prime distribution warehouse investment opportunity

PRIME DISTRIBUTION WAREHOUSE INVESTMENT OPPORTUNITY The Book People, Point 23 Millfield Lane, Haydock, Merseyside, WA11 9UR

PRIME DISTRIBUTION WAREHOUSE INVESTMENT OPPORTUNITY // The Book People, Point 23 Millfield Lane, Haydock, Merseyside, WA11 9UR www.mk2.co.uk

INVESTMENT SUMMARY

Strategically located at the intersection of the A580 East Lancashire Road and Junction 23 of the M6 motorway.

Prominent position near the entrance to Haydock Industrial Estate close to large Sainsbury’s and Booker Wholesale regional distribution centres.

Let to The Book People Group Limited on a full repairing and insuring lease which expires on 24th March 2021.

> £5,375,000NIY 7.5% | CAP VAL £65.60 psf

Modern distribution unit providing a total Gross Internal Area of circa 81,921 sq ft (GIA).

Rent has recently been reviewed to £430,000 per annum which equates to a base rent of £4.75 per sq ft.

Significant area of land for expansion capable of extending the unit by up to 30,000 sq ft. The Book People have expressed an interest in an extension.

We are instructed to seek offers in excess of £5,375,000 (Five Million, Three Hundred and Seventy Five Thousand Pounds) subject to contract, which reflects a net initial yield of 7.50% after allowing for purchasers costs of 6.61%. A purchase at this level would show a low capital value of £65.60 psf.

LOCATIONHaydock is in an established industrial/distribution location occupying a strategic position at the intersection of the A580 East Lancashire Road dual carriageway and Junction 23 of the M6 motorway. Located at the heart of the North West region’s motorway network, Haydock is approximately 15 miles east of Liverpool and 21 miles west of Manchester and benefits from excellent transport networks throughout the region. Haydock is a recognised location for major distribution facilities in the North West and is situated in St Helens Borough in Merseyside.


HAYDOCK

MANCHESTER21 MILES

LEEDS51 MILES

BIRMINGHAM90 MILES

LONDON180 MILES

LIVERPOOL15 MILES

A580

M6

M6

M62

M62

M57

M58 M60

M56

M56

M6

M53

M66M61

M65

M602

M60

A627(m)

SOUTHPORT

RUNCORN

MANCHESTER

MANCHESTER AIRPORT

LIVERPOOLBIRKENHEAD

CHESTER

WARRINGTON

A580

LIVERPOOL JOHNLENNON AIRPORT

23HAYDOCK

CONNECTIVITY DISTANCE (MILES)

M6 J23 1

St Helens Central Railway Station 4

Port of Liverpool 15

Liverpool John Lennon Airport 17

Manchester Airport 22

LOCATION DISTANCE (MILES)

Liverpool 15

Manchester 21

Leeds 51

Birmingham 90

London 180


SITUATIONThe property occupies a prominent position on Millfield Lane, the main road serving Haydock Industrial Estate that links the A580 East Lancashire Road to the south with the A58 Liverpool Road to the north. The property is accessed off Hall Wood Avenue and is adjacent to the two largest distribution warehouses on the estate occupied by Booker Wholesale (400,000 sq ft) and Sainsbury’s (626,000 sq ft). Other major occupiers on the estate include Costco, Palmer & Harvey, Corus and Syncreon.

EAST LANCASHIRE RD

GERARD

ST

LIVERPOOL RD

LIVERPOOL R

OAD

LOD

GE LN

WARRIN

GTO

N RD

CHURCH RD

PIELE RD

PIELE

RD

TITHEBARN RD

MILLFIELD LN

LODG

E LN

VISTA RDVICAR AGE RD

HALL WOOD AV

ASTON-IN-MAKERFIELD

HAYDOCK

NEW BOSTON

GARSWOOD

M6

M6

A58

A58

A58

A580

A580A599

A599

POINT 23MILLFIELD LANE

TO LIVERPOOL TO MANCHESTER

23

24

A49

Existing warehouse

2,787 sqm(30,000 SQ FT)

Extension

Two st

orey offic

es

Millfield Lane

Hall W

ood Avenue


BookerDistribution Centre M6 Jct 23Millfield LaneThe Book People

A580

Sainsbury’sDistribution Centre

CostcoWholesale

M6Haydock Cross

Industrial Esatate Boston Park

Palmer &Harvey

Corus


DESCRIPTIONThe property comprises a two bay single storey purpose built distribution warehouse constructed in 1996. The property is of steel portal frame construction with two storey offices to the front. The warehouse has an approximate clear height of 8m rising to 9m at the eaves. The external envelope is predominantly finished in double skin metal profile sheeting under a double skin profile sheet roof incorporating translucent roof lights.

