Mid Sussex Retail Park, B&Q and Pets at Home, Burgess Hill, Rh15 9Ug Mid Sussex Retail Park B&Q and Pets at Home Burgess Hill, Rh15 9Ug

Home , Bognor Regis, Burgess Hill, Lewes, M23 motorway, Steyning

MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG MID SUSSEX RETAIL PARK B&Q AND PETS AT HOME BURGESS HILL, RH15 9UG

PRIME SOUTH EAST RETAIL WAREHOUSE INVESTMENT OPPORTUNITY WITH RPI LINKED RENTAL UPLIFTS

1 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG

INVESTMENT SUMMARY

• Burgess Hill is situated in the county of West Sussex in the South East of England, 36 miles south of Central London.

• Affluent population with 42.3% of the 15 minute drive time catchment within the top Acorn Group ‘Affluent Achievers’.

• Very limited supply of retail warehousing in the town and the surrounding area.

• The property was developed in 2013 to a BREEAM standard of ‘Very Good’.

• The scheme extends to 54,429 per sq ft GIA.

• Let to B&Q plc and Pets at Home Ltd – ‘5A1’ covenants – on 15 year leases with no breaks, giving a WAULT of 11.00 years.

• Current income of £869,941 per annum, off low rents of £15.46 per sq ft and £18.57 per sq ft.

• The B&Q lease benefits from 5 yearly RPI linked rent reviews with collars and caps of 1.0% and 2.5% per annum compounded.

• Significant RPI related reversion in the B&Q rent and potential reversion in the Pets at Home rent, both in 2018.

• The property benefits from a ‘wide bulky goods’ planning consent and unimplemented mezzanine consent.

• Freehold.

• We are instructed to seek offers in excess of £14,810,000 (Fourteen Million Eight Hundred and Ten Thousand pounds), subject to contract and exclusive of VAT. This reflects an attractivenet initial yield of 5.50% (assuming purchaser’s costs at 6.8%).

• The yield rises to an anticipated 6.09% following a rent review settlement at £22.00 per sq ft, upon the Pets at Home rent review in July 2018 and the RPI linked B&Q rent review in August 2018.

MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG LET TO B&Q AND PETS AT HOME “ “ WITH A WAULT OF 11.0 YEARS

3 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG

A3 Epsom M20 M2 A243 LOCATION Woking A217 A23 M3 M25 M20

Farnborough A3 Caterham Burgess Hill is located in the affluent county of West Sussex in the South East of England. A331 M26 Aldershot A21 A228 The town lies approximately 11 miles north of Brighton, 26 miles south west of Tunbridge Guildford Wells, 15 miles south of Crawley and 36 miles south of Central London. Farnham A22 A24 Edenbridge Tonbridge A31 M23 A21 Gatwick The town benefits from excellent road communications, being adjacent to the A23, which A3 Airport Royal provides access north to Crawley and Junction 11 of the M23 motorway, which, in turn, Tunbridge Crawley Wells leads to the M25 motorway. Access is also provided south, via the A23, to Brighton and Haslemere A22 the A27, connecting east and west along the coast. London Gatwick International Airport A21 A3 Horsham is situated 20 miles north of the town. A23 Billingshurst A26 A272 A272 Burgess Hill railway station offers direct services to both London Bridge and London A272 Victoria with fastest journey times of approximately 50 minutes, whilst also running local Uckﬁeld services to Brighton and surrounding towns. A24 BURGESS HILL A26

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A27 A280 A27 SITUATION Chichester A27 A259 Worthing Brighton A26 The subject property is situated approximately 1.5 miles from the town centre in a Bognor Regis prominent and highly visible edge-of-town location, on the A273 (Jane Murray Way), circa Eastbourne 3 miles from the A23. The scheme is positioned to the north west of the roundabout junction of Charles Avenue and Hammonds Ridge, adjacent to a Tesco superstore. The immediate surrounding area is AD

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DEMOGRAPHICS Weekly Catchment Expenditure versus CACI Average

Burgess Hill is a fast growing affluent town in West Sussex. It has a resident population of approximately 30,635 people, whilst the population of ‘Mid Sussex’ is estimated at 155,900 people, according to the 2011 Census. The town is also seeing significant amounts of residential development with the Burgess Hill Town Wide Strategy aiming to deliver 4,000 new homes in the town.

