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Please consider the environment before printing this Property |
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High Yielding Retail Investment & Add Value Opportunity
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sold
private treaty
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£
760,000
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Location
Barnstaple is the principal town of North Devon, located approximately 322 km (200 miles) west of Central London, 138 km (86 miles) south west of Bristol, 96 km (60 miles) north of Plymouth and 61 km (38 miles) north east of Exeter.
The town benefits from good road communications being situated approximately 56 km (35 miles) south west of Junction 27 of the M5 Motorway, accessed via the A361. The A377 also provides a direct link to Exeter to the south west. In addition, the town is connected to the national railway network with a fastest journey time to London Paddington, via Exeter, of 3 hours 40 minutes. Exeter Airport is approximately 72 km (45 miles) to the south east.
Summary
- Prime retailing pitch
- Ground floor let to Waterstones (Net Assets £63.4m)
- Rent rebased from £79,000pa to £65,000pa
- The Store has traded as a bookshop since 1997 (initially as Ottakar’s and then under the Waterstones brand after their takeover in 2006
- Vacant first floor offering a residential conversion opportunity
- Freehold
- £760,000, subject to contract
- Net Yield 8.12%
- Based upon 9% for the ground floor commercial income and £50 per sq ft for the vacant first floor.
Situation
The subject property occupies a prime retailing pitch within the heart of Barnstaple town centre on the High Street, in between the two entrances to the Green Lanes Shopping Centre. Totalling approximately 131,000 sq ft of retail and leisure space with over 40 units and a 400+ space car park, the centre has a range of stores including TK Maxx, Wilko, River Island and New Look.
Other surrounding occupiers include Santander (adjacent), Superdrug (opposite), Boots, Primark, JD Sports, Clarks, Greggs and The Body Shop.
The property also benefits from being in close proximity to Barnstaple’s historic Pannier Market, one of Britain’s largest indoor markets and a popular visitor attraction.
Description
The property is arranged over ground and first floors. The ground floor comprises a retail unit which has been fitted out by the tenant, Waterstones, in their usual corporate style to provide a mainly open plan sales area with ancillary accommodation at the rear.
The first floor is vacant and was previously occupied by Ladbrokes. This accommodation sits over the front of the ground floor and benefits from a separate entrance via the High Street. It comprises an open plan trading area with ancillary accommodation.
The property has rear access for servicing and fire escape at ground and first floor via the service yard belonging to the shopping centre. There are permanent rights to use these routes.
Accommodation
The property has been measured by BKR Floor Plans and provides the following accommodation:
| Ground Floor – Net Internal Areas | ||
|---|---|---|
| Net Frontage | 8.76 m | 28’9” |
| Gross Frontage | 9.14 m | 30’0” |
| Zone A | 53.05 sq m | 571 sq ft |
| Zone B | 60.39 sq m | 650 sq ft |
| Zone C | 650 sq ft | 704 sq ft |
| Remainder | 58.62 sq m | 631 sq ft |
| ITZA | 1,151 | |
| Total Ground Floor | 237.45 sq m | 2,556 sq ft |
| First Floor | ||
| Net Internal Area | 108.69 sq m | 1,170 sq ft |
| Gross Internal Area | 136.84 sq m | 1,473 sq ft |
| Total Net Internal Area | 346.14 sq m | 3,726 sq ft |
The measured survey is available to download and will be re-addressed to a purchaser at a cost of £695 + VAT.
Tenure
Freehold.
Tenancy
The ground floor is let to Waterstones Booksellers Limited on effectively a full repairing and insuring for a term of 5 years from 16th January 2020, expiring on 15th January 2025.
The current passing rent is £65,000 per annum which, based on our analysis, equates to £56.50 Zone A.
The Property has been occupied by a bookseller since 1997 (initially as Ottakar’s and then under the Waterstones brand after their takeover in 2006). A lease renewal in November 2019 demonstrates Waterstones desire to remain in the property. The rent was rebased from £79,000 per annum to £65,000 per annum.
The first floor is currently vacant. Up until recently it was occupied by Ladbrokes who exercised a break option in their occupational lease dated 19th April 2022. The previous passing rent was £18,000 per annum.
The Tenant has the right to use a rear service yard area under the lease subject to payment of a service charge pursuant to a 1991 Deed of Grant.
Add Value Opportunity
The first floor is currently vacant and provides an opportunity to re-let. We also suggest it lends itself to a number of alternative uses including conversion to residential, subject to obtaining the necessary planning consents.
Available to download are plans for a proposed residential scheme which comprises a 2-bedroom flat totalling 68 sq m (732 sq ft) and a 1-bedroom flat totalling 50 sq m (538 sq ft). The existing street entrance can enable self-contained separate access from the ground floor which is a major benefit to any future conversion or refurbishment works.
According to Zoopla, the average estimated value for a flat in Barnstaple is £150,000 (in excess of £200 per sq ft). In comparison, the apportioned purchase price to the first floor is only £50 per sq ft.
Covenant
Waterstones Booksellers Limited (Co. No. 00610095), has reported the following figures;
| 24th April 2021 | 25th April 2020 | |
|---|---|---|
| Revenue | £230,885,000 | £376,024,000 |
| Pre-Tax Profits | £4,172,000 | £21,048,000 |
| Net Assets | £63,382,000 | £60,501,000 |
Waterstones was established in 1982 and is a leading retailer of books, stationery and other related products through a chain of bookshops in the United Kingdom, the Republic of Ireland, Isle of Man, Jersey, Holland and Belgium, and online through the Waterstones.com e-commerce website. According to its website the company employs 3,000 staff across over 280 bookshops. Waterstones sells coffee and food from cafes and restaurants within some of its shops, hosts public and private events and supports a large number of literary festivals.
Demand for books was strong immediately prior to the enforced closure of shops due to the Covid-19 Pandemic. After the closures, the online business performed strongly. The Company successfully repurposed the distribution centre as an online fulfilment operation and the overall impact on profitability was substantially mitigated by early action to curtail costs. For further information please visit www.waterstones.com.
VAT
The property is elected for VAT. We anticipate that the sale should be capable of being treated as a Transfer of Going Concern (TOGC).
Proposal
We are instructed to seek a figure of £760,000 (Seven Hundred and Sixty Thousand Pounds), subject to contract, reflecting a net initial yield of 8.12% assuming standard purchaser’s costs of 5.42%.
A purchase at the asking price reflects a 9.0% return, £686,000, and only £74,000 (£538 per sq m / £50 per sq ft) for the vacant first floor accommodation.
Please note that a purchaser will be re-charged the costs of the measured survey (£695+VAT) and searches (£875+VAT) which are provided in the data room.
Please note that a purchaser will be charged a Transaction Fee of 1.0% of the Purchase Price plus VAT.
Investment Considerations
An opportunity to acquire a freehold commercial property investment in the heart of Barnstaple town centre;
The property occupies a prime retailing pitch;
Ground floor securely let to Waterstones (Net Assets £63.4m);
Rent rebased from £79,000pa to £65,000pa;
Tenant has been in occupation since 1997 (as Ottakars with the lease being vested in Waterstones in 2014 after the renewal. They have subsequently renewed their lease in January 2020, demonstrating their commitment to this location;
Vacant self-contained first floor providing an opportunity to re-let or convert to residential use, subject to planning, to enhance value;
A purchase at the asking price will provide an investor with an attractive net initial yield and low capital value in relation to the upper parts;
Attractive lot size for an investor;
Contacts
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Singer Vielle
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Vendor's Solicitor Firm
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