Matalan and Sports Direct, Heathcote Road, Longton

Stoke-on-Trent, Staffordshire ST3 2NU

Overview

  • Longton is a large district forming part of the City of Stoke-on-Trent with the centre situated 2.6 miles north west.
  • It has excellent road and rail communications, with the A50 dual carriageway south of the town linking it to surrounding major cities as well as Junction 15 of the M6.
  • 143,127 people live within a 10 minute drive time increasing to over 234,000 people within 15 minutes.
  • Highly accessible location adjacent to the A50 dual carriageway and opposite the catchment's largest foodstore provision, a 108,000 sq ft Tesco Extra.
  • The property comprises a modern purpose built scheme totalling 43,378 sq ft GIA across two units which are occupied by Matalan and Sports Direct, both of which benefit from mezzanine accommodation.
  • The scheme is let to leading retailers, which are relevant and right-sized for the catchment with the surrounding retail provision having a limited fashion offer.
  • Customer car parking is situated to the front and side of the units with a total of 168 spaces giving a ratio of 1:258 spaces per sq ft.
  • Total scheme income of £563,000 per annum is secured on 5A1 covenants with a WAULT of 11 years from purchase. Sports Directs rent benefits from an RPI linked rent review C&C of 1-3% at the end of Year 5.
  • The units benefit from Open A1 non-food planning consent.
  • Freehold site extending to 2.93 acres.
We are instructed to seek offers in excess of £8,440,000 (Eight Million, Four Hundred and Forty Thousand Pounds) subject to contract and exclusive of VAT. An acquisition at this level reflects an Net Initial Yield of 6.25% off the Day 1 income rising to an estimated 6.45% in September 2023 assuming 2.5% pa RPI indexation on Sports Direct. Purchaser's costs of 6.68% assumed.

Location

  • Longton is a thriving district forming part of the larger city of Stoke-on-Trent catchment which comprises five other districts being Burslem, Fenton, Hanley, Tunstall and Newcastle-under-Lyme.
  • Traditionally known as the Potteries, the urban area has a total population of over 372,000 people.
  • Longton is located 2.6 miles and 5.4 miles south east of Stoke-on-Trent and Newcastle respectively and 33 miles north west of Derby.
  • Less than 5 miles to Junction 15 of the M6 making Longton easily accessible to the national motorway network
  • According to CACI Limited, an estimated 143,127 people live within a 10 minute drive-time increasing to over 234,000 people within a 15 minute drive-time of the subject property.
  • An increase of 1.6% is estimated by 2022 for the 15 minute drive-time catchment and 3.2% by 2027.

Road

Longton has excellent road communications with the A50 dual carriageway south of the town leading east to Derby, Nottingham and Uttoxter; and west towards Stoke-on-Trent, Newcastle-under-Lyme and the A500 which links into Junction 15 of the M6.

Rail

Longton Railway Station provides an hourly service to Stoke-on-Trent with a journey time of 6 minutes. Stoke-on-Trent has onward connections to Birmingham New Street and London Euston with 3 trains per hour with fastest journey times of 46 minutes and 1 hour and 24 minutes respectively.

Bus

The Longton Interchange bus station, situated in the heart of the town centre adjacent to Tesco Extra, provides regular bus services linking Longton to the rest of Stoke-on-Trent.

Situation

The subject property occupies a highly accessible location with the A50 dual carriageway adjacent and slip roads less than a minute's drive to both the north and south.

It forms part of Longton's principal retailing area to the south of the town centre, rear of Longton Exchange shopping centre.

Adjacent lies a 108,000 sq ft Tesco Extra with petrol filling station, the largest foodstore provision within the catchment, along with a 10,678 sq ft Next, 9,640 sq ft Argos and 3,190 sq ft Pizza Hut restaurant. To the rear of the property lies a 10,000 sq ft Farmfoods and 19,900 sq ft Lidl.

Within less than half a mile to the north west of the scheme lies Phoenix Retail Park comprising five retail warehouse units totaling 54,100 sq ft along with a 3,550 sq ft McDonald's drive-thru and Marstons pub. Tenants on the park include TK Maxx, Currys/PC World, Smyths Toys and Pets at Home.

Other national retailers within the immediate vicinity include Home Bargains, Wilko and B&M.

Description

The property is a modern purpose built two unit retail warehouse scheme totaling 43,378 sq ft GIA which was constructed in 2004.

It comprises steel portal frame construction with brick, panel elevations and partially glazed frontages. Both units have external canopies overhanging the glazed entrance points.

Unit 1 is let to Matalan totaling 34,975 sq ft and Unit 2 to Sports Direct totaling 8,403 sq ft. Internally, both units are fitted out to each retailer's standard specification and benefit from mezzanine accommodation. The Sports Direct mezzanine is used for both trading and ancillary purposes.

On-site customer car parking is situated to the front and side of the units with a total of 168 spaces providing a ratio of 1:258 spaces per sq ft. The car park is subject to pay & display operated by Smart Parking.

Servicing of the property is via a separate side road to the west of the site.

Tenure

Freehold site extending to approximately 2.93 acres (1.19 hectares).

Tenancy

The property comprises a modern purpose built scheme totalling 43,378 sq ft GIA across two units which are occupied by Matalan and Sports Direct.

The property is let to Matalan and Sports Direct producing a total income of £563,000 pa.

From completion of the sale, Unit 2 is to be let to Sportsdirect.com Retail Limited on a 10 year term at an initial rent passing of £138,650 per annum (£16.50 per sq ft) subject to a rent review at the end of Year 5 to the higher of Open Market Value or RPI compounded subject to C&C of 1-3%. Assuming a minimum of 2.5% pa RPI indexation the rent per annum will reach £156,870 (£18.67 psf) at the 2023 review.

Based on the above, the property has a weighted average unexpired lease term of 11 years.


Covenant Information

Matalan was founded in 1985 and is one of the leading fashion and homeware retailers in the UK. The company trades from 227 stores throughout the UK.

In July 2018, Matalan released strong results for the weeks ending May 26, as total revenues grew 5% to £265.9m and online sales rose by 39%. EBITDA was up 11% to £24.8m.

Matalan Retail Limited (02103564) has a Dun & Bradstreet rating of 5A1 with a minimum risk of business failure.

Sports Direct is today the UK's largest sporting goods retailer, and operates a diversified portfolio of sports, fitness, fashion and lifestyle facias and brands.

They operate approximately 700 stores across the UK and continental Europe. Preliminary results were announced in July 2018 with group revenue up by 3.5%

Sportsdirect.com Retail Limited (03406347) has a Dun & Bradstreet rating of 5A1 with a minimum risk of business failure.


VAT

We understand the property has been elected for VAT and it is anticipated that the transaction will be treated as a transfer of a going concern.

PLANNING

The property benefits from an Open A1 (non-food) planning consent.

SURVEYS

A Phase 1 Environmental report has been carried out by RPS dated September 2018. A copy is available on request.

EPCs

Unit 1 has an EPC rating of D (77) and Unit 2 of C (56). Copies are available on request.

Proposal

We are instructed to seek offers in excess of £8,440,000 (Eight Million, Four Hundred and Forty Thousand Pounds) subject to contract and exclusive of VAT. An acquisition at this level reflects an Net Initial Yield of 6.25% off the Day 1 income rising to an estimated 6.45% in September 2023 assuming 2.5% pa RPI indexation on Sports Direct. Purchaser's costs of 6.68% assumed.

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NET INITIAL YIELD:
6.25%
PRICE:
£8,440,000
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