Within the subject property’s 15 minute drive time catchment, 83.5% of households are categorised within the 3 highest Acorn Category Groups (ABC1), significantly above the CACI base average of 58.8%.

The highest Acorn Group ‘Affluent Achievers’ accounts for 42.3% of the catchment, significantly above the CACI base average of 22.7%.

A summary of key Acorn sub-categories is provided below:

% Versus CACI Base Comparison to Base Acorn Group Category % of Catchment Social Grade Description Average (GB) Average Executive Wealth 24.1 +95 Higher and intermediate managerial / AB +45% Affluent Achievers admin / professional Mature Money 15.9 +77 C1 Supervisory / professional +13% Rising Prosperity Career Climbers 15.8 +159 C2 Skilled manual workers -11% Successful Suburbs 8.2 +33 Comfortable Communities Semi-skilled / unskilled workers / DE -45% Steady Neighbours 9.3 +12 unemployed Modest Means 1.6 -79 Financially Stretched Striving Families 6.2 -22 CACI provide that 75% of Mean Household Income households within the 15 minute

CACI provide that within the 15 minute drive time catchment, the mean annual income is £47,644, drive time catchment are privately High £45k - £60k+ owned, 18% above the average. Very High £60k+ which is 30.7% above the base average. 15 min drivetime Southwater Conversely, just 10% of the Haywards Heath catchment live in ‘social rented’ homes, 42% below the average. Car ownership is 21% higher than the UK average. This information Burgess Hill £ £ £ £ describes an affluent car-borne Henﬁeld Hurstpierpoint population. £40k to £60k pa £60k to £80k pa £80k to £100k pa £100k+ pa Ringmer 22% above average 51% above average 76% above average 105% above average The level of unemployment for Steyning Catchment = 21.4% Catchment = 12.4% Catchment = 7.4% Catchment = 8.2% people aged between 16 and 74 Lewes Average = 17.5% Average = 8.2% Average = 4.2% Average = 4.0% stands at 1.3%, significantly less than the CACI base average of 2.0%. Southwick

5 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG

RETAIL WAREHOUSE PROVISION

There is a substantial undersupply of retail warehousing in Burgess Hill and the surrounding area. The only other retail warehouse provision in the town is located on the B2036 (London Road) and comprises a Wickes (19,776 sq ft), Halfords (7,676 sq ft) and Carpetright (8,907 sq ft). The Wickes was recently sold by Travis Perkins as part of a sale and leaseback portfolio and the Halfords and Carpetright are owned by Canada Life.

The lack of retail warehouse supply in the town and the surrounding area, coupled with the prominent positioning of the subject property, provides B&Q and Pets at Home with a competitive trading platform from where we understand each tenant trades well.

The table below identifies the DIY stores within a 15 mile radius of the subject property, and further highlights the lack of competition for B&Q in Burgess Hill.

Town Retailer Size (sq ft) Distance (miles)

0-5 Miles Burgess Hill Wickes 19,776 1.0 5-10 Miles Hove Homebase 35,550 9.3 FOODSTORE PROVISION 10-15 Miles The town’s dominant food offer is the 78,000 sq ft Tesco store, situated B&Q 42,034 10.0 Brighton adjacent to the subject property. The only other substantial food offer is the Wickes 28,400 10 .1 Waitrose in the centre of Burgess Hill. Sainsbury’s, Morrisons and Asda are not in the town. Shoreham Homebase 23,697 12.2 Lewes B&Q 36,192 13.7 Shoreham B&Q 37,373 15.0 TOWN CENTRE Crawley Homebase 35,444 15.0 The retail provision in the town centre is focused around The Martlets Shopping There are no other national multiple pet shops/operators in Burgess Hill. The nearest Pets at Home Centre, which comprises 124,000 sq ft and is anchored by Lidl, Iceland, Argos stores are in Hove (9.4 miles) and Horsham (14.5 miles). and New Look. The owner, NewRiver Retail, are currently redeveloping the scheme to include a new cinema, hotel, residential apartments and improved retail and leisure offer.

