Prime Hotel Investment PREMIER INN - MK2... Premier Inn // 1-6 Waterloo Street // Birmingham // B2...
Transcript of Prime Hotel Investment PREMIER INN - MK2... Premier Inn // 1-6 Waterloo Street // Birmingham // B2...
Prime Hotel Investment
PREMIER INN1-6 Waterloo Street // Birmingham
Index Linked with Whitbread PLC Guarantee
www.mk2.co.uk 2Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
> Birmingham is the UK’s second city and attracted a record 37.2million visitors in 2016.
> 100% prime location at the corner of Waterloo Street and Temple Row over looking St Philips Cathedral in the heart of the Commercial Business District.
> 152 bed hotel over ground and 7 upper floors together with reception, ground floor bar / restaurant and ancillary accommodation.
> Freehold.
> Let to Premier Inn Hotels Limited and guaranteed by Whitbread Plc on an FRI lease expiring on 18th May 2035 with a tenant’s break on 19th May 2030.
> Current rent of £1,166,795 per annum equating to £6,557 per bedroom after allowing for a rent on the ground floor bar / restaurant of £170,000 per annum equating to £40.00 per sq ft GIA.
> The rent is reviewed every 5 years to the Consumer Price Index upward only and capped at 5.00% with the next review on 18th May 2020. Adopting Bank of England Forecasts for CPI we estimate the reversionary rent to be £1,295,507 per annum.
> Terms agreed to vary the lease to provide 20
years terms certain on purchaser’s payment of tenant incentive. Further details on request.
> For the year ending March 2016 Whitbread reported turnover of £2.291 billion, pre-tax profit of £495 million and net worth of £2.655 billion.
> We are instructed to seek a offers in excess of £23,000,000 (Twenty Three Million Pounds)
subject to contract and exclusive of VAT, reflecting a net initial yield of 4.75% and an estimated reversion in 2020 to 5.28% after the deduction of purchaser’s costs of 6.75%.
A rare opportunity to purchase an exceptionally well located prime hotel, index linked and secured to a FTSE 100 company.
INVESTMENT SUMMARY
OFFERS IN EXCESS OF
£23,000,000NET INITIAL YIELD
4.75% REVERSION IN 2020
5.28%
PRIME LOCATION IN THE HEART OF THE COMMERCIAL BUSINESS DISTRICT
www.mk2.co.uk 3Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
The wider West Midlands conurbation has a population of 2.5million and 4.3million people of working age live within a 1 hour drive of the city.
With a GDP of £110 billion Birmingham has the largest concentration of businesses outside of London. There are over 75,000 companies including 1,200 international businesses located in the area and a vibrant business and financial services sector employing over 100,000 which is expected to grow by 30% by 2020.
Recently voted the most popular destination outside of London for meetings, conferences and events, Birmingham is home to the National Exhibition Centre, Barclaycard Arena, International Convention Centre and Symphony Hall and accounts for 40% of the UK’s conference and exhibition trade.
Over 37.2million people visited Birmingham in 2016 an increase of 12% since 2006 with almost 1 million international visitors.
is the UK’s second city with a population of circa 1.1 million and is considered one of the youngest in Europe with under 25’s accounting for 40% of the population.
BIRMINGHAM
40%OF THE UK’SCONFERENCE ANDEXHIBITION TRADE
25,000GRADUATES
PER YEAR
UK’S LARGEST REGIONAL ECONOMY OUTSIDE LONDON
// BIRMINGHAM TOWN HALL
// LIBRARY OF BIRMINGHAM
// THE BULL RING
// THE ICC
BIRMINGHAM HAS RECENTLY BEEN NAMED THE UK’S MOST INVESTABLE CITY AND THE SIXTH BEST IN EUROPE
www.mk2.co.uk 4Premier Inn // 1-6 Waterloo Street // Birmingham
Birmingham is located 117 miles from Central London and 70
miles from Manchester. It is a highly accessible City. In particular
it benefits from superb access by air, rail and road:
COMMUNICATIONS
AIR
Located 8 miles to the south east of the City, 11 minutes by train, Birmingham International Airport (BHX) is the third largest outside of London with over 50 airlines providing connections to 143 destinations in Europe, North America, Asia and the Middle East and is expected to handle around 15million passengers a year by 2020. In excess of £300million has been invested in the airport over the last 10 years including a runway extension doubling capacity and enabling it to directly compete with London Heathrow and Manchester for long haul flights to China, India and the West Coast of America.
