129 / 132 NORTH STREET & 133 QUEENS ROAD

CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY BRIGHTON 129/132 NORTH STREET & 133 QUEENS ROAD CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

Investment Highlights

• Brighton is one of the largest retail centres in the UK, with a primary catchment of 515,000 persons and boasts an eclectic and vibrant mix of high-end, mass market and boutique retailers. • Brighton ranks 9th on the PMA Retail Score and Fashion Score - evidencing the strength of the retail offer. • The subject property is situated in a dominant city centre location at the busy junction of North Street and Queens Road. • Flagship store of 71,935 sq ft, with three adjoining retail units. • Long WAULT of 14.3 years to expiry and 9.6 years to break. • 85% of the total income is secured against Boots UK Ltd for a further 16 years (11 years to break). • Remaining income secured against major UK retailers and TUI. • Freehold. • Obvious asset management opportunities to extend the WAULT and significant long term development potential (STPP). • Current total rental income of £1,523,000 pa.

We are instructed to seek offers in excess of £31,000,000 (Thirty One Million Pounds), subject to contract, for the freehold interest in this property. This reflects an attractiveNet Initial Yield (NIY) of 4.60%, assuming purchaser’s costs of 6.77%. “The subject property is situated in a dominant city centre location at the busy junction of North Street and Queens Road” Stratford 11 7 upon Avon Bedford M1 M11 A508 A509 A46 A5 10 Newport Biggleswade A10 Haverhill Ipswich A6 A44 Evesham Banbury Pagnell 9 11 A505 Sudbury 14 A14 A43 Milton A1 Royston A134 8 A422 A421 Sa‡ron 1 A44 Keynes 13 Walden A12 10 A505 A46 A131 Felixstowe 9 Letchworth 9 Harwich A43 12 Leighton M5 10 A5 A120 A44 8 A120 10 Stow-on- the-Wold Buzzard M1 M40 A1(M) Braintree Luton Stevenage STANSTED Cheltenham 11 7 A602 Colchester A133 11 Bicester Dunstable 8 A41 Bishop's 9 A120 10 A10 A34 LUTON Welwyn Stortford A130 A436 A131 9 6 Garden Aylesbury City Ware Witham A12 Clacton-on-Sea A417 A40 Kidlington 5 Witney Tring Hemel Hertford M11 A429 St 4 A40 A41 Hempstead Harlow 8 Hatfield Maldon A413 Albans M10 3 Chelmsford Stroud A40 Berkhamsted Hoddesdon 7 7 1 2 8 A418 Thame A414 A419 Cirencester 7 A4010 22 20 Amersham 24 M25 25 26 A12 A130 19 5 A420 Abingdon High Watford 6 18 Barnet Enfield 5 5 Wycombe 4 Chigwell 17 A10 A419 M11 28 Rayleigh Didcot M40 Beaconsfield A12 4 2 Brentwood 3 M1 A406 4 A127 2 Marlow 29 A127 Basildon Southend-on-Sea 1 A41 1 A40 Harrow Swindon M25 A13 Uxbridge A406 BRIGHTONCITY 16 Henley- Maidenhead A13 A429 129/132 NORTH STREET & 133 QUEENSCanvey ROAD Island M4 15 on-Thames Slough 17 7 30 A346 6 4 1 Woolwich Tilbury CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY A34 3 2 31 Windsor A4 Richmond Sheerness Reading 14 HEATHROW A205 Dartford Gravesend 13 M4 A329(M) A20 14 13 A2 2 Margate A350 12 Kingston A2 Rochester Herne 10 Bracknell 1 Staines upon Thames Swanley 1 Bay Newbury 11 A28 2 Gillingham A299 11 A232 Chatham Whitstable Sutton Sittingbourne A253 Ramsgate 3 Croydon 4 4 A28 Location Devizes M20 3 5 A34 Camberley Epsom M25 M25 2 Faversham 10 LONDOA22 N 4 A249 6 7 A338 3 M2 A33 4 Woking 9 5 6 Canterbury A23 A2 A339 A24 M26 7 9 5 7 Leatherhead 8 Sevenoaks A228 A3 M25 A2 5 6 Maidstone Basingstoke 8 A21 Deal Brighton is one of the largest commercial centres in the South East of 6 M3 Aldershot Dorking Redhill Oxted A26 Reigate M20 A28 A256 , located 46 miles (74 km) south of , 19 miles (30 km) west of Andover 7 Guildford Tonbridge A22 Farnham A31 A229 A24 A2 8 9 CHANNEL Godalming TUNNEL Eastbourne and 55 miles (88 km) east of . Ashford TERMINAL Dover A36 9 East 10 A303 A303 Alton GATWICK Grinstead Tunbridge Wells A20 10 A264 A34 A21 13 A338 M20 11 12 The city enjoys excellent road communications with the A23 dual A2070 M3 Folkestone A264 A31 Haslemere 11 M23 Hythe carriageway providing access to the M23 which leads to London, the M25 A3 A26 9 Horsham A22 Salisbury Winchester Crowborough A259 and the national motorway network beyond. In addition, the A27 skirts the 10 Haywards 11 A36 Heath north of the city and runs east / west from to Eastbourne. A354 A272 Romsey 12 Petersfield A23 Uckfield 13 Eastleigh 14 A21 4 SOUTHAMPTON In the year to 31st March 2016, Brighton railway station was the seventh A338 3 4 SOUTH DOWNS 2 5 A24 A22 A26 A259 1 7 1 NATIONAL PARK busiest station outside of London with 17.3m entries/exits (ORR). The station A283 8 A3(M) A27 Hailsham SOUTHAMPTON A259 offers fast and regular services to London Victoria and London Bridge, with A31 9 3 M27 10 Havant A27 11 A27 Ringwood Hythe 5 Bexhill- a fastest journey time of approximately 50 minutes, as well as local services 12 A31 Fawley Fareham 12 on-Sea A350 A22 Worthing Newhaven to Portsmouth, Seaford and Lewes. Gosport A338 Portsmouth Bognor Eastbourne A348 New Milton Regis is located 23 miles (37 km) to the north and Heathrow Lymington Cowes BRIGHTON Ryde Poole Christchurch Airport is located 48 miles (77 km) to the north west; both airports provideBournemouth domestic and international services and are ranked the first and second Sandown largest in the UK respectively. Brighton is further served by Southampton Shanklin International Airport located 54 miles (86 km) to the west.

