34-36 BENNETTS HILL 38 WATERLOO STREET BIRMINGHAM I B2 5SN PRIME INVESTMENT OPPORTUNITY Period multi-let office building in the heart of Birmingham’s Central Business District 34-36 38 BIRMINGHAM I B2 5SN BENNETTS HILL WATERLOO STREET EXECUTIVE SUMMARY • Unique opportunity to acquire a multi-let Birmingham CBD office building. • Period building extending to a net internal area of 10,817 sq.ft (1,004.9 sq.m) on ground floor, basement and four upper floors. • Most recent office refurbishment completed in 2018. • The office space produces a low average rent of £17.74 psf, set against a backdrop of £22 - £25 psf currently being achieved in nearby buildings. • 21% of the income is secured against AF Blakemore and Son Ltd, one of the largest family owned businesses in the UK, with a term certain of 6 years. • 17.3% of the income is secured against Marstons plc, with 4 years term certain. • We are instructed to seek offers in excess of £3m, subject to contract and exclusive of VAT, for the freehold interest, reflecting an initial yield of 6.32% rising to 6.35% in October 2019 and an ultimate reversionary yield of 6.69% based on ERV. This represents a low overall capital value of £277 per sq.ft BOLD TEXT STOKE-ON-TRENT Ashbourne 34-36 38 BIRMINGHAMNOTTINGHAM I B2 5SN Derby BENNETTS HILL WATERLOO STREET Newport BurBurttoonn STAFFORD upon Trent Loughborough Melton LOCATION M6 Ashby-de-la-Zouch Mowbray 34-36 Bennetts Hill/38 Waterloo Street consists of a This location benefits from excellent nearby amenities Telford Cannock period multi-let office building in the heart of Birmingham’s including bars, restaurants and cafés. There are a number M1 Oakham M6 TOLL M42 M54 CBD. The property occupies a highly prominent position on of notable occupiers within the property’s immediate vicinity, Tamworth LEICESTER the junction between Bennetts Hill and Waterloo Street just including Bodega Bar & Cantina, ASK Italian, Sabai Wolverhampton off Colmore Row, and is within easy walking distance of Sabai, Adams, Cosy Club, Dirty Martini, The Lost & Found Oldbury M69 Birmingham New Street Station / Grand Central, as well and Buffalo & Rye. Nuneaton M6 as Birmingham Snow Hill and Moor Street. 34-36 BENNETTS HILL Corby 38 WATERLOO STREET Grand Central New Street Station BIRMINGHAM COVENTRY Kidderminster KETTERING Rugby M42 M45 M5 Redditch NORTHAMPTON Church St Gt Charles St Queensway Colmore Row CATHEDRAL 34-36 BENNETTS HILL 38 WATERLOO STREET Waterloo St Temple St Bennetts Hill Corporation St New St GRAND CENTRAL A38 NEW STREET STATION BULL RING 34-36 38 BIRMINGHAM I B2 5SN BENNETTS HILL WATERLOO STREET DESCRIPTION The property consists of ground floor and basement retail and four upper floors of refurbished offices occupying a corner position at the junction of Waterloo Street and Bennetts Hill. The offices have been refurbished to a high standard,the most recent of which completed in 2018, and includes the following specification: • Air Conditioning • Perimeter wall trunking • Exposed services • LED lighting • Lift access • Kitchen accommodation There is also storage space available at basement level. ACCOMMODATION DEMISE TENANT AREA SQ FT AREA SQ M 38 Waterloo Street Messrs Eagles & Sproson GF 540 50.2 (Ground & Basement) (t/a Kall Kwik) B 1,219 113.2 34-35 Bennetts Hill A F Blakemore & Son Ltd GF 1,297 120.5 (Ground floor) (t/a Philpotts Limited) First floor Workforce Staffing Ltd 1,539 143.0 First floor (boardroom) UK Sepsis Trust Ltd 342 31.8 Second floor UK Sepsis Trust Ltd 1,875 174.2 Third Floor Marshalls Mono Ltd 1,857 172.5 Fourth floor Marstons plc 1,866 173.3 Basement store UK Sepsis Trust Ltd 112 10.4 Basement store Vacant 170 15.8 Total 10,817 1,004.9 34-36 38 BIRMINGHAM I B2 5SN BENNETTS HILL WATERLOO STREET TENURE TENANCIES The property is offered freehold. The property is let on 8 leases and licences as set out in the tenancy schedule, producing a current total rent of £201,910.50 pa. DEMISE TENANT AREA SQ FT AREA SQ M LEASE START LEASE END BREAK REVIEW RENT PA ERV PA COMMENT £25,500 38 Waterloo Street Messrs Eagles & Sproson GF 540 50.2 01.07.2016 30.06.2026 30.06.2021 01.07.2021 £25,500 (£35.94 (GF & B) (t/a Kall Kwik) B 1,219 113.2 + £5 Bst) A F Blakemore & Son Ltd £42,500 £45,400 34-35 Bennetts Hill GF 1,297 120.5 24.06.2010 23.06.2025 24.06.2020 Assignment to AF Blakemore has now completed. (t/a Philpotts Limited) (£32.77) (£35.00) £28,674 £28,856 First floor Workforce Staffing Ltd 1,539 143.0 21.04.2017 20.04.2022 