DEBENHAMS - Green and Partners · 2017-10-30 · prime, south-east, freehold, department store investment opportunity with secure long-dated income & fixed uplifts green&partners

PRIME, SOUTH-EAST, FREEHOLD, DEPARTMENT STORE INVESTMENT OPPORTUNITY WITH SECURE LONG-DATED INCOME & FIXED UPLIFTS

green&partners020 7659 4848

6-10A HIGH STREET, 3-9 GUILDHALL STREET, 11-14 GUILDHALL STREET,15-16 GUILDHALL STREET, 5-6 SUN STREET, SUN YARD AND 1-6 MERCERY LANE, CT1 2JG

D E B E N H A M S C A N T E R B U R Y

DEBENHAMS | CANTERBURY

2PRIME, SOUTH-EAST, FREEHOLD, DEPARTMENT STORE INVESTMENT OPPORTUNITY

INVESTMENT SUMMARY• The popular and internationally renowned cathedral city of Canterbury is

a dominant regional shopping centre offering an attractive and historic retailing environment and serving a primary catchment of 480,000 people.

• The city is a major tourist destination with circa 7.22 million tourists visiting every year, contributing some £454 million per annum to the local economy and supporting an estimated 9,400 tourism related jobs.

• Major national multiple occupiers represented in the city centre include Marks & Spencer, Topshop/Topman, H&M, Fenwick, Next, Zara, Primark, River Island, Tesco, Superdrug, Jack Wills, White Stuff, Hobbs, Crew Clothing, French Connection, Cote Brasserie, Carluccio’s and Gourmet Burger Kitchen.

• A prominent, part listed department store, held within three separate freehold titles and comprising circa 116,494 sq ft (10,822 sq m) of retail accommodation over four floors.

• Occupying three substantial prime core city centre sites totalling circa 1 acre (0.4 hectares) with extensive frontages onto High Street, Guildhall Street, Sun Street and Mercery Lane/Buttermarket and opposite the main entrance to Canterbury Cathedral.

• Let to Debenhams Retail Plc until 24th March 2034 (circa 16.5 years unexpired).

• Current rental of £1,433,718 pax with future fixed minimum uplifts the next being March 2018.

• Offers in excess of £24,400,000 (Twenty Four Million, Four Hundred Thousand Pounds), Subject to Contract and Exclusive of VAT, reflecting a net initial yield of 5.50% allowing for graduated purchasers costs of 6.76% at this level.

Net Initial Yield 5.50%

Minimum Running Yield March 2018 5.64%






LOCATIONCanterbury is an attractive and historic cathedral city in the north-east of Kent. It is situated on the River Great Stour about 62 miles (100km) south east of London, 17 miles (27km) north west of Dover and 29 miles (47km) east of Maidstone. Faversham, the major travel hub of Ashford, the historic town of Sandwich and the popular coastal towns of Herne Bay and Whitstable are all located nearby.

ROADThe city is easily accessible by road with the A2 (dual carriageway) affording direct access to the M2 motorway some 8 miles (13km) to the west connecting to London and the Channel Tunnel Rail Terminal, the latter a 30 minute drive to the south east. Whilst there are several car parks in the city centre a ‘park and ride’ scheme operates with frequent buses running at 7-8 minute intervals from designated areas on the outskirts of the city.

RAILCanterbury benefits from two railway stations. The high speed rail service from Canterbury West to London provides frequent, direct trains to London (St Pancras) with a fastest journey time of 56 minutes, as well as regular stopping services to London (Charing Cross) and trains to Ramsgate and Margate. Canterbury East station offers a service into London (Victoria) and mainland Europe via Ashford and Folkestone.

BUSThe hourly National Express coach service (Route 007) to Victoria Coach Station operates 16 services per day and is typically scheduled to take two hours. Eurolines UK coaches also run services to London and Paris. There is a wide range of local bus routes serving the universities and surrounding towns and villages.