ROAD
Birmingham benefits from easy access to the A38M, M6, M5, M42 and M40 Motorways. Typical drive times are as follows:
London 2 hours 32 minutes
Heathrow Airport 2 hours 11 minutes
Manchester 1 hour 41 minutes
Leeds 2 hours 11 minutes
Bristol 50 minutes
Edinburgh 5 hours 15 minutes
Solihull 20 minutes
MIDLAND METRO
The Midlands Metro Light Rail Transport System connects Wolverhampton to Birmingham’s City Centre (Snow Hill Station). At a cost of £127million the Metro has been extended through the city centre to Grand Central Station with further extensions planned for Brindleyplace, Edgbaston and Digbeth.
RAIL
Developed at a cost of £650million the recently opened Grand Central replaces New Street station increasing capacity to 140,000 passengers daily, 52million a year. At the heart of the UK rail network the station provides direct intercity access to London Euston, Manchester, Reading, Bristol, Nottingham, Leicester and Newcastle. The NEC and Birmingham International Airport can be reached in just 11 minutes.
Phase 1 of High Speed 2 rail (HS2) has now been granted Royal Assent and will connect London and Birmingham by 2026 with a new dedicated city centre terminus station at Birmingham Curzon Street. Phase 2 of the project will connect Birmingham with Manchester and Leeds, placing the City at the heart of the new national high speed network.
NEW YORK
DUBAI
DELHI
BARCELONA
KUALA LUMPUR
SYDNEY
SHANGHAI
OSAKATOKYO
CANCUN
FLORIDA
TORONTO
HAMBURG
NICE
MADRID
MONTEGO BAY
GENEVA
COPENHAGEN
BEIJING
SHARM EL SHEIKH
HONG KONG
PARIS
MANCHESTER86 MILES
LEEDS118 MILES
LONDON101 MILES
LIVERPOOL98 MILES
NOTTINGHAM51 MILES
LEICESTER43 MILES
NORTHAMPTON54 MILES
BRISTOL98 MILES
SHREWSBURY47 MILES
BIRMINGHAM
EDINBURGH292 MILES
SHREWSBURY
WOLVERHAMPTON
STAFFORD
STOKE-ON-TRENT
LICHFIELD
BIRMINGHAM
COVENTRY
WORCESTER
HEREFORD
TO BRISTOL& SOUTH WEST
TOLONDON
TO LONDON& SOUTH EAST
TO MANCHESTER& NORTH WEST
TO LEEDS& NORTH
EASTOSWESTRY
MARKET DRAYTON
TELFORD
BRIDGNORTH
BISHOPS CASTLE
LUDLOW
LEOMINSTER
ROSS-ON-WYE
LEDBURY
GREAT MALVERN
KIDDERMINSTER
STOURBRIDGEDUDLEY
WALSALL
BURTON-UPON-TRENT
UTTOXETER
TAMWORTH
NUNEATON
SOLIHULL
REDDITCH
EVESHAM
STRATFORD-UPON-AVON
WARWICK
RUGBY
LEEK
M6
M6
M6 TOLL
M69
M1
M42
M40
M5
M50
M54
M1
M1
£650mGRAND CENTRAL
www.mk2.co.uk 5Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
According to Marketing Birmingham this helped create an extra 2,100 jobs with visitor numbers increasing 12% since 2006. Birmingham is the only city outside of London to have all six leading department stores; John Lewis, House of Fraser, Debenhams, Selfridges, Harvey Nichols and M&S.
Birmingham has been voted the most popular destination outside of London for meetings, conferences and events for six successive years by the annual British Meetings & Events Industry Survey. With facilities such as the National Exhibition Centre and the International Convention Centre the city accounts for around 40% of the UK’s conference and exhibition trade and each year hosts over 850 events.
Birmingham stages more World and European sporting Championships than any other UK City. The recent £20.6 million refurbishment of the Barclaycard Arena and the £12.5million spent improving the Alexander Stadium the home of UK Athletics has further enhanced the offer. In addition, the city has Five Michelin starred restaurants more than any other English city outside of London and is famous for it’s 100+ Balti houses attracting 20,000 visitors a week.
In 2016 Birmingham attracted a record 37.2 million visitors of which nearly 1 million were from overseas making it the UK’s 4th most visited city.