Economic & Demographic Profile

Brighton boasts a primary catchment of 515,000 persons and an estimated shopping population of 329,000, evidencing its dominant retail environment. The catchment area encompasses the built up areas of Brighton, Hove, Shoreham-by-Sea and extends north to include affluent locations in the South Downs as well as Lewes, and Burgess Hill. 54% of the catchment are classed as being within the most affluent ABC1 social groups; this is largely due to the city’s well established position as a business hub and its excellent connectivity with London, and subsequent commuting population (PMA). Spending in Brighton is boosted by leisure and business tourism and the city ranks in the UK’s Top Ten tourist locations (VisitBritain.org). According to Brighton & Hove City Council, some 8.5 million tourists visit the city each year, bringing around £780 million to the local economy (2014). The city also has a significant student population of over 30,000, bringing additional spend to the catchment during term time and adding to the already relatively young population, which includes a high proportion of 15-44 year olds. BRIGHTON 129/132 NORTH STREET & 133 QUEENS ROAD CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

Retailing in Brighton

Brighton has an estimated 1.58m sq ft of in-town retail floorspace, ranking 27th of the PMA centres on this measure; however, it ranks 9th on its PMA Retail Score and Fashion Score, making the retail provision tight and in high demand. There is a particular undersupply of large format stores within the city. Retail demand for Brighton is exceptionally high with it being one of the key locations within which both UK and European retailers seek representation, having first established in London. The city’s retail offer is extensive and continues to provide one of the most exciting UK shopping experiences outside Central London. The retail core is principally linear, running in an east/west direction along Western Road and North Street. These prominent high streets form part of the prime retail pitch, along with Churchill Square Shopping Centre, Brighton’s primary covered shopping centre. ‘’ and East Street merge to create a unique shopping experience of historic passageways and streets occupied by aspirational and independent retailers. ‘The Lanes’ link directly with the city’s retail core via North Street and combine to create one of the UK’s top retailing destinations. Due to the city’s geography and historic nature, substantial in-town retail development is limited and in recent years developers have been forced to reposition existing stock as opposed to build afresh. An obvious example is, The Estate, which predominantly fronts North Street. The asset was acquired in June 2015 and is being substantially redeveloped to create a landmark mixed-use scheme, which will significantly enhance the eastern end of North Street. Situation

