8-10 Charterhouse Buildings and 60 and 68/70 Goswell Road

London EC1

Overview

Rare opportunity to acquire three highly reversionary investments all with asset management opportunities.
Three adjacent retail and office properties comprising the following:
  • 8 Charterhouse Buildings, EC1
  • 9-10 Charterhouse Buildings, EC1
  • 60 & 68/70 Goswell Road, EC1
  • Freehold
  • Prime Clerkenwell office and retail investments
  • Excellent connectivity, benefitting from close proximity to Barbican, Old Street and Farringdon stations
  • Net internal floor area of 39,847 sq ft
  • Highly reversionary multi-let offices totalling 33,721 sq ft, producing an annual income of £941,713.85, which equates to only £27.93 per sq ft
  • Highly prominent reversionary retail units let to Starbucks, Pret A Manger and Costa
  • AWULT of 4.76 years to expiries and 1.19 years to earliest breaks
  • A number of the office leases are outside the Act
  • Numerous asset management opportunities to drive income in the short term and enhance returns
  • Prime Clerkenwell rents are now in excess of £65.00 per sq ft
We are instructed to request offers for the properties as a whole or separately on the following basis

8-10 Charterhouse Buildings, EC1
  • Price £11,000,000 (Eleven Million Pounds)
  • Capital Value (£PSF) £867
  • Net Initial Yield 3.85%
  • Reversionary Yield (Date) 5.62% (2018)
60 & 68/70 Goswell Road, EC1
  • Price £20,000,000 (Twenty Million Pounds)
  • Capital Value (£PSF) £737
  • Net Initial Yield 2.83%
  • Reversionary Yield (Date) 5.10% (2016)
Portofolio
  • Price £31,000,000 (Thirty-One Million Pounds)
  • Capital Value (£PSF) £778
  • Net Initial Yield 3.19%
  • Reversionary Yield (Date) 5.28% (2018)

Location

Located in the heart of Clerkenwell, three buildings all occupying a highly prominent corner at the junction of Clerkenwell Road, Old Street and Goswell Road.

Situated minutes from the new Farringdon Crossrail Station eastern ticket hall on Charterhouse Street, Clerkenwell is now the favoured location for media, design and fashion office occupiers, chic residential schemes, high quality restaurants and luxury hotels.

Bordering the City of London and the exclusive West End, the area is considered one of the capital's most diverse and contemporary districts, providing a unique urban environment.

Traditionally linked with design, furniture and media companies such as Zaha Hadid Architects, Knoll and ITN, Clerkenwell's tenant base has evolved in recent years, mainly due to the rapid growth of the UK TMT sector. Within close proximity to Old Street and the Silicon Roundabout, Clerkenwell is now home to a number of TMT companies, including Beats by Dre, Publicis Group, WPP and Airbnb, as well as fashion retailers such as Christian Louboutin, Agent Provocateur and Alexander McQueen.

Against the backdrop of an evolving office occupier base and a growing residential environment, the restaurant and leisure provision in Clerkenwell is also constantly improving. The area now plays host to some of London's best restaurants and bars, including Granger & Co, Comptoir Gascon, St John, Bistro Bruno Loubet and Jason Atherton's new Sosharu.

Clerkenwell is also home to a number of internationally renowned hotels such as The Zetter Hotel, The M Hotel and The Rookery.

Situation

TRANSPORT LINKS

The properties benefit from excellent transport links, with a number of Underground and National Rail stations situated within close proximity providing easy access to the capital's extensive transport network.

Barbican (Circle, Metropolitan and Hammersmith & City Lines), Old Street (Northern Line) and St Paul's (Central Line) Stations are located approximately 200, 800 and 900 metres respectively from the properties.

Farringdon Station is also within close proximity, being situated 600 metres south west of the properties. Farringdon Station is serviced by a number of London Underground lines (Circle, Metropolitan and Hammersmith & City), as well as high speed National Rail (Thameslink) services to Bedford and Brighton (via London Gatwick and Luton Airports).

Multiple bus routes operate along Goswell Road, Old Street and Clerkenwell Road with services across Central London.

CROSSRAIL

Due to complete in 2018, Crossrail (Elizabeth Line) is a new, world class, high speed east-west rail link across London, connecting 37 stations and two of London's major international airports (Heathrow and London City). This £16 billion infrastructure project is the largest in Europe and upon completion will increase London's rail capacity by 10%. Crossrail is forecast to carry 200 million passengers a year and will bring an additional 1.5 million people within 60 minutes of London's key business districts.

