shopping centre investment...

Shopping Centre Investment OpportunitySt John’s Way Shopping Centre, Knowle, Solihull B93 0LE

INVESTMENT SUMMARY

n Rare opportunity to buy shopping centre in highly

desirable and affluent commuter village

n Located in the centre of Knowle

n 32,096 sqft retail scheme with 24 retail units

n Upper floor residential apartments to part of the scheme

n Fully let retail scheme let to 23 tenants

n Current income - £486,650 per annum, 29% secured to

Tesco

n Highly reversionary

n AWULT on retail of 5.3 years to expiries and 3.0 years to

breaks

n Considerable asset management initiatives and

development opportunities

n £5,700,000

n Initial Yield - 8% Reverisonary Yield - 9.1%

LOCATION

Knowle is a highly desirable residential location and affluent village that forms part of Solihull Metropolitan Borough. It is located approximately 3 miles south east of Solihull town centre, 11 miles south east of Birmingham and 11 miles north west of Warwick and Leamington Spa.

Knowle has a resident population of approximately 11,000, and there are 207,000 people living within the Borough (2011 Census). The population is affluent, with significantly higher proportions of managers and professional people than the national average.

Knowle has easy access to the main Midlands towns and cities and as such is a very popular location for professionals working in the likes of Birmingham and Solihull. There are excellent schooling provision for both primary and secondary schools.

The popularity of Knowle is reflected in the 2016 average house price of £450,000 which according to Rightmove increased 5% from 2015 levels and up 18% from 2014.

Knowle is directly to the south east of the M42 at Junction 5 which provides access northwards to the M6 and southwards towards the M40. The A4141 runs through Knowle which leads west to Solihull and into Birmingham and south east to Warwick and Leamington Spa.

Birmingham International Rail Station is located approximately 5 miles north of Knowle, off Junction 6 of the M42. It is on the mainline between Birmingham New Street and London Euston, with frequent services to London Euston and a journey time of approximately 75 minutes. The nearest train station to Knowle is at Dorridge, approximately 1 mile to the south west. It is served by Chiltern Railways and is on the Birmingham Snow Hill to London Marylebone. The journey time to Birmingham is approximately 20 minutes and London 1 hour 45 minutes.

Birmingham Airport is located 5 miles north of Knowle, adjacent to Birmingham International and the National Exhibition Centre.

SITUATION

St John’s is located in the centre of Knowle with frontage to High Street (A4141). The scheme leads to four public car parks which lie behind the scheme and High Street and are accessed from St John’s Close. The car parks have capacity for approximately 160 cars and provide up to 3 hours free parking. The scheme has direct pedestrian access from the car parks.

Along High Street nearby retailers include Costa, William Hill, Vision Express, Lloyds Bank and Natwest as well as various well regarded local restaurants and Loch Fyne.

Beyond the village car parks is predominantly residential development providing a mix of flats and detached homes. There is significant pressure on Knowle to expand into surrounding green belt and for the existing secondary school to expand.

DESCRIPTION

The property forms a large proportion of the retail offering in Knowle with the overall site extending to 1.51 acres. The majority of the shopping scheme dates from the 1960’s and comprises an open shopping centre with central pedestrian walkway. Several of the shops fronting High Street are older but have been part of the scheme for many years.

The retail offering is anchored by Tesco who have expanded into their current three units over time. There is a mix of restaurants, take-aways, ladies fashion shops, estate agents and hairdressers elsewhere in the scheme, many tenants have been in situ for many years.

Above a number of the retail units are residential apartments separately accessed from the precinct. These are generally 2 and 3 bed flats the majority of which have been sold off on a long leasehold basis.

To the rear of the units there are access roads within the demise which provide loading to the shops, some units have additional parking areas and garage stores.

TENURE

Freehold.

There is more information in the dataroom regarding highways. St John’s Way is within the development but is a public highway maintained by Solihull Borough Council.

Public

P

Public

P

Public

P

TENANCIESThe property is currently let to 23 retail tenants. The WAULT is currently 5.3 years to expiries and 3.0 years to breaks although this will increase on conclusion of the two ongoing lease renewals where tenants want new 20 year terms. Just under 29% of the income is secured to Tesco. The majority of the residential accommodation is sold off on long leaseholds with the majority of these leases now having just over 60 years unexpired. There is one regulated tenancy.

The current combined rent passing is £486,650 with further increases likely from outstanding negotiations with existing tenants. We believe there is significant rental growth potential in the scheme and our ERV shows almost a 15% uplift in the overall income profile.

Full tenancy information is set out in the schedule. More information regarding ongoing discussions with existing tenants on reviews and renewals is available on request.

Unit Tenant Trading as Sales Area sq.ft (ITZA)

Ancilliary Lease Start Rent Review Lease Expiry(Break)

Rent £pa Zone A or£/sq.ft

ERV ERV£/sq.ft

Comments EPC

5 St Johns Way S Ajetti Luna Rosa 846 362 11/12/2013 24/06/2018 23/06/2025(23/06/2020)

£19,800 £16.99 £30,810 £30.00 Guarantor RW Cressman Esq up to 23/06/2018.

