Equitable Building, St Ann's Square

Manchester

Overview

Location
  • Equitable Building provides a rare and exciting opportunity to acquire a landmark building in Manchester's prime retail core
  • Manchester is the largest economic centre in England outside London and is the fastest growing regional capital centre in the UK, forming the focus of economic activity in the North West
Description
  • The property comprises 9,058 sq ft of retail accommodation subdivided into 3 units, arranged over basement and ground floors
  • In addition there is 19,458 sq ft of vacant retail accommodation on three upper floors, providing a number of potential opportunities, including conversion to office, hotel or residential uses
Tenure/Tenancy
  • Freehold
  • 50% of the current income is secured for 10 years against Signet Trading Ltd, who represent a 5A1 D&B rating/li>
  • Current passing rent of £722,500 pa
Proposal
  • We are instructed to seek offers in excess of £12,500,000 (Twelve Million, Five Hundred Thousand Pounds), subject to contract and exclusive of VAT
  • A purchase at this level represents a net initial yield of 5.42%, taking into account acquisition costs of 6.72%

Location

MANCHESTER

Manchester is the administrative and commercial capital of the north west of England and is the largest economic centre in the country, outside London.

The city is located approximately 34 miles (55 km) east of Liverpool, 83 miles (133 km) north of Birmingham and 196 miles (314 km) north west of London.

The Greater Manchester region has benefited from large scale development in recent years including the ongoing Metrolink expansion, the £650m MediaCityUK development and the largest development in the UK NOMA at a cost of £800m. Further large scale development is planned for the city including the £800m Manchester Airport City (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, the Etihad Campus Project and a further £1billion to be invested by the University of Manchester to develop its campus.

NORTHERN POWERHOUSE

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 these core cities.

The initiative will focus devolved powers to an elected Mayor, including on housing, planning and transport policy. Approximately £13 billion will be invested in transport infrastructure across the North, including the plans for High Speed 2 and 3.

COMMUNICATIONS

Car
Manchester benefits from excellent communications with over 25% of the UK's motorway network running through the local area. The M60 arterial route provides connections throughout Greater Manchester via the M62, M61, M66, M67 and M56 and providing a direct link to the national motorway network.

Tram
The city is served by the UK's largest light rail network The Metrolink which stretches from Bury, Oldham and Rochdale to the north, Salford and Eccles to the west, Manchester Airport and Altrincham to the south and Ashton-under-Lyne to the west. Further expansion is underway to extend the service to Trafford Park and the Trafford Centre.

Air
Manchester Airport is located just 9 miles (14.4 km) outside the city centre and is the UK's third largest airport, handling c.22 million passengers a year with flights to over 225 destinations more than any other UK airport.

Rail
Manchester has two mainline stations, Piccadilly and Victoria, which are supported by other localised city centre stations including Oxford Road, Deansgate and Salford Central. These stations provide links to all major UK destinations with three services per hour to London Euston (2 hours), and regular services to Liverpool (33 minutes), Leeds (49 minutes) and Birmingham (1 hr 30 mins).
The proposed High Speed 2 rail network has the potential to reduce journey times from Manchester to London to 1 hour 8 minutes.
The development of the Ordsall Chord rail line (due to complete December 2017) will link Manchester Victoria and Manchester Piccadilly train stations for the first time and forms a crucial part of the £600m Northern Hub project, reducing rail congestion and regenerating the Salford area.

Situation

The property is situated in a prime position on a prominent corner site with extensive frontage to St Ann Street and St Ann's Square, both of which are in Manchester's vibrant core shopping area with all of the city's flagship department stores in close proximity.

St Ann Street and St Ann's Square have re-established themselves as home to some of Manchester's luxury jewellery stores such as Ernest Jones, David M Robinson, Fraser Hart, Hancocks, TAG Heuer and Mappin & Webb. The attractive pedestrianised squares and walkways in this area, combined with its central position linking Deansgate and Market Street, ensures St Ann Street and Square enjoy significant footfall and have a continuing appeal for retailers, shoppers and office occupiers.

RETAILING IN MANCHESTER

Manchester is the strongest retailing centre in the North of England and ranks 3rd in the top 200 Promis retailing centres in terms of retail provision, providing approximately 2.7 million sq ft of city centre retail floor space.

Major anchor retail stores represented in Manchester include House of Fraser, Selfridges, Harvey Nichols, Marks & Spencers and Debenhams, together with a strong high quality fashion offer including Armani, Hugo Boss, Vivienne Westwood, Jack Wills, Barbour and Louis Vuitton. As a result, Manchester attracts a strong annual retail spend of approximately £3.9 billion per annum.

Mass market retailing in Manchester is focused around The Arndale Centre and Market Street. The Arndale Centre extends to over 1.4 million sq ft and is home to over 200 individual shops and restaurants including the Apple store, Topshop, Aldi, Vodafone, Office and Next.

Description

The property comprises an attractive landmark building, of concrete frame construction with block in-fill and attractive façade under a flat roof.

The building is arranged over two basement levels, ground and three upper floors.