Farringdon Crossrail Station, located 600 metres from the premises, will be Central London's best connected transport hub with over 140 trains per hour. It will be the only station on the London Rail and Underground network with a three-way interchange between Thameslink, Crossrail and London Underground services. When Crossrail opens in 2018, approximately one quarter of the population of England will live within a 45 minute journey time of Farringdon Station. This improved connectivity will further enhance Clerkenwell's appeal to occupiers and increase demand for both residential and commercial accommodation.

Description

THE CHARTERHOUSE BUILDINGS

Comprising two attractive and prominent mixed-use Victorian terrace buildings arranged over lower ground, ground and four upper floors, providing a total of 12,693 sq ft (1,179.2 sq m) of retail and office accommodation. Both properties benefit from large glazed retail frontages of circa 25 metres to Goswell Road, with the upper floors accessed from two dedicated entrances.

8 CHARTERHOUSE BUILDINGS

8 Charterhouse Buildings comprises a highly prominent retail unit fitted to the corporate style of Starbucks, who occupy the lower ground and ground floors with media style offices on the upper floors, which benefit from their own separate entrance.
The offices have the following high specification:
  • Wall mounted air-conditioning
  • Perimeter trunking
  • Six person passenger lift
  • Unisex WCs on each floor
  • Recessed lighting
  • Excellent natural light
  • Video entry system
  • Kitchenette on each floor
9-10 CHARTERHOUSE BUILDINGS
9-10 Charterhouse Buildings comprises a highly prominent retail unit re-fitted in 2014 to the corporate style of Pret A Manger, who occupy the lower ground and ground floors with media style offices on the upper floors accessed from a separate street level entrance.
The offices benefit from the following high specification:
  • Wall mounted air-conditioning
  • Perimeter trunking
  • Suspended lighting
  • Kitchenette on each floor
  • Wall mounted heating and under floor heating in part
  • Wood strip flooring
  • Entry phone system

60 & 68/70 GOSWELL ROAD

Two interlinked office and retail buildings, which were comprehensively refurbished in 1996, comprising 24,796 sq ft (2,303.6 sq m) of well specified office accommodation, arranged over ground and five upper floors in 60 Goswell Road, and four upper floors in 68/70 Goswell Road. Typical office floors extend to circa 3,200 sq ft (297.3 sq m) and offer flexible, efficient space.
The office benefits from the following modern specification:
  • Central heating
  • Comfort cooling
  • Typical floor to ceiling height of 2.70m
  • Six person passenger lift
  • Suspended and plastered ceiling
  • Recently refurbished reception and lower ground floor client suite
  • Two car parking spaces
  • Courtyard garden/terrace at lower ground floor
68/70 Goswell Road has a prominent retail unit arranged over ground and lower ground floors totalling 2,358 sq ft (219.1 sq m).


Tenure

Freehold.

Tenancy

THE CHARTERHOUSE BUILDINGS

Fully let to 10 tenants in accordance with the tenancy schedules below producing a highly reversionary total rental income of £451,713.85 per annum.

8 Charterhouse Buildings:
Multi-let to 5 tenants in accordance with the tenancy schedule below producing a current rental income of £159,505 per annum./b>
9-10 Charterhouse Buildings:
Multi-let to 5 tenants in accordance with the tenancy schedule below producing a current rental income of £292,208.85 per annum.

Service charge

8 Charterhouse Buildings
The Service Charge budget for the year ending 31 December 2016 is estimated to be £7.48 per sq ft
9-10 Charterhouse Buildings
The Service Charge budget for the year ending 28 September 2016 is estimated to be £3.61 per sq ft

60 & 68/70 GOSWELL ROAD

Let in its entirety to Kingston Smith LLP, who have been in occupation since the property was built, by way of a single lease expiring 21 December 2021 with a tenant option to determine on 24 December 2016, subject to 6 months' notice and a 12 month rent penalty.
The current passing rent is £605,000 per annum, which equates to only £22.28 per sq ft overall. The next rent review is due on 25 December 2016.
Sub Tenancy
The ground and lower ground floors of 68/70 Goswell Road have been sub-let to Costa Ltd for a term expiring 29 September 2018. The current passing rent is £72,500 per annum which equates to £82.57 per sq ft ZA (£30.75 per sq ft overall).