VISITOR ECONOMY
FIVEMICHELIN STARRED
RESTAURANTS
// GREAT WESTERN ARCADE
THE CITY ACCOUNTS FOR AROUND 40% OF THE UK’S CONFERENCE AND EXHIBITION TRADE AND EACH YEAR HOSTS OVER 850 EVENTS.
// SELFRIDGES
// GERMAN MARKET, VICTORIA SQUARE
// JOHN LEWIS
www.mk2.co.uk 6Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
55 COLMORE ROW
GRAND CENTRAL/
NEW ST STATION
RADISON BLU HOTEL
THE MAILBOX
THE CUBE/ HOTEL
INDIGO
ST PHILLIPS CATHEDRAL
VICTORIA SQUARE
BIRMINGHAM TOWN HALL
GRAND HOTEL
STAYBRIDGE SUITES
PREMIER INN BIRMINGHAM
BULL RING SHOPPING CENTRE
EXCHANGE BUILDINGS
HOTEL DU VIN
SNOW HILL STATION
JOHN LEWIS
PARADISE DEVELOPMENT
SELFRIDGES
www.mk2.co.uk 7Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
Less than 5 minutes walk from both Grand Central and Birmingham Snow Hill train stations and close to New Street the centre of Birmingham prime retail zone. Surrounded by high quality office developments nearby occupiers include Natwest / RBS, Eversheds, Lloyds Bank, Government Office for West Midlands, together with high quality bars and restaurants including Gusto, Alchemist, Botanist, San Carlo, Pure Bar, Ask, Viva Brazil and Nosh and Quaff.
CAVENDISHHOUSE
BENNETTSCOURT
SOMERSETHOUSE
UNIONCHAMBERS
IMPERIALHOUSE
ST PHILLIPSPOINT
ST PHILLIPSCATHERDRAL
35
3737a
7
6
54
32
1
102104
85 to 89
79 to 83
78 to 90
98
41
3837
3635
34 38
42 to 44
5 to
7
3
11 t
o 1
29
to 1
08
1112
14
2324
2533
78
6
5
2 1
48
10 t
o 1
213
14
3439
4041
4243
4548 67 to 71 65 63
25
32
55 to 59
WATERLOO STREET
BENN
ETT’S HILL
TEMPLE ROW
TEM
PLE
STR
EE
T
NE
ED
LESS
ALL
EY
NEW
CANN
ON
PASSAGE
TEMPLE RO
W W
EST
Very prominently located at the corner of Waterloo Street and Temple Row overlooking St Philips Place, in the heart of the Central Business District.
SITUATION
IN THE HEART OF THE CENTRAL BUSINESS DISTRICT
www.mk2.co.uk 8Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
The hotel is accessed from a prominent ground floor reception off Waterloo Street comprising a reception desk, automated check in machines and managers office. Two 13 person lifts and a central staircase provide access to the hotel rooms.
The 7 upper floors are of similar design with a central corridor, laundry chute, linen rooms and two additional fire escape staircases serving the hotel rooms. All of the rooms are on-suite, air conditioned, with secondary glazing providing a mixture of double, single rooms and fitted out to Premier Inn’s brand standards. There are 7 disabled access rooms, one on each floor.
The large basement area provides basic storage accommodation. Lower ground floor has access from Temple Passage via concertina metal doors to a loading / bin store area which has one disabled car parking space. This floor serves both the hotel and bar / restaurant providing linen wash room, staff room, staff lockers, janitors cleaning room, beer store/cellar, dry store, freezer and chiller rooms, additional managers offices and customer toilets for the bar / restaurant.
The Beefeater Block restaurant and bar has recently been refurbished and provides an extensive glazed frontage with canopy to Waterloo
Street together with separate entrance adjacent to the hotel reception. Internally the property has a clear floor to ceiling height of 3.5 metres with a part tiled, part wood floor with exposed ceiling and air conditioning around a central bar area. Seating provides for 80 covers and to the rear is a kitchen and food preparation area with a lift providing access to the lower ground floor storage areas. There is a second access door from Waterloo Street (not used) together with a staircase to the lower ground floor to access the male and female customer toilets.
A full suite of building warranties relating to the original refurbishment can be made available to the purchaser.
Fully refurbished in 2010, the property extends over basement, lower ground, ground and 7 upper floors to provide 152 high quality bedrooms together with a ground floor bar / restaurant. The adjacent Fumo restaurant is held on a long leasehold interest.
