High Yielding Investment & Asset Management


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High Yielding Investment & Asset Management Opportunity

VALLEY RETAIL PARK, CHURCH ROAD, NEWTOWNABBEY, BELFAST BT36 7LP

Valley Retail Park

02

Executive Summary

Newtownabbey is a densely populated borough of Greater Belfast





Situated adjacent to the largest agglomeration of institutional owned retail parks in NI



High quality modern retail park comprising 7 units constructed in 2003



Extends to some 100,413 sq ft in total



Strong short term income



5 out of 7 units (80%) currently let, all on FR&I lease terms



Tenants include Halfords and Harvey Norman



Numerous asset management opportunities



AWULT to breaks of 3.6 years



Net income after irrecoverable shortfalls of £926,301 per annum



Held freehold and long leasehold



We are instructed to seek offer in excess of £6,500,000 subject to contract, for our client’s interest. A purchase at this level would provide an attractive net initial yield (based on current net income after landlord’s shortfalls) of 13.5% and a low capital value of £65 per sq ft. Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP

03

Location

Situation

Newtownabbey is a densely populated borough of Belfast, located some 6 miles north of the city centre. At the 2001 Census, Newtownabbey Urban Area had a population of 62,056, making it the fourth largest settlement in Northern Ireland.

The property is prominently situated on Church Road and benefits from extensive road frontage and is accessible from both the M2 Motorway and Shore Road. The surrounding area comprises high density housing and the Valley Leisure Centre is also in close proximity. Abbey Retail Park is situated approximately 250m to the south and Abbey Shopping Centre and Longwood Retail Park are approximately 500m to the south along Church Road.

The area forms part of Newtownabbey Borough Council and is largely residential, but also hosts a number of business occupiers including Capita, Abbey Business Park and Bombardier. Newtownabbey benefits from excellent road links to the city centre via the M2 motorway and Shore Road.

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Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP

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Description Valley Retail Park comprises a modern purpose built retail ware house scheme constructed in 2003, on a site extending to some 7 acres. The scheme provides approximately 100,413 sq ft arranged over 7 units.

SERVICE AREA SERVICE AREA

The property has been constructed to a very high standard and presents well. It is of standard steel portal frame construction, with part brick and part clad elevations. The units benefit from a rear service yard and there are approximately 518 spaces within a landscaped car park.

Unit 6 Unit 7

Unit 5

Unit 4 Unit 3

Unit 2 Unit 1

Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP For indicative purposes only

05

Retailing in Newtownabbey Newtownabbey is a strong retail centre, particularly for retail warehousing. The area attracts shoppers from all over Belfast and also has a strong draw from Carrickfergus, Larne, Ballyclare, Ballymena and beyond. The scheme benefits from a catchment population of 775,000 persons situated within a 30 minute drive time of which some 420,000 persons are situated within a 15 minute drive time (Source CACI). The area also has one of the highest concentrations of institutional ownerships in Northern Ireland, with the areas main schemes all being under institutional control.

ABBEY RETAIL PARK (HAMMERSON)

Longwood Retail Park, owned by Aberdeen AM. Tenants include Homebase, Mothercare, TK Maxx and Matalan.

ABBEY CENTRE (NEW RIVER)

Abbey Retail Park, owned by Hammerson. Tenants include Tesco, B&Q and Currys. Abbey Centre, owned by New River. Tenants include BHS, Next and Argos.

LONGWOOD (ABERDEEN ASSET MANAGEMENT)

Shore Retail Park, owned by CBRE Global Investors. Tenants include Dunelm and Pure Gym. The surrounding retail parks are all at or near 100% occupancy. Standalone occupiers in the area include M&S, Lidl and Toys R Us. Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP

SHORE RETAIL PARK (CBRE GLOBAL INVESTORS)

06

Planning The property has planning consent for Bulky Goods under the Northern Ireland Use Class Order. In Northern Ireland most Bulky Goods Parks are able to secure ‘softer’ occupiers such as Morthercare, Argos and Pet At Home with relative planning ease. Prospective purchasers should make their own enquiries. We believe there is scope to open up planning consents to include more leisure uses. Prospective purchasers are advised to make their own enquiries in this regard. The scheme provides for a car parking ratio of 1:194 sq ft.

