ASDA, WIGMORE LANE, LUTON, LU2 9TA - Prime Supermarket Investment Opportunity
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Prime Supermarket Investment Opportunity
ASDA, WIGMORE LANE, LUTON, LU2 9TA
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Asda, Wigmore Lane, Luton, LU2 9TA
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
Investment Considerations
• Luton is situated 35 miles north of London, with excellent communication
links, being located between Junctions 10 and 11 of the M1.
• The property is highly accessible, situated in close proximity to Luton
Airport, in a densely populated area.
• There are plans to expand Luton Airport significantly to over 18 million
passengers per annum, from 10 million currently.
• The subject property benefits from no other foodstore competition
within a 3 mile radius.
• Excellent trading store with established 24 hour operation and petrol
filling station.
• The unit currently totals 81,203 sq ft GIA on a 6.5 acre site with car parking
for 382 vehicles. The original GIA prior to tenant’s improvements was
66,130 sq ft.
• The property benefits from a long unexpired lease term of over 18 years
and is let to the secure 5A1 D&B rated covenant of Asda Stores Limited at
a rent equating to £25.32 per sq ft on the original area, allowing a 7.5%
addition for the petrol filling station.
• Rarely available and valuable lease with 5 yearly upwards only reviews to
RPI uncapped. The next rent review is in June 2017.
• Potential to re-gear the lease for a longer lease term in the future.
• Top quartile store for Asda with sales density of £1,698 per sq ft NSA,
compared with a company average of £1,285 per sq ft NSA. (Source: ORC).
• We are instructed to seek offers for the freehold interest in the
above property at a price in excess of £40,000,000 (Forty Million
Pounds), subject to contract and exclusive of VAT. A purchase at this
price reflects an attractive net initial yield of 4.28%, assuming
purchaser’s costs of 5.80%. The yield rises to an anticipated 5.02%
in June 2017, based on RPI averaging 3.24% from June 2012 – 2017.
The RPI increase from the last review to date (April 2014 being the last
available figure), provides an average uplift of 2.8% per annum equating
to a revised rent of £1,913,142 per annum, and a current reversionary
yield of 4.52%.
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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4
A14
Market
0
05
A1
A427 Corby A6
1
Harborough 43
A14
A1
A61
Asda, Wigmore Lane, Luton, LU2 9TA
Thetford
A1165
A1066
16
Ely
A1
Kettering A1
1
A1
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
42
3
A50
Mildenhall
A4
Huntingdon A14 A143
8
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St Ives
A10
7
Wellingborough Rushden A1
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Northampton A1
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A140
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The Subject Property
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RD
LUTON
7 22 RD
IN
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24 25 26 N
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5 Wycombe Watford 4 Chigwell
A10
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M1 2 A40
6 A12
GR
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Marlow 2 A127 Basildon Southend-on-Sea
Y
29
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AW
A40 Harrow6 A41 LUTON
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0
Uxbridge A4 3
A1 IL D
Maidenhead
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Slough LONDON A13
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Canvey Island FO R
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6 Woolwich RC
A5
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3 31 Tilbury
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Windsor A4 NS Sheerness
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14 Richmond A205 Dartford Gravesend TA
A329(M) 13 HEATHROW A2 A2 2
BL Margate
12 10 Bracknell Kingston
0 A2 Rochester Herne
A5 05
Staines
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1 Bay
RD
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11 upon Thames 2 Gillingham A28 LONDON LUTON AIRPORT
11 Sutton A232 Chatham SittingbourneWhitstable
A299
Ramsgate
8 A253
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5 LL Deal
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A2
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6 M3 Aldershot Dorking A2
6 EY RT
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A2
CAS
Redhill Oxted
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RL
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Guildford Reigate FA A2 AIR
7 Farnham Tonbridge LUTON AIRPORT
A31 M23 A2 PARKWAY
A22
Godalming
A229
CHANNEL
A24
9
GATWICK East Ashford
TUNNEL
TERMINAL Dover
Alton 9
Grinstead Tunbridge Wells 10
A20
A
Crawley 264
A2070
10
M20 11 12
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Folkestone
A2
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1
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1 A26
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Haslemere 11 Hythe
A26
Horsham
59
Crowborough
Location
A2
A22
Haywards
Heath
A272
Petersfield Uckfield
Luton is Bedfordshire’s principal administrative town and is located Luton and Luton Airport Parkway stations benefit from regular train
A23
Lydd/Ashford
A2
in a strategic position 35 miles north of London, 12 miles north of services to London (St Pancras), with a quickest journey time of
4
1
A2
A26
A259
A2
1
A2
2
A3(M) 83
A27 Lewes
Hailsham A259
Hemel Hempstead,
Hastings 13 miles north of St Albans and 15 miles west of approximately 23 minutes.
