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PRIME FLAGSHIP BUILDING FOR SALE

28 -32 ST ANN STREET

MANCHESTER

28-32 ST ANN STREET | MANCHESTER

n Manchester is the largest financial and business centre outside of London and is regarded as being the capital of the north, ranked by KPMG as the most competitive business location in Europe since 2010.

n Rare opportunity to buy a prime flagship rebased retail investment situated in Manchester’s primary upmarket fashion pitch.

n Manchester is home to the UK’s third largest airport outside London and is the most visited City in England by overseas visitors aside from the capital and Edinburgh, with over 1.15m overseas visitors per annum, worth £7.5 billion per annum.

n Manchester has 3 universities providing one of the largest student populations in Europe with an estimated 100,000 students.

n HS2 will make Manchester Piccadilly one of the best connected and productive locations in the UK.

n Freehold.

n Let on a new 15 year FRI lease to H&M Hennes & Mauritz UK Limited T/A Cos, the Vogue favoured fashion brand, from 24th June 2019 at a rebased rent. The lease is subject to a tenant only break clause at the end of the 5th,8th and 11th years.

n Flagship store providing a total floor area of 23,903 sq ft.

n Potential for future residential/office conversion on the upper floors.

n We are instructed to seek offers in excess of £6,600,000 (Six Million Six Hundred Thousand Pounds) subject to contract and exclusive of VAT which reflects a net initial yield of 5.68%, after allowing for purchaser’s costs at 6.64%.

INVESTMENT SUMMARY

Exchange Square

Royal Exchange

Deansgate

King Street

Cross Street

Corn Exchange

Market Street

Piccadilly GardensPRIME OFFICE CORE

Manchester Town Hall

St Ann's SquareArndale Shopping Centre

REISS

Spinningfields

URBAN & CIVIC RENAISSANCE

HOTEL REDEVELOPMENT

WATCHESSWITZERLAND

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For identification purposes only

LOCATION

MANCHESTER IS THE ADMINISTRATIVE AND COMMERCIAL CAPITAL OF THE NORTH WEST OF ENGLAND, ONE OF EUROPE’S MOST DYNAMIC CITIES, AND IS THE LARGEST ECONOMIC CENTRE IN THE COUNTRY, OUTSIDE OF LONDON.

Manchester has a population of approximately 2.8 million, with in excess of 12 million people within a 50 mile radius of the city centre and boasts the largest travel to work area of any conurbation outside of London.

The Greater Manchester region has benefited from large scale development in recent years, including the ongoing Metro Link expansion, and £650 million MediaCityUK development. The largest development in the North West – Noma - is being undertaken at a cost of £800 million. The 20 acre masterplan is creating new homes, offices, hotels, shops and restaurants. Further large scale development is planned for the city including the £800 million Manchester Airport City, comprising of approximately 5 million square feet, which will be the largest UK development since the London 2012 Olympics.

The £50 billion ‘Atlantic Gateway’ project which aims to reinvigorate the Manchester ship canal, and the Etihad Campus Project where a further £1 billion is to be invested in the University of Manchester to develop it’s campus.

The Northern Powerhouse proposes to boost economic growth across the north of England, targeting the core cities of Manchester, Liverpool, Leeds, Sheffield and Newcastle. Manchester lies at the heart of these plans, representing the largest economically and geographically of the east coast cities. The £300m development of the M56, A6 and the Airport Eastern Link to provide 10 km (6 miles) of new two lane dual carriageway on the east-west route from the A6 near Hazel Grove to Manchester Airport and link to the M56 will substantially ease congestion in the south of the conurbation.

Approximately £13 billion of expenditure is proposed to be invested in transport infrastructure across the North including plans for High Speed 2 and 3, which will half the journey time to London to an improved travel time of just 68 minutes. Major employers in the city include a number of blue chip businesses such as Amazon, Barclays, BBC, ITV, HSBC, Kellogg’s, Guardian Media Group, Stagecoach, Thomas Cook, RBS and numerous legal and professional firms. The relocation of BBC from London to Salford accounted for 2,500 new people coming to the City. MediaCityUK, where the BBC are located, is a £650 million, 36-acre scheme and it is estimated that the development will create up to 15,000 jobs and add approximately £1 billion to the regional economy over 5 years.

