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OCEAN VILLAGE
SO14 3TJ
SOUTHAMPTON
HIGH YIELDING, WELL SECURED MULTIPLEX CINEMA
INVESTMENT WITH REDEVELOPMENT POTENTIAL
2 CINEWORLD, OCEAN VILLAGE, OCEAN WAY, SOUTHAMPTON, SO14 3TJ
INVESTMENT SUMMARY
� Southampton
is a port of national importance and a
regional south eastern retail, leisure and commercial
destination. It benefits from exceptional road, rail, air and
sea communications, together with an extensive and affluent
primary catchment population of 719,000 people.
� Purpose
built 5 screen multiplex cinema situated within the
prestigious Ocean Village complex, a major mixed use scheme
built around Southampton marina comprising high quality
residential, office, retail and leisure developments.
� 12.7
years unexpired FRI lease to Cineworld, the UK’s largest
and fastest growing cinema operator by admissions.
� Passing
rent of £429,468 per annum, reflecting
£14.14 per sq ft subject to five yearly fixed uplifts throughout
the term equating to 2.5% per annum compound.
� Long-term opportunities to intensify the development and change
use of the site, to office or residential, subject to planning and
freeholder consent.
Offers are invited in excess of £5,600,000 (Five Million, Six
Hundred Thousand Pounds) subject to contract and exclusive
of VAT. A purchase at this level would reflect the following attractive
yield profile:
Net Initial Yield
7.25%
Reversionary Yield 03/2017
8.20%
Reversionary Yield 03/2022
9.28%
Equivalent Yield
8.13%
3 CINEWORLD, OCEAN VILLAGE, OCEAN WAY, SOUTHAMPTON, SO14 3TJ
LOCATION
Southampton is the administrative centre for
Hampshire and is major retail, leisure and
commercial centre. It is strategically located
approximately 76 miles south west of London,
30 miles east of Bournemouth and 20 miles
west of Portsmouth. Road communications to
the city are excellent with the M27 running east
to west immediately to the north of the city and
connecting in turn to the M3 motorway, which
provides fast and direct access to the M25
and London.
The city benefits from fast and frequent rail
services, with a direct service into London
Waterloo in a faster journey time of 1 hour
24 minutes.
Southampton (Eastleigh) Airport lies only 4.5
miles to the north at the intersection of the M3
and M27 Motorways. It is the leading “Fast
Track” airport for Central Southern England,
with 15 airlines serving 48 destinations, with
1.72 million passengers a year.
A34
A350
CHIPPENHAM
The port of Southampton is a major passenger
and cargo hub centrally located on the south
coast, benefitting from a unique double tide,
proximity to the national motorway network, a
major airport and excellent rail inks.
A346
SLOUGH
M4
A20
BRACKNELL
NEWBURY
M3
M25
A339
A33
A338
WOKING
M3
A3
BASINGSTOKE
A303
The city has undergone significant
SHAFTTESBURY
A350
regeneration in recent years with
developments such as West Quay Shopping
Centre transforming Southampton into a
dominant centre on the south coast. Total town
centre retail floorspace is now estimated at
2.18 million sq ft, ranking the city 12th out of
the Promis centres on this basis.
M23
A31
M3
SALISBURY
M25
GUILDFORD
ANDOVER
A36
LONDON
M4
READING
A281
HORSHAM
WINCHESTER
A23
A36
A354
A338
EASTLEIGH
M27
A31
SOUTHAMPTON
WATERLOOVILLE
A27
PORTSMOUTH
A348
BOURNEMOUTH
A272
A3
A27
A259
BRIGHTON
BOGNOR REGIS
NEWPORT
WEYMOUTH
CATCHMENT
& DEMOGRAPHICS
Southampton has an estimated shopping
population of 434,000 (Promis) people and
benefits from an extensive primary catchment
population of 719,000, ranking the city
16 on the Promis centres in this measure.
Demographic projections are positive, with the
city expected to experience above average
population growth over the period 2010–2015,
with an associated increase in the available
pool of comparison spending which currently
ranks 19th in the UK on this measure.
The Southampton catchment population
is relatively affluent with 51% of the urban
population classed within the ABC social
groups. According to Promis, car ownership
in Southampton is significantly above
average with a particularly high proportion
of 2 car households.
The age profile of the Southampton
primary catchment population includes a
particularly high proportion of young adults
ages 15–24, an important category in terms
of leisure spend.
The city has a strong higher education
sector. The University of Southampton and
Southampton Solent University together have
a student population of over 40,000.
