242 LOWER HIGH STREET � WATFORD � WD17 2JR

Hyundai

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ProposalWe are instructed to seek offers for the freehold interest in excess of £2,860,000 subject to contract and exclusive of VAT. A purchase at this level would refl ect an attractive Net Initial Yield of 6.25% and a low capital value of £372 per sq ft, after deducting purchasers costs of 6.43%.

HYUNDAI • 242 LOWER HIGH ST, WATFORD WD17 2JR2

LONDON

Watford

Romford

Bromley

Enfield

Luton

Aylesbury

Edgeware

Cheshunt

HarlowSt Albans

High Wycombe

HemelHempstead

WelwynGarden City

Stroud

MaidenheadSlough

A1

A23

A40

A41

A12

A10

A13

A4010

A413

A418

A406

M25

M25

M40

M11

M4

M4

M3

M1

M1

J19

J20

J16

J5

AylesburyAylesburyAylesburyAylesburyInvestment Summary.

Located in Watford’s primary commercial centre in the north west zone of the M25, adjacent to the M1 (J5) and 15 miles north west of London

Situated on Lower High Street (A411), in the heart of Watford’s southern retailing and commercial district

Purpose-built car dealershipRecently refurbished showroom,15 display bays (52 in total)Ancillary and workshop accommodation

Floor Area: 7,693 sq ftSite Area: 0.56 acres (28% site coverage)

Single let Spire Automotive LimitedSublet to Endeavour Automotive Limited

AWULT: 9.9 yrs (to expiry)

Marketing Rent: £189,844 pa (£18.85 psf)

Annual RPI linked rental uplifts (subject to a cap and collar at 2% - 6%)

Tenure: Freehold Opportunity for potential future redevelopment of site

Location.

Site

Pla

n.

£

*boundary for indicative purposes only

HYUNDAI • 242 LOWER HIGH ST, WATFORD WD17 2JR 3

2

4

WATFORD HIGH STREET

Waterfi eldsShopping Park

5

6

7

9

10

11 12

14

13

16

15

17

1. Glyn Hopkin Nissan / Suzuki

2. Europcar Watford

3. Kwickfi t

4. B&Q

5. Natuzzi Italia

6. DFS

7. Beadles Jaguar Land Rover

8. Mercedes Benz

9. Mothercare, Early Learning Centre, Trade Point

10. Home Sense, Pets At Home

11. Furniture Village

12. Curry’s PC World, Hobbycraft, Halfords

13. Screwfi x, Toolstation

14. Watford FC

15. Tesco Extra

16. Cotswold Outdoors, Argos, Smyths Toys

17. Intu Watford

18. SEAT

Local Occupiers.

3

Waterfi eldsWay

8

1

18

Planning permission granted for 92 apartments

at the former gasworks.

WiggenhallIndustrial Estate

Croxley Business Park & HollywellIndustrial Estate

WATFORD

HYUNDAI • 242 LOWER HIGH ST, WATFORD WD17 2JR4

Tenancy Information.

Property Tenant Name Guarantor Total Area Sq Ft

Lease Start

Lease Expiry

Break Option

Next Review

Rent review mechanism

Contracted Rent pa

Contracted Rent psf*

Hyundai Spire Automotive Limited - 7,693 22-Sep-2000 17-Feb-2029 - 24-Jun-2019 RPI (2%-6%)

Annual £189,844 £18.85

242 Lower High Street, WD17 2JR

Endeavour Automotive Limited (subtenant) - 7,693 11-May-2018 14-Feb-2029 - 24-Jun-2019 RPI (2%-6%)

Annual £155,000 £16.45

Accommodation Sq M Sq Ft

GROUND FLOOR:

Showroom & Ancillary 378 4,067

Workshops, Parts & Valet Bay 279 2,990

FIRST FLOOR:

Office Areas 59 636

TOTAL GIA 716 7,693

Display Parking 15

Customer & Additional Parking 37

TOTAL PARKING 52 SPACES

Accommodation.The building has been measured in accordance with the RICS Code of Measuring Practice (Sixth Edition) and provides the following Gross Internal Areas:

Franchise Information.

Rent Review Provision.

Hyundai are part of the Hyundai Group, which includes Kia Motors and Genesis Motors. They are a leading electric car manufacturer and are ranked in the Top 100 most valuable brands worldwide. In the UK, Hyundai has a market share of 3.8% (Dec 2018), an increase on the 2017 figure of 3.7%. They sold 89,925 new cars in 2018 and are ranked 10th in the UK by market share.

Hyundai were rated 17th in the Summer 2018 Dealer Attitude Survey with an overall score of 5.6. This survey provides an assessment of a franchisees desirability and profitability. Hyundai currently have two electric cars available in the UK: the Hyundai Kona and the Hyundai Ioniq, with the former being voted the 3rd best electric car to buy in 2019 with an industry leading driving range. With strong electric car take up, particularly around London, orders for the Kona have been suspended and the waiting list over 12 months.

