QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
PRIME MULTI-LET CITY CENTRE OFFICE AND RETAIL INVESTMENT QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
BRIGHTON STATION
QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
INVESTMENT SUMMARY
Fully let prime city centre office and retail investment
Comprehensively refurbished in 2009 Energy efficient office accommodation (EPC B rating)
Total floor area of 35,622 sq ft - 25,957 sq ft of office and 9,665 sq ft of retail accommodation
Multi-let to eight substantial tenants providing a diverse income stream Annual rent of £808,327 pa
35% of income reviewed to RPI
Ideally placed to benefit from rental growth due to constrained office supply in Brighton
WAULT of 4.8 years to breaks, and 6.59 years to lease expiries
Freehold
PROPOSAL
Offers in excess of £11,750,000
Net initial yield of 6.5% QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
BRIGHTON PIER
CHURCHILL SQUARE SHOPPING CENTRE
A259 ROYAL PAVILION THE LANES A259
CLOCK TOWER
THE GRAND HOTEL AMERICAN EXPRESS SOVEREIGN HOUSE
CIRCUS STREET VICTORIA GARDENS QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON
BRIGHTON UNIVERSITY TRAFALGAR PLACE GRAND PARADE CAMPUS
BRIGHTON STATION
NEW ENGLAND QUARTER
CITYVIEW
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QUEENSBERRY HOUSE O A AD A C D O D A N O 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF R
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R R W A23 A W Brighton is the cultural and creative capital of the UK’s South Coast, with significant art, advertising . A L P L N O D
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104-109 QUEENS ROAD | BRIGHTON W U A L E W Q N P I Brighton, located approximately 54 miles from Central London, benefits from excellent transport D O D L R TH S A R R A OAD O E R O T A N R S P E links, with Gatwick Airport situated approximately 28 miles to the north, and a regular fast train R CH C A D E UR V I U
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M25 STA Basingstoke M3 Brighton A21 Marina TH Guildford Queensberry House is positioned in Brighton’s best business E STR A34 A24 AND Tonbridge A31 M23 location. It is prominently located on Queens Road, the A3 Gatwick arterial route between the train station and the seafront, and Crawley A22 A26 the Brighton’s prime retail facilities comprising The Lanes and Petersfield Horsham Churchill Square Shopping Centre. A272 The property is located approximately 250m from Southampton A3 A24 A23 the train station, and approximately 700m from the M27 Lewes A27 seafront. A27 Worthing Portsmouth Bognor Regis The city’s retail heart is within a short walk, with The BRIGHTON Eastbourne Lanes, Brighton’s famous shopping streets approximately 500m to the south east and Churchill Square the same Isle of Wight distance to the south west. QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
An alternative economy super-city and a “dynamic centre for innovative companies forging novel ways of doing business
DEMOGRAPHICS AND BUSINESS/EMPLOYMENT
Brighton has a significant services sector and a population with high level service and communication skills. Alongside its retail, tourist, arts, entertainment and recreation assets, Brighton also has significant education, financial services, business/professional services and health sectors.
Brighton’s population is approximately 273,000. There are now over 120,000 people working in the city, including 8,000 entrepreneurs, many in the professional, scientific and creative industries. Between 1998 and 2008 employment in Brighton grew by 20,000 and the value of Brighton’s economy doubled compared to a 70% increase nationally.
Centre for Cities is an independent think tank that produces an annual report that profiles economic and labour market conditions across 64 major urban areas in the UK. Its 2015 Cities Outlook Report provides the following statistics relating to Brighton:
4th (of 64 cities) highest growth in net jobs between 2004 and 2014
9th highest employment rate in 2014 of 75.5%
6th highest qualified population (44.1% to NVQ4 +)
2nd highest digital connectivity (super fast broadband) of 89.3% of postcodes
7th lowest CO2 emissions per capita
Traditional businesses with a major presence in Brighton include American Express, Domestic & General, Lloyds Banking Group and Legal General. Other large private sector employers include Kimberley Clark, BUPA, Kineo, Riot Games and iCrossing. These last three are indicative of Brighton’s popularity with Creative, Digital and IT (CDIT) businesses with 16,000 people now working for creative businesses in the city and CDIT employment having grown by over 25% between 2010 and 2013, a 10% faster rate than the national average.
