LONG LET TOWN CENTRE INVESTMENT SECURED AGAINST THE ... · m1 a1(m) m40 m25 m25 m23 m11 m27 m20 m2 m5 a36 a34 a3 a24 a27 a23 a21 a303 a31 a36 a37 a4 a259 a229 a3(m) cheltenham cirencester

Lacuna PlaceH AV E L O C K R O A D , H A S T I N G S T N 3 4 1 B P

L O N G L E T T O W N C E N T R E I N V E S T M E N T S E C U R E D A G A I N S TT H E D E P A R T M E N T O F W O R K A N D P E N S I O N S & T E S C O

2Investment Summary

LACUNA PLACE, HAVELOCK ROAD, HASTINGS TN34 1BP

02

• High quality office building with ground floor retail accommodation totalling 39,696 sq ft.

• Constructed in 2008.

• Excellent town centre location forming part of the Priory Quarter office sector adjacent to Hasting train station and within a short walk of the Priory Meadow shopping centre and an abundance of amenities.

• BREEAM “Very Good” rating, provides excellent green credentials.

• Office accommodation let to the Department of Work and Pensions on a lease expiring in January 2033.

• Department for Work & Pensions lease subject to an RPI uplift in January 2023.

• Ground floor retail unit let to Tesco Stores Limited.

• Tesco lease subject to an uncapped RPI uplift in February 2019.

• Passing rent of £605,786.58, reflecting only £17.00 per sq ft on the office accommodation.

• Additional vacant ground floor retail unit fitted to shell & core, affording an opportunity to increase rental income.

• Freehold.

PROPOSAL • Offers are sought in excess of £10,000,000 (Ten Million

Pounds) subject to contract and exclusive of VAT.

• A purchase at this level reflects a Net Initial Yield of 5.68% and a Reversionary Yield of 5.76% in February 2019 (based on average RPI figures), assuming purchaser’s costs of 6.7%

• This equates to a capital value of only £252 per sq ft.

Hastings, one of the five original Cinque Ports established in 1155 to maintain ships for the Crown, is located in East Sussex on England’s south coast.The town is approximately 55 miles south of London, 31 miles south west of Ashford and 16 miles east of Eastbourne. It is connected to the national road network by the A21, linking to J5 of the M25, and the A259 south coast road leading to Brighton to the west and Folkestone to the East.

Hastings rail station offers frequent services to London, either by Southeastern Trains to London Bridge and Charing Cross or by Southern via Ashford to St Pancras International or Victoria. Ashford Station provides access to HS1/Eurostar. Hastings also benefits from an east-west rail service to Eastbourne (30mins) and Brighton.

London Gatwick airport is 39 miles to the north and the port of Dover (40 miles) and the Channel Tunnel (36 miles) are to the east. The population of Hastings is approximately 90,000.

ROAD

The town benefits from good road communications with the A21 providing links to Tunbridge Wells and the M25 beyond, whilst the A259 provides coastal links to Brighton, Ashford, the Channel Tunnel, ferry ports and the M20.

The newly opened Combe Valley Way also provides easy access to neighbouring Bexhill, Eastbourne and Brighton. At a cost of £120 million, the Bexhill to Hastings link road has reduced local congestion and travel times to Eastbourne and Brighton. It is anticipated this road improvement will assist the delivery of up to 2,000 new homes and 3,000 new jobs.

RAIL

Frequent trains run from Hastings direct to Charing Cross, Waterloo East, London Bridge and Victoria (via Brighton) from 83 minutes.

There is also a commuter train to Cannon Street and a service along the south coast connecting Hastings to Brighton (from 69 minutes) and Ashford International (42 minutes).

