Egstow Park is situated on the main A61 Chesterfield to Derby road, 5 miles south of Chesterfield and 1 mile from Clay Cross town centre, situated midway between Junctions 28 &29 of the M1. This brownfield site is undergoing significant redevelopment, being part of the wider Egstow regeneration programme bringing in more than 850 new homes, alongside offices, shopping areas hotel public spaces and woodland.
The objective is to create a fully serviced residential community with excellent communication links to the North and South of the area. The land allocated to retail development has a McDonalds and Marston’s pub already operating successfully and further retail development (non-food and beverage) being allocated to the site under offer from LPS, which is expected to be trading before the last quarter of 2020.
The very busy A61 link road Chesterfield to Derby road, provides significant traffic flow and a great development opportunity.
LPS have been offered this development from Carnworth Estates Ltd, headed by two very experienced property professionals who are also principals of a property consultancy in Leeds. The developers have Agreements for Lease in place with Costa Coffee (Costa Ltd, owned by the global food and beverage group, Coca Cola Inc.) and Home Bargains (owned by TJ Morris Limited, one of the UK’s fastest growing discount retailers).
Carnworth own the land on long leasehold (250 years), with a peppercorn rent, recently purchased from St Modwen plc. They will provide a turnkey fixed price contract to build the units to Costa and Home Bargains’ specifications within a 30 week build period upon acquisition of the land (expected late February). LPS have agreed Heads of Terms to buy the land and then commit to stage payments during the build, therefore offering the SDLT saving passed on to investors.
It is also of note that the developers have wider interests in this site and are involved in this regeneration scheme with a total value of £133m. This scheme completes the retails aspects of the overall regeneration plan.
Rational for Purchase
The UK discount retail market is set to grow by as much as 40% by 2022, resulting from discounters changing consumers perception of value and constantly undercutting mainstream retailers on branded household products. Home Bargains’ aim is to compete in the non-food and beverage discount market. More than £36 billion is expected to be spent through discounters in 2020 and a significant shift in shopping through retail parks rather than high street stores.
The Drive-thru sector has and continues to enjoy significant growth as consumers shift in behaviour, changes to more frequently buying food and beverage provision ‘on the go’.
Roadside operator requirements are driven today by this more sophisticated consumer base wanting convenience, cleanliness and choice. Busier lives demand convenience and fast service, coupled with more efficient use of land and space, thus providing many opportunities in this sector. Spending in ‘quick service’ coffee outlets in the UK reached £2.1bn in 2017, out of a total of £10.1bn spending in the sector.
For investors, this means there is scope to enjoy long term inflation linked income streams, backed by strong covenants.
LPS have been looking for such opportunities for some time, to provide investors with much needed diversity and we are offering this (our first) scheme of this nature, which has been negotiated off market, with attractive terms.
The agreed purchase price for the land and construction of the unit is £3.5m inclusive of purchasers’ costs. The land is to be acquired at £650,000, upon the syndicate immediately reaching its initial funding aim.
LPS 007 Ltd will fund the construction with development funding through a fixed price JCT design and build contract, with specified stage payments. an independent surveyor will be appointed, to sign off each stage.
We have negotiated an ‘interest payment’ rebate for the amounts paid during the build period (30 weeks maximum), including the cost of the land purchase, deducted from the balancing payment due at Practical Completion.
This enables us to provide a more attractive investment, than conventionally seen in this sector.