Investment Brochure - Citygrove :: Southwater Square development ...

Prime leisure
investment
opportunity
Southwater
Square
Telford

“The development will bring
a variety of entertainment to
the community including a
mixture of restaurants and, of
course, a Cineworld multiplex
which will feature state of the
art digital and 3D screens.”
Steve Wiener
CEO, Cineworld
A prime
investment
Offers are invited to purchase
the freehold interest in the
leisure element of the Southwater
Square development, a prime
cinema, hotel and restaurant
investment in Telford.
Southwater Square benefits
from a prominent pedestrian link
to Telford Shopping Centre, with
ample parking provided by a
new 600-space multi-storey car
park, due for delivery prior to
completion of the leisure scheme.
The leisure element of
Southwater Square will extend
to circa 99,000 sq ft (9,197 sq m)
and comprises an 11-screen
cinema, 85-bed hotel and
seven restaurants.
The scheme will have an
excellent tenant line-up
consisting of Cine-UK, Premier
Inn, Wagamama, Chimichanga,
Ask, Pizza Express, Bella Italia,
Nando’s and Harvester.
The investment will generate
a rental income of £1,574,750
per annum, derived from a
hotel rent of £4,000 per room,
restaurant rents of between
£26.50-£30.00 per sq ft and a
cinema rent of £12.00 per sq ft.
60% of the income, including
the cinema and hotel, will
have the benefit of index-linked
or fixed rental uplifts at review,
throughout the term.
The development, upon
completion, will benefit
from an average unexpired
term, weighted by income,
of 24.32 years to expiry and
20.48 years to breaks.
We are instructed to seek
offers in excess of £23,800,000
(twenty three million, eight
hundred thousand pounds)
subject to contract and exclusive
of VAT. A purchase at this level
would reflect a net initial yield
of 6.5% after allowing for
purchaser’s costs of 1.8% on
a forward funding basis.

A busy town
Telford is located 30 miles
west of Birmingham and
15 miles east of Shrewsbury
in the West Midlands.
The town is connected to
Birmingham city centre via the
M54 motorway, allowing journey
times of 30 minutes by car.
Regular rail services run
to Birmingham Moor Street
station from Telford Central,
with journey times of
35 minutes. Furthermore, six
major UK airports are within
a two hour drive of the town.
“The dawn of a very
exciting era for
Telford town centre”
Kuldip Sahota
Telford & Wrekin
Council

“Southwater Square is set
to be transformed into a
major leisure destination
in Telford complete with a
new cinema and market
leading restaurants”
John Bates
Premier Inn
An
expanding
town
The Borough of Telford is
identified as an important
regional growth point and as
such by 2026 is expected to
have seen a 23% population
expansion to 213,000 people.
Of the current population of
162,600, 64.5% are aged
16-64, constituting a younger
profile than the regional and
national average.
The manufacturing sector is
the largest employer in Telford,
with polymer and advanced
engineering businesses
particularly dominant following
a period of extensive foreign
direct investment. This has
created a resilient manufacturing
sector which outperformed
the national average during
the recent downturn.
Southwater Square will be
the dominant leisure scheme
within the catchment area.

The scheme is situated
within the wider Southwater
Square development, which
is the product of Telford
and Wrekin Council’s vision
for a vibrant and sustainable
heart for the town centre.
Once completed, Southwater
Square will offer circa:
• 349,620 sq ft (32,480 sq m)
of prime town centre offices
• 107,000 sq ft (10,000 sq m)
of new leisure space including
the cinema, hotel, restaurants
and the Council’s extensions
to the existing ice rink, Mecca
Bingo and Ten Pin Bowling
• Additional hotels
• 118,500 sq ft (11,000 sq m)
of additional events and
conferencing space
which will enhance
The International Centre
• 61,356 sq ft (5,700 sq m) of
non-residential institutions
including a public library
• 330 dwellings
• 600-space multi-storey car park
This first phase of the
development will incorporate
Citygrove’s scheme and the
Council constructing the
600-space multi-storey car park,
energy centre, public open
space, improvements to the
frontages of the existing
Mecca Bingo, Ten Pin Bowling
and ice rink and construction
of the Hub. The Hub is a
mixed-use centre combining
a library and offices occupied
by a range of public sector
organisations including the
council, police and fire service.
Citygrove’s scheme will form
an open central plaza at
the heart of the development,
and gives rise to the name
‘Southwater Square’. The plaza
is connected via a pedestrian
link to the southern entrance
of Telford Shopping Centre
and is situated adjacent to
The International Centre and
Telford Town Park.
In walking
distance
The circa 1,000,000 sq ft
(92,900 sq m) Telford Shopping
Centre is a super-regional
retail destination, tenanted
by over 200 retailers and is
anchored by Debenhams, Marks
& Spencer and House of Fraser,
driving an average foot-fall of
circa 300,000 people per week.
The International Centre
is a circa 161,500 sq ft
(15,000 sq m) conferencing
and exhibition venue attracting
in excess of circa 200,000
delegates annually and is
currently expanding its facilities.
The 420 acre Telford Town
Park is situated on the doorstep
of Southwater Square and
attracts up to circa 750,000
visitors annually. As part of the
development, the Council is
investing £3.4m in upgrading the
park’s facilities and constructing
a new visitor centre.
“The choice of
restaurants will
be second to
none in the area.”
Peter Atkinson
Nando’s

