MERE 2-10 MERE GREEN ROAD/296-324 LICHFIELD ROAD … · Executive Summary • The development site...

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2-10 MERE GREEN ROAD/296-324 LICHFIELD ROAD

THE ROYAL TOWN OF SUTTON COLDFIELDBIRMINGHAM B75 5BS

Pre-let to M & S and Boots. Existing 10 year lease to Greene King on part of the site

Retail Development Site with Full Planning Permission

Executive Summary

• The development site is located in Mere Green, an area of Four Oaks in The Royal Town of Sutton Coldfield, Birmingham• The affluent suburb of Mere Green is located 2 miles from Junction 3 of the M6 Toll and has good access to the A453, a link road connecting the town to the M6, the A5 and directly to Birmingham

• The opportunity comprises a development site with full planning permission for a 68,624 sq ft retail and leisure schemearranged across 11 separate units as well as an existing pub building which will be retained and is fully let to Greene KingBrewing and Retailing Limited

• The scheme benefits from 3 anchor tenants secured by way of two agreements for lease and one existing FRI lease• Marks & Spencer plc have committed to lease a 16,178 sq ft unit for a 20 year term from their access date (break in year 15)

• Boots have committed to lease a 3,544 sq ft unit for a 10 year term from practical completion/access• Greene King have agreed to enter into a new lease for a 10 year term• The scheme also benefits from having a number of units either under offer or progressing with retailers, including Greggs,Caffè Nero, Explore Learning, Boots Opticians and Prezzo

• 36% pre let by square footage• The site is offered on a Freehold basis• Unconditional offers in excess of £6,000,000, to acquire the land with the benefit of the planning permission and existinglease and Agreements for Lease

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The Opportunity

The subject property will comprise a mixed use development consisting of 68,624 sq ft of modern retail accommodation in 11 separateunits. The development is to be anchored by a 16,178 sq ft unit which has been pre let to Marks & Spencer plc and a 3,544 sq ft unitwhich has been pre let to Boots UK Ltd with 9 further units ranging from 4,061 to 14,779 sq ft.

There is a listed building situated on the site which forms part of the demise being sold, and has been incorporated and reconfigured aspart of the development. This building is fully let to Greene King Brewing and Retailing Limited on a new 10 year FRI lease expiring on18th August 2024 at a passing rent of £60,000 per annum. From the commencement of construction to practical completion of thescheme, Greene King will benefit from a reduced rent of £49,500 per annum. This unit extends to 4,550 sq ft. The scheme has beendesigned to accommodate the Restaurant as part of the wider development and offers income from the date of acquisition.

The Scheme

Total Sq Ft 68,624

Number of Units 11

Estimated Rental Value (when Fully Let) £1,207,569

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Location and Access

Mere Green is located in the county of West Midlands in centralEngland, approximately 10 miles north-east of Birmingham and 40 miles west of Leicester. The town is an affluent commercial centrewith strong transport and communication links to both the northand south. Mere Green is located 2 miles from Junction 3 of the M6Toll. The town also has easy access to the A453 which serves as alink road connecting the town to the M6, the A5 and directly toBirmingham.

In addition, the local rail station (Four Oaks) operates on a regularbasis (every 20 minutes) to London Euston (approximately 2hrs 10mins), (every 30 minutes) to Manchester Piccadilly(approximately 2hrs 20mins) and locally to Birmingham New Street (every 10 minutes), Leicester, Nottingham and Stoke-on-Trent. Birminghamand East Midlands airportsare located approximately15 and 32 miles awayrespectively, and betweenthem serve a number of UK, European and globaldestinations.

B4151

B4148

Wheatmoor Wood

Best WesternPremier Moor

Hall Hotel & Spa

THE ROYAL TOWN OF SUTTON

COLDFIELD

A5127

A453

A454

A453

M6 TOLLM6 TOLLLIC

HF

IELD

RO

AD

MERE GREEN

ROAD

TAMWORTH R

OAD

AD

RO

RD

FO

EE

W

A442

A41 A38 A42

A5

A456

A453

A454

A5127

M69M69

M1M1

M6M6

M42M42

M6M6

M5M5

M42M42M54M54

M45M45

WolverhamptonWolverhampton

BirminghamBirmingham

LeicesterLeicester

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Local Economy and Site InformationLocal Economy & DemographicsThe Royal Town of Sutton Coldfield forms part of the West Midlandsconurbation, and has a primary catchment population ofapproximately 205,000, of which approximately 105,000 areresidents of Sutton Coldfield. The town is projected to see close toaverage growth in population over the period 2011-16.