AIRThe closest major airport to Canterbury is London Gatwick 67 miles (107km) to the south west 1 hour 10 minutes’ drive although the area is also served by local airports, Lydd and Biggin Hill.

HEATHROW

CITY

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26

M23

M2M26

M25

M20

M25

M25

M25

M20

M11

M20

M11

A26

A23

A232

A406A41

A406

A10

A12

A13

A2A20

A205

A24

A13

A127A127

A414

A12

A130 A131

A12

A130

A25

6

A299

A28

A28

A2

A2

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A20

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A259

A259

A21

A229

A249

A21

A228

A21

A26

A22

A22

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A259A27

A26

A27

A23

A264

A264

A22

A22

A2

A253

Hertford

WelwynGarden

City Ware

Sheerness

Canvey Island

CANTERBURY

Chelmsford Maldon

Witham

FavershamRamsgate

Ashford

Tonbridge

Crowborough

EastGrinstead

HaywardsHeath

Sevenoaks

Croydon

Dartford

Harrow

St Albans

Southend-on-Sea

Margate

Brentwood

Clacton-on-Sea

Basildon

Dover

Folkestone

Tunbridge Wells

Maidstone

Hastings

Eastbourne

Gillingham

Brighton

Hove

LONDON

Hertford

WelwynGarden

City Ware

Sheerness

Canvey Island

CANTERBURY

Chelmsford Maldon

Witham

FavershamRamsgate

Ashford

Tonbridge

Crowborough

EastGrinstead

HaywardsHeath

Sevenoaks

Croydon

Dartford

Harrow

St Albans

Southend-on-Sea

Margate

Brentwood

Clacton-on-Sea

Basildon

Dover

Folkestone

Tunbridge Wells

Maidstone

Hastings

Eastbourne

Gillingham

Brighton

Hove

LONDON

GATWICKGATWICK

Canterbury is an attractive and historic cathedral city in the north-east of Kent



SUBJECT PROPERTY

SUBJECT PROPERTY

SUBJECT PROPERTY

SUBJECT PROPERTY

SUBJECT PROPERTY

CATHEDRAL

WHITEFRIARS CENTRE

MARLOWE THEATRE

HIGH STREET

Royal Museum/Library

Buttermarket

PARADE

ST GEORGES STREET

PRIMARK TESCO METRO

BUS STATION

BOOTS

FENWICK

M&S

NASONS DEPT STORE

MARLOWE ARCADE



DEMOGRAPHICSCanterbury has the largest district population in Kent at 149,100 persons (ONS). The city is the dominant retailing centre in the county and serves a primary catchment population of 480,000 with a shopping population of 217,000. The catchment has recently experienced above average population growth, with this trend set to continue over the next five years.

The city is home to three universities, with a total student population of circa 40,000 spread over University of Kent, Canterbury Christ Church University, Canterbury College and Kent Business School. As a consequence, young adults aged 15-24 are particularly over-represented.

Canterbury with its Cathedral and UNESCO World Heritage Site status, medieval streets, museums, restaurants and cafés, festivals and cultural amenities, river and countryside is a major tourist destination. ‘Visit Kent’ (2015) estimates that up to 7.22 million tourists visit the city every year, contributing circa £454 million per annum to the local economy supporting 9,400 tourism related jobs.

Canterbury is projected to see population growth over the

period 2016-2021

‘Visit Kent’ estimate tourism accounts for £454m of spending

with 7.22m visits per annum

Retail vacancy rate stands at 4.5%, well below the PROMIS

average

Large student population of circa 40,000 with three major

universities in the area

POPULATION GROWTH

TOURISMSPEND

STUDENT POPULATION

RETAILVACANCY



RETAILING IN CANTERBURYCanterbury has a compact retail core with an estimated floor space provision of 1.01 million sq ft ranking 19th in the UK on the PMA Anchor Score. The prime retailing pitch within Canterbury has traditionally been St. George’s Street, the Parade and High Street although this has been extended and now includes Whitefriars Shopping Centre.