Annual RPI linked rent reviews on 24 June anually, subject to a minimum increase of 2% and a maximum increase of 6%, offering a secure income stream.

*Rent psf apportioned on the basis that external car display bays and compounds are rentalised separately. Rental breakdown available on request.

Covenant.Spire Automotive Limited (D&B Rating 3A3) was acquired by Group 1 Automotive UK Limited (D&B Rating 5A2) in 2016. A Financial Summary for Spire Automotive Limited is set out below.

SPIRE AUTOMOTIVE 31-Jan-16 31-Dec-16 31-Dec-17

TURNOVER £449,836,986 £456,728,517 £480,883,035

PROFIT /(LOSS) BEFORE TAX £3,915,880 -£526,738 -£1,493,194

TANGIBLE NET WORTH £9,229,790 £9,154,220 £7,855,108

ENDEAVOUR AUTOMOTIVE LTD 31-Dec-14 31-Dec-15 31-Dec-16

TURNOVER £32,193,339 £101,668,064 £129,632,160

PROFIT /(LOSS) BEFORE TAX £35,292 £736,088 -£289,659

TANGIBLE NET WORTH -£1,149,424 -£615,163 -£706,857

The property is sublet to Endeavour Automotive Limited (D&B Rating N2). The group represents Volvo, Hyundai, and Lotus dealerships. A Financial Summary for Endeavour Automotive Limited is set out below.

WATFORD

HolywellIndustrial Estate

Peeglow & MoonGlow Industrial Estates

CoxleyBusiness Park

IntuWatford

Greatham RoadIndustrial Estate

M1

M1A41

A405

J5

A4111

A4008

A4125

Glow Industrial Estates

M1

Nearby Dealerships.

1. Audi - Group 1

2. BMW & Mini - Barons

3. Citroen & Peugeot - Palmers

4. Fiat - Palmers

5. Ford - Hartwell

6. Honda - Crown

7. Jaguar Land Rover - Group 1

8. Mazda - Milcars

9. Mercedes - Mercedes Benz Retail

10. Nissan & Suzuki - Glyn Hopkin

11. Renault - Renault Retail

12. Seat - Group 1

13. Skoda - Citygate

14. Toyota - Steven Eagell

15. Vauxhall - Advance

16. Volkswagon Citygate

17. Volvo - Volvo Cars

FRANCHISE - DEALER

ADULT CATCHMENT POPULATION

% OF TOTAL POPULATION EARNING £20,000+ PA (AGE 18+ YEARS)

5 MILES

5 MILES

10 MILES

10 MILES

300,000

189,000

1,385,000

831,000

2

1

3

6

5

4

7

8

9

10

1112

1314

15

16

17DRIVE TIME TO NEAREST TOWNS / CITIES

ST ALBANS 20 MINUTES(10 MILES)

LUTON 25 MINUTES(18 MILES)

LONDON 40 MINUTES(22 MILES)

SLOUGH 40 MINUTES(18 MILES)

MILTON KEYNES 50 MINUTES(39 MILES)

READING 1 HOUR(43 MILES)

HYUNDAI • 242 LOWER HIGH ST, WATFORD WD17 2JR6

Automotive Market Commentary.

0%

Less than 3 years old

4-6 years old

7 years old +

30%10% 40%20% 60%

The UK used car market remains strong with 7.61 million vehicles sold in 2018. Although the number of used car sales showed a small decline of 2.2% year-on-year, the used car market remains approximately 3.2 times the size of the new car market.

New car sales were marginally down in 2018 as a result of the lack of supply from manufacturers which were hindered by the introduction of Worldwide Harmonised Light Vehicle Test Procedure. Despite the prevailing supply constraints, there were still 2.37 million new vehicle registrations in 2018 which is above the 10 year average of 2.35 million.

The recent strong sales figures have been driven by increased petrol car sales (up 9% y-o-y), and Alternative Fuel Vehicle (AFV) sales (up 21% y-o-y). Registrations of AFVs have increased by 290% since 2015, highlighting their popularity amongst consumers which is pushing manufacturers to continually advance their technologies. There are 40 plug-in electric vehicles (EVs) now available in the UK market, with a further 20 due in 2019 alone.

The drive for greener vehicles alongside regulatory change has instigated a structural shift in the automotive market. The majority of manufacturers now expect that a quarter of sales will be from EVs by 2023, as emphasised by average waiting times with orders for a new factory ordered cars now taking 10-12 weeks, whilst wait times for EVs are often reported to be in excess of 6 months.