In 2001 the Sutton Coldfield area contained a significantly aboveaverage proportion of adults of working age categorised within themost affluent AB social group; social group C1which includes juniornon manual employees is also over-represented. In contrast, the leastaffluent D and E social groups are particularly under-representedwithin the Sutton Coldfield area.

Site AreaThe total site amounts to approximately 2.73 acres (1.05 hectares).

TenureThe site is offered on a freehold basis.

TCBs

LICH

FIELDR

OAD

Car Park

B

294

322

El Sub Sta

Shelter

3084

6

310

306

296

10

1115

4

1

290

292

5

324

304

She

lter

2

302

2

ArthurHouse

17 to 19

263

This plan is published for convenience of identification. Any boundaries shown are indicative only and should be checked against the Title Deeds. The plan is based upon Ordnance Survey Map with the permission of the Controller of H M Stationery © Crown Copyright.

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Site PlanMEREGREEN



NB. Indicative sizes only, vacant units are available for sub-division and amalgamation.

Tenancy

Unit StatusGroundFloor(sq ft)

Mezz (sq ft)

Total (sq ft) Tenant

AnnualRent (£)

Rent £ psf

Rent Free(Months)

Cap. Con(£)

LeaseTerm(years)

BreakOption(years)

Comments

1 AfL 11,162 5,016 16,178 M&S plc 280,000 25.09 6 280,000 20 15 Exchanged. Access subject to blackoutperiods. Restrictions on visibility/building.

2 Under Offer 1,061 – 1,061 Greggs 25,000 23.56 12 – 10 5 6 months rent penalty if break activated.

3 Vacant 1,061 – 1,061 Available 24,934 23.50 18 – – –

4 Heads of Terms 1,061 – 1,061 Boots Opticians 26,500 24.98 12 – 10 5 Offer from Boots Opticians.

5A Interest 3,058 1,006 4,064 Frais Ltd 70,000 22.89 18 – 15 5 Offer from Frais Ltd.

5B Vacant 1,306 653 1,959 Available 29,385 22.50 18 – – –

5C Interest 1,304 653 1,957 Available 29,340 22.50 18 – – –

5D Vacant 1,304 653 1,957 Available 29,340 22.50 18 – – –

5E Vacant 1,304 653 1,957 Available 29,340 22.50 18 – – –

5F Vacant 1,304 653 1,957 Available 29,340 22.50 18 – – –

5G Interest 1,304 653 1,957 Available 29,340 22.50 18 – – –

5H Under Offer 1,304 653 1,957 Explore Learning 28,000 21.47 12 – 15 4 Under offer and in solicitors hands.

5J Vacant 1,296 647 1,943 Available 29,160 22.50 18 – – –

5K Vacant 1,285 647 1,932 Available 28,913 22.50 18 – – –

6 Vacant 4,380 1,065 5,445 Available 98,550 22.50 18 – – –

7 Vacant 3,455 865 4,320 Available 77,738 22.50 18 – – –

8 Vacant 4,014 1,000 5,014 Available 90,315 22.50 18 – – –

9 Under Offer 3,000 500 3,500 Prezzo 75,000 25.00 12 – 25 – Under offer and in solicitors hands.

10 Under Offer 1,250 – 1,250 Caffè Nero 31,250 25.00 12 – 10 – Under offer and in solicitors hands.

11 AfL 3,544 – 3,544 Boots UK Ltd 86,125 24.30 12 – 10 – Exchanged. Access subject to blackoutperiods.

N/A Let 4,550 – 4,550Greene KingBrewing &Retailing Ltd

60,000 13.19 – – –

Existing building – let and occupied. Therent drops during construction to £49,500and reverts back to £60,000 at practicalcompletion or reviewed rent if higher.

Total 53,307 15,317 68,624 1,207,569

As shown above, all remaining units have permission for mezzanine floors. The cost associated with the construction of the mezzanines have not been included within our appraisal nor have they been rentalised. Furthermore, Units 5, 6, 7 and 8 are all capable of further sub-division or amalgamation to offer greater flexibility for prospective tenants.

Tenant/Leasing Analysis

Leasing AnalysisThe below table indicates the breakdown of units pre let/under offer, with interest from tenants or vacant by square footage and income.

Covenant & Lease Information on Secured Tenants

BOOTS UK LTD – 00928555

Founded in 1849, Boots is a medicines and toiletries retailer with over 2,500 stores in the UK. It is positioned in the Middle sector of thehealth/beauty market and is a private limited company. It is the UK retail arm of Alliance Boots after the merger of Alliance Pharmacy andBoots in 2006.