A merger of the University of Manchester and UMIST kick-started a £500 million building programme known as “Knowledge Capital” with the aim to become a top 10 university.

Manchester has three universities providing one of the largest student populations in Europe with an estimated 100,000 students. The City is also a thriving tourism, sporting and cultural economy. Key attractions in the City include the Manchester Arena (one of Europe’s busiest indoor venues), Imperial War Museum North, The National Football Museum, Old Trafford Cricket Club, Manchester United and Manchester City Football Clubs, the National Cycling Centre and the UK’s best theatre scene outside London with a total of 13 theatres.


Nottingham

Lancaster COMMUNICATIONS

ROADManchester benefits from an excellent and highly developed transport infrastructure with the M60 Orbital Motorway connecting Greater Manchester with the M62, M61, M66, M67 and M56 motorways and providing a direct link to the National Motorway Network beyond.

TRAMThe Manchester Metrolink System was the UK’s first modern street operating light rail system and now serves a significant proportion of the Greater Manchester conurbation, linking Bury, Oldham, Altrincham and Eccles, Ashton-under-Lyne, Rochdale, East Didsbury, MediaCityUK and Manchester Airport to the city centre. The recently completed £185 million Second City crossing has improved the capacity, flexibility and reliability of the Metrolink system and also includes a new tram stop on Exchange Square.

AIRManchester Airport is the largest UK regional airport and is located 13 km (8 miles) south of Manchester city centre. The airport operates over 200 direct flights to worldwide destinations with access to most of western Europe within 3 hours and daily direct flights to multiple US cities and Middle East hubs. The airport benefits from a direct rail link into the city centre with a journey time of approximately 15 minutes. A new terminal is planned for the airport which will be completed in 2023 and will see passenger numbers increase from the current 20 million each year to 50 million each year by 2050.

RAILThere are two mainline rail stations within the city centre (Manchester Piccadilly and Manchester Victoria), which provide intercity services throughout the UK including direct, regular services to London (fastest journey time under 2 hours); Edinburgh (3 hours 19 minutes) and Cardiff (3 hours 29 minutes).


“60% OF THE UK’S RESIDENTS WITHIN A 2 HOUR DRIVE OF THE CITY CENTRE”


SITUATIONSt Ann Street is situated within Manchester’s prime retailing central core, situated in between the retail thoroughfares of Market Street and King Street. St Ann’s Square connects with St Ann Street at the heart of Manchester Shopping District and is home to exclusive shops, the Royal Exchange Theatre and Bars and restaurants. Nearby retailers include French Connection, LuLulemon, Russel & Bromley, TAG Heuer, David M Robinson (Rolex) and Mappin & Webb.

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ST. JOHNSGARDENS

SACKVILLEGARDENS

PICCADILLYGARDENS

ST. PETER’SSQUARE

DEANSGATECASTLEFIELD

UNIVERSITY OFMANCHESTER

ALBERTSQUARE

BarbirolliSquare

ST. ANN’SSQUARE

Manchester Central

Radisson Hotel

Midland Hotel

ManchesterCentral Library

Town Hall

ManchesterArena

Bridgewater Hall

Great Northern

Hilton Hotel

RoyalExchangeTheatre

St. Ann’ sChurch

House ofFraser

Selfridges

The Lowry Hotel

NationalFootballMuseum

The CornExchange

ManchesterCathedral

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BRIDGE ST .

MARKET STREET

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SOUTH KING ST.

KING ST.

PICCADILLYSTATIO N

OXFORD ROADSTATIO N

VICTORIASTATION

DEANSGATES TATION

SALFORDCENTRAL

PICCADILLYGARDENS

STREET

SPINNINGFIELDS

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MANCHESTER IS ONE OF THE UK’S TOP RETAIL DESTINATIONS WITH AN ESTIMATED RETAIL FLOORSPACE OF 2.75 MILLION SQ FT AND A RETAIL SPEND OF CIRCA £3.9 BILLION PER ANNUM.

The City ranks 2nd out of the UK PROMIS Centres, benefiting from an estimated primary catchment population of 1.6 million people.