Some dealerships are looking to reposition their properties by proactively rolling out enhanced and consumer focussed aftersales services. The main determinant of this market is the number of vehicles on the road, which has risen 0.9% over 2018 to 34.6 million vehicles.

The graph highlights that in 2018, 79% of cars on the road in the UK were over 4 years old. This underpins the strong demand for servicing, maintenance and repair, which continues to remain robust for safety, economic and performance reasons. Furthermore, this provides an opportunity for dealerships to expand and innovate their aftersales offering, and it is widely anticipated that automotive retailers will need to adopt these changers in order to maintain their respective market share.

There is a distinction between the manufacturer and distributor sides of the UK motor industry which is particularly important in light of some recent notable manufacturing relocations and Brexit related noise. Not all the recent UK manufacturing relocations are Brexit related, with Honda’s recently relocating to Japan in order to better serve the larger Asian and US markets that account for 95% of their global sales. This is unsurprising as 80% of cars made in the UK are exported to over 160 different markets.

In comparison, the UK car dealer market is in robust health. Car pricing will be influenced by trade tariffs but to a large extent this impact will be softened by the prevailing low interest rate environment which funds up to 90% of new car and 50% of used cars purchases. Amidst all this activity the car dealership remains central to the delivery of the evolving product and represents the key point of contact with customers with 79% of motorists buying their most recent car from a dealership.

THE BREAKDOWN OF UK CARS ON THE ROAD BY CAR AGE (2018)

HYUNDAI • 242 LOWER HIGH ST, WATFORD WD17 2JR 7

2013 2018

Average Rent £ psf £13.55 psf £14.14 psf

Average Rent Overall £310,609 pa £335,415 pa

Average Yield 6.46% 5.55%

Prime Yield 4.98% 3.98%

Average Unexpired Lease Term 17.1 yrs 12.5 yrs

Average Lot Size £4,764,109 £6,221,200

Average SQ FT 23,279 sq ft 24,297 sqft

Average Site Density 26% 34%

% of RPI Transactions 77% 62%

The Automotive Investment Market.

Automotive property has been an ever-growing and attractive asset class for investors who are often attracted by prominent, well connected real estate with substantial unexpired lease terms to robust covenants who have incurred considerable expenditure on the assets.

The automotive market has consolidated over the past 10 years following a flurry of M&A activity. Simultaneously, brands have continued to demand bigger facilities and dealerships to house their widening range of vehicles and to support the growing aftersales revenue streams.

The growing investor interest in the automotive sector has resulted in the car dealership market achieving investment volumes of £311 million in 2018, which is the second highest annual figure on record behind the £494 million recorded in 2014. Excluding 2014, investment volumes in 2018 represent almost a fifth of total investment into car dealerships over the past 10 years.

In recent years the market has been buoyed by increasing numbers of specialist investment funds and property companies focusing on automotive investment opportunities. As the weight of money being drawn to car dealership investments has increased, yields have compressed over the past 5 years (see table), with both average and prime yields decreasing by c. 100 bps. This has pushed average lot sizes up, reinforcing the attraction of the sector to institutional investors.

THE EVOLUTION OF CAR SHOWROOM INVESTMENTS

INVESTMENT COMPARABLES

PROPERTY FLOOR AREA (SQ FT) ACRES TENANT(S)

UNEXPIRED LEASE TERM

(YRS)RENTAL RENTAL

(PSF) PRICE NIY COMMENTS DATE

Bristol (Cribbs Causeway) Jaguar Land Rover 73,196 - Guy Salmon Limited 20 £1,136,000 £15.52 £24,000,000 4.43% Off market forward funding,

5 yearly RPI Reviews Dec-18

Camberley Volkswagen 8,048 0.81 Volkswagen Group (UK) Ltd 7 £288,019 £35.79 £5,150,000 5.25% 5 Yearly Open Market Dec-18

Yeovil Volkswagen 22,221 1.87 Heritage Automotive Limited 20 £250,000 £11.25 £4,500,000 5.17% 5 Yearly RPI Reviews Nov-18

Huddersfield Jaguar Land Rover 58,000 -  Rybrook Vehicles Ltd 20 £700,000 £12.07 £13,000,000 5.00% Forward funding,

5 yearly RPI Reviews Aug-18

Newcastle Upon Tyne Vauxhall 30,282 3.26 Vertu Motors (VMC) Limited 15 £416,514 £13.75 £7,000,000 5.58% 5 yearly Fixed uplifts Aug-18

Wolverhampton BMW & MINI 60,582 3.49 Rybrook Vehicles Ltd 20 £750,000 £12.38 £15,000,000 4.64% 5 Yearly RPI Reviews Jun-18

Crawley Mercedes 44,360 2.75 Boiling Investments Limited 20 £700,000 £15.78 £15,150,000 4.33% 5 Yearly RPI Reviews Mar-18

Watford Fiat 9,720 0.25 Palmers (St Albans) Limited 8 £115,000 £11.83 £2,440,000 4.41% 5 Yearly Open Market Jan-18

Recently refurbished car dealership comprising showroom, offices, workshop and ancillary accommodation. Site coverage of 28% with attractive display bay provision.