21.04.2020 (£18.63) (£18.75) £1,200 £6,412 First floor (boardroom) UK Sepsis Trust Ltd 342 31.8 Licence 30.04.2019 Holding over. (£3.51) (£18.75) Rent increases to £33,210 pa from 01.10.2019. £32,287.50 £35,156 Second floor UK Sepsis Trust Ltd 1,875 174.2 02.08.2016 01.08.2026 02.08.2021 02.08.2021 Two months’ rent free from 01.08.2019 following (£17.22) (£18.75) non-exercise of 2019 break to be topped up by vendor. £35,549 £35,549 Rent free expiring 25.07.2019 to be topped up by vendor. Third Floor Marshalls Mono Ltd 1,857 172.5 11.04.2019 10.04.2024 11.04.2022 (£19.14) (£19.14) 4 months’ rent free if 2022 break not exercised. Half rent until 14.09.2019 to be topped up by vendor. £35,000 £35,000 8 months half rent if 2023 break not exercised. Fourth floor Marstons plc 1,866 173.3 14.05.2018 13.05.2028 14.05.2023 (£18.76) (£18.76) £19,250 pa (14.05.2023-13.01.2024) £38,500 pa (from 14.01.2024) Terminable by either party on 30 days’ notice or on Basement store UK Sepsis Trust Ltd 112 10.4 Licence 01.08.2026 £1,200 £700 determination of second floor lease Basement store Vacant 170 15.8 £1,020 Currently used as cleaner’s cupboard Total 10,817 1,004.9 £201,910.50 £213,593 34-36 38 BIRMINGHAM I B2 5SN BENNETTS HILL WATERLOO STREET COVENANTS Financial information for the tenants is set out below: PRE-TAX SHAREHOLDERS’ TENANT YEAR END TURNOVER COMMENT PROFIT FUNDS Messrs Eagles & – – – – Individuals Sproson(t/a Kall Kwik) A F Blakemore & Son Ltd Large grocery 30/04/2018 £1.257bn -£20.66m £74.5m (t/a Philpotts Limited) wholesale business Workforce Staffing Ltd 30/09/2017 £25.5m £353,177 £1.505m Recruitment company UK Sepsis Trust Ltd 31/03/2018 £1.667m £150,682 £450,982 Charity Manufacturers of Marshalls Mono Ltd 31/12/2017 £400.6m £67.3m £347.5m landscape and construction products Large brewing and Marstons plc 20/09/2018 £1.14bn £54.3m £957.6m pub plc 34-36 38 BIRMINGHAM I B2 5SN BENNETTS HILL WATERLOO STREET MARKET COMMENTARY INVESTMENT MARKET EVIDENCE Birmingham is currently seeing record levels of investment, for both real estate Sentiment towards Birmingham has never been greater which has resulted in unprecedented demand and infrastructure, which has seen the city spearhead a regional economy worth for asset management opportunities in the CBD. Below is a table of recent transactions: an estimated £110bn. PRICE PROPERTY PRICE YIELD DATE COMMENT Birmingham’s office market comprises a wide range of different sectors from legal PSF and financial services to Fintech, gaming and advanced manufacturing. The continuing lack 79-83 Colmore 1.2 years term certain. Single let to of quality office stock and ongoing demand has resulted in positive rental growth, estimated £8.475m £305 5.88% Available Row, Birmingham Royal Bank of Scotland. to be 2.2% per annum over the next 5 years. With 40% of the population being under the age of 25 (the youngest of any major 125 year leasehold with a ground rent 63 Church Street, September of £20,713 p/a. European city) and 65,000 students living in the city, Birmingham was named the UK’s £4.05m £251 6.71% Birmingham 2018 Vendor: Altrincham Developments. most Entrepreneurial city in 2018. This has resulted in a major surge in demand for Purchaser: Private small and serviced office suites, such as those in the subject property. 3 Temple Row West is multi-let and 3 Temple Row refurbished. Bull Street is single let to the West / £6.55m £325 5.33% June 2018 Secretary of State for 10 years. RENTAL MARKET EVIDENCE 42-43 Bull Street Vendor: Private. Purchaser: Columbia Threadneedle Demand for small suites has been strong in recent years with rents growing and incentives tightening. With prime rents currently set at £34 psf and due to rise. the rental tone in 20,013 sq ft Mixed-use unrefurbished 24 Bennetts Hill, December multi-let investment. 9.77 years term 34-36 Bennetts Hill of £18.75-£19.14 psf indicates potential for growth. The chart below £4m £200 5.90% Birmingham 2017 certain. demonstrates recent transactions for similar sized suites in the CBD. Vendor: REI PLC. Purchaser: Dunmoore. SIZE RENT PER PROPERTY TENANT DATE 6 Bennetts Hill, SQ FT SQ FT 29,365 sq ft Mixed-use, Multi-let 102/104/106 August £7.2m £245 3.34% Colmore Row, 2017 Vendor: REI PLC. 5th Floor 126 Colmore Row Clive Reeves PR 860 £27.00 February 2019 Birmingham Purchaser: Cervidae Consultancy. 2nd Floor, 14 Waterloo MJ Mapp 1,710 £22.00 January 2019 Street, Birmingham Let to Wilkes Partnership, expiring 31st 37-43 Dec 2027.