Location03

BOURNEMOUTH

BRISTOL

OXFORD

SOUTHAMPTON

L O N D O N

GATWICK

SOUTHAMPTON

BRISTOL

CITY

LUTONGLOUCESTER

9

4

M3

M4

M1 A1(M)

M40

M25

M25

M23

M11

M27

M20

M2

M5

A36

A34

A3

A24

A27

A23A21

A303

A31

A36

A37

A4

A259

A229

A3(M)

CHELTENHAM

CIRENCESTER

A10

A346

A419

A420

A44

A12

A2

BRIGHTON

EASTBOURNE

ISLE OF WIGHT

E N G L I S H C H A N N E L

HASTINGS

DOVER

WORTHING

GUILDFORD

EPSOM

FARNHAM CRAWLEY

HORSHAM

ASHFORDINTERNATIONAL

(EUROSTAR)WINCHESTER

MAIDSTONESEVENOAKS

DARTFORD

SOUTHEND-ON-SEA

CANTEBURY

MARGATE

SALISBURY

ANDOVER

NEWBURY

WEYMOUTH

DORCHESTER

YEOVIL

BATH

SWINDON

AYLESBURY

CHELMSFORD

BISHOP’SSTORTFORD

BASINGSTOKE

FOLKESTONE

PORTSMOUTH

A259

M25

M25 HEATHROW

A22

A26

ROYALTUNBRIDGE

WELLS

EURO TUNNEL

CROYDONBROMLEY

EASTGRINSTEAD


DISTANCE BY ROAD

Ashford International 34 milesBrighton 36 milesGatwick Airport 39 milesM25 Junction 5 42 milesCentral London 71 miles

TRAIN TIMES

London Bridge from 1 hr 22 minsCannon Street from 1 hr 40 minsCharing Cross from 1 hr 33 minWaterloo East from 1 hr 28 minsVictoria from 1 hr 50 minsBrighton from 1 hr 10 minsAshford International from 42 mins

CAMBRIDGE RD A21

C

ORN

WAL

LIS

GD

NS

B

RAYB

ROOK

E ROAD

DENMARK PLACE A259

PR

IOR

Y STREET A

21 C

AMB

RID

GE

GD

NS

DEV

ONSH

IRE R

OAD

SOUTH TERRACE

HAVE

LOCK ROAD

QUEE

NS

ROAD

ALBERT R

OA

D

PRIORY MEADOWSHOPPING CENTRE

DEBENHAMS

HASTINGS

RETAIL AREAS

P

P

P

PELHAM PL

P

The property is situated in Hastings town centre within The Priory Quarter, has a prominent frontage onto Havelock Place and rear access to Priory Square.

The Priory Quarter was developed in phases and has delivered over 100,000 sq ft of high quality offices over a 10 year period aimed at attracting local, regional and national companies to the area.

Occupiers in the area include Department of Work and Pensions, Saga Group, General Dynamics, Medica, Park Holiday and Hasting Direct.

Hasting railway station, Priory Meadow Shopping Centre, Sussex Coast College and the town centre amenities are all within a short walk of the property.

Situation04


LOCAL AMENITIES

HotelsThe Bannatyne Spa HotelTravelodgePremier Inn

Golf clubsHastings & St Leonards Golf ClubBeauport Park Golf ClubSedlescombe Golf Club

Restaurants & RetailTesco ExtraMorrisonsSainsbury’sCosta CoffeeCafé NeroThe Priory Meadow Shopping Centre

GalleriesThe Jerwood Gallery

Lacuna Place

05


Sussex Coast College

Priory Meadow Shopping Centre and Public Car Park

Queensbury House

One Priory Square -Saga Group Limited

Havelock Place -Department of Work

& Pensions

Priory StreetCar Park

Universityof Brighton

Priory Square

Universityof Brighton

Cornwallis Gardens

Bus Station

Hastings

Department of Work & PensionsLacuna Place


06

Description07

Lacuna Place was developed in 2008 as the first phase of the Priory Quarter, Hastings.The building provides 31,911 sq ft of Grade A office accommodation with a ground floor reception, offices on 1st to 4th floor and, a terrace on the 4th floor and basement car parking for 13 cars. The offices were built to Grade A standard with rating BREEAM “Very Good”.

In addition, there are two retail units on the ground floor, Unit One totals 3,143 sq ft and Unit Two totals 4,642 sq ft.

