Notting Hill Gate

Home , Kensington, Notting Hill, Notting Hill Gate

76-78 76 -78 NOTTING HILL GATE | 5

Executive SUMMARY

♦♦Prime retail and residential property ♦♦Retail accommodation let to the Royal situated in an iconic London location Bank of Scotland at a rent of £300,000 per annum, reflecting £210 Zone A ♦♦Principal Notting Hill Gate location directly opposite the northern entrance ♦♦The residential flat is offered freehold to the underground station and has been newly developed ♦♦Freehold totalling 7,459 sq ft (692.96 sq m) ♦♦Further development potential ♦♦Attractive retail unit with a stunning high ♦♦Strong rental and capital growth location specification triplex flat benefiting from its own private entrance from Pembridge Gardens

We are instructed to seek offers in excess of £15,000,000 (Fifteen Million Pounds) subject to contract for our client’s freehold interest in the property 6 | 76 - 78 NOTTING HILL GATE

Location

The property is located on Notting Hill Gate in Notting Hill Gate benefits from proximity to the Royal Borough of Kensington and Chelsea both Hyde Park and Holland Park as well as an (RBKC), London W11. Notting Hill Gate forms extensive range of cultural destinations including; a main strategic link and sits on an axis between the new home of London’s Design Museum Notting Hill/Portbello/Westbourne Terrace to the in Holland Park, the Serpentine Gallery in north, Holland Park Avenue to the west, Marble Kensington Gardens, and the Museum Quarter in Arch/Oxford Street to the east and Kensington/ South Kensington. Hillgate Village to the south. Notting Hill, along with the surrounding areas of Notting Hill, along with the surrounding areas of Holland Park and Kensington, is internationally Holland Park and Kensington, is internationally recognised as some of London’s most traditional, recognised as some of London’s most traditional, affluent and fashionable addresses. All three areas provide an eclectic mix of shops, restaurants and affluent and fashionable addresses bars, making the area a popular lifestyle choice for local residents as well as attracting visitors from wider London and beyond. 76 -78 NOTTING HILL GATE | 7 8 | 76 - 78 NOTTING HILL GATE

Communications

Notting Hill Gate Underground provides excellent access to the The property is also situated less than a 10 minute walk from Notting Hill Gate Underground rest of London via the tube network. The station which caters to 17 Holland Park Tube station (Central line). provides excellent access to million users a year has two entrance and exit points, the north of The station is within ten minutes from the new Crossrail station which lies directly opposite the property. the rest of London via the tube currently under construction at Bond Street (Jubilee and Central network. The station which caters Notting Hill Gate underground station (Central, District and Circle lines) and Paddington. This exciting new project, due to open in lines) provides convenient and direct access to Bond Street (7 2018, will provide access to Heathrow Airport in 33 minutes and to 17 million users a year has minutes), Victoria (10 minutes) and Liverpool Street (19 minutes). Canary Wharf in just 12 minutes. two entrance and exit points, The closest main line station is London Paddington (1.1 miles) In addition, numerous bus routes pass along Notting Hill Gate. the north of which lies directly which provides national train links as well as the Heathrow Express. opposite the property 76 -78 NOTTING HILL GATE | 9

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Not to scale - for identification purposes only 10 | 76 - 78 NOTTING HILL GATE

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PEMBRIDGE ROAD PEMBRIDGE

HOUSE UNITED

ENTRANCE

TO CORBYN AND KING AND CORBYN TO

PRE-LET RESTAURANT PRE-LET REDEVELOPMENT SITE REDEVELOPMENT

SWEAT SHOP SWEAT CANBURG

76-78

TAIZE CATERING

TEQUILA TEX-MEX MEXICAN RESTAURANT

NARUREHOUSE FRANCHISING CZECH EMBASSY

S ituaTION

The property is arguably the most prominent unit on Notting Hill Gate, occupying a highly visible location to the north side that experiences very high footfall due to one of the two Notting Hill Underground Station entrances being directly in front of the property. The property benefits from a dual frontage to both Notting Hill Gate and Pembridge Gardens. Pembridge Gardens is characterised by attractive 3 storey terraced town houses with Portland stone frontages. The remaining elevations which bound the property consist of a mixture of period buildings and more contemporary properties. 12 | 76 - 78 NOTTING HILL GATE