The ground floor offers 520 sq m (5,600 sq ft) of retail accommodation, comprising 3 retail units which have been combined to provide one larger unit with frontage to St Ann Street (Ernest Jones), together with two units which have been combined to form a corner retail unit with return frontage to St Ann Street and St Ann's Square (David M Robinson), and finally a retail unit fronting St Ann's Square (Three mobile).

The three upper floors historically provided office accommodation, until Habitat converted the upper floors to retail use in 1995. The upper floors are now vacant, with the 1st floor stripped back to a shell finish and the top two floors still comprising Habitats fit out. The upper floors offer great potential for a variety of uses including office, residential or hotel, with an entrance to be provided through the vacant corner retail unit at the junction of St Ann Street and Barton Square.

The basement provides an additional 551 sq m (5,500 sq ft) accommodation, of which 321 sq m (3,458 sq ft) is let to the existing retailers and 190 sq m (2,042 sq ft) is vacant.

To the rear of the building, is a gated courtyard, providing loading/escape access for the building.

Tenure

Freehold.

Tenancy

The property is let to three tenants on FR&I terms, with the upper floors remaining vacant.
Over 50% of the current income is secured against Signet Trading Ltd, who trade as Ernest Jones jewellers, for 10 years, and represent a 5A1 D&B rating. The property currently produces £722,500 per annum, with potential to substantially increase this by letting the upper floors.

Market Commentary

Further information can be found within the marketing particulars.


Covenant Information

3UK Retail Ltd (Company no. 06014452) Guaranteed by Superdrug Stores Plc (Company no. 008070403)
Three mobile is part of the CK Hutchison Holdings Ltd group of companies which has mobile operations in 11 countries. Three employs more than 4,400 people across its offices in Maidenhead, Glasgow and Reading and its 324 retail stores.

The lease is guaranteed by Superdrug Stores Plc, who have a Dun & Bradstreet rating of 5A1. This represents a minimum risk of business failure based on the following accounts available in the link below.

David M Robinson Ltd (Company no. 00958819)
David M Robinson is one of the UK's leading jewellers with 6 stores across the UK, and winner of the prestigious de Beers Diamonds International Award on two separate occasions. The David M Robinson store at the unit in St Ann's Square is a Rolex accredited watchmaker, and the store is undergoing extensive refurbishment of their Rolex accredited workshop and goldsmith workshop.

David M Robinson have a Dun & Bradstreet rating of 2A1, which represents a minimum risk of business failure, based on the following accounts available in the link below.

Signet Trading Ltd (Company no. 03768979)
Signet Trading Ltd are a subsidiary of Signet Jewellers Ltd, who are the worlds largest retailer of diamond jewellery. Signet operate approximately 3,600 stores worldwide, primarily under the name brands of Ernest Jones (trading in the subject property), Kay Jewellers, Zales, Jared the Galleria of Jewellery, H. Samuel, Peoples and Piercing Pagoda.

Signet Trading Ltd have a Dun & Bradstreet rating of 5A1 which represents a minimum risk of business failure, based on the following accounts available in the link below.


VAT

We understand the properties are elected for VAT purposes, and therefore would anticipate the sale to be treated as a Transfer of Going Concern.

ASSET MANAGEMENT OPPORTUNITIES

There is planning permission for retail use on the upper floors of 7-19 St Ann Street, which was granted on 26 October 1995 (planning ref no. 048325/FO/CITY1/95), before which time it was used as office accommodation.

There are a number of asset management opportunities to enhance value. We have highlighted some of the key opportunities below:


Ground Floor Retail
  • 1. Re-let the 3 Mobile unit fronting onto St Ann's Square to one of the existing occupiers or a new retailer at lease expiry in September 2017.
  • 2. Negotiate a new lease with David M Robinson with effect from their lease expiry in September 2017.
  • 3. Take back possession of the David M Robinson unit at lease expiry, on the grounds of redevelopment, by reconfiguring the unit and combine it with the 3 Mobile unit which will also become vacant in September 2017. This will create a larger and very prominent unit fronting onto St Ann's Square, with potential for Ernest Jones to further expand into this unit.
  • 4. Consider creating an alternative entrance to the upper floors from the 3 Mobile unit, thus allowing Ernest Jones to expand into the remaining accommodation along St Ann Street.

Upper floors
  • 1. Potential to create an estimated Net Internal Area on upper floors of 1,491 sq m (16,049 sq ft).
  • 2. Infill the lightwell at second and third floors to accommodate WC's and increase the potential net internal floor area to 1,732.95 sq m (18,653 sq ft).
  • 3. Relet the upper floors for retail use.
  • 4. Refurbish and convert to alternative uses such as office, residential, hotel or medical use, subject to approvals.

SERVICE CHARGE

The tenants each contribute towards a service charge for the repair and maintenance of the building. The current service charge budget for the year ending 31 December 2016 is £19,260, which equates to £2.11 psf. The lease to Signet Trading Ltd incorporates a service charge cap at £3.08 psf, subject to annual RPI uplifts.

EPC

The buildings have an EPC rating of D87. Further information available upon request.

Proposal

We are instructed to seek offers in excess of £12,500,000 (Twelve Million, Five Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level represents a net initial yield of 5.42%, taking into account acquisition costs of 6.72%.

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NET INITIAL YIELD:
5.42%
PRICE:
£12,500,000
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