The accommodation has a prominent frontage onto Havelock Road with rear access onto Priory Square and is one of a cluster of buildings which form The Priory Quarter. The floor plates are regular and create open plan areas either side of the central core with a feature reception with dual access onto Havelock Road and Priory Square.


The building benefits from the following specification:

• Feature ground floor reception

• 2x 10 person passenger lifts

• Fully accessible raised floors

• Metal tile suspended ceilings

• LG7 compliant recessed lighting

• Three pipe fan coil air conditioning

• BREEAM rating “Very Good”

• Secure basement parking for 13 cars (1:2,455 sq ft) with numerous public car parks nearby

• Designated cycle racks

• Terrace at 4th floor level

• Male, female and disabled WC’s and shower facilities

• DDA compliant

Prior to the letting to the Department of Work and Pensions the building was used by the University of Brighton as a teaching facility, planning consent has since been obtained to a change of use from D1 to B1 to accommodate the letting.

The Department of Work and Pensions will be moving its employees from its current base in Ashdown House on the outskirts of Hastings to Lacuna Place and the adjacent Havelock Place in Hastings town centre. The intention is to fit out and link both buildings to create a Regional Hub. The works are expected to start in 2019 with a view to relocating staff upon completion.

Accommodation08

TenureFreehold.


Description Sq m Sq ft

Offices NIA

Reception 96.7 1,041

First Floor 772.4 8,314

Second Floor 765.5 8,240

Third Floor 765.5 8,240

Fourth Floor 564.5 6,076

Offices Sub Total 2,964.6 31,911

Retail NIA

Unit One 292.0 3,143

Unit Two 431.3 4,642

Retail Sub Total 723.3 7,785

TOTAL 3,687.9 39,696

Typical floor plan

Site

For identification purposes only. Not to scale.

Floor Areas

Tenancy09


Demise Use Area (sq ft)

Tenant Lease Start

Lease Expiry

Break Option

Rent Review

Current rent

£psf Comments

Basement, Part Ground & 1-4 Floors

Office 31,911 The Secretary of State for

Communities and Local

Government

26/01/2018 25/01/2033 26/01/2028 26/01/2023 26/01/2028

£533,639 £17.00 First review linked to RPI with a collar of 0% and a cap of 3%. Second review to the higer of OMV or rent passing. The tenant is paying a reduced rent of £354,978.45 per annum until first review. Vendor to top-up. Lease subject to a Schedule of Condition.

Unit One Retail 3,143 Teco Stores Limited

18/02/2009 17/02/2024 18/02/2019 £72,147.58 £22.96 Rent reviewed to the higer of passing rent or uncapped RPI.

Unit Two Retail 4,642 Vacant Fitted to shell and core.

TOTAL 39,696 £605,786.58

Covenant10


The Department of Work and Pensions

Department of Work and Pensions (DWP) is responsible for welfare, pensions and child maintenance policy. It is the UK’s biggest public service department that administers the State Pension and a range of working age, disability and ill health benefits.

Tesco Stores Limited (Company No. 519500)

Tesco Stores Ltd (Company No. 519500) is wholly owned by Tesco Plc, one of the largest retailers in the world. Established in 1919, Tesco now operate from over 6,902 stores nationwide, employing over 476,000 staff. Tesco is the leading food store operator within the UK, the largest of the ‘Big Four’ supermarket chains dominating the UK’s grocery market. Tesco holds a current market share of 27.7% (at 25/05/2018).

Tesco Stores Ltd has a D&B rating of 5A1.

25/02/2017£’000

27/02/2016£’000

28/02/2015£’000

Sales Turnover £40,134,000 £39,843,000 £42,278,000

Pre-Tax Profit £266,000 (£231,000) (£3,727,000)

Net Worth £749,000 £1,077,000 (£98,000)

Market Overview11


Local Office Market OverviewThe Priory Quarter, Hastings provides the only genuine grade A office accommodation in the town and has attracted local, regional and national occupiers to Hastings over a period of 10 years. As demonstrated by the letting history of The Priory Quarter, the development of speculative offices in a cost effective location has attracted inward investment and helped retain existing occupiers.