“The development has
attracted high quality
restaurant tenants and
will create 260 jobs
that will ensure that the
scheme is a success.”
Toby Baines
Citygrove
Legal boundary plan
First floor plan Hotel second/third floor plan
Site, planning
and tenure
Site
The site is currently cleared
and within Council ownership,
as outlined in red on the
legal boundary plan.
Planning
Full planning consent was
granted on 8th March 2012. This
permits a leisure development
comprising a hotel, cinema, class
A3/A4 floorspace, multi-storey
car park, class A1/A3/A3/B1 unit
within the multi-storey car park,
replacement surface car park,
public realm improvements
and associated works including
highways works.
Tenure
The scheme will be held on
a freehold basis.

The leisure
destination
The scheme will be built
around the central plaza
and will comprise an 11-screen
cinema, 85-bed hotel and
seven restaurants, totalling
circa 99,000 sq ft (9,197 sq m).
An excellent tenant line up
consisting of Cine-UK, Premier
Inn, Pizza Express, Zizzi, Bella
Italia, Nando’s, Harvester,
Chimichanga and Wagamama
will ensure that the scheme
maintains a strong day and
night-time footfall.
The seven restaurant units,
totalling circa 26,000 sq ft
(2,415 sq m) GIA, will be
arranged on the ground floors
with excellent frontage onto
the central plaza and external
seating areas.
The cinema will be arranged
over the first floor with a ground
floor foyer accessed from the
central plaza.
The hotel accommodation
will be arranged over the first,
second and third floors with
a ground floor lobby accessed
from the central plaza.
The 85 rooms will be built
to Premier Inn’s standard
specification.
The Council will construct
a new 600-space multi-storey
car park to service the leisure
scheme and will carry out
all public realm improvements
to Southwater Square.
The car park will be accessed
from Coach Central, adjacent
to the scheme.
“The development will
transform Telford town
centre and give it a
vibrant beating heart.”
Kuldip Sahota
Telford & Wrekin
Council

Cinema and restaurant
development
A scheme to be delivered
by Citygrove, comprising an
11-screen Cineworld Cinema
as well as four restaurant units
facing onto Southwater
Square.
Mixed use building
This exciting, mixed use
building will include an
improved library provision, a
First Point and contact centre;
to deliver front line services
to residents. This building also
incorporates space for a
bar/restaurant and cafe.
Opening early 2014
Hotel and restaurant
development
A scheme to be delivered
by Citygrove, comprising
an 85-bed Premier Inn above
three bar/restaurant units.
Bars and restaurants will be
located on the ground floor,
facing onto Southwater
Square.
Restaurant unit
A self-contained A3/A4 unit
fronting onto the new public
square extending to 390 sq m
(4196 sq ft) together with
aspirations for outside dining
with views over the newly
created Southwater Lake.
Mixed-use
development site
Available in the medium
term as whole or in part.
The site has scope for a
range of uses including retail,
office and residential.
Multi-storey car park
The first phase of this
development will provide
600 car parking spaces within
a safe, convenient location,
accessible from Coach
Central. The car park will
also incorporate retail space
facing onto Southwater
Square extending to
186 sq m (2002 sq ft).
Bar/restaurant unit
A self-contained A3/A4
unit fronting onto the
main street extending
to 525 sq m (5651 sq ft)
Energy Centre
This development is key to
making Southwater a truly
sustainable development.
Completion 2012
The bigger
picture
Telford Ice Rink extension
A Council-led development
incorporating a new entrance
to Telford Ice Rink and a new
soft play facility. The existing
ice rink will also undergo
significant refurbishment works
internally and externally.
Completion 2012
Bar/restaurant unit
A Council-led development
providing a new standalone
A3/A4 bar/restaurant
forming the new frontage
to the existing bowling and
bingo unit. Extending to
303 sq m (3261 sq ft)