3 HavantA27
Chichester Brighton
11
12 12
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Littlehampton
A27
SHOREHAM A27
Stevenage.
Bexhill-
on-Sea
Hove
Worthing Newhaven Luton is currently undergoing a major town centre regeneration and
A22
t
Eastbourne
Portsmouth Bognor
Regis
Seaford
The town benefits from excellent road communications, being investment programme, which includes upgrades to the town’s bus
Ryde
located adjacent to Junctions 10 and 11 of the M1 motorway. It is also and railway stations, as well as improvements to the town’s urban
well served by a number of primary roads, including the A6 trunk road environment.
Sandown
and the A505 dual carriageway, which links the A1 and the A5.
Shanklin
Luton Airport is one of the fastest growing airports in the UK, offering
flights to major European and worldwide destinations.
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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Asda, Wigmore Lane, Luton, LU2 9TA
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
Catchment & Demographics
Luton benefits from a primary catchment population of 337,000 people and a shopping
population of 165,000 people. The catchment population is anticipated to see growth of 1.3%
per annum between 2013 and 2018 above the UK average of 0.7% per annum. CACI predict there
are 113,434 people living within a 10 minute drive time of the subject property, extending to
385,875 people within a 20 minute drive time.
Consumer spending in Luton is above the UK average; per capita in-store comparison
expenditure in 2013 was £2,401, substantially ahead of the PMA average of £2,314. Comparison
retail expenditure in Luton is anticipated to increase by 1.9% per annum between 2013 and 2018,
in excess of the PMA average of 1.7% per annum.
Situation
The property is situated in close proximity to Luton Airport, 2.5 miles
east of Luton town centre, in a predominantly residential area.
Opposite the store is a small district centre, with occupiers including
Iceland, Coral, a local newsagents, a budget gym and Wigmore
Library.
Luton Airport is currently the 6th largest of the 40 airports in the
UK and serves as the base for Easyjet. There are proposals to
expand the airport significantly, with the aim of growing it to over
18 million passengers per annum by 2028 from 10 million currently.
The airport is the single largest centre of employment in the area,
contributing over 8,000 jobs and £1 billion to the region annually.
The proposed expansion would increase this to 9,000 jobs and
£1.48 billion respectively. (Source: London Luton Master Plan).
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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Asda, Wigmore Lane, Luton, LU2 9TA
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
SAINSBURY’S
81,700 sq ft
5.1 Miles/14 mins
A6
ORRISONS
,772 sq ft
iles/19 mins
A505
M1
A6 The Subject Property
A
sq ft ASDA - 81,203 sq ft
8 mins
Foodstore Competition
A5228
11
A505
A505
Importantly, the subject property benefits from having a
A505 monopoly position within the 5 and 10 minute drive time
A505
area, and also there are currently no other large foodstores
DUNSTABLE providing competition located within a 3 mile radius.
A6 LUTON LONDON
SAINSBURY’S
70,000 sq ft
TESCO
100,000 sq ft A505
LUTON
AIRPORT
The closest existing competition includes 2 Sainsbury’s
7 Miles/16 mins 5.7 Miles/15 mins
SAINSBURY’S
A1081
foodstores; an 81,700 sq ft store to the north side of the
61,367 sq ft
A5
3.1 Miles/11 mins town and a 61,367 sq ft store adjoining the centre of Luton,
located 5.1 miles and 3.1 miles from the subject property
A1081
respectively. There is a 100,000 sq ft Tesco unit to the west of
the town, lying between Luton and Dunstable.