Whitefriars Shopping Centre, jointly owned by TIA Henderson and Canterbury City Council is a 600,000 sq ft open air scheme anchored by Fenwick department store. Re-developed in 2005/6, the shopping centre hosts national fashion retailers including H&M, Topshop, Zara, Next, M&S and River Island. The Marlowe Arcade, is incorporated in the Whitefriars Shopping Centre and is located between St Margaret’s Street and Rose Lane providing access to both The Parade and St George’s Street. Anchored by Primark the scheme also contains a number of upmarket retailers such as Hobbs, Phase Eight, Ecco, Karen Millen and Swarovski. In addition, Canterbury has an extensive F&B offer such as Byron Burgers, Zizzi’s, Carluccio’s, Gourmet Burger Kitchen, Nandos, Cote Brasserie, Wildwood, Ask and Prezzo. There are also a high number of high quality independent caterers which significantly enhance the city’s food offer.

Canterbury Cathedral

Whitefriars Shopping

Centre

Canterbury West

CanterburyEast

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HIGH STREET

PARADE ST GEORGE’S ST

GUILDHALL

ST

KING ST

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NORTHGFATE

BROAD STREET

THE FRIARS

BURGATE

OLD DOVER ROAD

DOVER STREET

WATLING STREET

BEER CART LANE

STOUR STREET

CASTLE

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W

CASTLE

STREE

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ST MARGARET

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ROSE LN

MARLOWE AVE

HAWKS LANE

ST PETER’S G

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ST GEORGE’S LANEWHITEFRIARS ST

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HAVELOCK STREET

CANTERBURY

Canterbury has a compact retail core and is ranked 19th in the UK on the PMA Anchor Score

subject property



THE PROPERTYThe property is prominently situated at the core of the city’s main retailing pitch (High Street, Parade and Whitefriars Shopping Centre) and opposite the main entrance to Canterbury Cathedral. As a result, the location benefits from a significant volume of footfall.

The property comprises three distinct buildings, which themselves are made up of an amalgamation of properties from several periods, the oldest of which dates back to the 1700’s with more modern extensions being added subsequently. Parts of the property are listed (more information available on request).

The asset is let in its entirety to Debenhams Retail Plc who occupy two of the buildings and have underlet the smallest unit, 15/16 Guildhall Street & 5/6 Sun Street, to Cotswold Outdoor. The property is currently used for A1 retail purposes as well as ancillary storage.

The property is prominently situated at the core of the city’s main retailing pitch



50 metres

For more information on our products and services:www.experian.co.uk/goad | [email protected] | 0845 601 6011

Canterbury

Experian Goad Plan Created: 10/10/2017Created By: Green and Partners

Copyright and confidentiality Experian, 2017. © Crowncopyright and database rights 2017. OS 100019885



ACCOMMODATION The asset provides the following GIA floor areas as follows:

Address Area (sq ft) Area (sq m)

15-16 Guildhall Street, 5-6 Sun Street, Sun Yard

Ground 3,885 360.9

First 3,101 288.1

Second 2,895 269.0

Third 214 19.9

Total 10,095 937.9

11-14 Guildhall Street, 6-10a High Street, 1-6 Mercery Lane

Ground 25,179 2,339.2

First 22,666 2,105.7

Second 17,492 1,625.1

Third 3,125 290.3

Total 79,871 7,420.2

3-9 Guildhall Street

Basement 2,181 202.6

Ground 11,945 1,109.7

First 10,205 948.1

Second 1,573 146.1

Third 624 58.0

Total 26,528 2,464.5

TOTAL 116,494 10,822

The individual properties have been measured by Plowman Craven. We understand that their survey is warranted and is assignable to a purchaser.



TENUREFreehold.

TENANCY DEBENHAMS RETAIL PLCThe property is let in its entirety on a 30 year FR&I lease commencing 25th March 2004 and expiring on 24th March 2034 providing an unexpired term of circa 16.5 years. Debenhams has an option to renew the lease by giving not more than 2 months and not less than 12 months’ written notice prior to the term end. The new lease will be for 25 years at an open market rent agreed at the commencement of the new term. Rent reviews will be 5 yearly to OMRV.