Watford is one of the main commercial centres in the north west quadrant of the M25 and benefits from its proximity to Central London - adult catchment of 1,350,000 within 10 miles of the site, of which 60% earn more than £20,000 per annum.

The unit fronts Lower High Street (A411), which provides easy access to the A4008, M1 (J5), M25 and beyond. Watford High Street train station is less than 200 meters to the north west.

Prime location with excellent transport links and connectivity, in close proximity to major retailing hubs and mixed-use development projects including the Waterfields Shopping Park and the proposed former gasworks redevelopment which will further increase the affluence of the area.

Watford Council is currently overhauling the access to the town centre, and is planning £1.5 billion of investment over the next 10 to 15 years to improve services, transport infrastructure and leisure facilities. This will further enhance the connectivity and attraction of the location for customers.

Let to Spire Automotive Limited (D&B Rating 3A3), acquired by Group 1 Automotive (D&B Rating 5A2) with a passing rent of £18.85 psf. Sub-let to Endeavour Automotive Limited, with a rebased rent of £155,000 per annum.

Lease expiry in February 2029, with 10 years unexpired. Annual reviews fixed in-line with RPI, subject to a cap and collar 2% - 6% per annum compounded providing a secure income stream with guaranteed rental uplifts.

Owing to the central location within Watford, this car showroom premises could offer future residential redevelopment opportunities. This can be seen by the recent planning permission achieved at the gasworks development site, 0.5 miles from the car showroom.

HYUNDAI • 242 LOWER HIGH ST, WATFORD WD17 2JR8

Investment Rationale. Tenure.

Rateable Value.

EPC.

Freehold.

We are advised that the property is assessed in the 2017 Valuation List as “Car Showroom & Premises”. Rateable Value £131,000.

To be provided.

8

The property is elected for VAT and it is anticipated that the transaction will be treated as a Transfer of Going Concern (TOGC).

Vat & TOGC.

Data room access can be provided upon request.

Data Room.

Freehold

Tenure.

Proposal.

We are instructed to seek offers for the freehold

interest in excess of £2,860,000 subject to contract

and exclusive of VAT.

A purchase at this level would reflect an attractive Net Initial Yield of 6.25% and a low capital value of £372 per sq ft, after deducting purchasers costs of 6.43%.

Key Contacts.+44 (0)203 486 3468+44 (0)7980 809031lzielinski@geraldeve.com

T:M:E:

Leo Zielinski+44 (0)203 486 3476+44 (0)7740 862 511vsmith@geraldeve.com

T:M:E:

Vicky Smith+44 (0)203 486 3460+44 (0)7342 051 757pscott@geraldeve.com

T:M:E:

Phil Scott

+44 (0)203 588 7200+44 (0)7831 827 442bbexson@automotive-property.com

T:M:E:

Bill Bexson+44(0)203 588 7200+44 (0)7733 535 952ehighnam@automotive-property.com

T:M:E:

Eddie Highnam

Conditions under which these particulars are issuedAll details in these particulars are given in good faith, but Gerald Eve LLP and Automotive Property Consultancy Ltd ( APC) for themselves and the Vendors/Lessors of this property for whom they act give notice that:-1. These particulars do not and shall not constitute, in whole or in part, an offer or a contract or part thereof, and Gerald Eve LLP and Automotive Property Consultancy Ltd ( APC) have no authority to make or enter into any such offer or contract.2. All statements contained in these particulars are made without acceptance of any liability in negligence or otherwise by Gerald Eve LLP and Automotive Property Consultancy Ltd ( APC), for themselves or for the Vendors/Lessors.3. None of the statements contained in these particulars is to be relied on as a statement or representation of fact or warranty on any matter whatsoever, and intending purchasers must satisfy themselves by whatever means as to the correctness of any statements made within these particulars.4. The Vendors/Lessors do not make, give or imply, nor do Gerald Eve LLP and Automotive Property Consultancy Ltd ( APC) or any person in their employment have any authority to make, give or imply, whether in these particulars or otherwise, any representation or warranty whatsoever in relation to the property.

The statement does not affect any potential liability under the Property Misdescriptions Act 1991. Particulars issued March 2019.

© 2019 Gerald Eve LLP. All rights reserved.Gerald Eve LLP is a limited liability partnership registered in England and Wales with registered number OC339470 and its registered office at 72 Welbeck Street, London, WIG 0AY

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