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Please consider the environment before printing this Property |
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London Retail and Residential Investment / Development Opportunity
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sold
private treaty
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£
1,300,000
Guide price
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Location
Kingston upon Thames is an affluent and historic town in the Royal Borough of Kinston upon Thames, London. Situated on the banks of the River Thames it has excellent transport links, located just 19 km (12 miles) from Central London and 13 km (8 miles) from Junction 10 of the M25 Motorway. The town is also close to the M3, M4 and the A3 and Heathrow Airport is approximately 11 km (7 miles) to the north-west.
The town is also connected to the national railway network with a journey time to London Waterloo of 30 minutes, making it an ideal location for professionals and commuters. There are also regular services to Kempton Park, Twickenham and Wimbledon. More than 40 bus routes service Kingston town centre, providing a frequent service to all parts of the Borough, other parts of Greater London, Surrey and Heathrow Airport.
One of only five royal boroughs in England and Wales, Kingston is a medieval town steeped in history and heritage. The town’s royal connection dates back over a thousand years and seven Saxon Kings are thought to have been crowned here.
With hundreds of stores, a bustling Market Place and a vibrant offer of independent shopping, Kingston is one of the biggest shopping destinations in Surrey.
Summary
- Located in an affluent London Borough
- Positioned in the heart of the town centre, directly opposite The Bentall Centre
- Retail income let to the secure covenant of Sharps Bedrooms Ltd (Pre-Tax Profits £24.3m)
- New lease from May 2022
- Tenant has been in occupation since 2017
- Rent rebased – 34% below previous rental level
- Large vacant residential apartment on the first floor, presenting a development opportunity
- Freehold
- £1,300,000, subject to contract
- Net Yield of 8% on the commercial element
- Value of £380,000 on the residential element
- Gross yield of 6.3% on residential element once flat is re-let and overall blended yield of 7.8%
Situation
The property is situated in the heart of Kingston upon Thames town centre on the pedestrianised Fife Road, immediately opposite The Bentall Shopping Centre. Kingston upon Thames train station is a couple of minutes’ walk to the north-east.
The Bentall Centre is the prime retailing destination in the town, totalling approximately 33,909 sq m (365,000 sq ft) with over 1,900 car parking spaces. Anchored by the Fenwicks owned Bentalls Department Store, the centre houses 75 stores across four floors, with over 1,000 brands ranging from fashion to homewear and gifts to electricals, as well as an extensive food and drink offering. Retailers include Apple. Nike, Zara, H&M, Jo Malone, North Face, Ralph Lauren, Ted Baker, Boss, Timberland and Curzon Cinema. It is reported that the centre has an annual footfall of 13 million with a catchment size of 2.4 million residents.
Other nearby occupiers include SportsDirect.com, Caffe Nero, Marks & Spencer, Russell & Bromley and Foot Locker.
Description
The property comprises a retail unit at ground floor, plus a self-contained three-bedroom residential apartment and ancillary accommodation on the first floor.
The retail unit is predominantly open-plan and has been fitted out to a high standard by the tenant in their usual corporate style.
The residential element benefits from self-contained access from the ground floor at the front of the property via Fife Road and is arranged to provide three bedrooms, kitchen, lounge and bathroom. It is currently vacant.
There is a rear yard area which includes two car parking spaces. These spaces are currently designated to the retail tenant via a licence which can be terminated by the Landlord at any point if they wish to carry out any works to the property. Therefore, parking for the residential upper parts can be provided if / when necessary.
Accommodation
The property has been measured by BKR Floor Plans and provides the following Net Internal floor areas:
| Net Frontage | 6.68 m | 21.92 feet |
| Gross Frontage | 7.17 m | 23.52 feet |
| Zone A | 40.0 sq m | 431 sq ft |
| Zone B | 41.8 sq m | 450 sq ft |
| Zone C | 46.4 sq m | 499 sq ft |
| Zone D | 45.4 sq m | 489 sq ft |
| ITZA | 842 | |
| Total Ground Floor NIA | 173.6 sq m | 1,869 sq ft |
| First Floor Storage | 35.5 sq m | 352 sq ft |
| First Floor Residential | 89.0 sq m | 958 sq ft |
| Total First Floor Net Area | 124.50 sq m | 1,310 sq ft |
A set of floor plans is available to download and the measured survey report will be re-addressed to a purchaser at a cost of £345 + VAT.