10A
We are aware that planning applications have been made for
A1081
10 2 additional supermarket proposals in Luton. Firstly plans
are for a 42,000 sq ft Morrisons in part of the B&Q Warehouse
on Dallow Lane, some distance from the subject property
to the west of the town. The second is for a site opposite
Key Vauxhall Motors and formerly occupied by the motor works
5 Minute Drive close to Luton Parkway Station, understood to have been
10 Minute Drive made by Sainsbury’s. However, neither have been granted
planning consent at present.
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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Asda, Wigmore Lane, Luton, LU2 9TA
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
Description Accommodation
The subject property provides a well configured modern supermarket. The store was originally built The current measured gross internal area is as follows:
in 1980 to comprise a purpose built foodstore with a GIA of 66,130 sq ft. The store was subsequently
extended in 2006 and further extended and remodelled in 2008 by Asda, to provide a revised GIA of Floor Use GIA sq ft GIA sq m
around 81,200 sq ft.
Ground Floor Store (including storage) 60,902 5,658
The store also has the benefit of a petrol filling station at the entrance to the site, also operated by Ground Floor Covered Loading/Storage Area 14,413 1,339
Asda and within the lease demise.
First Floor Office and Staff (front) 5,888 547
Ample car parking is located to the front and side of the unit providing a total of 382 spaces, equating Total GIA 81,203 7,544
to an attractive ratio of 1 : 196 sq ft.
The agreed area for rent review purposes within the original lease is 66,130 sq ft.
The total site area is 6.5 acres, providing a low site cover of 29%.
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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Asda, Wigmore Lane, Luton, LU2 9TA
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
Tenancy
The property is fully let to Asda Stores Limited on a full repairing
and insuring lease from 26 January 1981, expiring 23 June 2032,
at a current rent of £1,810,358.87 per annum. Allowing a 7.5%
addition for the petrol filling station, this equates to a rent of
£25.32 per sq ft on the original GIA of the store, prior to tenant’s
improvements. The lease is subject to 5 yearly upward only
reviews to RPI uncapped, taken from the May RPI figures. The
next review is due in June 2017.
Over recent years, on the rare occasions when Asda have
taken leases they have usually had review clauses capped
at 7.5% or 3% per annum. However, given RPI is predicted
to average in excess of 3% per annum over the next 3 years,
the uncapped RPI reviews allow the incoming purchaser to
benefit from a significant uplift in rent and therefore attractive
running yield in June 2017 and subsequent reviews.
RPI for the following years predicted to be:
Date RPI figure
May 2013 3.10% *
May 2014 2.50% **
May 2015 3.20% ***
May 2016 3.60% ***
May 2017 3.80% ***
* Actual May 2013 figure.
** April 2014 figure.
*** Office of Budget Responsibility annual forecast.
Based on the above predictions, RPI until June 2017 will
average 3.24% and therefore the rent at the 2017 review
would increase to £2,123,166 per annum, reflecting £29.70
per sq ft.
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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Asda, Wigmore Lane, Luton, LU2 9TA
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
Asset Management
It is considered in the future there could be the potential to negotiate with Asda to extend the lease to
give an unexpired term of 25 years in exchange for capped and collared RPI increases.
It should be noted that under current Landlord and Tenant Act legislation, the landlord would be able
to rentalise the tenant’s improvements at the end of the existing lease. This would reduce the current
rate to £20.62 per sq ft, again allowing a 7.5% addition for the petrol filling station.
Planning
The property was granted planning consent in November 1981 for the erection of a foodstore and in
1982 for the development of the petrol filling station. Subsequently the consent has been amended
to allow an extension to the store.
In 2012 consent was granted for a 25,866 sq ft mezzanine floor within the existing supermarket and
construction of a decked car park over the existing surface car park to provide an additional 127
spaces. This consent has not yet been implemented.
The planning consents are available on request.
Tenant Covenant
Asda was founded in 1949 and became a subsidiary of Walmart, the world’s largest retailer, in 1999.
Asda are one of the ‘Big Four’ supermarket chains dominating the UK grocery market. They are
currently the second largest supermarket by market share in the UK after Tesco, having a market
share of 17.3%. Of the ‘Big Four’ supermarkets, they have been the most resilient over recent months,
having experienced a 2% sales rise in the 12 weeks to 28 April 2014. Tesco and Morrisons both
experienced sales losses, whilst Sainsbury’s sales grew 0.3% over the same period.