CURRENT RENT PAX &

MINIMUM RENT REVIEW PROVISIONS£1,433,718 pax

The table below highlights the rent review provisions and minimum uplifts for the remainder of the term:

Rent Review Date

Minimum Annual Rent

Rent Review Comments

25/03/2018 £1,469,561From and including 25th March 2014 to and including 24th March 2019, each year on 25th March the rent is increased by 2.5% for the following year

25/03/2019 £1,506,300Reviewed to the higher of (i) The yearly rent payable immediately prior to the rent review date (ii) The open market rent (iii) £1,477,264 pax

25/03/2024 £1,671,389Reviewed to the higher of (i) previous rent increased by 2.5%. (ii) The open market rent (iii) £1,671,389 pax

25/03/2029 £1,891,023Reviewed to the higher of (i) previous rent increased by 2.5%. (ii) The open market rent (iii) £1,891,023 pax

SUB-LEASE

15-16 Guildhall Street, 5-6 Sun Street and Sun Yard has been sublet by Debenhams to Outdoor & Cycle Concepts Ltd (t/a Cotswolds Outdoor) for 15 years from 13th October 2014 at a rental of £120,000 pax. Cotswold Outdoor benefit from a tenant option to break in year 10. They received 10 months’ rent free.

The property occupies three substantial prime core city centre sites totalling circa 1 acre (0.4 hectare).



Debenhams is steeped in British retailing heritage founded over 200 years ago, originally becoming a Plc in 1928 and re-listing on the LSE in 2006 following its de-merger from the then Burton Group (Arcadia). The company is now a leading international, multi-channel brand which trades from over 240 department stores across 27 countries. The company’s primary focus is on developing and delivering a mix of own brands, international brands and concessions including Jeff Banks, Jasper Conran, Julien MacDonald, Betty Jackson, Ben de Lisi, and John Rocha while the likes of Franco Manca, Nandos, Patisserie Valerie and Costa Coffee also frequently take concessions in the store.

Tenant Company No

Financial Year Ending

D&B Rating

Sales Turnover

Profit Before Tax

Tangible Net Worth

Debenhams Retail Plc

83395 03/09/2016 5A 1 £2,105,400,000 £178,400,000 £1,010,600,000

Debenhams PLC has released the following preliminary results for the 52 weeks to 2nd September 2017:

• Group gross transaction value grew 2% to £2,954,100,000

• Underlying profit of £95,200,000 in line with expectations, before exceptional charges as guided in relation to Debenhams Redesign strategy of £36.2m

• Net debt reduced by 1.1%

• Beauty sales grew by 5%; Food by 8%, whilst clothing declined by 0.5%, broadly in-line with the UK market. Digital sales grew 12.7%, driven by mobile orders up 57% in the UK

• The PLC have invested in blow LTD, the UK’s leading digital beauty services provider and are soon announcing a partnership with Sweat! to trial gyms, initially in three stores

Outdoor and Cycle Concepts Ltd have 69 stores throughout the United Kingdom and are an outdoor recreation retailer owned by PAI Partners. The company has a Dun & Bradstreet rating of N1, representing a minimum risk of business failure. For the financial year ending 31/12/2015 the company reported a turnover of £135,530,000, pre-tax profits of £14,888,000 and a net worth of (£37,764,000).

In May 2015 Outdoor and Cycle Concepts Ltd acquired the major brand of Snow + Rock and all of its trading subsidiaries via a £40m loan facility to enhance its offer in the outdoor sector. This was fully drawn down in 2015 and explains the company’s negative net worth for the year. However, despite having a negative net worth, D&B have continued to apply a ‘minimal risk’ of business failure, which can be justified by the company’s performance for 2015.



