Protected: Iconic Retail Arcade in the Heart of Bournemouth

Accommodation

The property provides currently total accommodation of 48,419 square feet / 4,498 square meters gross, 39,813 square feet / 3,698 square meters net.

Please refer to the available tenancy schedule which provides a detailed breakdown of the units within The Arcade.

Furthermore, a detailed schedule of accommodation and floor plans can be downloaded from the downloads section below. This will be assigned to a purchaser at a cost of £1,745 + VAT.

Planning

Planning permission has been obtained for the conversion to residential of the ancillary accommodation above units 2 to 7 and unit 23. This enables seven new residential units to be created.

Application 7-2021-12534-P relates to the creation of five residential units, whilst application 7-2019-6315-AO provides for the formation of two residential units.

https://planning.bournemouth.gov.uk/plandisp.aspx?recno=102967#

https://planning.bournemouth.gov.uk/plandisp.aspx?recno=98810

In addition, an existing residential unit is positioned above unit 1, and a further unit has the potential to be created above unit 20 although planning does not currently exist.

We suggest that the potential value to be created by residential conversion is in the order of £1.095m. Please refer to the tenancy schedule for further information.

Tenure

Freehold.

The arcade has three freehold ownerships. Firstly the majority of the property owned by the vendor, Silverlake Estates LLP; units 8-11 owned by Interceptor 3 Limited; and, units 12 & 13 owned by Mellowood Properties.

In 1922, the arcade had 12 freehold owners. At that time, they entered into a deed to manage the communal parts. “The 1922 Committee” overseas the management of the communal parts of the arcade, appointing managers.

Service Charge

Please refer to the tenancy schedule for details of the service charge and breakdown per tenancy. Schedule 1 charges relate to the costs incurred by the vendor in managing the units being sold. Schedule 2 charges relate to the maintenance of the common parts by The 1922 Committee.

The current service charge budget is £16,250 for Schedule 1 items and £64,994 in respect of Schedule 2 items. Due to the void units, there is a current deficit of -£29,674 to the freeholder.

Tenancy

In accordance with the tenancy schedule, the property produces a current income of £537,906 per annum which after shortfalls amounts to a true net income of £508,232 per annum.

Note that the income will drop in May 2024 when a new lease with Waterstones commences at the agreed level of £70,000; this renewal is in the process of being documented.

We suggest that the estimated rental value of The Arcade is £537,929 per annum.

The current arrears position is as follows:

• Gembox Jewellers £49,959
• Maravi Brands £235
• Total £50,194

It should be noted that the arrears from Gembox are the result of ill-health of the tenant. As a result, the current owner has taken no action but the individual is now recovered and planning to clear the arrears.

Tenants Information

Covenant

Space NK Ltd (Co. No. 02773985), has reported the following figures:

For further information visit www.spacenk.com.

The high profits in 2021 are because of an intercompany sale.

Waterstones Booksellers Ltd (Co. No. 00610095), has reported the following figures:

For further information visit www.waterstones.com.

Charles Fox (Jewellers) Ltd (Co. No. 00202014) has reported the following figures:

For further information visit www.charlesfoxjewellers.com.

Richmond Classics Limited (Co. No. 02192148) has reported the following figures:

VAT

The property has been registered for VAT and it is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC) so that VAT will not be payable on the purchase price.

Proposal

We are instructed to seek offers in the region of £5,350,000 (Five Million, Three Hundred and Fifty Thousand Pounds), for the freehold interest.

A purchase at the asking price reflects a true net initial yield (after shortfalls) of 8.9% and a reversionary yield based upon the suggested rental value of 9.2%. with purchasers costs at 6.60%.

Having regards to the potential value over £1m to be extracted by residential conversions as outlined above, we suggest a sensible allocation of the purchase price for this opportunity to be in the order of £300,000. This would allocate £5,050,000 of the purchase price for the retail arcade which reflects a net initial yield of 9.4% and a reversionary yield of 10.0%.

Please note that a purchaser will be re-charged the costs of the measured survey (£1,745 + VAT), and the searches which are to be provided.

Investment Considerations

1. Opportunity to acquire an iconic retail arcade within the centre of Bournemouth;

2. Opportunities to enhance value by letting and improving the retail income;

3. Planning permission to create residential accommodation;

4. Grade II Listed;

5. Freehold;

6. Attractive yield profile