In 2011 HSBC Business described Brighton as “an alternative economy super-city and a dynamic centre for innovative companies forging novel ways of doing business” QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
DESCRIPTION
Queensberry House is a purpose-built office building, constructed in the 1960s and comprehensively refurbished and extended in 2009. The building also provides retail accommodation at ground and basement levels.
As part of the refurbishment, a penthouse office suite was added, which benefits from an extensive rooftop terrace and panoramic coastal views.
The property is arranged over basement, ground and six upper floors, with an office reception at ground floor.
The property benefits from nine car parking spaces at the rear accessed off Frederick Street. Further parking is available nearby at the 162 space NCP North Street, and the 587 NCP Brighton Theatre on Church Street.
Following the full refurbishment in 2009, at a cost of approximately £115 per sq ft, the property provides Grade A office accommodation with amenities including:
New heating and cooling to the offices via VRV systems New raised access floors New windows comprising double glazed aluminium units New metal suspended ceilings with LG7 compliant lighting Two new 8-person DDA compliant lifts serving basement to 5th floors New electrical supplies, meters and switchgear New water and gas supplies and drainage New fire alarm system New roof and elevations painted QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
FLOOR PLANS TENURE
Typical upper floor plan: Freehold. The site area total approximately 0.28 acres (0.11 hectares).
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Freehold Demise
Right of way for car park access Not to scale - for identification only QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
TENANCIES
The property is let on effective full repairing and insuring terms, in accordance with the tenancy schedule below:
Tenant Floor/Unit Sq ft Rent pa Rent psf Lease Start Lease Expiry Break Date Review Date Comments Rent is reviewed to RPI (uncapped) Tesco Stores Limited 104/105 4,827 84,177 17.44 25/06/2009 24/06/2024 – 25/06/2019 Arranged over ground and basement Parks Residential Limited 107 1,524 30,000 19.69 25/12/2008 24/12/2023 – 25/12/2018 Arranged over ground and basement Rent is reviewed to RPI (uncapped McClelland Music Limited 108 1,524 32,500 21.33 23/04/2014 22/04/2024 22/04/2019 23/04/2019 Arranged over ground and basement 24/03/2019 Rent is reviewed to RPI (uncapped) Subway Realty Limited 109 1,790 37,500 20.95 25/03/2014 24/03/2029 25/03/2019 Sublet to Rajeev Sharma t/a Subway 24/03/2024 Arranged over ground and basement 31/03/18 Lease is reviewed to higher of RPI or OMV + 10% Rolling break Dyn Limited First 4,998 131,328 26.28 31/03/2015 31/03/2025 31/03/2020 6 month rent deposit thereafter on Lease guaranteed by Dynamic Network 6m notice Services Inc Lockton Companies Second (part) 3,638 90,950 25.00 01/02/2011 31/01/2021 – 01/02/2016 International Limited Optical Express Limited Second (part) 1,454 29,000 19.94 12/12/2012 11/12/2017 – Third 5,001 Rent payable by tenant is based on a Brighton Business Centre Fourth 4,950 combination of guaranteed and turnover 372,872 23.50 06/05/2010 05/05/2020 – 06/05/2015 rent. Further details below. Limited (t/a Regus) Fifth 4,998 Tenant has a contractual right to renew Sixth 918 lease for a further 5 years. Total 35,622 808,327
REGUS OCCUPATIONAL HISTORY: REGUS RENT CALCULATION MECHANISM:
Regus took occupation in 2010 and following a 6 month fit out Rent payable by Regus is calculated as follows: traded up over an 18 month period. Following an initial emphasis Guaranteed Rent – 50% of quarterly market rent, reviewed 5-yearly and currently £93,218 per quarter (£372,872 per annum). toward larger spaces and occupiers, the accommodation has recently been reconfigured to provide more smaller spaces, Basic Rent – 50% of quarterly turnover, capped at 50% of quarterly market rent (current cap of £46,609 per quarter). increasing the capacity from 150 desks to 260 desks. To achieve a rent that equates to the market rent, quarterly revenue must be a minimum of £186,436.