Boots have entered into an Agreement for Lease dated 27th March 2014. The lease will be for a term of 10 years from Practical Completionat an initial rent of £86,125 per annum. The rent is reviewed 5 yearly to the higher of passing rent and Open Market Rental Value. Bootsare an existing tenant on site and will continue to trade from a temporary unit during construction. This cost has already been met by theVendor by way of an upfront contribution.

Boots currently occupy their existing unit by virtue of holding over under their previous expired lease. The parties have mutually agreed toextend the deadline for applying for a new lease under the 1954 Act to enable them to remain in occupation pending development. Bootshave entered into an agreement for surrender of their unit – they are to surrender the unit and move to a temporary unit once the Landlordis ready to commence development and has carried out some preparatory works to enable the temporary unit to be commissioned.

Turnover £Pre-Tax Profit £

Net Worth £

31st Mar 2012 6,354,000,000 240,000,000 234,000,000

31st Mar 2011 6,372,000,000 220,000,000 217,000,000

31st Mar 2010 6,303,000,000 337,000,000 313,000,000

Sq ft %age Rent (ERV)£ %age

Agreement forLease 19,722 29% 366,125 30%

Under Offer 7,768 11% 159,250 13%

Heads of Terms 5,125 7% 26,500 2%

Interest 7,978 6% 128,680 11%

Vacant 27,570 40% 467,014 39%

Let to Greene King 4,550 7% 60,000 5%

Total 68,624 100% 1,207,569 100%

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MARKS & SPENCER PLC – 00214436

Marks and Spencer plc is a major multinational retailer headquartered in the City of Westminster, with 703 stores in the United Kingdomand 361 stores spread across more than 40 countries. It specialises in the selling of clothing and luxury food products. M&S was foundedin 1884 by Michael Marks and Thomas Spencer in Leeds. In 1998, it became the first British retailer to make a pre-tax profit of over £1 billion and is listed on the FTSE 100 Index.

Marks and Spencer have entered into an Agreement for Lease dated 25th February 2014. The lease will be for a term of 20 years fromPractical Completion at an initial rent of £280,000 per annum. There is a tenant break option in year 15. The rent is reviewed 5 yearly tothe lower of Open Market Value and the current passing rent multiplied by 1.145.


Net Worth £

30th Mar 2013 10,026,800,000 564,300,000 4,375,300,000

31st Mar 2012 9,934,300,000 658,000,000 4,787,800,000

2nd Apr 2011 9,740,300,000 780,600,000 4,767,400,000

GREENE KING BREWING & RETAILING LIMITED – 03298903

Established in 1799, Greene King is one of Britain’s leading breweries with a combination of 2,300 pubs, restaurants and hotels. Today, in addition to the Greene King ales, the company owns brands such as Loch Fyne, Hungry Horse, Farmhouse Inns and Old Speckled Hen.

Greene King entered into a new 10 year lease expiring on 18th August 2024 at a passing rent of £60,000 per annum. There is an openmarket value rent review in the fifth year. From the commencement of construction to practical completion, Greene King will benefit froma reduced rent of £49,500 per annum.


Net Worth £

28th Apr 2013 1,116,000,000 45,000,000 930,000,000

29th Apr 2012 993,000,000 50,000,000 890,000,000

1st May 2011 866,000,000 13,000,000 886,000,000

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Covenant Information on Under Offer and Interested TenantsGREGGS PLC – 502851

Established in 1937, Greggs is a leading bakery retailer in the UK with over 1,500 stores nationwide. There are plans to add 500 outlets to theexisting portfolio over the next few years, they state that 50% of the UK population does not currently have access to a Greggs shop. Greggshave recently expanded into continental Europe, with the opening of four branches in Belgium. Greggs do not operate any franchise businesses.

PREZZO PLC – 03919682

Founded in the year 2000 by Jonathan Kaye, Prezzo is primarily a pizza and pasta restaurant chain with over 160 outlets across the UK. It is positioned in the Middle sector of the market and is modelled on Ask Central. Prezzo plc also operates the Ultimate Burger, Chimichangaand Caffe Uno restaurant concepts.

