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JOHNSTREET,WARRINGTON
AnalysisoftheDevelopmentOpportunityForHighStreetGroup
Gavin Fraser – Enesis Ltd 10th October 2016
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OverviewTheschemeTheschemeisalargeresidentialschemeinthetowncentreofWarrington.Theschemeisverywelllocatedinterms of its relationship to the Golden Square Intu Shopping centre and the Central Railway station. It iswrappedintheregenerationoftheTownCentre,whichisnowunderconstruction.
Thesummaryofassetisasfollows:
Thesitehasfullplanningconsentthatwas implementedbytheconstructionofphase1,knownasCheshireLines,andbythecompletionremediationandpilingworks.Thereareefficiencyworksthatimprovethevalueofthedesignsignificantly,asbothaPRSandBuytoLetexitstrategy.
The land acquisitionwill be fundedby the ‘front---funding’ of the freehold reversion for the consented scheme.Valued on a 28YP and £350 per annum ground rent the reversion would have a value of circa £2.9m. ThepreconditionsthatexistfromE&JCapitaltofront---fundthefreeholdreversionare:
• That theground rent ispaidduring theconstructionperioduntil it is transferred into the individualapartments
• There is a completion bond put in place, using standard ABI performance bond terms. This can beplacedagainstHSG/ theSPCor thebuilder.The localbuilding thathasbeenengaging in thepricingprocesswithusisHarbourconstruction.WewilldiscusstherebondingcapabilitythiscomingFriday.
Theschemecanbedeliveredinthreephasesandthereisthepotentialforthefollowing3exits:
• InstitutionalPRS(PRS).ThiswouldbetheGraingerMksolution.• Buy to Let Investors (BTL). Most schemes that are too small or badly located will exit to buy---to---let
investors.TheexitwouldbeorganisedthroughinvestmentclubssuchasKnightknoxorConnells.Wecanaccessbothorganisationsassoonasweareready.
• Privatesales.Theflatscouldbesoldinatraditionalmanner.ThiscouldbedoneatthesametimeastheBTLInvestorsaboveanditcouldalsobesupportedbyrollinganyunsoldunitsintoprivaterental,supportedbyaBTLmortgage.
AssumingthattheBuytoLetexitisthemostcommonthentheschemehasprofitabilitytothetuneof£5.8m,overtheperhapsa4---5yeardeliveryplan.Thebuildwouldrequireanaveragedrawncapital(abovethefreeholdreversion)of£7.9m,whichwillbemadeupof£5.9mdebt(at65%ofLTC)and£2.0mequityinvestment.
ThePartiesThe site is owned by a local developer / asset---holder, Bob McLaughlin. The sale price is £3.1m, with £600kdeferred fro12months.Thedeferredpaymentwouldsitasseniorchargeover theassetuntildevelopmentfinance is deployed. At that time the chargewould be demoted to second charge (or some other form ofsecurity–tbc).
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TheRegenerationofWarringtonWarrington isaUnitaryAuthority, formed in1998,withapopulationofcirca200,000people.Warrington iscurrentlyexperiencingthethirdlargestgrowthintheUk,behindLondonandAberdeen,andhasamongstthehighestemploymentratesat80%ofitspopulation.ItisasimilarfirstgenerationnewtowntoMiltonKeynes.
OverviewofRegenerationSincegaining its independenceas aUnitaryAuthority therehasbeenamasterplan to regenerate the towncentre.Sincethefinancialcrisisofthelate2000’stheregenerationhasregainedmomentumandsince2013WarringtonCouncilhaveannounced£800mofregeneration,ofwhich£450miseitherbuiltorunderway.
Thetowncentreregenerationiswrappedaroundthepedestrianzoneandthecentralstation,andisfocusedonthreeactivezonesinthefollowingchronologicalorder:
• Greenarea.ThiscomprisedtherefurbishmentandextensionoftheexistingGoldenSquareShoppingCentre,ownedbyIntu.
• YellowArea.TheisthedemolitionandnewbuildofalargeportionoftheoldtowncentreknownasTimeSquareorBridgeStreetarea.Thisisfullycontractedandthephasedbuildingworkisunderway.
• Blue Area. This is regarded as the Stadium Quarter and comprises the central station, the rugbystadium and the proposed residential, secondary education and commercial developments. Thisregenerationhasbegunoverthelast2years.Oursiteisshowninred.
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IntuShoppingCentreExtension,GoldenSquare
This£65mextensiontotheGoldenSquareShoppingCentreinWarringtonhasbeencompletedasamajorregenerationofWarringtontowncentreinbothretailandleisureuses.The300,000ft2extensionoffersunitssuitablysizedformodernretailersaswellasintroducinga100,000ft2departmentstoreintothetown.Aswellasthemajorretailelementtheschemeprovidestwonewpublicsquaressurroundedwithleisureusesandlinkinginwiththetowncentrepedestrianisationscheme.
Carparkingaboveandbelowthenewextensionandanewstateofthearttransportinterchange,adjacenttothecentralrailwaystation,hasalsoimprovedaccessibilitytothemanynewattractionsthatareavailable.
ThebusstationanditsentrancetotheIntuCentreisadjacenttothestationandlessthana2minutewalkfromthestationfrontageofoursite.
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TimesSquare/BridgeStreetRegenerationThe regeneration of the Bridge Street area is beingrenamedasTimeSquare.Theconstructionofthe£107mredevelopmenthasbegunandisexpectedtobecompletedwith2018.Itcomprises42,000sqftofretail,92,000 sqft of leisure, 42,000 sqft newmarket hall, amulti---storey car parkwith 1,200 spaces, 100,000 sqft ofcouncilofficesandanewpublicsquare.
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StadiumQuarterRegenerationTheStadiumQuarterregenerationhasmultipleaspectstoit.Theseparateaspectsareasfollows:
• Green Area – comprises the Rugby stadium and thecompleted regeneration, including outlet stores and carshowrooms. The regeneration was completed some timeagoandhasnowspreadsomelengthuptheA49tocreateahuge retail corridor extending out from the StadiumQuarter
• Blue Area – comprises the residential blocks known as
Cheshire Lines. This is a mixed PRS and homeownershipcommunity. Likeour site, it is accessed fromCentralWay,whichisthestationapproachroad.Itisfullyoccupiedeventhoughtheregenerationhasyettowraparoundit.
• Yellow Area – comprises the central station, which has
directtrainstobothManchesterandLiverpool,in15---20mins.The station has undergone a recent refurbishment,refocusingthestationanditsaccessontoCentralWay.Asaconsequencethestationisnowamodernstationthatfacesthefoyerofourdevelopment.
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• PinkArea– ispart---developed.Thepart totheNorthhas been transformed into a nuclear and energycentre of excellence and separately a UTC facility inconjunction with Manchester MetropolitanUniversity.
The area to the South West is currently beingtransformed into a paved plaza that links throughtheunderpasstoGoldenSquareShoppingCentre.
The area to the South East is an existing car parkthat is leasedout toacarparkprovider,untilnextmonth.
• RedArea is yet to be developed. The Council have a
JV with Iliad, but progress has yet to be made. Thearea is currently used as a temporary car---park, buthasconsentforOfficesanda Hotel.
• Red&WhiteHatch–isoursiteandwillwraptheregenerationaroundthestationproperly,with284
residentialunitsbuiltoverthreephasesfrom2017to2020.
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TheAppraisalsForthepurposeofanalysiswehavefocussedtheappraisalonaBTLexit.Itshowsaprofitof£2.17mthatwouldneetobesharedwithGMP.Weshouldsharethiswiththembywayofillustration.
Phase1
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