VATThe property has been elected for VAT and any disposal will be by way of a Transfer of a Going Concern (TOGC).

INVESTMENT COMPARABLES

Property Date Tenant Initial Yield Price Purchaser Comment

MANCHESTERThe Ryland Buildings, Market Street

Current Debenhams 5.07% £84.5m Under Offer 466,000 sq ft. Rent £4.416m pax. Same RR pattern as subject property. 21.5 years unexpired.

SOUTHAMPTONQueensway

Current Debenhams 5.95% £29m Under Offer 295,000 sq ft. 16.5 yrs unexp. Same RR pattern as subject property. Rent £1.869m

NOTTINGHAM 48/52 Long Row

Jul 2017 Debenhams 5.35% £25.15m Altum Capital 190,993 sq ft over four floors. 22.5 yrs unexpired. Option for 25yr extension. £1,479,983 pax (£7.31psf). Fixed rental increases 3% pa until 2020 and then 5 yr. upward only OMRR.

EASTBOURNE 158/170 Terminus Road

Apr 2017 Debenhams 5.88% £14.1m Private Overseas Investor

102,946 sq ft 2.5% uplifts until 2018 then fixed uplifts. 17 yrs unexpired.

WINCHESTER 12/15 High Street

Apr 2017 Debenhams 4.16% £15.825m Surrey CC PF (CBRE)

50,612 sq ft in a prime location. 17 years unexpired with fixed uplifts.

CHICHESTER 12/18 West Street & 51/55 Tower Street

Apr 2017 House of Fraser

5.25% £13.4m Charities PF (Savills IM)

69,313 sq ft. 22 yrs unexpired. £10.34 psf £752,584 pax. OMRR

CAMBERLEY Park Street

Dec 2016 House of Fraser/ NatWest

5.90% £17.6m Surrey Heath Council

113,000 sq ft. £1,013,000 pax Expiry 2039. 5yrly RR. Nat West expires 2032 £66,000 pax

EPCA copy of the EPC’s are available on request.



PROPOSAL We have been instructed to seek offers in excess of £24,400,000 (Twenty Four Million, Four Hundred Thousand Pounds), Subject to Contract & Exclusive of VAT, which reflects a net initial yield of 5.50% allowing for graduated purchaser’s costs of 6.76% at this level.

Net Initial Yield 5.50%





CONTACTFor further information, access to the data room or to arrange an inspection please contact

David Freeman +44(0) 20 7659 [email protected]

Ed Smith +44(0) 20 7659 [email protected]

Patrick Over+44(0) 20 7659 [email protected]

Simona Malinova+44(0) 20 7659 [email protected]

MISREPRESENTATION ACT 1967: The agents for themselves and for the vendors or lessors of the property whose agents they are give notice that: (i) these particulars are given without responsibility of The agents or the vendors or lessors as a general outline only for the guidance of prospective purchasers or tenants, and do not constitute the whole or any part of an offer or contract; (ii) The agents cannot guarantee the accuracy of any descriptions, dimensions, references to condition, necessary permissions for use and occupation and other details contained herein and any prospective purchaser or tenant should not rely on them as statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy of each of them; (iii) no employee of The agents (and their joint agents where applicable) has any authority to make or give any representation or warranty or enter into any contract whatsoever in relation to the property; (iv) VAT may be payable on purchase price and/or rent, all figures are quoted exclusive of VAT, intending purchasers or lessees must satisfy themselves as to the applicable VAT position, if necessary by takingnappropriate professional advice; (v) except in respect of death or personal injury caused by the negligence of The agents, its employees or servants, The agents will not be liable, whether in negligence or otherwise howsoever, for any loss arising from the use of these particulars save to the extent that any statement made in these particulars has been made fraudulently. November 2017. Designed and produced by Creativeworld Tel: 01282 858200

green&partners020 7659 4848

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DEBENHAMS - Green and Partners · 2017-10-30 · prime, south-east, freehold, department store investment opportunity with secure long-dated income & fixed uplifts green&partners