The subject property occupies a highly prominent corner position, situated AVAILABLE at the junction of North Street, West Street and Queens Road. The pitch benefits from significant footfall, being situated equidistant between Churchill Square, Brighton’s only shopping centre to the west and the city’s famous ‘Lanes’ to the east. The aforementioned redevelopment of The Hanningtons Estate is anticipated to strengthen the eastern end of North Street and in turn bolster footfall at the subject property. The property’s exceptional position within Brighton’s retailing core is further enhanced by the proximity of Brighton railway station which is situated a short distance north, along Queens Road. Also in close proximity are an array of well-known national multiple retailers including Superdry, Holland & Barrett, Sainsbury’s Local, , Metro Bank and TK Maxx.

THE LANES BRIGHTON 129/132 NORTH STREET & 133 QUEENS ROAD CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

Description

The property comprises an extremely prominent corner retail building arranged over ground 129 North Street benefits from a double rear docking station on Windsor Street making and four upper floors. The building has been split to provide the main modern retail store and a rear servicing simple. Due to the topography of Brighton the building is built on a hill and further three well configured shop units, totalling approximately 77,647 sq ft. The building is built consequently the unit benefits from large entrances for both retail floors. The ground floor is around a steel frame with brick walls and highly distinctive glazed curtain walling on the front accessed from the primary North Street entrance and the first floor is accessed from Queens elevations. Road. The bulk of the building (129 North Street) has been occupied by Boots since 1979 and was 130 North Street comprises an attractive regularly configured shop unit with a prominent frontage substantially redeveloped in 1998 specifically for them. The improvements included two new to North Street and ancillary accommodation on first floor. 131/132 North Street comprises a escalators and a 20 person passenger lift between the ground and first floors and internal works; double fronted store which benefits from a return frontage and first sales accommodation. 133 these floors provide large open retailing floorplates whilst the second and third floors are used Queens Road is arranged over ground and first floor and we understand benefits from an A2 for storage and staff accommodation. Use Class. All three of the units have rear access and the North Street units have undercover servicing from Windsor Street, which the tenants use for car parking and deliveries.

“The building has been split to provide the main modern retail store and a further three well configured shop units, totalling approximately 77,647 sq ft.” BRIGHTON 129/132 NORTH STREET & 133 QUEENS ROAD CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

Tenure

The property is held Freehold.

Tenancy

The property is let on effective FRI terms to three national retailers with 133 Queens Road currently vacant. The tenancies produce an attractive WAULT of 14.3 years to expiry, 9.6 years to break and are described further in the tenancy schedule below.

Ground Ground First First Lease Start Expiry Date GIA ITZA Total Unit Tenant Rent (£pa) Sales Ancillary Sales Ancillary Comments (Rent Review) (Break) (sq ft) (units) (sq ft) (sq ft) (sq ft) (sq ft) (sq ft)

Current passing rent of £831,300 pa. 129 Reversionary lease signed and starting on 25/03/1998 23/06/2033 North Boots UK Ltd £1,300,000 71,395 71,935 24/06/2018 at £1,300,000 pa. Vendor to top-up (24/06/2023) (24/06/2028) Street to new rent upon completion. Tenant only break on not less than 9 months notice. Mutual rolling break after 01/11/2017 on not less 130 Krispy Kreme UK 17/10/2020 than 6 months notice and subject to a £50,000 North 01/02/2016 £68,000 809 524 492 1,301 Ltd (01/11/2017) landlord payment. Contracted outside of Street S24-28 of the Landlord & Tenant Act 1954. 131-132 Mutual rolling break after 23/06/2018 on 07/11/2021 North TUI UK Retail Ltd 08/11/2016 £105,000 1,630 1,051 1,002 2,632 12 months notice. 2.5% addition for return (23/06/2018) Street frontage.

