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High Yielding, Well Secured Retail Investment
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sold
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£
612,000
Subject to contract
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Location
Dundee is Scotland’s fourth largest city with a population of approximately 148,000 and over 300,000 people living within a 30 minute drive time. It also has one of the highest student population ratios in the UK with 50,000 people studying within 30 minutes of the city.
The city benefits from good road communications with the A90 connecting to Aberdeen approximately 105 km (65 miles) to the north-east, the M90 linking with Edinburgh approximately 97 km (60 miles) to the north and the A9 to Glasgow some 129 km (80 miles) to the south-west.
Dundee is connected to the national railway network with frequent services to other Scottish cities, including Aberdeen, Edinburgh and Glasgow whilst also being situated on the main East Coast route connecting Dundee to Newcastle, York and London, as well as other key UK cities. Dundee Airport operates direct flights to London City. Another key gateway, just a short walk from the city centre, is the Port of Dundee where unrestricted river anchorage is available for deep water vessels of up to 240m.
Dundee is a dynamic city with an exciting future driven by the £1 billion Waterfront Development, the third largest regeneration project in the UK. It is also the UK’s first UNESCO city of design with the V&A the only design museum in the world outside London. (Source: www.investindundee.com).
Summary
- Prime city centre retailing pitch
- Let to Costa Limited, owned by The Coca-Cola Company
- Highly secure income – Net Assets £275 million
- Let until May 2027
- Re-based rent
- Heritable interest (Scottish equivalent of English freehold)
- £612,000, subject to contract
- 10.9% Net Initial Yield
Situation
The property is located in the heart of the town centre, occupying a prime and prominent position on the corner of the pedestrianised Murraygate, at its junction with Commercial Street.
Surrounding occupiers include The Body Shop (adjacent), Marks & Spencer, HSBC, Bonmarche, Optical Express, Caffe Nero, Greggs and WHSmith. In addition, 11-23 Murraygate (two doors from the subject property) is currently being re-developed to provide a ground floor retail unit which has been let to Tesco on a 15 year lease along with 31 apartments on the upper floors.
The property benefits from being situated midway between the city’s two shopping centres, the Overgate Centre and Wellgate Centre. With over 60 stores and 700 parking spaces, Overgate is home to occupiers including H&M, Primark, JD Sports, Next, Greggs, Sports Direct and Superdry. Wellgate comprises approximately 350,000 sq ft of retail and leisure accommodation and 600 car parking spaces, with retailers including Home Bargains, Iceland, Burger King, B&M, Savers and Poundland.
Description
The property comprises a ground floor retail unit with ancillary accommodation on first floor. Internally, the retail floor area has been fitted out by the tenant to their usual corporate style. The remaining two upper floors are separately owned.
The property is Listed (hence no empty rates payable) and located within a Conservation Area.
Accommodation
The property has been measured by BKR Floor Plans and provides the following Net Internal floor areas:
| Net Frontage | 9.60 m | 31’6” |
| Gross Frontage | 10.41 m | 34’2” |
| Zone A | 76.09 sq m | 819 sq ft |
| Zone B | 83.42 sq m | 898 sq ft |
| Zone C | 44.03 sq m | 474 sq ft |
| Total Ground Floor | 203.54 sq m | 2,191 sq ft |
| First Floor | 185.71 sq m | 1,999 sq ft |
| Total | 389.25 sq m | 4,190 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 £425 + VAT.
Tenure
Heritable (Scottish equivalent of English Freehold).
Tenancy
The property is let to Costa Limited on a full repairing and insuring lease for a term originally commencing on 16th May 2016, expiring on 16th May 2027.
The lease originally expired on 15th May 2031 and incorporated a tenant break clause on 16th May 2022. In accordance with a Minute of Extension and Variation of Lease dated 21st March 2022 the lease expiry was amended to 16th May 2027 and the break clause was removed. In addition, the rent was rebased from £90,000 per annum to the current passing rent of £70,000 per annum.
Covenant
Costa Limited (Co. No. 06557400), has reported the following figures;
| 31st December 2020 | 30th December 2019 | |
|---|---|---|
| Revenue | £603,588,000 | £880,587,000 |
| Pre-Tax Profits (Loss) | (£222,103,000) | £5,336,000 |
| Net Assets | £275,461,000 | £464,872,000 |
Established in 1971, Costa Coffee is the UK’s largest coffee shop chain with over 2,400 stores plus 1,400 stores in 31 international markets and 8,000 Costa Express self-service machines worldwide. The company opened 63 new stores in the latest financial year.
In January 2019 The Coca-Cola Company announced that it had completed the acquisition of Costa Limited from Whitbread PLC for $4.9 billion. The Coca-Cola Company is the world’s largest non-alcoholic beverage company employing over 700,000 people with more than 200 brands within its portfolio.
For further information see www.costa.co.uk and www.coca-colacompany.com.
VAT
The property has been registered for VAT. It is anticipated that the sale of this property will be treated as a Transfer of a Going Concern (TOGC).
Proposal
We are instructed to seek a figure of £612,000 (Six Hundred and Twelve Thousand Pounds), subject to contract, reflecting a net initial yield of 10.9%, assuming standard purchaser’s costs of 4.92%.
Please note that a purchaser will be re-charged the costs of the measured survey (£650 + VAT) and searches (£352.98) 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 city centre retail investment;
- The property occupies a prime retailing pitch;
- The investment provides highly secure income, being let to Costa Limited (Net Assets £275m), owned by Coca-Cola;
- Re-based rent;
- A purchase at the asking price reflects an attractive net initial yield;
- 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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