Tenancy & Accommodation Schedule The property is let and provides accommodation as follows:

UNIT

TENANT

FLOOR AREA (SQ FT) GIA

RENT P.A

RENT PER SQ FT

LEASE START

LEASE END

BREAK OPTION

1&2

Harvey Norman Leasing (NI) Ltd*

46,513

£590,000

£12.68

05/05/2008

04/05/2023

04/05/2018

3

Harry Corry Limited

10,780

£134,550

£12.48

13/08/2003

12/08/2018

-

4

Halfords Limited

10,780

£134,575

£12.48

01/11/2003

31/10/2023

20/11/2019

5

Vacant

10,780

-

-

-

-

-

6

Vacant

10,780

-

-

-

-

-

7

Homestyle Group Operations Limited (t/a Harveys)

10,780

£134,550

£12.48

11/11/2005

11/11/2020

-

100,413

£993,675

Totals

COMMENT

Break option 5/5/2018 exercised

Break option in 2014 was not exercised

*Lease guaranteed by Harvey Norman Holdings Ltd Average Weighted Unexpired Lease Term To Break Options – 3.6 years

Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP

07

Service Charge

Rateable Value

Income & Shortfall Analysis

Based on the May 2015 to April 2016 budget the service charge is £74,690 per annum, reflecting circa £0.74 per sq ft overall with approximately £16,037 per annum currently paid by the landlord in respect of the vacant units (5 and 6).

The scheme has benefited from the recent Northern Ireland Rates Revaluation, which came into effect in April 2015.

The property is generating significant short term income. The rents are derived from long established multiple tenants, most of whom have been in occupation since 2003.

All other service charge is recoverable from the tenants. The Insurance shortfall in respect of the vacant units is currently £4,282 per annum.

Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP

The Rates have been reduced by approximately 6% overall. This will be of benefit to both occupiers and landlord. In neighbouring Longwood Retail Park and Abbey Retail Park, Rates payable have increased significantly, generally a rise of 30%-60%.

The property is almost 80% let and has a weighted average unexpired lease term (to break options) of 3.6 years.

Vacant rates payable in respect of units 5 and 6 are estimated to be £47,055 per annum combined.

The current total vacant rates, insurance and service charge shortfalls paid by the landlord are £67,374 per annum (this is incurred entirely in respect of the two vacant units).

For more information see www.draftvalues.dfpni.gov.uk.

The current net income is therefore £926,301 per annum.

08

Covenant Status and Tenant Information Halfords

Founded in 1909, Halfords is a retailer of car parts, car enhancement, camping, touring and bicycles operating in the UK and Ireland.

Harry Corry

Harry Corry is a Northern Irish home decor store. They have a total of 50 stores located throughout Northern Ireland, the Republic of Ireland and Scotland. Harry Corry Interiors is a family run business which was established by Harry Corry in 1968.

Harveys furniture

Harveys is a British retailer founded in 1966, specialising in living room and dining room furniture, with over 150 stores throughout the United Kingdom. The tenants are all long established, multiple operators.

TENANT

YEAR END

TURNOVER

PRE TAX PROFIT

DELPHI SCORE

NET WORTH

Harry Corry Ltd

28/02/2014

£38,497,508

-£364,395

91/100

£5,717,695

Halfords Ltd

28/03/2014

£803,100,000

£86,000,000

100/100

£548,000,000

Homestyle Group Operations Limited (t/a Harveys)

28/06/2014

£28,869,000

£25,000

89/100

£253,122,000

Harvey Norman is a large Australian-based retailer of electrical, computer, furniture, entertainment and bedding goods. It is a franchise and the main brand is owned by Harvey Norman Holdings Limited.

Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP

(figures reported in Australian Dollars). Franchise Sales Revenues

$4,770,000,000

Up 1.14% on previous year

Company Operated Sales, Other Revenues & Other Income

$2,547,290,000

Up 8.0% on previous year

Profit Before Tax Excluding Net Property Revaluation Adjustments

$312,710,000

up 26.6% on previous year

Earnings Before Interest & Tax (“EBIT”)

$337,500,000

Up 44.4% on previous year

**Information obtained from Harvey Norman Holdings website www.harveynormanholdings.com.au All Reports are available in the Data Room.

The following information was obtained from Experian.