CAFFÈ NERO LTD – 04129005

Founded in 1997 by Ian Semp, Caffè Nero now operates over 450 company-owned coffee shops in the UK, including the Nero Expressformat in airports. Worldwide, Caffè Nero operates in Turkey (entered market in 2007) and the Middle East (entered market in 2009). It is positioned in the Middle sector of the catering market and is the largest independent coffee retailer in the UK. Product offering includestraditional coffees and hot drinks alongside cold coffee, milkshake and fruit juice blends and lunch-foods such as Paninis, salads and soups.Caffè Nero plans to open 45-50 stores p.a in the UK and anticipates strong expansion in international markets.


Net Worth £

29th Dec 2012 734,502,000 53,342,000 226,790,00031st Dec 2011 701,088,000 60,500,000 198,383,00027th Dec 2010 662,326,000 52,523,000 176,227,000


Net Worth £

30th Dec 2012 144,524,000 17,324,000 91,703,0001st Jan 2012 123,873,000 16,131,000 78,807,0002nd Jan 2011 104,827,000 14,018,000 67,192,000


Net Worth £

31st May 2013 204,326,000 21,108,000 134,354,00031st May 2012 184,566,000 19,077,000 113,282,00031st May 2011 165,583,000 17,354,000 94,264,000

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Development Appraisal

AppraisalA detailed development appraisal is available in the data room.

Estimated Rental Value £1,207,569

Net Initial Yield 6.6%

Net Development Value £17,260,000

Construction Costs (exc. mez) £6,730,000

Professional Fees (10%) £670,000

Additional Costs (Including rentfree and void assumptions forvacant units)

£2,100,000

Finance £240,000

Total Costs £9,740,000

Profit on cost 12.5% £1,220,000

Residual Land Value (after costs of 5.8%) £6,000,000

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Planning and Construction

Planning PermissionAPPLICATION NUMBER: 2012/04410/PA

Planning Permission was granted by Birmingham City Council on 30th August 2012 for the demolition of existing buildings and erection ofmixed use development comprising retail foodstore (Class A1 - 1,779 sq m floorspace), non-food retail units (Class A1 - 2,901 sq mfloorspace), restaurant/cafe units (Class A3 - 1,372 sq m floorspace), car parking, pedestrian walkway, public square and associated landscaping,public realm works and servicing at land bounded by 2-10 Mere Green Road/296-324 Lichfield Road, Mere Green, Sutton Coldfield,Birmingham, B75 5BS.

Supporting documentation is available in the data room.

Construction Cost EstimatesThe total construction cost for the proposed project is estimated to be £6,730,000. This equates to a rate per m2 GIFA of £1,231 and a rate per sq ft GIFA of £114. The costs exclude VAT, Professional Fees and Statutory Fees. Please refer to the data room for a full cost plan.

Construction TimetableA development programme is available in the data room.

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Proposal

Capital AllowancesWe understand that there are no transferable capital allowancesavailable.

Plant & MachineryNone of the systems or equipment have been tested by Cushman & Wakefield and purchasers may wish to make their owninvestigations to check that they are in working order.

VATWe understand this property has been elected for VAT which willtherefore be chargeable on the sale.

ProposalParties are welcome to come forward with a proposal of offers inexcess of £6,000,000 on an unconditional basis.

Data RoomAccess to the data room can be provided upon request.

The property is sold by Administrators without title guarantee. Whilst replies to enquiries may be provided, these areoffered without warranty and interested parties are to rely solely on their own enquiry and inspection. Standard termsand conditions relevant to a sale by Administrators will apply.

CUSHMAN & WAKEFIELD LLP43/45 Portman SquareLondon W1A 3BGwww.cushmanwakefield.com

The Mis-Representation Act 1967.

Cushman & Wakefield (and any joint agent appointed) for themselves and for vendors or lessors of this property, whoseagents they are, gives notice that: 1 The particulars are produced in good faith, but are a general guide only and do notconstitute any part of a contract. 2 No person in the employment of the agent(s) has any authority to make or give anyrepresentation or warranty whatsoever in relation to this property. 3 The property is offered subject to contract andunless otherwise stated all rents are quoted exclusive of VAT. 4 Nothing in these particulars should be deemed astatement that the property is in good condition, or that any services or facilities are in working order. 5 Unlessotherwise 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.

Design & Production by Plus Art Ltd 0115 972 4000

Contacts

MIKE BURDENPartner – Capital Market Group+44 (0) 207 152 [email protected]

RORY TURNERAssistant Surveyor – Capital MarketGroup+44 (0) 207 152 [email protected]

For leasing information:

JONATHAN ROWLEY+44 (0) 121 212 [email protected]

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MERE 2-10 MERE GREEN ROAD/296-324 LICHFIELD ROAD … · Executive Summary • The development site...

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