165 – 197 SAUCHIEHALL STREET & 128 – 142 BATH STREET GLASGOW G2 3ER 01 INTRODUCTION A RARE OPPORTUNITY TO ACQUIRE THE HERITABLE INTEREST IN A PRIME LONG-INCOME MIXED USE INVESTMENT ON AN ICONIC GLASGOW RETAIL STREET 02 INVESTMENT SUMMARY THE SAUCHIEHALL BUILDING HAS AN INCOME EXPIRY PROFILE OUTSTANDING WEIGHTED AVERAGE UNEXPIRED LEASE TERM CERTAIN OF 15.8 YEARS, WITH 83% OF THE INCOME SECURED TO TENANTS WITH A DUN & BRADSTREET RATING OF 5A1 OR 5A2. 10 YEARS + Glasgow is regarded as the second most 63% of the income is secured to tenants 8-10 YEARS important and largest retail market in the with a Dun and Bradstreet Credit Rating UK after the West End of London, this of 5A1, with a further 20% secured against 6-7 YEARS is confirmed by its consistent number 2 a 5A2 rated covenant. 3-6 YEARS position in the CACI UK Retail Rankings which also places it in the top 20 super Outstanding Weighted Average Unexpired 0-3 YEARS league of major European shopping Lease Term (WAULT) of 16.8 years to destinations by commercial expenditure. expiries and 15.8 years to break options. Glasgow is the largest city in Scotland Passing Contracted Rent of £3,713,301 per and one of Europe’s most dynamic annum, subject to a service charge shortfall and vibrant cities with over £4.95bn of of £2,600 over unit 32 (TK Maxx) resulting comparison goods spend available in in a net income of £3,710,701. the catchment area. 26% of the income is subject to RPI linked The Sauchiehall Building comprises a full rental uplifts. city block of well configured high street Heritable Interest (Scottish equivalent retail, leisure and car park accommodation of English Freehold). TENANTS PERIOD % INCOME which was extensively altered and refurbished in the early 2000’s and has We are instructed to seek offers in excess of Q PARK, PURE GYM, SMASHBURGER 10 YEARS + 29% since benefited from further refurbishment £60,600,000 for the shares in a Luxembourg including, under the current ownership, the SPV, net of debt. A purchase at this level PRIMARK, WH SMITH, MILLETS , CHILANGO 8-10 YEARS 39% addition of three new-build leisure units. would provide a net initial yield of 6.00%, allowing for purchasers costs of 2.00%. TK MAXX 6-7 YEARS 11% The property’s immediate pitch benefits from annual footfall of 16 Based upon the approximate GIA of 313,001 SUPERDRUG , SPORTS DIRECT, ELANIC 3-6 YEARS 15% million, higher than both Buchanan sq ft, a purchase at this level would reflect Street and Argyle Street. an attractive capital rate of £193.61 per sq ft RBS, GUARANTEE AND NEWSAGENT 0-3 YEARS 5% 03 06 GLASGOW ith a population of 650,000 Other major employers within Glasgow and an extended catchment include Glasgow City Airport, BAE population of 2.3 million Systems, Pernod Rickard, United Biscuits Wpeople, Glasgow is Scotland’s largest and the city’s three main universities. city and the third largest in the UK. The VIBRANT In 2014 Glasgow hosted The city’s comparison goods spend is £4.85 billion per annum whilst convenience Commonwealth Games, the Ryder Cup expenditure is £5.23 billion per annum. and the MTV European Music Awards. The city is a world class location for CITY The city has the largest economy in film and TV production with major Scotland and contributes substantially to international productions such as World the UK economy. Glasgow is Scotland’s War Z, Cloud Atlas, Fast & Furious 6 first city to secure the UK Government’s and Outlander filmed on location here. LOCATION City Deal worth £1.3 billion and is the In addition, Glasgow hosted the MOBO first city in the UK to implement the Awards for the fourth time in 2016. These Tax Increment Financing (TIF) scheme. events cement Glasgow’s reputation as The city generated nearly £19.6 billion one of the most vibrant and dynamic in Gross Value Added to the Scottish cities in Europe. economy in 2015, outperforming the UK average by more than a third. The state of the art SSE Hydro National Arena opened in August 2013 and is Important employers in Glasgow’s the second-busiest music arena in the banking, finance and insurance sectors world in terms of ticket sales, behind only include Santander, RBS, Lloyds Banking London’s The O2 Arena. This makes the Group, Barclays Bank, Clydesdale Bank, arena busier than the Manchester Arena JP Morgan, Morgan Stanley, Esure, Direct and the famous Madison Square Garden Line, Churchill Insurance, Aviva and in New York. Royal Sun Alliance. In addition, Glasgow has a high representation of public sector employers including the Ministry of Defence, the Department of Work and Pensions, HMRC and The Student Loans Company. GLASGOW IS SCOTLAND’S LARGEST CITY AND THE THIRD LARGEST IN THE