkswagen Group United Kingdom Ltd, is the importation and distribution of Volkswagen, Audi, SEAT and Skoda vehicles and parts. These four brands account for approximately 20% of the entire UK car market.

The tenant company has reported the following financial accounts.

The sub-tenant, Lancaster Motor Company Ltd, is a subsidiary of Jardine Motors Group UK Ltd, one of the top ten dealer groups in the UK.

Year Ending 31/12/2017 (£000,000)

Year Ending 31/12/2016 (£000,000)

Turnover £10,412.7 £9,792.9

Pre-Tax Profit £156.0 £125.5

Total Equity £719.3 £704.3

Page 11: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

Address Date Tenant Unexpired TermPrice NIY

Volkswagen, Camberley

Dec 2018Volkswagen Group UK Ltd

6.5 years£5,200,000 5.20%

Vertu Specialist Cars, Newcastle Upon Tyne

Dec 2018Honda Motor Europe Ltd

14.5 years£3,700,000 5.37%

Volkswagen, Cheltenham

Nov 2018Volkswagen Group UK Ltd

6 years£4,100,000 5.83%

Audi, Cardiff May 2018Volkswagen Group UK Ltd

7.5 years£8,000,000 6.05%

Volvo, Milton Keynes Jan 2018Marshall Motor Group Ltd

8.5 years TBO£3,100,000 5.45%

MOTOR TRADE INVESTMENT MARKETThere continues to be strong demand from investors for opportunities within the sector, often attracted by the strength of covenant and the long term alternative uses of the site. We set out below a schedule of recent comparable investment transactions and further details are available upon request.

Page 12: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

EPCThe property has an EPC rating of C 56.

VATThe property is elected for VAT which will be payable on the purchase price. It is intended that the sale will be treated as a TOGC.

PRICEWe are instructed to seek offers in excess of £8,125,000, subject to contract and exclusive of VAT, for the freehold interest which reflects a net initial yield of 6.00% (assuming purchase costs of 6.67%).

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

Page 13: PRIME FREEHOLD CAR DEALERSHIP INVESTMENT€¦ · • Milton Keynes is recognised as one of the fastest growing towns in the UK ... is a major attraction to businesses and between

For further information or to make arrangements for a viewing, please contact:

ANDREW TAYLOR

Email: [email protected]

DDI: 020 7318 1934

FURTHER INFORMATION

SUBJECT TO CONTRACT AND EXCLUSIVE OF VAT

DISCLAIMER: Hoddell Stotesbury Morgan Limited (9050701) trading as HSM, for themselves and for the vendors of this property whose agents they are give notice that:- (i) the particulars are set out as a general outline only for the guidance of intending purchasers and do not constitute, nor constitute part of, an offer or contract; (ii) all descriptions, dimensions, references to conditions and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct but any intending purchaser should not rely upon them as a statement or as representations of fact but should satisfy themselves by inspection or otherwise as to the correctness of each of them; (iii) no person in the employment of HSM has any authority to make or give any representation or warranty whatever in relation to this property. (iv) unless otherwise stated all rents or prices quoted are exclusive of VAT which may be payable in addition. (v) HSM has not made any investigations or otherwise of any issues concerning pollution and potential land, building, air or water contamination. Prospective purchasers must undertake their own enquiries and satisfy themselves in this regard. Date: February 2019.

LANCASTER VOLKSWAGEN AND SKODA, GREYFRIARS COURT, KINGSTON, MILTON KEYNES MK10 0BN

RICHARD HARDING

Email: [email protected]

DDI: 020 7318 1930