DESCRIPTION
FULLY REFURBISHED IN 2010, THE PROPERTY EXTENDS OVER BASEMENT, LOWER GROUND, GROUND AND 7 UPPER FLOORS.
www.mk2.co.uk 9Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
www.mk2.co.uk 10Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PGwww.mk2.co.uk 10
Basement Basic storage space
Lower Loading area / Bin store /
Ground Disabled car parking space /
Linen wash room / Staff room /
Janitors cleaning room /
Beer store / Dry store /
Freezer/ Chiller / Managers
offices / Customer toilets
Ground Hotel Reception /
Beefeater Block
– Bar & Restaurant
Floor 1 21 Rooms (1 DDA)
Floor 2 21 Rooms (1 DDA)
Floor 3 22 Rooms (1 DDA)
Floor 4 23 Rooms (1 DDA)
Floor 5 23 Rooms (1 DDA)
Floor 6 23 Rooms (1 DDA)
Floor 7 19 Rooms (1 DDA)
Total 152 rooms
BASEMENT LEVEL
LOWER GROUND FLOOR
GROUND FLOOR
TYPICAL UPPER FLOORS
Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
The property comprises the following areas;
ACCOMMODATION
The ground floor bar and restaurant has been measured on a gross internal area (GIA) basis and provides 4,234 sq ft (393.3 sq m) of accommodation.
www.mk2.co.uk 11Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
The rent is reviewed every 5 years upward only to the Consumer Price Index (CPI) subject to a cap of 5.00% per annum compounded. There is a tenant’s break clause on 19th May 2030 on giving 12 months written notice.
Terms have been agreed with the tenant to vary the lease to provide a 20 years term certain. In return the purchaser will pay a tenant incentive and reduce the CPI cap from 5.00% to 4.00% per annum compounded. Further details on request.
The current rent of £1,166,795 per annum equates to £6,557 per bedroom after allowing for a rent on the ground floor bar / restaurant of £170,000 per annum equating to £40.00 per sq. ft. GIA.
The ground floor Fumo restaurant is let on a 999 years long leasehold interest from 3rd April 2009 at a peppercorn rent.
Let on full repairing and insuring terms for 25 years to Premier Inn Hotels Limited with a Whitbread PLC guarantee from 19th May 2010 at a current rent of £1,116,795 per annum.
TENANCY
Premier Inn is the UK’s largest hotel chain with 730 hotels and over 64,000 bedrooms trading across the UK and Ireland and a further 10,000 new rooms planned by 2018. Like for like sales increased 9% in 2016.
Premier Inn Hotels Limited has an Experian credit rating of 100 described as very low risk and a credit limit of £9,500,000. Their most recent accounts are summarised as;
£000S 3 MARCH 2016 26 FEB 2015 27 FEB 2014
Turnover 743,195 374,540 288,681
Pre-tax Profit 255,471 149,056 75,494
Net Worth 931,147 717,374 636,984
TENANT INFORMATION
PREMIER INNWhitbread Plc is the UKs largest hotel, restaurant and coffee shop operator in the UK employing 50,000 people and is a FTSE 100 company. Incorporating some of the best known brands in hospitality the group includes
Costa Coffee, Hub by Premier Inn, Beefeater Grill, Table and Table and Brewers Fayre. Also enjoining an Experian Credit rating of 100 and a credit limit of £10,00,000 their accounts are summarized as;
£MILLIONS 3 MARCH 2016 26 FEB 2015 27 FEB 2014
Turnover 2,921.8 2,608.1 2,294.3
Pre-tax Profit 495 463.2 342.8
Net Worth 2,655.4 2,071.4 1,695
TENANT INFORMATION
WHITBREAD PLC
www.mk2.co.uk 12Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
Major new brands including Gusto, Alchemist, Cosy Club, Botanist, Viva Brazil, Pure Bar, Adams are now established with Gaucho and Los Iguinos due to start trading in the next few months. Demand has resulted in strong rental growth and deals of note include;
The Birmingham CBD has seen significant numbers of high profile bar / restaurant openings in recent years.
Investor demand for well let index linked prime hotel investments remains very strong with a lack of good quality product reaching the market, particularly up and built stock. This has resulted in yield compression over the last 12 months. Deals of note include;
BARS & RESTAURANTS HOTEL INVESTMENT MARKET
MARCH
2017Under offer to a major restaurant brand at a rumoured £55.00 per sq ft.
FORMER AUSTIN REED UNIT TEMPLE ROW WEST
JANUARY
2017Ground floor with basement, under offer to a Tai Restaurant at £41.50 per sq ft.