Covenant Information

THE CHARTERHOUSE BUILDINGS

The first Starbucks was opened in 1971 in Seattle. Over the next 14 years the chain grew, opening stores throughout America before going public in 1985 (SBUX). Since then, Starbucks has gone from strength to strength and is now the largest roaster, marketer and retailer of speciality coffee in the world, operating in 65 countries with over 21,000 stores. Further information can be found at: www.starbucks.com
Pret A Manger opened their first store in London in 1986. Over the last 30 years it has grown substantially to over 350 outlets around the world. The company focuses on creating handmade, natural food and 100% organic drinks without expiry dates, with unused stock at the end of each day being donated to charity. The company was founded by Julian Metcalfe and Sinclair Beecham, who remain substantial shareholders. European private equity firm Bridgepoint acquired the majority stake in the company in 2008, transforming Pret from a domestic to a global business. Further information can be found at www.pretamanger.co.uk

60 & 68/70 GOSWELL ROAD

Kingston Smith LLP was founded in 1923 and is a top 20 UK audit and accountancy firm. They have 491 employees including 61 partners located in 6 offices across London and the South East.
The firm was one of the founding members of KS International which has recently merged with Morison International to form a $1 billion association of accountants known as Morison KSi. The merged entity will have 1,201 partners, 8,990 professional staff and 375 offices in 88 countries. The merger will be effective as of 1 April 2016.
Kingston Smith LLP latest accounts dated 30 April 2015 show a turnover of £43.2 million and a pre-tax profit of £15.42 million.


VAT

All properties are elected for VAT and therefore VAT will be payable on the purchase price. It is envisaged that the sale will be structured as a transfer of a going concern.

THE CHARTERHOUSE BUILDINGS

Asset Management Opportunities
HUT Architects have prepared a development option to create an additional storey providing two luxury penthouse apartments, totalling 2,035 sq ft (189 sq m) GIA. Details of the scheme are available upon request. Residential values in the area are upwards of £1,500 per sq ft
Alternatively, an opportunity exists to create additional offices on the roof top area.
Potential to amalgamate the office floors at every level, creating larger floor plates with a single dedicated office entrance on the Charterhouse Buildings and providing lift access throughout.
Highly reversionary offices, with all the leases outside the Landlord and Tenant Act 1954.
Highly reversionary retail, with an outstanding rent review in respect of the Pret A Manger unit

EPC
8 Charterhouse Buildings: The building has an EPC rating of D (95)
9-10 Charterhouse Buildings: The building has an EPC rating of D (88)

Planning
Neither property is listed but they are situated within the Hat & Feathers Conservation Area within the London Borough of Islington.

Site Area Dimensions
The approximate extent of the freehold ownership is shown outlined in orange for indicative purposes only.
The site area extends to approximately 0.05 acres (0.02 hectares) with a frontage onto Goswell Road of 25 metres (82 ft.).

60 & 68/70 GOSWELL ROAD

EPC
The building has an EPC rating of E (104).

Planning
The property is not listed but is situated within the Hat & Feathers Conservation Area in the London Borough of Islington.

Site Area Dimensions
The approximate extent of the freehold ownership is shown outlined in blue for indicative purposes only. The site area extends to approximately 0.15 acres (0.6 hectares) with a frontage onto Goswell Road of 40 metres (131 ft).

Asset Management Opportunities
Highly reversionary office investment with the opportunity to realise a substantial rental uplift in December 2016, based on a net effective rent of £1,089,168 per annum, equating to £43.92 per sq ft on the offices above ground.
Potential to restructure the office lease in December 2016 removing the retail element while simultaneously agreeing a new longer lease to Costa.

INVESTMENT RATIONALE

  • Three modern, adjacent mixed-use investments
  • Freehold
  • Highly reversionary passing office rent of only £27.93 per sq ft
  • Opportunity to significantly increase rents in the short term
  • Growth location close to Crossrail
  • A number of the office leases are outside the Act
  • Circa 70% of income secured against Starbucks, Pret A Manger and Kingston Smith LLP
  • UK headquarters of Kingston Smith LLP
  • Numerous asset management opportunities to drive income and capture returns
  • Low capital value per sq ft compared with recent investment transactions
  • Highly liquid lot size
  • Kingston Smith LLP have occupied 60 & 68/70 Goswell Road for over 20 years

Proposal

We are instructed to request offers for the properties as a whole or separately on the following basis:

8-10 Charterhouse Buildings, EC1

  • Price £11,000,000 (Eleven Million Pounds)
  • Capital Value (£PSF) £867
  • Net Initial Yield 3.85%
  • Reversionary Yield (Date) 5.62% (2018)
60 & 68/70 Goswell Road, EC1
  • Price £20,000,000 (Twenty Million Pounds)
  • Capital Value (£PSF) £737
  • Net Initial Yield 2.83%
  • Reversionary Yield (Date) 5.10% (2016)
Portofolio
  • Price £31,000,000 (Thirty-One Million Pounds)
  • Capital Value (£PSF) £778
  • Net Initial Yield 3.19%
  • Reversionary Yield (Date) 5.28% (2018)

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NET INITIAL YIELD:
3.19%
PRICE:
£31,000,000
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