The unit benefits from 4 dock level and 4 surface level loading doors that face onto the main yard area at the rear of the property. The warehouse has a concrete floor, high bay lighting and is heated by a mixture of gas fired space and ambi-rad heaters.

The two storey offices are rectangular in shape and positioned at the front of the unit with double glazed windows, suspended ceilings incorporating recessed strip lighting, carpeted floors (raised at first floor level), gas fired central heating, comfort cooling cassettes and WC’s on each floor.

Externally the concrete yard has a depth of approximately 25 metres. It is possible to create further yard or parking by removing landscaping. To the side of the warehouse is dedicated expansion land that can accommodate a single story warehouse extension of up to 30,000 sq ft. Fronting the unit with separate access is the staff & visitor parking area that can accommodate up to 50 vehicles.


ACCOMMODATION

The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and provides the following approximate gross internal floor areas.

The site extends to a total area of approximately 5.4 acres providing a low site cover of 33% including the expansion land.

SQ M SQ FT

Warehouse 6963.37 74,953

Ground Floor Office 323.67 3,484

First Floor Offices 323.67 3,484

TOTAL 7,610.71 81,921

TENUREFreehold.


TENANCY DETAILS

The property is let on full repairing and insuring terms for 25 years expiring on 24th March 2021 having approximately 4.5 years remaining on the lease. The current passing rent is £430,000 per annum which was agreed at the recent rent review, an uplift on the previous rent of 4.6%. The rent equates to £4.75 per sq ft with an additional 5.25% for Landlord’s fixtures and fittings (warehouse heating and lighting, office floor boxes and trunking, burglar and fire alarms and fork lift battery chargers) and an additional 5% for the expansion land.

Founded in 1988 The Book People has built a reputation as one of the nation’s favourite booksellers. They offer customers a carefully curated range of titles at low prices delivering up to 80% discount to RRP which is often cheaper than other distributors such as Amazon. They visit offices direct up and down the country as well as having a thriving online business www.thebookpeople.co.uk

The company founder Seni Glaister led a management buy out of the company in 2014 with the assistance of private equity fund Endless LLP. Endless LLP has over £1billion of funds under management and has significant track record in this sector and is actively

investing in The Book People to expand their product range and online presence. In addition, management have steamlined the operation by cutting costs including the relocation of the head office in Surrey and closing down a warehouse facility in Coventry which has enabled them to focus non-online distribution in Haydock. They own a further property in Bangor North Wales which handles order fulfilment from their website.

The Book People Group Limited has a D&B rating of 2A2 and shareholders funds of £3,800,000. Their direct subsidiary The Book People Limited is currently occupying the unit and paying the rent.

The tenant may apply for landlord’s consent to erect an extension to the building (up to 30,000 sq ft) at any time at their own expense. The landlord is entitled within a period of 2 months from the date of consent to complete the extension at their cost, the annual rent increasing accordingly on practical completion (area of extension x current rent per sq ft of the premises).

A copy of the lease is available upon request.

TENANT COVENANT

Summarised below are the financial accounts for The Book People Limited ;

31ST DEC Y/E TURNOVER PRE-TAx PROFIT NET WORTh £000’S £000’S £000’S

2014 78,783 (12,975) (£8,388)

2013 83,808 (6,823) 4,505

2012 93,091 (2,476) 11,329

The next accounts are due to be filed on 30th September 2016 and we understand will show a return to profitability for the company.


OCCUPATIONAL MARKET

Demand for well located, good quality distribution warehouses has increased significantly over the previous 2 years with a noticeable reduction in available units. Retailers in particular continue to position themselves to best adapt to the changing nature of consumer shopping patterns and developers have responded to the shortage by undertaking speculative development particularly in the core markets of the West Midlands and the North West. The lack of supply has resulted in a marked increase in rental values and a reduction in incentives on new lettings. Furthermore tenants have increasingly turned to build to suit options due to the lack of supply, which is having further positive impact on rental growth. Recent transactions include the following:

The logistics and distribution sector continues to provide strong returns and is a leading investment sector and thus is competitively sought after. Relevant investment transactions are set out here:

INVESTMENT MARKET

July 2016 Millfield Road Let to Enviropax for 10 years with 5 year Haydock tenant break at £6.00 psf on 30,200 sq ft.