133 Vacant Left vacant due to redevelopment. 12 months Queens (Rent and Rates £50,000 894 674 87 798 1,779 rent and rates guarantee to be provided by the Road Guarantee) vendor.

Electricity The Southern 12/12/1978 11/12/2058 Peppercorn Substation Electricity Board

Totals £1,523,000 77,647 BRIGHTON 129/132 NORTH STREET & 133 QUEENS ROAD CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

Market Commentary

Unlike most retail centres nationally, prime rents in Brighton remained resilient throughout the recent recession at approximately £200 Zone A, highlighting the strength and depth of occupational demand for the city. Post-recession rents in the Standard Life owned Churchill Square have grown steadily to approximately £245 Zone A (net effective) and strong rental pressure remains. Rents along the traditional prime section of Western Road directly opposite the Churchill Square currently stand at approximately £180 Zone A, with similar rents being achieved on East Street within ‘The Lanes’ in the smaller aspirational retail units. The rental tone on North Street where the subject property sits, equidistant between Western Road and East Street, currently stand at £125 Zone A, lower than neighbouring retail pitches and consequently offering strong potential for rental growth going forwards. Furthermore, each of the tenancies within the subject premises have been agreed within the last 15 months due to landlord redevelopment negotiations and therefore provide a low base from which to grow rents in the short to medium term. 129 North Street Boots are currently passing off £18.07 per sq ft. Looking at the rental evidence below, £18.07 per sq ft provides a low passing rent for a large format flagship store within Brighton.

Town Occupier Transaction Date GIA (sq ft) Rent Net Rent psf Comments Southampton H&M Lease Renewal Apr-16 32,868 £1,125,000 £34.25 Bluewater Boots Regear Jan-15 44,642 £2,455,310 £55.00 Headline rent Brighton WH Smith Lease Renewal Jun-13 22,563 £713,800 £27.42 of £33.20 Topshop / Open Market Headline rent Brighton May-13 33,400 £921,402 Topman Letting of £27.60 Open Market Brighton Bershka / Zara Mar-13 14,931 £465,000 £29.60 Letting

130 & 131-132 North Street Passing rents equate to a low £124 Zone A (Krispy Kreme) and £92.50 Zone A (TUI), applying A/15 and A/20 to the first floor sales and first floor ancillary accommodation respectively. We highlight below two recent zoned transactions within the vicinity of the subject premises, evidencing the low passing rents within the subject property. “85% of the total income is Address Tenant Transaction Date NIA (sq ft) Rent Zone A Comments 82 North Open Market Stepped rent – 25 year lease. Metro Bank Mar-15 8,209 £134.00 secured against Boots UK Ltd for Street Letting Average £345,000 No breaks. 143 North 99p Stores 10 year lease. a further 16 years” Lease Renewal Dec-13 10,750 £200,000 £118.50 Street (now Poundland) No breaks. BRIGHTON 129/132 NORTH STREET & 133 QUEENS ROAD CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

Asset Management “Long attractive WAULT

The leases with Tui and Krispy Kreme of 14.3 years to expiry were recently regeared and 133 Queens Road left empty to provide the landlord and 9.6 years to break” with flexibility to redevelop the block. Any purchaser will have the ability to further secure the asset’s income by renegotiating/reletting these units on more favourable terms, should they wish to do so.

130 North Street - Krispy Kreme UK Ltd Krispy Kreme originally occupied their unit on a 10 year lease expiring October 2020 at £68,000 pa (the current passing rent). This lease was surrendered and regranted in 2016 with the landlord paying a £280,000 premium to add break clauses. A further £50,000 landlord Investment Comparables Rear Servicing payment is payable if the break is actioned. Date Address Tenant Years to Expiry Price NIY Purchaser