UK 07 No.1 £1.3bn £10.08bn PROMIS RETAIL TOTAL RANKING CATCHMENT SPEND 842,000 CITY DEAL, PROMIS SHOPPING SCOTLAND’S FIRST POPULATION AND LARGEST 1.84M 3rd £19.6BN PROMIS PRIMARY GVA (2015) - LARGEST CATCHMENT LARGEST CITY IN ECONOMY IN POPULATION THE UK SCOTLAND 08 RETAILING IN GLASGOW GLASGOW IS THE SECOND The street is currently experiencing very high levels of tenant demand which has LARGEST AND MOST resulted in rental growth, where the Zone IMPORTANT RETAIL A rate has increased from £260 to £330 MARKET IN THE UK AFTER per sq ft over the past 12-18 months, representing an increase of 27%. LONDON’S WEST END. Sauchiehall Street is one of the strongest he city is consistently ranked retailing pitches in Glasgow and attracts number 2 in the CACI retail rankings predominately national and international and PROMIS Market Analysis ranks mass market fashion, convenience, Tthe city number 1 on the following bases: retail and leisure occupiers. The street welcomes 16m shoppers per year and has one of the UK’s strongest and most stable Primary Catchment Population: 1.84 m levels of footfall, outperforming both Buchanan Street and Argyle Street. Estimated Shopping Population: 842,000 Glasgow’s retail core is further enhanced Volume of comparison retail spend by presence of three covered shopping available in the catchment area: £4.95bn malls, namely Buchanan Galleries, Princes Square and the St. Enoch centre. Over 5.3 million square feet of Buchanan Galleries is Glasgow’s prime retail space can be found in Glasgow, covered shopping centre, it is anchored with prime and super prime shopping by John Lewis, Next and Boots and boasts to be had within one square mile in the fashion brands such as River Island, RETAIL city centre. Glasgow’s retail core follows Hollister and Mango as key tenants. Land a continuous Z shape in what is Securities have recently announced plans known as the ‘Golden Z’ comprising to progress with the “Southern Extension” Sauchiehall Street, Buchanan Street which will comprise a new-build MSU and Argyle Street. fronting Buchanan Street which is understood to be pre-let to Next. Glasgow’s retail sector generates more than £3.3 billion per annum The St. Enoch’s Centre was extensively supporting 17,000 full-time jobs and, refurbished in 2010 at the cost of £150m post Brexit vote, is showing no sign of and now comprises 1 million sq ft of retail weakening with H&M recently acquiring and leisure space. Major tenants include their biggest store in the UK. Debenhams, H&M, Hamley’s, JD Sports, Boots and Superdry. Buchanan Street is the undoubted prime retail pitch in Glasgow and is Princes Square has recently undergone considered to be a genuinely world a £7.5m refurbishment and is home to class retail destination. some of the city’s high-end fashion retailers including Belstaff, COS, Ted Baker and Vivienne Westwood. The centre is also one of the most popular city centre destinations for eating and drinking. 09 CACI UK RETAIL RANKINGS 2016 GLASGOW’S LEISURE AND RESTAURANT MARKET HAS EXPERIENCED CONSIDERABLE GROWTH OVER THE PAST 24-36 MONTHS AND A NUMBER OF HIGH-PROFILE OCCUPIERS HAVE ENTERED THE MARKET, DRIVING TOTAL CENTRE EXCEPTIONAL RENTAL UK RANK RF CENTRE RF SCORE COMPARISON SPEND (£M) GROWTH IN THE SECTOR. 01 London - West End 9,306 £4,772.8 he demand for high profile well-located leisure units has surged in recent years 02 Glasgow 3,960 £1,900.8 and a number of new bars, restaurants Tand cafés have opened on and around the Golden Z. 03 Manchester 3,427 £1,815.1 Notable entrants include Yo! Sushi, Five Guys, Gourmet Burger Kitchen, Vapiano, Byron Burger, Bella Italia, Revolucion De 04 Birmingham 3,150 £1,599.0 Cuba, Cote Brasserie, Hard Rock Café, Bill’s, Las Iguanas and Carluccio’s. 05 Leeds 2,950 £1,416.8 In addition to the national multiple restaurant brands, there is an established and growing independent restaurant scene 06 Liverpool 3,131 £1,316.7 in Glasgow City Centre. 07 Westfield Stratford City 2,585 £1,304.9 08 Westfield London 2,594 £1,293.6 09 Bluewater 2,431 £1,233.2 10 Trafford Centre 2,167 £1,228.1 10 LOCATION TRANSPORT HUBS HOTELS PRIME FOOTFALL The Sauchiehall Building is extremely well Several major upmarket and budget served via rail, bus and the Subway, with hotels are located in close proximity DRIVERS Buchanan Bus Station, Central Station, to The Sauchiehall Building, namely LOCATION In comparison to Argyle Queen Street Station and Cowcaddens The Blythswood Hotel, Dakota Hotel, Street and Buchanan Street, Subway Station, all within 5 minutes’ Hampton by Hilton, Abode, Apex, Point Sauchiehall Street benefits walk. Moreover, Glasgow is well accessed A and Citizen M amongst others.