“Telford is a large and
busy town which lacks
a modern restaurant
quarter – Southwater really
delivers in this respect.”
Jonathan Haverhand
Bella Italia
An excellent
tenant mix
Given its prominent location
and character it is not surprising
that the scheme has attracted
an excellent tenant mix. The
property is let to Cine-UK, Premier
Inn, Wagamama, Chimichanga,
Ask, Pizza Express, Bella Italia,
Nando’s and Harvester.
The tenancy schedule
(overleaf) explains the principle
financial terms of these
lettings. Copies of the leases
are available upon request.
All leases are to be granted
on effective full repairing and
insuring terms and contain
upward-only rent reviews.
In all other respects, the leases
are worded to institutional
standards. The Council will be
responsible for the maintenance
and upkeep of the general
Southwater area which will
be recoverable from the
tenants of the leisure scheme.
The external envelope of the
building is recoverable by way
of a separate service charge.
The income is secured against
excellent quality covenants.
60% of the income, including
the cinema and hotel, will
have the benefit of index-linked
or fixed rental uplifts at review,
throughout the term.
The development, upon
completion, will benefit
from an average unexpired
term, weighted by income,
of 24.32 years to expiry and
20.48 years to breaks.

Tenant profiles
The cinema is let to Cine-UK Ltd,
which owns and operates the
Cineworld chain of cinemas.
Since its launch in 1996 the
company has been the fastest
growing exhibitor in the country.
Cine-UK currently operate 79
cinemas, four of which are in
the top ten grossing cinemas in
the UK and Ireland. For the year
ending December 2011, the
company had in excess of 48.3
million admissions and achieved
a turnover of £348 million.
The hotel is let to Premier Inn
Hotels Ltd, a subsidiary of the
Whitbread group. Premier Inn
is the UK’s largest budget hotel
chain with over 590 hotel sites,
equating to 43,000 rooms across
the UK and Ireland. Premier
Inn plans to open a further
18,000 rooms by 2016. Turnover
for the year ending March 2011
was £87,378,000.
Unit 2A is let to Mitchells &
Butlers Retail (No2) Ltd, trading
as Harvester. The company, a
subsidiary of Mitchells & Butlers
PLC, operates 246 outlets
as of September 2010 with 175
Harvester restaurants serving
freshly prepared salads and meat
dishes in a family orientated
atmosphere. For the year ending
September 2010, Mitchells &
Butlers Retail (No2) Ltd saw a
turnover of £291,772,000.
Unit 2B is let to Prezzo PLC
trading as Chimichanga,
which offers a Mexican dining
experience in the UK. Prezzo
PLC trades from 168 branches
nationwide, predominantly
providing an Italian cuisine
experience. The company
was placed on the Alternative
Investment Market in 2002
and for the year ending
July 2011, received a turnover
of £59,600,000.
Unit 3 is let to Ask Restaurants
Ltd trading as Zizzi, which offers
an authentic Italian experience.
Ask Restaurants Ltd is a
subsidiary of the Gondola group
of companies, which serve
in excess of 43 million meals a
year in over 664 restaurants.
For the year ending June 2011,
Ask Restaurants Ltd turned
over £193,348,000.
Unit 4 is let to Pizza Express
(Restaurants) Ltd which is
also a subsidiary of the
Gondola group of companies.
Pizza Express (Restaurants) Ltd
currently operates 402
restaurants throughout the UK,
and experienced a turnover
of £332,490,000 in the year
ending June 2011.
Unit 5 is let to Bella Italia
Restaurants Ltd, who offer
Italian dining in 85 restaurants
throughout the UK. The company
is a subsidiary of the Tragus
Group, one of the largest
independently owned restaurant
operators in the UK, whose
brands include Strada and
Café Rouge. Bella Italia
Restaurants Ltd experienced
a turnover of £67,628,000 for
the year ending May 2011.
Unit 6 is let to Nando’s
Chickenland Ltd, a restaurant
chain which concentrates on
delivering a Portuguese style
dining experience. Nando’s
opened their first restaurant in
Ealing in 1992, and now has
241 restaurants across the UK.
For the year ending February
2011 the company produced
a turnover of £317,356,000.
Unit 7 is let to Wagamama Ltd,
owned by its management and
capital investors: Duke Street
Capital and Hutton Collins.
Wagamama is an award winning
brand, whose restaurants are
based on Japanese style
noodle bars serving up fresh
Asian flavours in a contemporary
setting. The company now
operates 70 restaurants in the
UK and turned over £110,664,000
in the year ending April 2011.
Tenancy schedule
Unit Tenant Area Rent psf Rent pa Term Break Rent Review
Years Clause /Premium
Cinema Cine-UK Ltd 40,000 sq ft £12.00 £480,000 25 N/A 2.5% compound
(3,716 sq m) R/F – 6 months per annum. £1.15m
reverse premium
Hotel Premier Inn 85 beds £4,000 per room £340,000 25 Yr 20 CPI – 0 to 4%
Hotels Ltd R/F – 1.5 months
2A Mitchells & Butlers 4,000 sq ft £30.00 £120,000 25 Yr 15 RPI – 1 to 3%
Retail No 2 Ltd (371.6 sq m) R/F – 8 months
(t/a Harvester)
2B Prezzo PLC 4,000 sq ft £30.00 £120,000 25 N/A OMV
(t/a Chimichanga) (371.6 sq m) R/F – 8 months
3 Ask Restaurants 3,500 sq ft £30.00 £105,000 25 Yr 15 OMV
Ltd (t/a Zizzi) (325.2 sq m) R/F – 8 months £175,000 reverse
premium
4 Pizza Express 3,500 sq ft £30.00 £105,000 25 Yr 15 OMV
(Restaurants) Ltd (325.2 sq m) R/F – 8 months
5 Bella Italia 3,500 sq ft £28.57 £100,000 20 Yr 15 OMV
Restaurants Ltd (325.2 sq m) R/F – 12 months
6 Nando’s 4,000 sq ft £28.00 £112,000 20 Yr 15 OMV
Chickenland Ltd (371.6 sq m) R/F – 8 months
7 Wagamama Ltd 3,500 sq ft £26.50 £92,750 25 N/A OMV
(325.2 sq m) R/F – 12 months
Total 99,000 sq ft £1,574,750
(9,197 sq m)
Tenant Number of units Year End Turnover
Cine-UK Ltd 79 December 2011 £348,000,000
Premier Inn Hotels Ltd 590 March 2011 £87,378,000
Mitchells & Butlers Retail No 2 Ltd (t/a Harvester) 175 September 2010 £291,772,000
Prezzo PLC (t/a Chimichanga) 168 July 2011 £59,600,000
Ask Restaurants Ltd (t/a Zizzi) 118 June 2011 £193,348,000
Pizza Express (Restaurants) Ltd 402 June 2011 £332,490,000
Bella Italia Restaurants Ltd 85 May 2011 £67,628,000
Nando’s Chickenland Ltd 241 February 2011 £317,356,000
Wagamama Ltd 70 April 2011 £110,664,000