Harvey Norman

Harvey Norman Holdings Ltd reported the following in their Annual Report 2014**

Harry Corry – Proposal for Company Voluntary Agreement (CVA)

Harry Corry Ltd sent CVA proposals to stakeholders in April 2015. The company is seeking to close 8 of its 50 stores. The stores to be closed are designated as Category C Leases. Valley Retail Park is designated as a Category B Lease. Category B, along with Category A leases are stores which the company wishes to retain, but are seeking to vary the terms of the existing leases. As part of this CVA Proposal, Harry Corry Ltd has requested a 20% rent reduction at Valley Retail Park for a period of 24 months. This would reduce the rent from the current £134,550 per annum to £107,640 per annum (£26,910 per annum reduction). It is understood the outcome of the CVA Proposal (whether it will be accepted or not) will be known by the beginning of May 2015. Prospective purchasers will be updated during the marketing period and are advised to make their own enquiries. Details of the CVA Proposal are contained in the Purchasers’ Pack.

09

Asset Management The property presents numerous asset management opportunities. Rents in neighbouring Abbey and Longwood retail parks generally range between £15 - £20 per sq ft. (mixed planning consents). Under the April 2015 Rates Revaluation, the Rates payable in these other schemes are due to increase (in the region of 30% - 60%), whilst simultaneously decreasing overall at Valley Retail Park. This presents a strong opportunity to entice tenants from these other schemes to Valley Retail Park with significantly lower overall occupational costs.

There may be recreational and leisure synergies with the Valley Leisure Centre, situated diagonally opposite the park. The property may also be suitable for business type uses including a call centre or trade counter occupiers (subject to planning). Harvey Norman are currently marketing their lease. We understand there is an opportunity to take a surrender premium for early release (break option in May 2018). Alternatively there may be prospect to revise terms for a smaller floor plate, at a reduced rent.

We believe that the scheme would benefit from partly taking on a more leisure orientated direction (subject to planning). The scheme is located within a densely populated residential suburb, where families make up a large proportion of the demographic. There is also the considerable draw to the area engendered by the strong surrounding retail offer. Potential leisure type occupiers that could be targeted include: Cinema Bowling Alley Bingo Family Restaurants

Indoor Play Indoor Adventure Centre Gym Drive Thru / Pod Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP For indicative purposes only

10

EPC’s UNIT

TENANT

EPC RATING

1

Harvey Norman

B-32

2

Harvey Norman

B-44

3

Harry Corry

B-47

4

Halfords

B-43

5

To Let

B-58

6

To Let

B-80

7

Harveys

B-82

Full Energy Performance Certificates are available in the data room.

Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP

Purchasers Pack

VAT

A Purchasers’ Pack has been compiled for prospective purchasers to review due diligence relating to the property and is available upon request.

The property is registered for VAT and therefore VAT will be payable on the purchase price. It is envisaged the sale will be treated as a transfer of a going concern (TOGC).

All information provided subject to contract and is given without warranty, liability and reliance.

Tenure Held on both freehold and long leasehold titles. Further information is in the Purchaser’s Pack

11

Proposal We are instructed to seek offers in excess of £6,500,000 subject to contract and exclusive of VAT, for our client’s freehold interest. A purchase at this level would provide an attractive net initial yield (based on current net income after landlord’s shortfalls) of 13.5% and a low capital value of £65 per sq ft.

Further Information For further information or to arrange access please contact: Tim Reid

Capital Markets 028 9042 6752 [email protected]

Colin Mathewson

Retail Agency 028 9043 6919 [email protected]

CBRE

DISCLAIMER: CBRE These particulars are issued by CBRE on the understanding that any negotiations relating to the property are conducted through them. Whilst every care is taken in preparing them, CBRE for themselves and for the vendor/lessor whose agents they are, give notice that:- (i) the particulars are set out as a general outline for guiding potential purchasers/tenants and do not constitute any part of an offer or contract, (ii) any representation including descriptions, dimensions, references to condition, permissions or licenses for uses or occupation, access or any other details are given in good faith and are believed to be correct, but any intending purchaser or tenant should not rely on them as statements or representations of fact but must satisfy themselves (at their own expense) as to their correctness, (iii) neither CBRE, nor any of their employees have any authority to make any or give any representation or warranty in relation to the property. April 2015.

Valley Retail Park, Church Road, Newtownabbey, Belfast BT36 7LP

Gavin Elliott

Capital Markets 028 9043 6750 [email protected]

Imperial House, Donegall Square East, Belfast, BT1 5HD www.cbre.co.uk/ni