6 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG

DESCRIPTION

The subject property was constructed in 2013 and comprises an attractive and modern The property was designed and constructed to a BREEAM standard of ‘Very Good’ and development of circa 54,429 sq ft GIA, arranged across 2 units and there is also a garden centre. includes permeable paving, solar hot water and rainwater harvesting tanks. The fabric of the building exceeds the requirements of Building Regulations which minimises the The units are of steel portal frame construction finished to a high specification with property’s future carbon footprint. significant glazing and prominent tenant signage. Customer access and egress to the property is from a dedicated junction on the A273 EPC (Jane Murray Way). The tarmacadam surfaced customer car park is situated to the front of the units with approximately 196 parking spaces, giving a good ratio of 1 space per 278 The EPC rating for both units is as follows: sq ft GIA. Unit Tenant Rating The service yard is situated to the rear of the property and is accessed from a dedicated service road, accessed off Charles Avenue to the east of the site. A B&Q A 16 B Pets at Home A 23

7 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG

TENURE

The site delineated in red is held freehold. This is provided for indicative purposes only. SIZE

Access to The site extends to approximately 4.25 acres (1.7 Service Area hectares), giving a site cover of 26.8%. PLANNING

The property benefits from a ‘wide bulky goods’ consent allowing the sale of:

Charles A • DIY builders merchant and home improvements • Kitchens, bathrooms and associated accessories venue • Wall and floor coverings • Furniture, homewear and furnishings • Electrical and gas products Jane Murray W • Motor parts/car accessories • Pets and pet supplies and accessories ay • Garden supplies and equipment (including plants) and seasonal goods (related to Christmas).

Goods falling outside this range may be sold where they form a minor ancillary part of the store’s operations.

Copies of the planning consents are available on request. CURRENT INCOME OF £869,941“ PER “ANNUM, OFF LOW RENTS OF £15.46 PER SQ FT AND £18.57 PER SQ FT.

8 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG

TENANCIES

The scheme is let to 2 market leading ‘5A1’ retailers and benefits from a WAULT of 11.00 years.

Next Rent Current Rent Current Rent Unit Tenant GIA (Sq ft) Lease Start Date Expiry Date Comments Review (per annum) (per sq ft) Original planning consent included a trading A B&Q plc 45,272 19/08/2013 18/08/2028 19/08/2018* £699,941 £15.46 mezzanine of 10,000 sq ft. Assumed as 8,500 sq ft in the rent review B Pets at Home Ltd 9,157 15/07/2013 14/07/2028 15/07/2018 £170,000 £18.57 clause. 54,429 £869,941 £15.98

*The B&Q lease benefits from 5 yearly upward only rent reviews, linked to RPI, with collars and caps of 1.0% and 2.5% per annum compounded.

B&Q – RPI Linked Rent Reviews

We set out below RPI information based on actual and forcasted RPI figures:

Unit Year RPI figure (%) B&Q Cap (%) Rent

2014 2.52 £717,440

A 2015 1.02 £724,757

2016 1.86 2.50 £738,238

2017 3.20* £756,694 B 2018 3.50* £775,611

*Provided by the Office of Budget Responsibility.

Based on the above, the B&Q rent will increase to £775,611 per annum at the August 2018 rent review.

The Office of Budget Responsibility forecast that RPI will be in excess of 3.0% in years 2019, 2020 and 2021. It is therefore anticipated that the 2.5% rental cap will be achieved in these years, following the August 2018 rent review.

9 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG

RENTAL COMMENTARY

Good quality locations, especially in the South East of England, have continued to see strong levels of tenant demand over recent years. The lack of available sites and the high levels of consumer spending have resulted in increasing rental levels in locations such as Burgess Hill.