Citygrove has created
a reputation for
building high quality,
innovative and
successful schemes.
Citygrove
and the
development
team
Citygrove is one of the UK’s
leading developers of
commercial leisure and retail
space. In recent years the
company has built and let over
186,000 sq m (2 million sq ft) of
commercial accommodation
throughout the country for
institutional clients and has a
reputation for building
high quality, innovative and
successful schemes.
Past Citygrove leisure
schemes have included:
• Westgate, Aldershot
(completion due October 2012)
• The Parkway, Bury St Edmunds
• Cityview Leisure Park, Haverhill
• Barbican Leisure Park, Plymouth
• The Colonnades, Croydon
• Anchor Leisure Park,
Bishop’s Stortford
• Chichester Gate Leisure
Park in Chichester.
The professional and design
team, as well as the principal
build contractor who will
be used for this development,
all have extensive experience
in delivering leisure
developments. The purchaser
will benefit from a complete
package of warranties from
the building team.

Proposal
We are instructed to seek
offers in excess of £23,800,000
(twenty three million, eight
hundred thousand pounds) subject
to contract and exclusive of VAT.
A purchase at this level would
reflect a net initial yield of 6.5%
after allowing for purchaser’s costs
of 1.8% on a forward funding basis.
Jones Lang LaSalle
Martin Le Grice
020 7087 5342 or 07867 803271
martin.legrice@eu.jll.com
Mark Smith
020 7087 5349 or 07966 398373
mark.l.smith@eu.jll.com
Misrepresentation Clause
The accuracy of any description, dimensions, references to condition, necessary permissions for use and occupation and
other details contained herein is not guaranteed and is for general guidance only and prospective purchasers or tenants
must not rely on them as statements of fact or representations and must satisfy themselves as to their accuracy. Neither Jones
Lang LaSalle or Savills nor any of its employees or representatives has any authority to make or give any representation or
warranty or enter into any contract whatever in relation to the property. Rents quoted in these particulars may be subject to
VAT in addition. The reference to any mechanical or electrical equipment or other facilities at the property shall not constitute
a representation (unless otherwise stated) as to its state or condition or that it is capable or fulfilling its intended function.
Prospective tenants/purchasers should satisfy themselves as to the fitness of such equipment for their requirements.
Subject to Contract April 2012
A web-based data room has
been set up in order to view
more detailed project information.
For access and further
information please contact:
Savills
Andrew McGregor
020 7409 8861 or 07970 971538
amcgregor@savills.com

Citygrove Securities PLC
10 Albemarle Street
London W1S 4HH
United Kingdom
Tel: +44 (0)20 7647 1700
Fax: +44 (0)20 7647 1701
london@citygrove.com