Recent trading figures, since the works completed in June 2015, Profit Rent – When 50% of quarterly revenue exceeds 50% of quarterly market rent, a profit rent is payable, demonstrate a strong uptick in revenue, with average desk rents calculated as follows: now at £280 per month, and occupancy levels forecast at (Quarterly revenue – (quarterly market rent * 2)) * 30%. This is capped at 20% of quarterly market rent. 90-95%. At these trading levels there is strong potential for a landlord to enjoy profit rent in the region of £12,000 - £25,000 At current market rent, a quarterly revenue of £186,436 is required to generate a Profit Rent. The most recent per annum. quarterly revenue exceeds this. Further information available on request. QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
TENANT INFORMATION
Tenant Turnover from latest account Profit Net worth D&B rating
Tesco Stores Limited, Company no. 519500 £42,547,000,000 £1,696,000,000 £3,038,000,000 5A1
Parks Residential Limited, Company no. 02984119 Not disclosed Not disclosed £200,322 B2
McClelland Music Limited, Company no. 04295879 Not disclosed Not disclosed £368,757 A2
Subway Realty Limited, Company no. 04174473 £28,613,501 £1,946,179 £655,859 A3
Dyn Limited, Company no. 07938282 Not disclosed Not disclosed £255,784 B2
Dynamic Network Services Inc Not disclosed Not disclosed Not disclosed 1R3
Lockton Companies International Limited, Company no. 01211673 Not disclosed £2,647,031 £25,558,493 4A1
Optical Express Limited, Company no. SC161469 £79,479,693 -£3,589,047 -£1,830,278 N1
Brighton Business Centre Limited (t/a Regus), Company no. 7226401 £876,000 -£184,000 -£759,000 N2
Tesco Stores Ltd is a subsidiary of Tesco PLC, one of the world’s largest Founded in 2001, Dyn is an internet performance company. grocers, with over 500,000 staff in 12 countries. In the UK, Tesco have Queensberry House is the company’s European headquarters. over 3,500 stores.
Parks Residential Letting Agency is a leading Brighton and Hove lettings The world’s largest privately owned insurance brokerage firm, and property management company, established in 1992. founded in 1966
McClelland Music trade as Hobgoblin Music, established in 1976, selling music instruments, with a particular focus on the folk market. They currently One of the UK’s leading eyecare providers. have nine branches across the UK.
Subsidiary of Regus PLC, established in 1989 and now one A franchised sandwich shop, operating in the UK since 1996 with1,400 of the global leaders in serviced offices. stores in the UK.
SERVICE CHARGE:
The 2015 service charge budget is £5.53 per sq ft for the office accommodation and £1.21 per sq ft for the retail units. Each tenant also pays into a sinking fund which will be transferred on sale and currently amounts to circa £160,000, subject to confirmation. QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
BRIGHTON OFFICE MARKET
Brighton and Hove established itself as a major office centre in the 1970s, when several Two new office schemes are now being promoted into this relative vacuum of which McAleer & predominantly financial institutions relocated from London, to join public sector occupiers led by Rushe’s speculative CityView, located north of the train station, will provide 32,000 sq ft of office Brighton & Hove City Council. accommodation and is under construction with completion due at the end of 2015. Agents are not formally quoting a rent, however prospective tenants are being issued with leasing terms based on Alongside these financial occupiers, the Brighton market has been characterised in recent years by a rent of £28 per sq ft which will conceivably rise to £30 per sq ft at completion. This scheme is an influx of media and technology companies attracted by the culturally diverse lifestyle available to likely to appeal to financial and mature tech companies. employees in the city. These companies now account for circa 50% of total office take up. The second potential scheme is Cathedral Group’s Circus Street scheme where a 30,000 sq ft However, Brighton’s office stock has hardly changed since the mid 1980’s with an estimated building is likely as part of a £100M mixed use development and will be targeted towards smaller 85% of Brighton’s 4 million sq ft of stock built before 1987. The only major schemes within the and fast growing tech companies. The site is currently being cleared and development is planned