13-15 Sidney Street, 131-132 North Street - TUI UK Retail Ltd Jan-17 Next 11 £21,815,000 3.65% Overseas Private Tui (formerly First Choice) have been in occupation since 1988. A lease renewal 38-42 East Street, Lush, Estée Lauder, Dec-16 - £14,375,000 4.10% Redevco was agreed in 2016 at £124,750 pa on Brighton Maje, a 5 year lease (without break) but a 31-37 High Street, Aberdeen Asset £19,750 (16%) discount was agreed for the Jun-16 Boots 14.5 £21,900,000 4.06% landlord flexibility. We consider this unit Islington Management to be highly reversionary. 181-185 Western Road, Feb-16 H&M 10.5 £17,100,000 4.50% Overseas Private Brighton The Hanningtons Estate, Multi-Let - Development 133 Queens Road - Vacant Jun-15 - £57,100,000 2.30% Redevco Brighton Opportunity Left vacant with a view to future redevelopment by the vendor. 132-134 North Street, Sainsbury’s, Merseyside May-15 WAULT 4.75 £15,150,000 4.20% Brighton Sports Direct, Poundland Pension Fund 71-78 North Street & Waterstones, Jan-14 WAULT 12 £8,000,000 4.86% Private 40-44 West Street, Brighton Pret a Manger, BRIGHTON 129/132 NORTH STREET & 133 QUEENS ROAD CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

Covenant Status

Boots UK Limited (00928555) Founded in 1849, Boots is the UK’s largest pharmacy chain and operates over 2,500 stores throughout the country, employing over 70,000 staff. Their primary business is the sale of medicines, health and beauty products and a range of food and drink. They have an Experian Credit Score of 100/100.

Fin. Year End Turnover Pre-Tax Profit Net Worth 31-Aug-15 £9,198,000,000 £542,000,000 £367,000,000 31-Mar-14 £6,340,000,000 £507,000,000 £456,000,000 31-Mar-13 £6,204,000,000 £452,000,000 £430,000,000

Krispy Kreme UK Limited (04532445) Krispy Kreme UK Limited is the UK retail arm of the world renowned Krispy Kreme Doughnuts. They opened their first UK store in 2003 and have now grown to over 35 locations. The brand offer 16 different varieties of doughnuts and are considered a market leader. They have an Experian Credit Score of 100/100.

Fin. Year End Turnover Pre-Tax Profit Net Worth 31-Jan-16 £61,700,000 £11,759,000 £17,745,000 01-Feb-15 £52,192,000 £7,274,000 £8,135,000 29-Dec-13 £52,393,271 £3,166,379 £2,326,822

TUI UK Retail Limited (01456086) TUI UK Retail Limited forms part of the multi-national travel company TUI Group, which can date its roots back to 1923. 131-132 North Street was previously occupied by First Choice with whom TUI merged in 2007 to form TUI Group. The store trades as Thomson, the UK brand of TUI, and is expected to be rebranded to the TUI branding by 2018, when the Thomson name is phased out. They have an Experian Credit Score of 85/100.

Fin. Year End Turnover Pre-Tax Profit Net Worth 30-Sep-15 £199,000,000 £8,000,000 £8,000,000 30-Sep-14 £203,488,000 £1,007,000 -£108,878,000 30-Sep-13 £206,661,000 -£5,330,000 -£111,185,000 BRIGHTON 129/132 NORTH STREET & 133 QUEENS ROAD CORE CITY CENTRE HIGH STREET RETAIL INVESTMENT OPPORTUNITY

EPCs

The Energy Performance Certificates and Recommendation Reports for the property are available upon request: • 129 North Street - Boots – C71 • 130 North Street – Krispy Kreme – E111 • 131-132 North Street – TUI – D81 • 133 Queens Road – Vacant – D77

VAT

The property is elected for VAT.

Proposal

We are instructed to seek offers in excess of £31,000,000 (Thirty One Million Pounds), subject to contract, for the freehold interest in this property. This reflects an attractive Net Initial Yield (NIY) of 4.60%, assuming purchaser’s costs at 6.77%. Further Information For further information on this property please contact:

Chris Lewis Sam Waterworth Pierre Kunkler Tel: 020 7152 5991 Tel: 020 7152 5149 Tel: 020 7152 5565 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]

Cushman & Wakefield LLP (and any joint agent appointed) on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: (1) The particulars are produced in good faith, but are a general guide only and do not constitute any part of a contract. (2) No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatsoever in relation to this property. (3) The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. (4) Nothing in these particulars should be deemed a statement that the property is in good condition, or that any services or facilities are in working order. (5) Unless otherwise 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. Publication Date: May 2017. Designed and Produced by Creativeworld. T 01282 858200.