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Rateable Value
According to the Valuation Office website the rateable value for the property is as follows;
| 16 New George Street | £72,500 |
The business rate multiplier is 51.2 pence per pound.
Accommodation
The property has been measured by BKR Floor Plans and provides the following Net Internal floor areas:
| Net Frontage | 8.31 m | 27’3” |
| Gross Frontage | 8.84 m | 29’0” |
| Zone A | 50.63 sq m | 545 sq ft |
| Zone B | 50.63 sq m | 545 sq ft |
| Zone C | 38.00 sq m | 409 sq ft |
| Remainder | 46.17 sq m | 497 sq ft |
| ITZA | 982 | |
| Ground Floor Total | 185.43 sq m | 1,996 sq ft |
| First Floor | 204.19 sq m | 2,198 sq ft |
| Second Floor | 191.00 sq m | 2,056 sq ft |
| Total | 580.63 sq m | 6,250 sq ft |
The measured survey report is available to download and will be re-addressed to a purchaser at a cost of £690 + VAT.
Tenure
The property is held under a head lease from Plymouth City Council for a term of 125 years from 3rd January 1992 (in excess of 93.25 years unexpired) at a ground rent of 10% of the occupational rent, i.e. £4,062.50 per annum.
As the occupational lease has a rent free period until 27th March 2024 there is no head rent payable until this expires.
There is no head rent payable if the property is vacant.
Tenancy
The property is let to KK Foods SW Limited (t/a Chopstix), guaranteed by Kernow Koffi Limited, for a term of 15 years from 27th March 2023, expiring on 26th March 2038. There is a tenant’s break option on 27th March 2033, subject to six months’ notice. The lease is full repairing and insuring, subject to a Schedule of Condition in relation to the first and second floors.
The lease is subject to a 12 month rent free period expiring on 27th March 2024. The vendor will ‘top-up’ the income by way of an appropriate adjustment on the completion sum in order that a purchaser does not suffer an income shortfall.
The passing rent in accordance with the lease is £65,000 per annum. However, for the period from 27th March 2024 to 26th March 2028 the annual rent shall be reduced to £40,625 per annum.
Therefore, an investor will benefit from an initial income of £40,625 per annum, with a guaranteed minimum increase to £65,000 per annum in March 2028.
The lease benefits from five yearly upwards only rent reviews.
Covenant
Chopstix is the UK’s largest Asian quick service restaurant group. Established in Camden Market in 2002 by entrepreneurs Sam Elia and Menashe Sadik, the company celebrated its 20th anniversary last year, and is currently undergoing a busy period of expansion. The Chopstix Group consists of over 100 Chopstix sites, in addition to 10 sites operating as Yangtze, and 27 sites under the Chozen Noodle brand, which the group acquired earlier this year.
The business boasts a strong pipeline of new sites, through both company operated and franchise ownership models, having already opened new equity stores in Bracknell and Brent Cross in the first half of the year and having recently secured agreements with other experienced QSR operators including Sparta Foods, Haven and Butlin’s.
The Group plans to open 30 new stores this year, creating almost 1,000 new jobs in the process. The rapid expansion has been fuelled by record revenues, with system sales forecast to hit over £65m by the end of FY23 (23 April 2023), an increase of over 40 per cent compared to FY22. Revenue is projected to rise even further in FY24, with system sales expected to hit over £90m over the next financial year (Source: What Franchise).
The company has announced a long-term franchise agreement with KK Foods SW (the tenant) as it looks to develop a pipeline of stores across the South-West. KK Foods SW, which already has significant experience operating Quick Service Restaurant (QSR) businesses, opened its first Chopstix store in Plymouth, recording a record first week of sales for a Chopstix franchise site, with a second site launch planned in Portsmouth later this year.
For further information visit www.chopstixnoodles.co.uk.
The guarantor on the lease, Kernow Koffi Limited, has reported Net Assets of £1,320,998 for the year ending 31st August 2022.
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).
Proposal
We are instructed to seek a figure of £375,000 (Three Hundred and Seventy-Five Thousand Pounds), subject to contract, reflecting an effective net initial yield of 10.4%, rising to a guaranteed 15.0% in March 2028.
Please note a purchaser will be re-charged the cost of the searches (£1,500) and measured survey (£690 + 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
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An opportunity to acquire a city centre investment;
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The property is located in the heart of Plymouth’s prime retailing centre;
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New letting in March 2023;
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15 year lease term;
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Let to an established ‘Chopstix’ franchisee – the UK’s largest Asian quick service restaurant group;
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A purchase at the asking price reflects a very attractive yield profile;
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Attractive lot size for an investor.