city centre in the past 25 years have been Trafalgar Place (250,000 sq ft) and Amex’s 220,000 to commence towards the end of 2015. sq ft new HQ building at 1 John Street which replaced its previous HQ fronting Edward Street comprising circa 300,000 sq ft. A lack of supply is helping to drive rental growth with top headline rents currently over £25 per sq ft, as evidenced by the recent letting to Dyn in Queensberry House at £26.28 per sq ft. Elsewhere in It is estimated that circa 750,000 sq ft of city centre offices have been removed from Brighton’s the city, Sovereign House has regularly achieved rents of £23-£23.50 per sq ft and £25 per sq ft office stock in the past decade as demand for housing and student housing made change of use at Trafalgar Place. away from offices profitable for owners of ‘tired’ office buildings. This has further accentuated the effects of a long term lack of office development and led to a supply shortage. In similar sized South East office centres, such as Maidenhead, Woking and Staines, headline rents are now £35 per sq ft, £30 per sq ft and £33 per sq ft respectively. In this context, Brighton’s KEY RECENT INVESTMENT TRANSACTIONS IN THE SOUTH EAST AND headline rents are very sustainable and offer strong potential for rental growth in the short term. SOUTH COAST MARKET INCLUDE:
Size Rent Date Sold Address Tenants WAULT Sale Price NIY Purchaser (sq ft) (per sq ft)
Aug -15 The Atrium, Uxbridge Multi Let 4.3 years 156,529 £24.95 £55,900,000 5.68% Blackrock
May -15 Argentum, Hammersmith Regus 5.2 years 25,424 £30.78 £16,226,000 4.10% Royal London
May -15 Apex Plaza, Reading Multi Let 3.2 years 221,231 £26.13 £90,000,000 5.63% Legal & General
Apr -15 One City Park, Hove Legal & General 11.8 years 78,121 £18.83 £23,170,000 6.00% Kames
Dec -14 Chiswick Gate, Chiswick Multi Let 2.1 years 13,339 £26.67 £6,510,000 5.50% Private
Oct -14 Newplan House, Epsom Multi Let 4.3 years 23,100 £19.73 £6,900,000 6.25% Cornerstone
Sep -14 Goldvale House, Woking Multi Let 4.1 years 20,556 £21.64 £6,450,000 6.50% LaSalle
Aug -14 80 Moorbridge Road, Maidenhead Multi Let 5 years 18,894 £21.88 £6,840,000 5.66% Legal & General
Dec -13 Two City Park, Hove Legal & General 10 years 67,296 £18.90 £18,080,000 6.65% M&G
Nov -13 One Gloucester Place, Brighton Multi Let 3.8 years 37,721 £20.60 £11,025,000 6.66% Royal London QUEENSBERRY HOUSE 104-109 QUEENS ROAD | BRIGHTON | BN1 3XF
View from Queensberry House roof
EPC PROPOSAL
The office accommodation benefits from an excellent EPC rating of B 39. We are instructed to seek offers in excess of £11,750,000 (Eleven Million Seven Hundred and Fifty Thousand Pounds) reflecting an initial yield of 6.5%, net of the usual purchaser’s costs of 5.8%. The retail units benefit from the following EPCs: 104/105 – C 68 107 – C 75 109 – D 78 108 – C 58
CAPITAL ALLOWANCES CONTACT
The vendor has not claimed CAs during its ownership. Owing mainly to the 2009 Richard Talbot-Williams Hugh Yates full refurbishment of the building there is an estimated pool of £1.75m-£2.2m of 0207 338 4244 0207 338 4336 qualifying expenditure, which assuming Corporation Tax of 20% would result in a [email protected] [email protected] tax saving of circa £350,000-£440,000. Capital allowances are available to the purchaser by separate negotiation.
Misrepresentation Act 1967: BNP Paribas Real Estate Advisory & Property Management UK Limited for themselves and for the vendor(s) or lessor(s) of this property whose agents they are, give notice that: 1. These particulars do not constitute, nor constitute any part of, an offer or contract. 2. None of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact. 3. Any intending purchaser or lessee must satisfy himself by inspection or otherwise as to the correctness of each of the statements contained in these particulars. 4. The vendor(s) or lessor(s) do not make or give and neither BNP Paribas Real Estate Advisory & Property Management UK Limited nor any person in their employment has any authority to make or give, any representation or warranty whatever in relation to this property. Finance Act 2013: Unless otherwise stated all prices and rents are quote exclusive of VAT. The Business Protection from Misleading Marketing Regulations 2008: These details are believed to be correct at the time of compilation but may be subject to subsequent amendment. September 2015
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