Asda has a portfolio of over 500 stores across the UK and benefit from a 5A1 covenant, as rated by
Dun & Bradstreet. We set out below a summary of their most recent company accounts:
Sales Turnover Pre-Tax Profit Net Worth
Tenant Year Ending D&B Rating
(000)s (000)s (000)s
Asda Stores 31/12/2012 £22,813,900 £483,500 £5,090,400
5A1
Ltd 31/12/2011 £21,661,000 £506,900 £4,601,800
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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Asda, Wigmore Lane, Luton, LU2 9TA
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
Trading Report
Oxford Retail Consultants have undertaken a trading report detailing
catchment and spend forecasts for 2014 for the subject property. The report
highlights the following:
• The resident shopping catchment population in 2014 is forecast at
47,824 people and has a bias towards families and above average income
households.
• By 2018, there are 6,983 new homes forecast to be built in the area on
developments of 50 units or more.
• The store is forecast to achieve sales of £85.2 million and a Maximum
Sum Available for Rent of £70.27 per sq ft, significantly above the current
passing rent of £25.32 per sq ft.
• ORC forecast the Asda 2014 company average sales density is
£1,285 per sq ft NSA, this store achieves £1,698 per sq ft NSA; an index of
132. This places Luton in the top quartile of all Asda stores.
The report is available to interested parties on request.
VAT
The property has been elected for VAT purposes.
Proposal
We are instructed to seek offers for the freehold interest in the above property
at a price in excess of £40,000,000 (Forty Million Pounds), subject to
contract and exclusive of VAT. A purchase at this price reflects an attractive
net initial yield of 4.28%, assuming purchaser’s costs of 5.80%. The yield
rises to an anticipated 5.02% in June 2017, based on RPI averaging 3.24%
from June 2012 – 2017.
The RPI increase from the last review to date (April 2014 being the last available
figure), provides an average uplift of 2.8% per annum equating to a revised
The unit totals 81,203 sq ft on a 6.5 acre site with car parking for 382 vehicles. rent of £1,913,142 per annum, and a current reversionary yield of 4.52%.
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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Asda, Wigmore Lane, Luton, LU2 9TA
Prime Supermarket Investment Opportunity with Uncapped RPI Rent Reviews
Contacts
Paul Wilkinson Ellie Kirkby
T: 020 7317 3799 T: 020 7317 3790
M: 07770 585 313 M: 07764 241 898
E: p.wilkinson@wilkinsonwilliams.co.uk E: e.kirkby@wilkinsonwilliams.co.uk
Wilkinson Williams
Heathcoat House
20 Savile Row
London W1S 3PR
www.wilkinsonwilliams.co.uk
MISREPRESENTATION NOTICE
Wilkinson Williams LLP give notice to anyone who may read these particulars as follows:
1. These particulars are prepared for the guidance only of prospective purchasers. They are intended to give a fair overall description of the property but are not intended to constitute part of an offer or contract. 2. Any information contained herein (whether in the text, plans or photographs) is given in good faith but should not
be relied upon as being a statement of representation or fact. 3. Nothing in these particulars shall be deemed to be a statement that the property is in good condition or otherwise nor that any services or facilities are in good working order. 4. The photographs appearing in this brochure show only certain parts of the property
at the time when the photographs were taken. Certain aspects may have changed since the photographs were taken and it should not be assumed that the property remains precisely as displayed in the photographs. Furthermore, no assumptions should be made in respect of parts of the property which are not shown in the
photographs. 5. Any areas, measurements or distances referred to herein are approximate only. 6. Where there is reference in the particulars to the fact that alterations have been carried out or that a particular use is made of any part of the property, this is not intended to be a statement that any necessary planning, building
regulations or other consents have been obtained and these matters must be verified by an intending purchaser. 7. Descriptions of the property are inevitably subjective and the descriptions contained herein are given in good faith as an opinion and not by way of statement of fact. Plans are published for convenience of
identification only and although believed to be correct, their accuracy is not guaranteed and they do not form part of any contract. May 2014. Designed and produced by Creativeworld Tel: 01282 858200
Investment Location Catchment & Foodstore Description, Tenancy Asset Management, Trading Report, Contacts
Considerations Demographics, Competition Accommodation Planning, VAT,
Situation Tenant Covenant Proposal
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