D-92

7 St Johns Way T Newey Sale Room 150(150)

119 24/06/2016 23/06/2019 £4,500 £28.02 £4,800 £30.00 G-214

9 St Johns Way R Benbrook Cristal 817(731)

107 24/06/2016 23/06/2021(23/06/2019)

£17,000 £24.78 £22,465 £30.00 D-86

11 St Johns Way

P Johal Ltd Piccadily Cards

678(484)

11/07/2010 10/07/2020 £9,000 £18.60 £15,975 £33.00 Also have refrigerated container in rear loading bay on licence.

D-94

12-14 St Johns Way

Acorns Children’s Hospice Trading Ltd

Acorns 733(725)

257 21/01/2012 20/01/2022 £24,000 £31.33 £25,210 £33.00 Recent rent review concluded. First two years rent now £22,000 pa before rising to £24,000. Vendor will top up to the £24,000 level.

D-94

15 St Johns Way

Handyline Ltd Royle Household

436(375)

134 20/07/2011 19/07/2021 £11,400 £29.51 £12,710 £33.00 Includes rear garage store

E-112

16-18 St Johns Way

Sequence (UK) Ltd Shipways 720(720)

252 17/08/2016 16/08/2021 £24,000 £31.58 £25,020 £33.00 New letting. Tenant upsized from unit on High Street.

C-67

17 St Johns Way

Inspeyer Ltd Bannister Eyecare

323(319)

105 06/09/2013 06/09/2018 05/09/2026(05/09/2018)

£9,500 £28.13 £11,050 £33.00 E-105

19 St Johns Way

A Alam Deli Pizza 432(374)

70 17/06/2016 16/12/2016 £9,000 £23.13 £13,440 £35.00 D-94

20 St Johns Way

The Curtain & Blind Shop Ltd

Knowle Interiors

585(505)

88 07/08/2007 28/09/2020 £12,000 £22.89 £15,590 £30.00 Tenant created covered area in rear yard.

G-189

21 St Johns Way

Temptations Lingerie Ltd

Temptations 552(426)

390 01/03/2014 01/0 29/02/2024 £13,000 £30.43 £15,370 £33.00 Includes two rear garage stores.

E-114

22 St Johns Way

T Li Tom Li Cantonese

412(353)

132 08/04/1992 06/04/2017 £11,000 £29.29 £13,015 £35.00 Solicitors instructed on lease renewal proposal for 20 year term at £13,000.

E-104




ERV ERV£/sq.ft

Comments EPC

32 St Johns Way

R Spriggs Pets World 597(487)

344 18/08/2012 18/08/2017 17/08/2022 £13,500 £27.72 £17,220 £33.00 D-86

34-36 St Johns Way

Xact Homes Ltd Xact Homes 1,389(1,077)

57 New 5 yearterm

£34,000 £31.33 £35,680 £33.00 New lease agreed as

tenant is taking Unit 36 in

addition to existing unit.

New lease on combined

double unit agreed.

D-77E-106

38-44 St Johns Way

Tesco Stores Ltd Tesco 8,302 3646,570

25/03/2016 25/03/2021 24/03/2026(24/03/2021)*

£140,000 £14.78 £140,000 £14.78 Lease renewal in 2016.

*Break option in March

2021 requires 6 months

notice. There are further

annual breaks from

2021 on no less than 12

months notice, these

are only exercisable if a

supermarket is developed

and opens in accordance

with planning application

PL/2011/01469/FULM.

C-71

1592 High Street (Ground)

Ale Rooms Ltd Ale Rooms 677(474)

04/11/2016 04/11/2021 03/11/2026(03/11/2021)

£15,000 £31.65 £15,405 £32.50 C-73

1594-1596 High Street

R Sudtagon Thai Village 994(849)

225 01/07/2000 29/06/2017 £33,000 £22.97 £40,020 £32.50 Lease includes two self

contained flats on upper

floors. Solicitors instructed

on lease renewal proposal

for 20 year term at

£40,000.

D-78

1598 High Street

The Salon in Knowle Ltd

The Salon 710(552)

01/04/2013 31/03/2018 £15,000 £27.17 £17,940 £32.50 D-83

1600 High Street

R Panesar Specialist Periodontics

481(439)

165 01/04/2009 31/03/2019 01/04/2019 £14,520 £32.14 £15,095 £32.50 D-78

1602 High Street

The Shoe Box of Knowle Ltd

Shoe Box 487(441)

306 01/08/2009 31/07/2019 £15,000 £30.54 £16,965 £35.00 F-128

1604 High Street

Hamilton Jones Interiors Ltd

Hamilton Jones Interiors

620(459)

09/06/2014 08/06/2019 £13,000 £28.32 £16,065 £35.00 F-143

1606 High Street (Ground)

A&N Barbieri Toni Barbieri 374(360)

118 18/03/2014 18/03/2019 17/03/2024(17/03/2019)