7-8 WATERLOO STREET
SEPTEMBER
2016Let to Damascena at £44.50 per sq ft.
5-7 TEMPLE ROW WEST
SEPTEMBER
2016Let to Byron Burgers ar £72 per sq ft.
92-93 NEW STREET
JUNE
2016Let to Gusto at £35.00 per sq ft.
THE GRAND HOTEL COLMORE ROW
Based on the above evidence we are of the view that the Beefeater Block bar and restaurant has an estimated rental value of £170,000 per annum equating to £40.00 per sq ft GIA.
BRIDLE PATH, WATFORD 124 Beds. Full Forward Funding on a 25 years lease with break at 20 to Premier Inn Hotels Limited.
TOTHILL STREET, WESTMINSTER339 Beds Hub by Premier Inn. Forward commitment on a 25 years lease guaranteed by Whitbread Plc.
ROYAL ARSENAL GARDENS, WOOLWICH 128 rooms. Full forward funding on a 25 years lease with a break at 20 to Premier Inn Hotels Limited .
EXCHANGE BUILDINGS, BIRMINGHAM 140 rooms part of a larger mixed use scheme. Let to Premier Inn Hotels Limited on a 25 years lease with break at 20.
WINDSOR ROAD, SLOUGH131 rooms. 25 years with a break at 20 to Premier Inn Hotels Limited.
Under offer at circa
£13.8 million
£101.925 million
£21.2 million
£42.75 million
£13.2 million
4.70%initial yield
3.96%initial yield
4.05%initial yield
4.50%initial yield
4.50%initial yield
MARCH
2017
DECEMBER
2016
MARCH
2016
JANUARY
2016
JANUARY
2016
www.mk2.co.uk 13Premier Inn // 1-6 Waterloo Street // Birmingham // B2 5PG
CONSUMER PRICE INDEX FORECAST According to the latest Bank of England inflation report, Consumer Price Index growth has increased substantially in the last three quarters and is currently running at 2.4% pa. The fall in the value of sterling and the associated pressures on import costs, food and fuel prices is leading to an upward trend in inflationary pressure in the UK economy. The Bank of England has a target of 2.00% per annum CPI, however, their actual forecast for the next few years is as follows;
Based on these figures we estimate that the rent at review in May 2020 will increase to £1,295,507 per annum.
CAPITAL ALLOWANCES The property was original funded utilising Business Premises Renovation Allowances (BPRA) and therefore there are no remaining capital allowances available on the property.
VAT The property is elected for VAT and therefore VAT will be payable on the purchase price however we anticipate that the transaction will be structured by way of a TOGC.
ENERGY PERFOMANCE CERTIFICATE The property has an EPC rating of C-53. A copy of the EPC is available upon request.
TENURE Freehold.
2018
2.70%2019
2.60%2020
2.40%
We are instructed to seek a offers in excess of £23,000,000 (Twenty Three Million Pounds) subject to contract and exclusive of VAT, reflecting a net initial yield of 4.75% and an estimated reversion in 2020 to 5.28% after the deduction of purchaser’s costs of 6.75%.
FINANCIALS
OFFERS IN EXCESS OF
£23,000,000NET INITIAL YIELD
4.75% REVERSION IN 2020
5.28%
MK2 Real Estate Limited
Maddox House
117 Edmund Street
Birmingham B3 2HJ
Mark Rooke
T: 0121 2141972
M: 07985 877578
Mark Johnson
T: 0121 2141977
M: 07748 105812
For further information or to arrange a viewing please contact;
IMPORTANT INFORMATION
1. No description or information given by MK2 Real Estate Ltd whether or not in these Particulars and whether written or verbal (“information”) about the property or its condition or its value may be relied upon as a statement or representation of fact. MK2 Real Estate Ltd do not
have any authority to make any representations and accordingly any information given is entirely without responsibility on the part of the agent or the seller. 2.These particulars do not constitute, nor constitute part of, an offer or contract, nor shall they merge in any offer or contract
which may hereafter be made between the sellers or lessors and the recipient of the information. 3.The photographs show only certain parts of the property at the time they were taken. Any areas measurements or distances given are approximate only. 4. Any reference to alterations
to or use of any part of the property is not a statement that any necessary planning, building regulations or other consent has been obtained.These matters must be verified by any intending buyer. 5. Any buyer must satisfy themselves by inspection or otherwise as to the correctness
of any information given.
Designed and produced by Diablo: www.diablodesign.co.uk May 2017