Description

Built in the late 1950’s, 76-78 Notting Hill Gate is a highly prominent mixed use retail and residential property arranged over basement, ground and four upper floors comprising a total area of 7,459 sq ft (692.96 sq m). Retail The retail accommodation is arranged over basement, ground and first floors and is accessed directly from Notting Hill Gate. The ground floor mainly comprises a banking hall with two interview rooms while the first floor and basement are used as offices and ancillary space respectively. The retail benefits from the following: ♦♦ Well configured banking hall

♦♦ Excellent frontage to Notting Hill Gate

♦♦ Suspended ceiling with mineral fibre tiles in the banking hall

♦♦ Comfort cooling

The property benefits from a dual frontage to both Notting Hill Gate and the residential lined Pembridge Gardens 76 -78 NOTTING HILL GATE | 13

Residential The residential accommodation is arranged over the three upper floors of the property. These have been converted to form a self contained triplex residential apartment which has its own secure private entrance from Pembridge Gardens. The newly converted accommodation boasts almost 3,800 sq ft and has floor to ceiling glass which creates an abundance of natural light. The flat also has a 1,000 sq ft roof terrace with stunning views across Notting Hill presenting the ideal space for entertaining. The residential flat benefits from the following: ♦♦ Private entrance and lift

♦♦ 4 bedrooms/4 bathrooms

♦♦ Contemporary interior designed apartment

♦♦ 1,000 sq ft roof terrace 14 | 76 - 78 NOTTING HILL GATE

Accommodation

FLOOR USE AREA (SQ FT) AREA (SQ M) Roof Terrace 1,000 92.90 Second to Fourth Residential 3,796 352.66 First Office 1,052 97.73 Ground Zone A 1,017 94.48 Zone B 667 61.97 ITZA 1,350.5 125.47 Basement Ancillary 927 86.12 TOTAL 7,459* 692.96* * The total area excludes the roof terrace.

The RESIDENTIAL accommodation boasts almost 3,800 sq ft and has floor to ceiling glass which creates an abundance of natural light 76 -78 NOTTING HILL GATE | 15

Larder RESIDENTIAL FLOOR PLANS

Third Floor TheFourth residential Floor totals 3796 sq ft with an additional 1000 sq ft dual aspect south and west facing roof terrace

92 sq m - 1,000 sq ft Terrace (Approx.) 353 sq m - 3,796 sq ft Gross Internal Area (Approx.)

Larder Larder

Ground Floor First Floor SSecondecond Floor Floor TThhirirdd Floor FloorThir d Floor Fourth FoFloorFourthurth Floor Floor

92 sq m92 - 1, sq00 m0 sq- 1, ft00 Terrace0 sq ft Terrace(Approx.) (Approx.) 353 sq m353 - 3,796 sq m sq- 3,796 ft Gross sq ft Internal Gross InternalArea (Approx.) Area (Approx.)

Ground GroundFloor Floor First FloorFirst FloorSecondSecond Floor Floor 16 | 76 - 78 NOTTING HILL GATE

Tenure

Freehold Tenancies

The basement, ground and first floors are let to The Royal Bank of Scotland on a 25 year lease from July 2009, expiring June 2034. The lease is subject to tenant only break options in 2019, 2024 and 2029 in addition to 5 yearly upward only rent reviews, the latest of which was settled at a passing rent of £300,000 per annum, equating to £210 ITZA. The lease is drawn inside the Landlord & Tenant Act 1954 and the tenant will therefore have the right to renew the lease upon expiry. A specific contractual right to renew is included in the lease. The residential flat is offered freehold and has been newly developed. 76 -78 NOTTING HILL GATE | 17

Tenant’s Covenant

R oYAL Bank of Scotland PLC The current retail tenant under the lease is Royal Bank of Scotland plc, which is a wholly owned subsidiary of the Royal Bank of Scotland Group plc. The UK Government currently has a majority shareholding ownership (approximately 81.14%) of the Royal Bank of Scotland Group plc and its wider group businesses, including the Royal Bank of Scotland plc. The Royal Bank of Scotland plc has a Dun and Bradstreet rating of 5A1, representing a minimum risk of business failure. More information is available at www.rbs.com 18 | 76 - 78 NOTTING HILL GATE

