South Somerset District Council purchases B&Q, Glastonbury for £4.405m
South Somerset District Council purchases B&Q, Glastonbury for £4.405m11 Sep 2019
Acquisition advice was provided by retail warehouse specialist Ellie Kirkby a Principal at Avison Young.
A top performing branch of DIY and home improvement warehouse B&Q has been acquired for £4,405,000, reflecting a net initial yield of 7.19%. Acquisition advice was provided by retail warehouse specialist Ellie Kirkby a Principal at Avison Young and the legal work undertaken by Paul Longman, partner at regional law firm Trethowans.
The property is a 27,000 square foot retail warehouse, with 8,000 square foot external garden centre and 4,000 square foot secure delivery yard. It has been tenanted by B&Q since its construction with an unexpired lease term of seven years.
The Council undertook substantial due diligence, mindful of current difficulties within the retail market, but were attracted by the performance of the store since opening in the early 1990’s, lack of competitors locally, live requirements from other occupiers, and lack of retail warehousing in the town.
The property has excellent visibility, being at the meeting point between the two main roads locally, the A361 and A39, and immediately adjacent the dominant local supermarket, Tesco.
The purchase forms part of the Council’s investment strategy, which is focused on finding value within a competitive market, to help provide an income. The current fear surrounding retail investment has allowed the right assets to become affordable, representing excellent value for money, as part of a balanced portfolio.
The property was also purchased with an eye on the future development of part of the car park, which will allow income and capital value to be maximised.
The Council’s Portfolio Holder John Clark comments; “Whilst out of district, this store is one that we know well, and one that we consider to be shielded from the general malaise that has hit retail warehousing, by the lack of supply in the town and substantial catchment for the occupier.” “This investment is the latest success in achieving the commercial strategy, which is focused on generating income to continue the provision of public services. We are pleased to report that progress of sum invested and projected gross and net return are all on target.”
Ellie Kirkby at Avison Young commented ‘‘This should prove to be a solid investment for South Somerset Council. The unit is let to the 5A1 D&B rated covenant of B&Q plc at a reasonably low rent, and the lack of other major DIY provision in the town, coupled with a distinct lack of retail warehouse supply, makes this an attractive and relatively rare investment opportunity. In addition there are asset management opportunities for the Council to add value here.”
The asset forms part of South Somerset’s growing portfolio, which includes High Street retail, in town and out of town offices, industrial, energy storage and a residential development site.