The City ranks 1st on both PMA Retail Score and PMA Fashion Score. Major anchor store retailers represented include Selfridges, Harvey Nichols, Marks & Spencer, Debenhams, House of Fraser, Next and Primark. The prime retail in the city is predominantly focused along the pedestrianised Market Street, which complements the Manchester Arndale Centre and the New Cathedral Quarter. Manchester Arndale Centre comprises 1.4 million sq ft and is anchored by Next with a full line up of mid-market fashion operators such as Top Man, Superdry, Hollister and River Island. The Centre provides a footfall of over 40 million and is considered to be one of the UK’s premier shopping centres.

St Ann Street/St Ann’s Square is the historic retailing core home to exclusive shops linking Deansgate, King Street, The Royal Exchange Arcade and Market Street. King Street is

situated to the south of the retailing core acting as a major arterial route connecting the traditional CBD with Spinningfields. Designer and speciality retailers located on King Street include Hugo Boss, The White Company and Belstaff.

Deansgate is one of the principal arterial routes through the city centre and is regarded as the traditional prime retail and leisure pitch. Deansgate has the ability to provide both day and night time trade due to its excellent location, being in close proximity to a wide ranging target audience and is still one of the strongest bar/restaurant pitches. Operators include Las Iguanas, The Living Room, Cote, Gaucho Grill, Lunya, JD Wetherspoon and Patisserie Valerie.

Spinningfields is the city’s leading business and leisure destination and is one of the UK’s most visited city centre destinations with over 5.5 million visitors per year, and daily footfall in excess of 14,000 people, and annual retail and leisure spend in excess of £80 million.


RETAILING IN MANCHESTER


2.8 MILLION people live in Greater Manchester

80/FTSE 100 based in Manchester

Greater Manchester accounts for

£28 BILLION of the regions GDP making it one of the most successful large urban Zones outside of London

MANCHESTERis the largest and fastest growing regional capital centre in the UK

100,000 students and highly

educated workforce

MANCHESTER is predicted to outperform Berlin, Tokyo and Paris by

3.8% 2015 - 2020

STRONG CIVIC LEADERSHIPtransformational change delivered by Manchester City Council and the Homes & Communities Agency over the last 20 years

* Oxford Economics

DESCRIPTIONThe property comprises a retail unit arranged over ground, basement and four upper floors. The tenant trades from ground and first floors with the basement, second and third floors being utilised as ancillary accommodation. A customer lift provides access to all the upper floors (except the fourth floor) and the basement ancillary. The building is Grade II listed and is situated in a conservation area.



ACCOMODATIONThe property is arranged over basement,ground and four upper floors providing the following approximate floor areas:-

Ground Floor Sales 4,023 sq ft (373.75 sq m)

Ground Floor ITZA 1,600 units

Basement Ancillary 4,131 sq ft (383.78 sq m)

First Floor Sales 3,876 sq ft (360.09 sq m)

Second Floor Staff / Offices / Ancillary

3,939 sq ft (365.94 sq m)

Third Floor Ancillary 4,184 sq ft (388.70 sq m)

Fourth Floor Plant 3,750 sq ft (348.38 sq m)

Total Area 23,903 sq ft (2,220.66sq m)

TENANCYThe property is let to H&M Hennes & Mauritz UK Limited t/a Cos (Company No: 01413450) on a 15 year full repairing and insuring lease from 24th June 2019 at a current rent of £400,000 pa exclusive, reducing to £385,000 pa exclusive on the 21st November 2021. The lease is subject to 5 yearly upward only rent reviews, up to a maximum increase in rent of 15%.

The tenant has break clauses expiring on the 5th, 8th and 11th years of the term on 6 months’ written notice.

The previous tenant GAP were paying a rent of £400,000 pa.

RENTAL ANALYSIS

It is our opinion that the initial rent of £400,000 pa devalues to a Zone A rent of £139.75 psf applying a 5% allowance for return/prominence to the ground floor area, A/10 to first floor sales, A/12 to second floor, A/25 to third floor ancillary, A/20 to basement ancillary and A/40 to the fourth floor plant.

The rent of £385,000 pa payable from 21st November 2021, devalues to a Zone A rent of c.£134.75 psf on the same basis, or £16.10 per sq ft.