Market Commentary

Retail Market Residential Market London’s rising prominence as a global retail destination, combined with its strong outlook for domestic The pool of property which in aggregate constitutes the Prime Central London market, is primarily spend, has intensified demand from retailers for units in Central London’s core shopping destinations. located within the boroughs of Kensington and Chelsea, in which Notting Hill Gate is located, and the However, this demand is filtering out to peripheral and ‘local’ retail markets across Central London, in City of Westminster. particular in those prime residential areas where its affluent population have the disposable income to The RBKC has traditionally had the highest average transaction values of all the London boroughs. It support an ‘upmarket’ convenience retail offer. has recovered well since the financial crisis and average prices in the borough currently sit 60% above Average rents across the wider West End, which Notting Hill falls into, have increased 6.3% per annum their pre-crunch peak. Overall, we expect to see total growth over the five year period of 22.7% in over the last three years, almost double its long term average of 3.7% and outperforming the wider Prime Central London, assuming no Mansion Tax, but allowing for a revision of the council tax system London average. as an alternative. We would expect to see similar levels of uplift in the Notting Hill submarket. Current prime Zone A rents within Notting Hill Gate are in the region of £200 to £225 per sq ft. The lower end of this range represents a discount to the nearby retail centres of Kensington High Street and Westbourne Grove of 28.6% and 50.0% respectively. Examining rental forecasts for the wider RBKC rents are expected to see average growth of 3.4% per annum through to the end of 2019, in excess of their long term average of 2.1%. Considering the current discount of Notting Hill Gate compared to other retail centres in the borough, we envisage rental growth to outperform the RBKC average. The West End retail investment market continues to be the primary focus for a wide range of investors, both domestic and overseas. Investors are looking to capitalise on the liquidity of the London market, the strength of the occupational markets, rental growth potential and the wealth preservation qualities of well located assets.

Investors are looking to capitalise on the liquidity of the London market, the strength of the occupational markets, rental growth potential and the wealth preservation qualities of well located assets 76 -78 NOTTING HILL GATE | 19

INVESTMENT COMPARABLES

Address Type Price Net Initial Yield Date

16-18 Whitehall Place, SW1 Retail £6.85m 2.23% Dec-14

55-61 Kensington High Street, W8 Retail / Office / Residential £19.50m 2.85% Dec-14

17-18 Irving Street, WC2 Retail / Residential £14.40m 3.18% Nov-14

60 St Johns Wood, NW8 Retail / Residential £4.25m 3.69% Aug-14

100-106 Kensington High Street Retail / Office £14.50m 4.22% Aug-14

7-9 Kensington High Street Retail / Residential £11.35m 3.83% Jul-14

145-147 Kensington High Street, W8 Retail £7.99m 4.14% Jun-14

90 Notting Hill Gate, W11 Retail £5.74m 3.90% Jun-14

83-85 Notting Hill Gate, W11 Retail £4.85m 3.71% Jan-14 20 | 76 - 78 NOTTING HILL GATE 76 -78 NOTTING HILL GATE | 21 22 | 76 - 78 NOTTING HILL GATE

VAT CONTACT

No election to charge VAT has been made. As such no VAT will be George Gawthrop Paul Cockburn Thomas holcroft charged on the purchase price and RBS will not pay VAT on their rent. T: 020 7409 8002 T: 020 7409 8788 T: 020 7535 3305 M: 07807 999 079 M: 07870 555 706 M: 07967 555 532 EPC E: [email protected] E: [email protected] E: [email protected]

EPC’s for the property are available upon request. Proposal

We are instructed to seek offers in excess of £15,000,000 (Fifteen Million Pounds) subject to contract for our client’s freehold interest in the property. A purchase at this level would reflect an initial yield of 3.50% on the retail and £1,817 per sq ft on the residential accommodation after allowing for standard purchaser’s costs of 5.80%. Upon leasing the residential accommodation we estimate the property to be reversionary to 3.36% overall. Savills forecast the rental value of the retail will rise to £300 ZA in the next 3 to 5 years.

Dataroom Important Notice Savills, their clients and any joint agents give notice that:

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 Further information can be found on the dataroom: form part of any offer or contract and must not be relied upon as statements or representations of fact. www.savills.co.uk/76_78NHG Any areas, measurements or distances are approximate. The text, photographs and plans are for guidance only and are not necessarily comprehensive. It should not be assumed that the property has all necessary planning, building regulation or other consents and Savills have not tested any services, equipment or facilities. Purchasers must satisfy themselves by inspection or otherwise.

Designed and Produced by Savills Marketing: 020 7499 8644 | April 2015

76-78 NOTTING HILL GATE