Secure Long Income Roadside Portfolio
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SECURE LONG INCOME ROADSIDE PORTFOLIO OVER 17 YEARS OF SECURE INCOME TO MCDONALD’S RESTAURANTS LTD ACROSS 5 PROMINENT FREEHOLD ROADSIDE DRIVE-THRU PROPERTIES RENTS BASED OFF APPROXIMATELY CIRCA 40% OF ERV CREATING A GROUND RENT STYLE INCOME STREAM PORTFOLIO SUMMARY • Five prominent recently redeveloped freehold roadside drive-thru assets, all located on busy arterial roads. Whitchurch - SY13 1JZ • All assets strategically situated on roundabouts with dual road access generating strong trade for tenants due to increased traffic numbers. • Securely let to McDonald’s Restaurants Ltd with an AWULT of over 17 years to expiry. Highly sought after drive-thru planning consent with 24 hour • New Forest - BH24 3HN trading adding significant value to each site. EDINBURGH GLASGOW • Unique revisionary income with the rent topped up to 2022 reviews producing £264,858 per annum. • Estimated rental value of £645,830 per annum. • All five leases benefit from2% per annum fixed uplifts West Lynn - PE34 3LW reviewed five yearly. LEEDS MANCHESTER • Significant uplift in rental value in 2038 upon lease expiry reflecting a ground rent style income. BIRMINGHAM • Offers in excess of £7,100,000 (SEVEN MILLION ONE NORWICH HUNDRED THOUSAND POUNDS) subject to contract and exclusive of VAT. A purchase at this level will reflect anet CAMBRIDGE Yarmouth - NR13 5AR initial yield of 3.5% and an ultimate reversionary yield of 8.52% after allowance for purchaser’s costs of 6.8% LONDON BRISTOL EXETER Uckfield - TN22 5EP SECURE LONG INCOME ROADSIDE PORTFOLIO 2 PORTFOLIO TENANCY SUMMARY The portfolio is entirely let to McDonalds Restaurants ltd on FRI leases producing a current income of £228,800 per annum. Our client will be topping up to the 2022 fixed rental uplifts to provide a purchaser with a rent of £264,858 per annum. The individual tenancies are summarised in the schedule below. Unexpired Site 2022 Topped Area 2022 Rent ERV ERV No. Location Lease Start Rent Review Lease Expiry Term Area Up Rent Comments (sq ft) (Per sq ft) (Per annum) (Per sq ft) (Years) (Acres) (Per annum) Fixed 5 yearly rental increases New Forest to 2% pa. 1 25/12/2013 24/12/2038 24/12/2038 18.00 3,686 1.37 £66,550 £18.05 £138,225 £37.50 BH24 3HN From 2028 - £73,205 pa; From 2033 -£80,525 pa. 1) Property element let at £48,400 and based on Fixed 5 yearly rental in- creases rising From 2027 - £53,240 pa; West Lynn 2 29/09/2012 28/09/2037 28/09/2037 17.00 4,103 0.87 £61,578 £15.01 £143,605 £35.00 From 2032 - £58,564 pa. PE34 3LW 2) Car Park £13,150 per annum on car parking with annual rent reviews linked to RPI (cap of 1% & 4%). Fixed 5 yearly rental increases Whitchurch 3 24/06/2012 23/06/2037 23/06/2037 16.75 4,404 1.01 £48,400 £10.99 £154,140 £35.00 From 2027 - £53,240 pa; SY13 1JZ From 2032 - £58,564 pa. Fixed 5 yearly rental increases Uckfield 4 24/06/2012 23/06/2037 23/06/2037 16.75 3,044 1.19 £45,980 £15.11 £106,540 £35.00 From 2027 -£50,578 pa; TN22 5EP From 2032 - £55,635 pa. Fixed 5 yearly rental increases Yarmouth 5 29/09/2012 28/09/2037 28/09/2037 17.00 2,952 0.96 £42,350 £14.35 £103,320 £35.00 From 2027 - £46,585 pa; NR13 5AR From 2032 - £51,243 pa. Total 17.12 18,189 5.4 £264,858 £14.63 £645,830 £35.50 SECURE LONG INCOME ROADSIDE PORTFOLIO 3 PLANNING COVENANT INFORMATION Each site in the portfolio benefits form A3 use (E use after 1st Sept 2020) and A5 use McDonald’s is the largest chain of quick service restaurants in the world. It (Sui Generis after 1st Sept 2020), however they also benefit from the highly sought serves tens of millions of customers each day. after roadside drive thru use, with 24 hours trading* Having opened the first UK McDonald’s in Woolwich in 1974, the company now operate We are of the opinion that this will command a higher rental value due to the premium 1,270 restaurants and franchisee operations on high streets, shopping centres, roadside attached to this specific consent. locations, leisure centres, airports, railway terminals and motorway service stations across the UK. *With the exception of Pickets Post which is open 5am – 11pm. For the year ending 31/12/2018 Mcdonald’s Restaurants Limited (Co No. 01002769) reported a turnover of £1.51Bn and pre-tax profits of £306.27M. For the same year they had reported net worth of £1.098Bn. BACKGROUND Each site in this portfolio was carefully identified by McDonald’s for occupation in 2012 from a substantial roadside portfolio held by administrators. Each