• Busy and attractive south coast resort town

• Prominent freehold retail & restaurant parade

• Shops well secured to major national retailers

• Restaurant let on a new 15 year lease

• Low rental base giving excellent growth prospects

• Asset management potential

• £1,650,000 subject to contract

• 8.11% net initial yield

Bournemouth’s prime retailing core is divided into two main pedestrianised thoroughfares; Commercial Road to the west and Old Christchurch Road to the east. The town boasts a wide range of major national retailers including department stores Debenhams, Beales and House of Fraser and multiple retailers Next, Topshop/Topman, Monsoon, Marks & Spencer, H&M, Boots and Primark.

The subject property occupies a highly prominent corner position on the edge of the prime pedestrianised retailing thoroughfare of Commercial Road at its junction with Terrace Road. Major retailers close by include H&M, JD Sports, Zara, Marks & Spencer, River Island and Primark.

The property comprises a parade of three shop units of brick built construction under a part slate part flat roof.

102 Commercial Road (Maplin) and 104 Commercial Road (Animal) both provide good size well configured ground floor shops with first floor ancillary accommodation. Both shops have a false façade at second floor.

106 Commercial Road (Ojo Rojo) provides a prominent end of parade ground floor restaurant and bar with additional dining and an open kitchen at first floor (approximately 120 covers). The second floor has restricted access and provides an additional food preparation area and office. We understand the tenant spent c £300,000 fitting out the unit.

We understand that the property is not listed and does not lie in a Conservation Area.

The shops have A1 (retail) consent and the restaurant enjoys the benefit of A3 (restaurant) consent.

Freehold

Tenancies

The property is let as follows:-

102 Commercial Road is let to Maplin Electronics Limited on a full repairing and insuring lease from 30th November 2011 to 21st March 2017 at a current rent of £52,000 per annum. There is a 5 year reversionary lease in place from 22nd March 2017 (approximately 5.5 years unexpired) with the benefit of a ‘day one’ upward only rent review. The tenant has been granted a rent free period expiring 4th November 2016. The vendor will ‘top up’ any rental shortfall due from completion.

104 Commercial Road is let to H Young (Operations) Limited t/a Animal on a 5 year full repairing and insuring lease from 25th March 2012 (approximately 6 months unexpired) at a current rent of £50,000 per annum. The lease is contracted outside the Landlord & Tenant Act 1954.

106 Commercial Road is let to Rojo Restaurants Limited t/a Ojo Rojo (with a director’s guarantee) on a 15 year full repairing and insuring lease from 22nd December 2015 (approximately 14.25 years unexpired) on a stepped rent as follows:

The lease has the benefit of 5 yearly upward only rent reviews and the landlord has the benefit of a £10,000 plus VAT deposit which is to be returned to the tenant after 5 years subject to good rental payment history / substantially complying with the lease covenants. The vendor will ‘top up’ the rent to £40,000 per annum from completion.

The total current income is £142,000 per annum.

We devalue the current shop rents as follows assuming a first floor ancillary rate of £3 psf:- 

102 Commercial Road (Maplin) - £52,000 per annum - £50.64 psf Zone A 

104 Commercial Road (Animal) - £50,000 per annum - £39.96 psf Zone A

We devalue the current restaurant rent as follows assuming a half rate at first floor sales/kitchen and £1 psf at second floor. 

106 Commercial Road (Ojo Rojo) – Average rent £33,000 per annum - £17.29 psf GIA 

Rents in Bournemouth came under pressure following the opening of Castlepoint Shopping Park and during the recession. However the town has fought back and in the last few years the occupational picture has improved and strengthened significantly. 

The arrival of Legal & General’s new 115,000 sq ft West Central leisure scheme which has a new 10 screen Odeon cinema and pre lets to Frankie & Benny’s, Ask Italian and TGI, and which is scheduled to open this Christmas, will further strengthen the town centre. 

However demand for space in Commercial Road has particularly improved following the arrival of large new stores for Primark and River Island. Recent additional lettings close by include JD Sports and  Tiger. 

It is our view that with other new lettings in Commercial Road imminent and few vacant shops now available, rental growth prospects off the current rents look good.

The structure of the building with its false second floor façade gives the impression that the shops have second floor accommodation. For the retail units there is no usable space, only a flat roof and the second floor above the restaurant only provides limited additional accommodation. An opportunity could exist, at some point in the future and subject to receipt of planning permission to develop this space either to give the shops more accommodation or to build residential accommodation on this level and potentially higher.

Finally with occupational demand improving and as 104 Commercial Road (Animal) is let outside the Landlord & Tenant Act 1954, an investor could look to take possession of the shop at expiry and look to relet at a higher rent creating reversionary value for the rest of the block.

The property has been elected for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

Our client is seeking offers in the region of £1,650,000 (One million, six hundred and fifty thousand pounds), subject to contract, reflecting a net initial yield of 8.11%.

1. An opportunity to acquire a highly prominent freehold retail and restaurant investment on one of the principal shopping streets in the town centre;

2. The shops are let off low rents to major retailers providing secure income with excellent rental growth prospects. The restaurant provides long dated income from an attractive new operator;

3. Potential to enhance value by developing the upper floors;

4. A purchase at the asking price reflects an attractive net initial yield.