The rent compares favourably with evidence in the immediate vicinity which can be set out as follows: -

a) 10 St Ann’s Square (Fat Face)

Lease renewal October 2018 agreed at a rent of £250,000 pax, which reflected a headline Zone A rate of £200 per sq ft.

b) 24/28 St Ann’s Square (David Robinson Jeweller)

Open market letting August 2018 at a rent of £265,000 pax, which reflected a headline ZA of c£145 per sq ft and a net ZA tone of c £140 per sq ft.

c) 16 St Anns Square (& Other Stories)

Open market letting February 2016 at a rent of £700,000 pax, which reflected a headline Zone A of £240 per sq ft and a net tone of £220 per sq ft.

Rents on King Street are currently c.£150 ZA.

TENUREFreehold.


VATWe understand that the property is elected for VAT purposes and it is anticipated that the sale will be treated as a Transfer of A Going Concern. (TOGC).

COVENANTH&M Group is one of the strongest retailing names and consists of 8 brands with around 4,900 stores in 72 markets. Cos is a high end fashion brand for women and men, opening its first store in Regent Street, London in 2007. The company has since opened 224 stores worldwide.

The most salient accounting information on H&M Hennes & Mauritz UK Limited can be set out as follows: -

YEAR 30/11/2017 GBP 000 £

30/11/2016 GBP 000 £

30/11/2015 GBP 000 £

Turnover 1,062,485 1,040,814 1,013,202

Pre Tax Profit 37,300 50,386 50,437

Net Worth 156,360 142,198 121,359

The company has been given an Experian Credit Score of 100/100 reflecting very low risk.


EPCThe property has an EPC rating of C74. Further information is available from this office.

PROPOSAL

We have been instructed to seek offers for the freehold interest in excess of £6,600,000 (Six Million Six Hundred Thousand Pounds) subject to contract and exclusive of VAT, which reflects the following yield profile, net of purchaser’s costs of 6.64%: -

Net Initial Yield 5.68%

Reversionary Yield 5.46%

Equivalent Yield 5.49%

True Equivalent Yield 5.68%

This reflects a capital value of c.£276 per sqft.

Recent comparable sales evidence can be set out as follows: -

1) 52/56 Market Street, Manchester (Adidas)

Freehold retail investment let to Adidas until June 2026, with a tenant break in June 2021, let at a rent of £550,000 pa, which reflects a Zone A rent of £258 per sq ft, or £37.31 per sq ft, sold in September 2019 for £10.3m which reflected a net initial yield of 4.99%. The store comprises of c.14,710 sq ft arranged over ground and three upper floors. The sale price reflected a capital value of £699 per sq ft.


2) 24/26 King Street (Body Shop)

Freehold retail investment let to Body Shop sold in March 2019 for £1.5 million which reflected an equivalent yield of 5.25%.

3) 20/22 King Street (Tast)

Freehold retail investment let to Tast sold in March 2019 for c.£2m which reflected a net initial yield of 5.4% and an equivalent yield of 5.25%.

4) Equitable Buildings 11/19 St Ann Street and 28 St Ann’s Square

Freehold sale of commercial space let to Ernest Jones and David M Robinson, with the residential upper parts sold off, was purchased by Aviva in December 2018 for £11.55m which reflected a net initial yield of 5.11%. DWR Jewellers occupied c.4,624 sq ft over 2 levels paying a rent of £265,000 pa (c.£145 ZA) and Ernest Jones occupied c.4,434 sq ft over 2 levels paying a rent of £365,000 pa (c.£135 ZA).

The sale price reflected a capital value of £1,275 per sq ft.

5) 35 King Street (Jack Wills)

Freehold retail investment let to Jack Wills on a lease to expire September 2020 at a rent of £238,000 pa sold for £4.75m in December 2017 which reflected a net initial yield of 4.70%. The unit was rack rented. The sale price reflected a capital value of c.£404 per sq ft.

Messrs. Jackson Criss for themselves and for the vendors or lessors of this property whose agents they are to give notice that: (i) the particulars are set out as a general outline only for the guidance of intending purchasers or lessees, and do not constitute, nor constitute part of, an offer or contract; (ii) all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them as statements of representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them; (iii) no person in the employment of Messrs. Jackson Criss has any authority to make or give any representation or warranty whatever in relation to this property. 101918. Designed by TCC 10/19.

For further information or to arrange an inspection of the property, please contact:

Philip Hay BSc (Hons) MRICS

020 7637 [email protected]

Mike Jameson BSc (Hons) MRICS

020 7637 [email protected]

https://www.tccommunications.co.uk/#1

https://www.jacksoncriss.co.uk/

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