subject to contract

Summary

Location

Blackheath is an affluent and cosmopolitan area of South East London on the border of the Royal Borough of Greenwich and the London Borough of Lewisham. Blackheath sits approximately 13 km (8 miles) south-east of Central London and 3.2 km (2 miles) south of Greenwich.

Blackheath is well connected to the national railway network with services to London Bridge taking only 12 minutes, plus regular services to London Victoria, London Charing Cross and London Cannon Street. The nearest underground station is North Greenwich, on the Jubilee Line and the DLR also operates from Greenwich making travelling to the West End from Blackheath easy. There are numerous bus routes to Whitehall, Woolwich, Stratford and Crystal Palace. London City Airport is approximately 8 km (5 miles) to the north-east and Heathrow Airport approximately 32 km (20 miles) to the west.

With the neighbourhood being so well connected it is very popular with professionals who can be at work in the West End, City or Canary Wharf in less than half an hour. Families are also attracted to the area due to its first-class education facilities. The area has a quintessential villagey feel due to its attractive Georgian and Victorian architecture, gourmet restaurants, cafes, shops and independent boutiques.

Blackheath benefits from its own 275-acre heath, one of the largest areas of common land in Greater London and highly valued by the residents and visitors. It is also situated alongside Greenwich Park in which sit major London tourist attractions including the Greenwich Observatory and Greenwich Prime Meridian. The London Marathon begins in Blackheath and Royal Blackheath Golf Club, instituted in 1608, is England’s oldest.

Situation

The property lies within the Blackheath Conservation area and occupies a highly prominent position fronting Lee Terrace, just moments away from the village’s vibrant high street, train station and Blackheath common.

The property also benefits from being in a densely populated residential area.

Description

Situated on the site of a former car showroom, the property forms the commercial element of “Forbury” a prestige, contemporary development by Berkeley Homes completed in 2019.  The residential element comprises 24 luxury properties with 14 of these homes being apartments and 10 being townhouses. 

The highly attractive scheme was voted “Best Small Development” by the Evening Standard New Homes Awards and awarded Silver in the 2020 Best Luxury Development award by WhatHouse?

The investment comprises the ground floor which has been fitted out by the tenant to a high specification and benefits from extensive glass floor-to-ceiling frontage. 

The property has an EPC rating of A. A copy of the EPC is held within the data room.

Accommodation

The property provides the following accommodation:

 sq msq ft
Gross Internal Area315.33,394
Net Internal Area 314.43,384

A full set of floor plans is available to download.

Use

Under the terms of the Headlease the property may be used as a BMW car showroom, a Majestic Wine retail store or other upmarket wine merchant for the retail sale of wines, spirits, beers and ancillary items normally sold in Majestic Wine retail stores or other high class use within Classes A1, A2 or B1 (A) of the Schedule to the Town & Country (Use Classes) Order 1987 Part II (as in force at 1st August 2015). 

The following uses are expressly prohibited: Retail Warehouses, Funeral directors, Dry cleaners, Pet Shops, Charity shops, Betting shops and establishments, Payday Loan shops, Off-licences save as permitted above, Sex shops, erotic dancing premises or stores for the sale of products of disrepute and any use in connection with drug or criminal rehabilitation or management.

Planning use is as a retail warehouse (use class A1).

Tenure

Virtual Freehold.  999 year lease from 15th July 2019 at a peppercorn rent.

The long leaseholder has a right to use five car parking spaces.

Tenancy

The property is let to Majestic Wine Warehouses Limited on a full repairing and insuring lease for a term of 15 years from 31st July 2019, expiring on 30th July 2034 (in excess of 13 years unexpired lease term). There is a tenant’s break option on 30th July 2029, subject to a minimum of six months’ notice. 

The current passing rent is £90,000 per annum (£286.26 per sq m / £26.60 per sq ft overall) and rent payments quarterly (but currently paid monthly under a personal side letter arrangement). 

There is an RPI-linked rent review on 31st July 2024, based upon compound annual increases with a collar and cap of 2% and 4% respectively. Assuming the collared RPI of 2%, the minimum rent in July 2024 will be £99,367 per annum.

There is an upwards only rent review on 31st July 2029.

The tenant has an excellent payment record with no rent payment delays during lockdown.  All rents are paid and up to date.

The vendor will top-up the income to £99,367 per annum, given the minimum increase at 31st July 2024.

Covenant

For the year ending 1st April 2019, Majestic Wine Warehouses Limited (Co. No. 01594599) reported the following figures:

Revenue£12,830,000
Adjusted Pre-Tax Profits£12,830,000
Net Assets£80,454,000

Majestic Wine is the UK’s largest specialist wine retailer. Originally founded as ‘Majestic Vintners’ by Sheldon Graner in 1980, the first warehouse was opened in Harringay, North London. There are now over 200 stores in the UK and another two in France. For further information visit www.majestic.co.uk.

In December 2019 Majestic Wine completed the sale of its business to US investment firm Fortress Investment Group for £95 million. The fortress is a leading, highly diversified global investment manager with approximately $52.7 billion of assets under management as of 31st December 2020. Founded in 1998, Fortress manages assets on behalf of approximately 1,800 institutional clients and private investors worldwide across a range of credit and real estate, private equity, and permanent capital investment strategies. With headquarters in New York, the company has approximately 840 employees. For further information see www.fortress.com.

Majestic Wine is bucking the retail trend with new store openings. The company has revealed a new expansion strategy as it targets future growth across the UK and has said it recorded a “transformational year” which has seen the launch of new branding, a 65 percent change in the products stocked, a new website, and core systems and two other new stores. The company also reported that the number of new customers rose by 70 percent, with a “significant online growth” in the past 12 months. New developments that further link the digital and store experience will launch later this year as the business remains committed to a nationwide network of physical stores, which also act as hubs for home delivery. Chief Executive John Colley has been quoted as saying that the company is “in a very strong position….our model is truly omnichannel, with a strong online presence backed up by the only national chain of wine, beer, and spirits stores”. (Source: Retail Gazette)

Majestic Wine was named as one of the Best Places to Work in 2020 after receiving a Glassdoor Employees’ Choice Award, ranking at number 19 in the Top 50 and being the highest-ranked retailer on the list. 

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 £1,750,000 (One Million, Seven Hundred and Fifty Thousand Pounds), subject to contract, reflecting a net initial yield of 5.35%, assuming purchaser’s costs of 6.14%. 

Please note that a purchaser will be re-charged the costs of the searches which are provided in the data room.

Please note a purchaser will be charged a Transaction Fee of £10,000 + VAT.

Investment Considerations

  1. An opportunity to acquire a flagship retail investment in an affluent London borough;
  2. The investment provides very secure income, being let to Majestic Wine (Net Assets £80.45m), owned by the global investment group Fortress ($52.7 billion of assets under management);
  3. Long income investment with over 13 years unexpired lease term and over 8 years to break;
  4. The property forms part of a prestige, award winning development by Berkeley Homes;
  5. As an indication of the attractiveness of the Blackheath area, it has been reported on Zoopla that the average price paid for a house in Blackheath over the past 12 months is approximately £730,000;
  6. A purchase at the asking price reflects an attractive net initial yield.

Data Room and clicktopurchase®

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Vendors Solicitor

Charles Russell Speechlys