£11,000 £28.92 £12,290 £32.50 E-107

1606a High Street

A Hughes Barbarellas 354(341)

100 18/03/2013 18/03/2018 17/03/2023(17/03/2018)

£10,170 £28.36 £11,585 £32.50 E102

1592a High Street

S Winter-Moore 01/01/1980 30/12/2078 £60 £60




ERV ERV£/sq.ft

Comments EPC

Flat 2 St Johns Way

S Harris 01/01/1980 30/12/2078 £60 £60

Flat 4 St Johns Way

R Sudtagon 01/01/1980 30/12/2078 £60 £60

Flat 6 St Johns Way

Mr & Mrs K Martin 01/01/1980 30/12/2078 £60 £60

Flat 8 St Johns Way

S Measures & N Durant

30/06/1997 22/03/2022 31/12/2186 £190 £190

Flat 10 St Johns Way

P Lovegrove 01/01/1980 31/12/2078 £60 £60


J Yorke 01/01/1980 31/12/2078 £60 £60


P Whitehouse-Lowe

01/01/1980 31/12/2078 £60 £60 Flat is currently for sale through local estate agent. Re-geared long leasehold agreed in principle.


A Kiely 01/01/1980 30/12/2079 £60 £60


G Ashton 01/01/1991 2 yearly £6,000 £6,000 Regulated tenancy. G-3


T Li 01/01/1980 31/12/2078 £60 £60


H Pike 09/07/2010 31/12/2168 £30 £30


D Sherlock 01/01/1980 31/12/2078 £60 £60

Garage 2 St Johns Way

G Ashton 29/09/1992 28/09/1995 £360 £360


D Brown 02/07/2016 21/07/2019 £720 £720


Inspeyer Ltd 132 06/09/2013 06/09/2018 05/09/2026 £360 £360 Used for storage by Bannister Eyecare.

TOTAL 21,669 10,397 £486,650 £551,980

SERVICE CHARGEThere are two separate service charges covering the retail and residential elements, the retail budget for 2017 is anticipated to be c. £47,600, a decrease of almost 20% from the previous year. The residential budget is likely to be just under £5,000. More information is available in the data room.

RECENT RETAIL ACTIVITY

There is currently only one vacant shop in the centre of Knowle which is the old Shipways estate agents, this is vacant as the business have upsized and moved to the St John’s scheme. The last vacant unit in the scheme has been let to Xact Homes who are expanding their business into a second unit.

Over the course of the last 12 months a number of tenants have renewed leases and when vacancies have come up new tenants have taken the units. Rents are moving in an upward direction but are generally still below the general rental tone along High Street. We believe there is further potential to increase the general rental tone throughout the scheme. Our ERVs range between £30 and £35 Zone A.

There is strong demand from retailers to get representation in Knowle and we are aware of a number of unsatisfied requirements from various retailers, coffee chains and restaurants seeking units in the village.

ASSET MANAGEMENT OPPORTUNITIES

We believe there are both short term and longer term opportunities to enhance the retail offering in the scheme. There is the potential to look at larger scale development projects both at ground floor, to increase some of the retail unit sizes and the upper floors by potentially increasing the residential on site.

• Conclude lease renewals with Units 22 and 1594/1596 High Street (currently with solicitors)

• Look to introduce coffee shop and restaurant operators into the scheme

• Look to relet to further regional and national covenants

• Look to combine or expand existing units

• Re-gear residential leaseholds over time

• Buy back residential flats

• Look to develop further residential on the upper floor

PRICE

We are instructed to seek offers in excess of £5,700,000. A purchase at this level represents an initial yield of 8% and a reversionary yield of 9.1%, allowing for purchaser’s costs of 6.62%.

VAT

The property is elected for VAT and VAT is payable on the purchase. The intention would be to sell by way of a TOGC.

EPC’s

Individual ratings are within the tenancy schedule. Copies of the certificates are available in the dataroom. CONTACTS

For further information or to arrange inspections please contact :-

There is also a dataroom available for interest parties, access can be provided on request.

ANDREW FRANCK-STEIER0121 513 [email protected]

Misrepresentation Clause : The accuracy of any description, dimensions, references to condition, necessary permissions for use and occupation and other details contained herein are not guaranteed and are for general guidance only and prospective purchasers or tenants must not rely on them as statements of fact or representations and must satisfy themselves of their accuracy. Neither Franck-Steier Price Ltd, nor any of their employees or representatives has any authority to make or give any representation or warranty or enter into any contract whatever in relation to the property. Prices and rents quoted in these particulars may be subject to VAT in addition. The reference to any mechanical or electrical equipment or other facilities at the property shall not constitute a representation (unless otherwise stated) as to its state or condition or that it is capable of fulfilling its intended function. Prospective tenants/purchasers should satisfy themselves as to the condition of such equipment for their requirements.

Franck Steier Price Ltd

Third Floor, Victoria House

114-116 Colmore Row, Birmingham, B3 3BD

ANDREW PRICE0121 513 [email protected]

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