Tenure
Freehold.
Tenancy
The ground floor retail unit is let to Sharps Bedrooms Limited on a full repairing and insuring lease for a term of 5 years from 2nd May 2022, expiring 1st May 2027. There is a tenant’s break option on 2nd May 2025, subject to six months’ notice and a penalty of £8,950 plus VAT if exercised.
The current passing rent is £77,500 per annum.
The tenant has been in occupation since 2017 and signed a new lease in May 2022, demonstrating their continued commitment to the property. The rent has been rebased from £118,000 per annum to £77,500 per annum (a 34% reduction).
In accordance with a licence, the tenant has a right to use two car parking spaces within the rear yard.
The residential element is currently vacant.
The estimated rental value for the residential element is proposed at £24,000 per annum (£2,000 per calendar month), providing an opportunity to increase the rental income.
Therefore, the current income is £77,500 per annum and the estimated rental value is £101,500 per annum.
Developmental Potential
Subject to planning permission, we suggest there is the potential of undertaking a development of the upper floors. Two examples of possible residential schemes are available to download. These include extending the property and adding a second floor to create three flats (1 x 1-bed and 2 x 2-beds) with a total Gross Internal Area of approximately 285 sq m (3,070 sq ft).
Our research suggests that 1 and 2-bed flats above retail in this location are worth in the order of £600 per sq ft. Hence, an exit value in the order of £1,840,000, thereby providing a significant potential to enhance value.
Covenant
Sharps Bedrooms Limited (Co. No. 07685430) has reported the following figures:
| Year Ending | 3rd October 2021 | 27th September 2020 |
|---|---|---|
| Turnover | £112,472,000 | £87,965,000 |
| Pre-Tax Profits | £24,272,000 | £11,230,000 |
| Net Current Assets | £27,477,000 | £46,621,000 |
Sharps are the UK’s leading fitted bedroom, living and home office furniture company, closing the year with 62 showrooms located in a combination of retail parks, shopping centres and high streets. For further information visit www.sharps.co.uk.
VAT
The property has been registered for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC), subject to the Buyer complying with its obligations in respect of registering for VAT and opting to tax in accordance with the Special Conditions of Sale.
Proposal
We are instructed to seek a figure of £1,300,000 (One Million, Three Hundred Thousand Pounds), subject to contract, for the freehold interest.
Allocating an investment yield of 8% to the retail accommodation equates to a value of £920,000, leaving a value of £380,000 in relation to the residential element.
Assuming the existing flat is re-let at 24,000 per annum (£2,000 per calendar month), the yield for this element will be 6.3% and the overall blended yield will be 7.8% (gross).
If one were to undertake a redevelopment of the upper parts, subject to planning, then we estimate the exit value to be in the order of £1,840,000 (£6,464 per sq m / £600 per sq ft) compared to an existing value of £380,000 (£3,145 per sq m / £292 per sq ft).
Please note that a purchaser will be re-charged the costs of the searches (£779.80 plus VAT) which are provided in the data room.
Please note that a purchaser will be charged a Transaction Fee of £10,000 plus VAT.
Investment Considerations
Located in an affluent London Borough;
Positioned in the heart of the town centre, immediately adjacent The Bentall Centre;
Retail income well-secured against Sharps Bedrooms (Pre-Tax Profits £24.3m);
New lease from May 2022 at a re-based rent (34% less than previous rent);
The tenant has been in occupation since 2017 and renewed their lease, demonstrating their continued commitment to the property;
Vacant self-contained residential upper parts with refurbishment/development potential;
Freehold;
Attractive lot size to an investor.
Contacts
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Singer Vielle
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Vendor's Solicitor Firm
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