In particular, we believe the ‘DIY’ market is particularly strong at the current time, with good trading performances from established occupiers, being B&Q, Wickes and Homebase, and increased competition following Bunnings’ acquisition of the Homebase business. We would highlight recent relevant transactions:

Wickes - Burgess Hill

Wickes have agreed to take a 15 year lease at a rent of £325,000 per annum equating to £16.43 per sq ft. COVENANT INFORMATION B&Q - St Albans

B&Q is the largest home improvement and garden centre retailer in the UK, We understand B&Q have agreed to pay a rent equating to circa £24.00 per sq ft on a new employing over 27,000 people across their 300 strong UK store portfolio. 45,000 sq ft unit. Their most recent accounts are as follows: Wickes - Kingston

We understand an uplift was agreed at the 2015 rent review to a rent equating to £28.00 Year Ending Sales Turnover Pre Tax Profit / Net Worth D&B Rating per sq ft on the 25,200 sq ft unit. They also agreed a 15 year reversionary lease. (000’s) Loss (000’s) (000’s) Tapi - Hove 31/01/2016 £3,704,000 -£68,900 £4,493,200 5A1 31/01/2015 £3,664,000 £5,400 £4,368,900 We understand that Tapi have agreed to take the 10,000 sq ft former Staples unit on Davigdor Road, at a rent equating to £32.00 per sq ft with 9 months’ rent free.

The B&Q rent review is related to RPI, subject to a 2.5% cap.

Pets at Home has a rent review in July 2018, to open market value, and we would suggest Pets at Home is the UK’s leading pet supplies retailer with more than 370 the unit is reversionary with an ERV in the region of £22.00 per sq ft. A rent review stores and 6,000 employees. Their most recent accounts are as follows: settlement at this level would result in an uplift to £187,000 per annum, based on a floor area of 8,500 sq ft, as stated in the rent review clause.

Year Ending Sales Turnover Pre Tax Profit / Net Worth D&B Rating (000’s) Loss (000’s) (000’s) VAT 31/03/2016 £739,726 £81,843 £598,310 5A1 The property has been elected for VAT, however, it is anticipated that the transaction will 26/03/2015 £689,697 £79,920 £517,138 be treated as a Transfer of a Going Concern (TOGC).

10 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG

11 MID SUSSEX RETAIL PARK, B&Q AND PETS AT HOME, BURGESS HILL, RH15 9UG PURCHASE PRICE

We are instructed to seek offers in excess of £14,810,000 (Fourteen Million Eight Hundred and Ten Thousand Pounds), subject to contract and exclusive of VAT. This reflects an attractivenet initial yield of 5.50% (assuming purchaser’s costs at 6.8%).

The yield rises to an anticipated 6.09% following a rent review settlement at £22.00 per sq ft, upon the Pets at Home rent review in July 2018 and the RPI linked B&Q rent review in August 2018.

The property is held in a Jersey based SPV and further details are available upon request. FURTHER INFORMATION

Should you require any further information on the property or wish to arrange an inspection, please do not hesitate to contact:

Hamish Whiteman Miles Marten [email protected] T: 020 7317 3777 / M: 07770 748 290 [email protected] Nick Staunton [email protected] Jack Lloyd T: 020 7317 3796 / M: 07747 883 231 [email protected]

Staunton Whiteman LLP Wilkinson Williams LLP 9-10 Savile Row Heathcoat House London 20 Savile Row W1S 3PF London W1S 3PR 020 7287 2228

MISREPRESENTATION ACT 1967 AND DECLARATION Messrs Staunton Whiteman LLP and Wilkinson Williams LLP 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 condition and necessary permission for use and occupation and other details are given in good faith and are believed to be correct, but any intending purchasers should not rely on them as statements or representations of fact and must satisfy themselves by inspection or otherwise as to the correctness of each of them: iii) no person in the employment of Staunton Whiteman LLP or Wilkinson Williams LLP has any authority to make or give any representation or warranty in relation to this property.

12Brochure by: Adrian Gates Design 07710 316 991