In addition to the recent 57,000 sq ft letting to The Department of Work and Pensions other notable deals include the sale of One Priory Square comprising 44,000 sq ft to Saga Group for their own occupation and the letting of 25,000 sq ft at Bexhill Innovaton Park to Park Holidays.

Hastings forms part of the Sussex triangle bounded by Brighton the west and Crawley and Tonbridge to the north and Ashford to the east. In contrast to the more established markets of Brighton and Crawley, Hastings offers a significant rental discount with prime rents standing at only £17.00 per sq ft, with potential for future rental growth.

There is no Grade A supply currently available in the area and the only new development is at Bexhill Innovation Park where High Weald House comprising 25,000 sq ft is under construction and scheduled for completion Q2 2019.

Investment MarketThe South East office investment market continues to perform strongly, and pricing has remained robust as investors are attracted by the relatively high returns available compared to other sectors of the property market and other asset classes. Where assets with good fundamentals have come to the market, there has been significant interest from both domestic and overseas investors. Demand is particularly strong for assets offering longer income, let to strong covenants with private overseas investors, local authorities and UK institutions all looking to acquire.

Recent transactions of note include the following:

Date Address Tenant Term Certain (years) Price Net Initial Yield

Aug-18 Quadrangle, Redhill AXA 9.25 £21m 5.46%

Aug-18 Pinnacle House, Wimbledon Kindred (London) Limited 14.1 £40.19m 5.50%

Jul-18 Building One, Abingdon Business Park Gigaclear PLC 10 £9.6m 5.79%

Jul-18 Volvo HQ, Maidenhead Volvo UK 9.3 £12.06m 5.30%

Jun-18 Volkswagen HQ, Milton Keynes Volkswagen 16.6 £50.15m 4.83%

Jun-18 Axis One, Langley Travelport Worldwide Ltd 9.1 £19.33m 5.65%

Mar-18 36 Clarendon Road, Watford Salmon Ltd 10 £15.5m 5.60%

Nov-18 Eaton House, Hounslow Let to Secretary of State for Communities and Local Government 10 £8.3m 5.65%

Nov-17 Centrica, Oxford Centrica 9.7 £35.03m 4.90%

Oct-17 Cobham Centre, Marlow Chelton Ltd 19 £31m 5.11%

Misrepresentation Act. These brief particulars have been prepared as agent for our client and are intended as a convenient guide to supplement an inspection or survey. Their accuracy is not guaranteed. They contain statements of opinion and in some instances we have relied on information provided by others, you should verify the particulars on your visit to the property and the particulars do not obviate the need for a full survey and all the appropriate enquiries. Accordingly, there shall be no liability as a result of any error or omission in the particulars or any other information given. Compiled October 2018.

FURTHER INFORMATION & CONTACT DETAILS

James ArchibaldT: 020 3362 4357M: 07979 746 791E: [email protected]

Richard HardingT: 020 3362 4349M: 07730 817 019E: [email protected]

Lacuna PlaceH AV E L O C K R O A D , H A S T I N G S T N 3 4 1 B P

EPCThe property has an EPC rating of D (77).

VATWe understand the property will be treated as a Transfer of Going Concern for VAT purposes.

PROPOSALOffers are sought in excess of £10,000,000 (Ten Million Pounds) subject to contract and exclusive of VAT.

A purchase at this level reflects a Net Initial Yield of 5.68% and a Reversionary Yield of 5.76% in February 2019 (based on average RPI figures), assuming purchaser’s costs of 6.7%

This equates to a capital value of only £252 per sq ft.

Documents

LONG LET TOWN CENTRE INVESTMENT SECURED AGAINST THE ... · m1 a1(m) m40 m25 m25 m23 m11 m27 m20 m2 m5 a36 a34 a3 a24 a27 a23 a21 a303 a31 a36 a37 a4 a259 a229 a3(m) cheltenham cirencester