June 2016 Winwick Quay 15 year reversionary lease to AAH Pharma Warrington at £5.25 per sq ft on 150,492 sq ft.

Nov 2015 Units B & C Boston Park Let to Syncreon for 5 years with 3 year tenant Haydock break at £5.75 psf on 71,700 sq ft.

Oct 2015 Venus 110 Let to Amazon for 10 years with 5 year tenant Knowsley Business Park break at £5.25 psf on 110,000 sq ft.

Oct 2015 Grand Central, Trafford Park Let to XPO Logistics for 15 years with 10 year Manchester tenant break at £5.50 psf on 250,000 sq ft.

Sept 2015 Unit A Boston Park Let to ERIKS for 10 years with a 5 year tenant Haydock break at £6.00 psf on 30,147 sq ft.

Aug 2015 Europa Boulevard Lease renewal for 5 years to Newey & Eyre at Warrington £5.15 psf on 70,116 sq ft.

Aug 2016 Road One 105,755 sq ft let for 4 years (tenant break Winsford Industrial Estate option) was sold for £5,550,000 reflecting a Northwich net initial yield of 7.15%.

July 2016 Unit A, Telford Way 103,093 sq ft let for 9.25 years was sold Wakefield 41 Industrial Estate for £6,200,000 reflecting a net initial yield of 6.70%.

June 2016 Manor Park 169,748 sq ft let for 6 years was sold for Eastgate Way £11,500,000 reflecting a net initial yield Runcorn of 6.75%.

June 2016 Airport City 37,413 sq ft let for 13.5 years was sold for Manchester £7,680,000 reflecting a net initial yield of 4.60%.

June 2016 Unit 1 Silkstone Court 52,246 sq ft let for 5 years was sold for Barnsley £3,200,000 reflecting a net initial yield of 6.55%.

ASSET MANAGEMENT

OPPORTUNITIES

The tenant has expressed a need for further accommodation on the site. There is therefore the opportunity to extend the unit by up to 30,000 sq ft. by utilising the expansion land and regear the lease with the tenant in the short-term.

The rent agreed at the recent rent review was discounted due to a 15 year term assumption in the rent review clause. Potential therefore exists at lease regear or new letting on lease expiry to increase the rent to current headline rent levels of around £5.25 per sq ft.

If the tenant vacates at lease expiry then potential to refurbish and extend the unit at a higher rent whilst capturing “development profit” on the extension.

We are instructed to seek offers in excess of £5,375,000 (Five Million, Three Hundred and Seventy Five Thousand Pounds) subject to contract, which reflects a net initial yield of 7.50% after allowing for purchasers costs of 6.61%. A purchase at this level would show a low capital value of £65.60 psf.

PROPOSAL

Warehouse & Offices C-68

A copy of the EPC is available upon request.EPC

The property is elected for VAT however it is anticipated that the transaction will be treated as a transfer of going concern (TOGC).

VAT

MK2 Real Estate LtdMaddox House, 117 Edmund Street, Birmingham B3 2HJTel: 0121 214 1970 Email: [email protected]

Mark Rooke0121 214197207985 877578 [email protected]

Mark Johnson0121 214197707748 [email protected]

For further information or to arrange an inspection please contact;

IMPORTANT INFORMATION 1. No description or information given by MK2 Real Estate Ltd whether or not in these Particulars and whether written or verbal (“information”) about the property or its condition or its value may be relied upon as a statement or representation of fact. MK2 Real Estate Ltd do not have any authority to make any representations and accordingly any information given is entirely without responsibility on the part of the agent or the seller. 2.These particulars do not constitute, nor constitute part of, an offer or contract, nor shall they merge in any offer or contract which may hereafter be made between the sellers or lessors and the recipient of the information. 3.The photographs show only certain parts of the property at the time they were taken. Any areas measurements or distances given are approximate only. 4. Any reference to alterations to or use of any part of the property is not a statement that any necessary planning, building regulations or other consent has been obtained.These matters must be verified by any intending buyer. 5. Any buyer must satisfy themselves by inspection or otherwise as to the correctness of any information given.

Designed and produced by Diablo: www.diablodesign.co.uk SEPTEMBER 2016

Paul Rixon0121 214197907768 [email protected]

prime distribution warehouse investment opportunity

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