4 CINEWORLD, OCEAN VILLAGE, OCEAN WAY, SOUTHAMPTON, SO14 3TJ
SITUATION
West Quay
Shopping Centre
Odeon
Cineworld
Ocean Village
The subject property is ideally
situated within the prestigious
Ocean Village complex on
Ocean Way, approximately
0.6 miles south east of the
prime shopping centre. Ocean
Village comprises a major
mixed-use scheme built around
Southampton marina, including
high quality residential, office,
retail and leisure developments.
immediately south of the subject
property. The scheme currently
comprises three residential
blocks of up to 9 storeys with a
further phase nearly completed
comprising a further three blocks
rising up to 26 storeys providing
299 homes. In addition, the
development includes up
to 8 restaurants to create a
destination for fine dining.
The scale of residential
development in the immediate
vicinity has substantially
increased following the
development of Admirals Quay
To the south of the subject
property are a number of modern
office developments built over
3-4 storeys, with major occupiers
including Price Waterhouse
Ordnance Survey © Crown Copyright 2014. All rights reserved. Licence number 100022432. Plotted Scale - 1:8470
Neptune
Way
Maritime
Chambers
Prospect
House
Canute
Chambers
Grove
House
Barclays
House
Meridians
House
Ocean Way
Canute Road
Charter House
Europe
an Way
Multi Storey Car Park
(776 spaces)
Enterprise
House
Ocean Village
re
Innovation Cent
Maritime Walk
Sapphir
e Cour
t
Arcadia
House
Royal Crescent Road
Savannah
House
Harbour
Lights
Cinema
d
oa
tR
er
Alb
Ocean Way
uth
So
Ticket Booth
m
Ad
Marina
Maritime Walk
Proposed New 5*
76 Bedroom Hotel
with Spa and
Restaurants/Bars
ira
te
nu
ad
Ro
ay
Qu
Ocean Village
Marina
Ca
l’s
Tasman
Court
Coopers, BDO, E3 Consulting
and Expense Reduction
Analysts.
In addition to the residential
towers, there is a significant
amount of new commercial
development coming forward,
which will further enhance the
quality of the location. MDL
Developments Limited, as
freeholder of Ocean Village,
has planning permission for a
5 star, 76 bedroom hotel with
associated spa, restaurants,
bars/clubs and function rooms
with 12 residential units. A new
multi-storey car park providing
776 spaces was completed in
2007 immediately north of the
subject property.
5 CINEWORLD, OCEAN VILLAGE, OCEAN WAY, SOUTHAMPTON, SO14 3TJ
CINEMA COMPETITION
DESCRIPTION & ACCOMMODATION
TENANCY
Given the size of the catchment, cinema provision in
Southampton is very low. The primary competition comprises
the 13 screen Odeon cinema at the Leisure World scheme
approximately 1 mile to the north west on West Quay Road.
The subject property comprises a purpose built 5-screen
multiplex cinema arranged primarily over ground floor with a
licensed bar area, ancillary staff area and projection rooms
located at mezzanine level.
Also situated within the Ocean Village complex close by to
the south of the subject property is the 2 screen Harbour
Lights cinema operated by City Screen. However, this cinema
does not compete directly with the mainstream operators,
specialising in world and independent cinema as well as
providing screenings for the corporate market.
The property is of steel portal frame construction and the
external walls are constructed of blockwork internally and an
external skin of brickwork, with a profiled steel roof above.
The property is entirely let on a 20 year FRI lease from
27th March 2007 to Cineworld Cinemas Ltd, with a surety from
Cineworld Estates Ltd and Cineworld Holdings Ltd.
The passing rent is £429,468 per annum reflecting
£14.14 per sq ft, subject to 5 yearly fixed uplifts based on
2.5% per annum compound.
Hammerson’s outline planning application for its £70million
Watermark WestQuay scheme has been approved. The
950,000 sq ft mixed-use scheme will be delivered in two
phases and comprise of a landmark 10 screen cinema let to
Showcase Cinema de Lux, along with up to 20 restaurants
and additional retail space.
There are ample public car parking facilities in the immediate
vicinity, with 105 spaces located directly to the front of the
unit and 52 spaces immediately adjacent to the southern
elevation, with further parking areas located throughout the
estate. The completion of the multi-storey car park in 2007
further improved parking facilities within the immediate
vicinity, with the addition of 776 spaces.
The property provides the following approximate gross
internal floor areas:
Sq ft
Sq m
28,433
2,641.43
First Floor Ancillary
3,868
359.34
First Floor Projection
2,406
223.52
Ground Floor
The initial rent was calculated by adopting a full rate on the ground floor
area and half rate on the first floor ancillary areas. The projection rooms were
not rentalised.
The site area is approximately 0.80 acres (0.32 Ha).
TENURE
The property is held long leasehold for 125 years from
5th October 1987 from Ocean Village Resorts Limited at
a peppercorn rent.
A copy of the headlease documentation is available
upon request.
