Warrior Capital has sold the Planet Organic office headquarters and flagship store on London’s Westbourne Grove for £11.35m to SRG Holdings reflecting a net initial yield of 4.6% and a capital value of £890 per sq ft.
The agreed passing rent on the investment steps up to £571,550pa which equates to £45 per sq ft – substantially above the tone for the location.
The sale means that Warrior has achieved a leveraged IRR of 97% following the store’s acquisition in October 2018.
The 12,746-sq ft property at 42 Westbourne Grove was originally acquired with a view to carrying out a residential mews development to the rear of the property, alongside a reconfiguration of the retail and commercial premises fronting Westbourne Grove. To allow for this, Warrior completed a simultaneous re-gear with Planet Organic on acquisition taking their lease outside the Act whilst also producing an uplift in rent and extending their occupation by five years. However, within a year, Planet Organic was acquired by private equity house, Inverleith, and the store became central to the retailer’s operational strategy so a new 15-year lease was agreed.
Ryan Todd of Warrior Capital comments: “Through marrying the purchase of the asset with a re-gear of Planet Organic’s lease we were able to maximise the valuation and minimise our front-end equity contribution.
“The property is an important site for Planet Organic providing a flagship store, HQ offices and a ‘dark kitchen’ preparing food for distribution to their other outlets. Working with Planet Organic to agree a second re-gear providing a new 15-year lease, produced an investment value which, in our view, outweighed the long-term redevelopment potential and made a sale of the property preferential.
“Planet Organic is a landmark store on Westbourne Grove and we’re pleased that they have been able to secure their occupancy to support their future expansion while we have been able to realise a return on our exit from the asset.”
The retailer is the UK’s largest fully certified organic supermarket, and currently has nine stores across London.
Warrior Capital is one of the leading investors in this area of London, and owns around £350m of commercial and residential properties across the Notting Hill area focussed predominantly on Portobello Road, Queensway and Westbourne Grove.
This part of London is due to be further enhanced by the ongoing redevelopment of the Grade II listed former Whiteleys store where Queensway intersects with Westbourne Grove. The £1.5bn scheme – which is due for completion in 2023 – will include 153 apartments; a five-star Six Senses hotel; a cinema; 75,000 sq ft of retail space; and a gym.
Warrior Capital played a central role in bringing forward the redevelopment of Whiteley’s having initially purchased the scheme in partnership with Meyer Bergman. Warrior was responsible for managing the asset, evolving the design and development brief and securing planning permission.
Ryan Todd comments: “This is one of London’s most vibrant areas and we remain committed to acquiring further properties and enhance them through active management”.
Tydus and Orme Property acted for Warrior Capital in the sale. SRG Holdings was advised by CBRE.