site was strategically selected due to the prominence of their location with specific focus on roundabouts and dual road access. McDonald’s undertook significant investment on each site carrying out redevelopments and in some cases carrying out extensions. This major investment by McDonald’s was in lieu of any capital contribution, but was reflected in the major reduction in rental levels set within the leases. TENURE All properties are held freehold. SECURE LONG INCOME ROADSIDE PORTFOLIO 4 ERV The current passing rent of £228,800 per annum equates to an average rent of £12.58 psf across the portfolio, which is extremely low in comparison to the estimated rental value. We are of the opinion that based on conservative ERV’s of £37.50 psf and £35.00 psf, this produces an overall estimated rental value of £645,830 per annum. Market comparables are listed below highlighting the reversionary nature of these assets. Town Address Tenant Size (sq ft) Transaction Rent (pa) Rent (psf) London Staples Corner Shopping Park McDonald’s 4,199 OML £150,000 £35.72 Cardiff International Sports Village Starbucks 1,800 OML £100,000 £55.56 Cheshire Cheshire Oaks Costa 1,810 OML £100,000 £55.25 Bedfordshire Sandy Costa 1,800 OML £90,000 £50.00 Chelmsford Springfield Starbucks 2,045 OML £102,250 £50.00 Yorkshire Wakefield Costa 1,800 OML £90,000 £50.00 Newbury Newbury Retail Park McDonald's 2,000 RR £90,000 £45.00 Berkshire Newbury McDonald’s 2,000 OML £90,000 £45.00 Lewisham Sydenham McDonald’s 3,500 OML £144,000 £41.14 Slough Buckingham Ave McDonald’s 3,122 RR £123,319 £39.50 Berkshire Slough McDonald’s 3,122 OML £123,319 £39.50 Croydon Waddon Retail Park McDonald’s 2,646 RR £104,517 £39.50 Bicester Bicester Gateway Burger King 4,186 OML £163,600 £39.08 High Wycombe Wycombe Retail Park Pizza Hut 3,434 RR £117,511 £34.22 Malvern Malvern Shopping Park McDonald's 3,180 RR £103,570 £32.57 SECURE LONG INCOME ROADSIDE PORTFOLIO 5 Picket Post, New Forest, BH24 3HN INVESTMENT SUMMARY • Prominent roadside drive-thru location on a busy road • Located on A31 next to Shell Petrol Filling Station and is the only standalone restaurant at this junction • The site is accessible to traffic from both directions of A31 and is located close to a junction • Leases benefit from 2% per annum fixed uplifts reviewed five yearly • Entirely let to McDonald’s Restaurants Limited until December 2038 • Next guaranteed fixed uplift to take place in 2028 • Rent topped up to 2023 review producing £66,550 per annum • Benefits from on-site parking for approximately 22 cars and children’s play area • ERV of £138,225 per annum SECURE LONG INCOME ROADSIDE PORTFOLIO 6 d LOCATION a o R y r u Picket Post is a busy road junction and service area in the New Forest National Park of Hampshire, b s i l a Rockford England. It lies on the A31 road which merges into the M27. It is the main road connection between the S New Forest Bournemouth and the South East of England. Ibsley Water Blashford Picket Post is located on the A31 dual carriageway which passes through the New Forest. It is situated Linford 2.5 miles from the A338 at Ringwood and 8 miles from Junction 1 of the M27 at Cadnam. A minor road 31 to the village of Burley joins with the A31 at Picket Post. McDonald’s is the only standalone restaurant A Shooley at Picket Post as is accessible to traffic flow from both directions of the very busy dual carriage way. The property is 15 miles north-east of Bournemouth and 19 miles west of Southampton which is serviced by the A31, A338, M27 roads, Brockenhurst Station, Sway Station by rail and Bournemouth A31 Forest Corner International by air. 31 A Ringwood The property is situated to the north of the A31, the main connection road west of Southampton at the same service station as Shell. SECURE LONG INCOME ROADSIDE PORTFOLIO 7 DESCRIPTION The property comprises a modern drive-thru restaurant surrounded by woodland and benefits from on-site parking for approximately 22 cars and a small garden with children’s play area facility. The property has a site area of approximately 1.37 acres. OS Plan B&W 419000 419100 106200 106200 A31 106100 106100 SECURE LONG INCOME ROADSIDE PORTFOLIO 8 419000 419100 Metres 0 5 10 20 30 40 50 Scale: 1:1250 Picket Post Ringwood Supplied by: National Map Centre BH24 3HN Plot centre co-ordinates: 419074,106152 License number: Herts100031961 Download file: lewpart_newforest.zip Produced: 09/01/2019 Project name: lewpart_newforest Serial number: 2067337 © Crown copyright and database rights 2018.