Passing Rent
£429,468
£14.14 sq ft
March 2017
£485,903
£16.00 sq ft
March 2022
£549,755
£18.10 sq ft
6 CINEWORLD, OCEAN VILLAGE, OCEAN WAY, SOUTHAMPTON, SO14 3TJ
TENANT’S COVENANT
Cineworld Group plc was founded in 1995 and is now one of the leading cinema
groups in Europe. It is the only fully quoted cinema business in the UK. The UK
business was merged with Cinema City in February 2014 and now has 202 sites
and a total of 1,858 fully digital screens including four out of the ten highest
grossing cinemas in the UK and Ireland.
In 2013, Cineworld accounted for 51.5 million admissions in the UK had revenues
of £406.1 million and an Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) before exceptional items of £72.3 million.
The combined UK and Irish cinema market is dominated by three major UK
exhibitors, Cineworld Cinemas, Odeon UCI and Vue. In total, they account for over
70% of the total market box office revenues.
In 2013, Cineworld’s UK and Ireland box office market share increased to 27.4%
Retail and advertising revenues continue to be the significant other sources of
income along with popcorn, soft drinks and coffee.
The rate of new cinema openings has been falling in recent years, partly due to the
limited number and associated lead time of new retail and leisure developments.
There were over 3,900 cinema screens in the UK by the end of 2013 (2012: 3,858)
representing growth of over 1.0% compared to a 0.9% growth in 2012 (Source: The
Cinema Exhibitors’ Association).
Cineworld Estates Limited (surety)
26 Dec 2013
27 Dec 2012
29 Dec 2011
Sales Turnover
£6,532,000
£6,393,000
£6,146,000
Profit/(Loss) Before Taxes
£2,564,000
£3,194,000
£2,985,000
£47,411,000
£45,588,000
£42,337,000
Tangible Net Worth
The company has a Dun and Bradstreet rating of 5A1 reflecting minimal risk of business failure.
Cineworld Holdings Limited (surety)
26 Dec 2013
27 Dec 2012
29 Dec 2011
–
–
–
£38,829,000
£26,964,000
£17,392,000
£300,157,000
£301,328,000
£302,369,000
Sales Turnover
Profit/(Loss) Before Taxes
Tangible Net Worth
The company has a Dun and Bradstreet rating of 5A1 reflecting minimal risk of business failure.
Key financial information relating to the tenant and sureties is set out below:
Cineworld Cinemas Limited (tenant)
26 Dec 2013
27 Dec 2012
29 Dec 2011
£176,061,000
£169,617,000
£164,576,000
Profit/(Loss) Before Taxes
£15,390,000
£15,528,000
£11,769,000
Tangible Net Worth
£38,925,000
£46,185,000
£41,572,000
Sales Turnover
The company has a Dun and Bradstreet rating of 5A1 reflecting minimal risk of
business failure.
ASSET MANAGEMENT
Given the intensity of development in the
immediate vicinity with existing buildings
constructed up to 9 storeys and residential towers
up to 26 storeys, it is clear that the subject site
is under utilised and in the long-term will provide
significant opportunities for an intensification of
development on the site by building upwards
for private residential, student or office uses,
VAT
The property is elected for VAT.
subject to planning and freeholder consent. In
terms of residential values, we understand that 2
bedroom apartments within the Admirals Wharf
development are currently selling for prices in
excess of £300,000.
FURTHER INFORMATION
MARK GIRLING
T: 020 7312 7460
E: mark.girling@montagu-evans.co.uk
NICK RICHARDSON
T: 020 7312 7420
E: nick.richardson@montagu-evans.co.uk
GUY HARRIS
T: 020 7866 8605
E: guy.harris@montagu-evans.co.uk
Subject to contract
Offers are invited in excess of
£5,600,000 (Five Million, Six
Hundred Thousand Pounds)
subject to contract and
exclusive of VAT. A purchase
at this level would reflect the
following attractive yield profile:
Net Initial Yield
7.25%
Reversionary Yield 03/2017
8.20%
Reversionary Yield 03/2022
9.28%
Nominal Equivalent Yield
8.13%
Misrepresentation Act 1967
Montagu Evans LLP for themselves and for the vendors or lessors of this property whose agents they are, give notice that:
1 The particulars are set out as a general guideline only for the guidance of intending purchasers or lessees and do not constitute the whole or any part of an offer or contract. 2. All descriptions, dimensions,
references to condition and necessary permissions of the use and occupation, and other details are given in good faith without responsibility whatsoever and any intending purchasers or tenants should not
rely on them as statements or representations of fact, but must satisfy themselves by inspection or otherwise as to the correctness of each of them. 3. Montagu Evans LLP nor their employees has any authority
to make or give any representation or warranties whatsoever in relation to the property. 4. Unless otherwise stated, all prices and rents are quoted exclusive of VAT and intending purchasers or lessees must
satisfy themselves independently as to the applicable VAT position. 5. All the plans and maps provided within the particulars are for identification purposes only.
12562.001 Cineworld Southampton, Ocean Way | September 2014
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