SOUTH EAST DISTRIBUTION WAREHOUSE INVESTMENT

Transcription

1 SOUTH EAST DISTRIBUTION WAREHOUSE INVESTMENT Modular Heating Group Ltd, Unit 3, Juniper West, Fenton Way, Southfields Industrial Estate, Basildon, Essex, SS15 6SJ

2 INVESTMENT SUMMARY SUMMARY Modern distribution warehouse unit built in 2003 forming part of a purpose built estate of 4 units. The unit measures approximately 41,396 sq ft (3, sq m) GIA. Freehold Let to Modular Heating Group Ltd who have occupied the unit for 10 years. The property was originally leased from 19th May 2006 for a term of 10 years on FRI terms. The tenant signed a reversionary lease on the 1st October 2010 extending the lease by 4 years to expire on the 18th May Current rental income of 266,869 pa equating to 6.45 per sq ft ( per sq m). Next rent review 19th May 2016 on an upwards only basis to Open Market Rental Value. Local evidence supports the rent is reversionary to 7.00 per sq ft ( per sq m). Offers are invited in excess of 3,480,000 (Three Million Four Hundred & Eighty Thousand Pounds) for the freehold interest, subject to contract and exclusive of VAT. A purchase at this level would reflect a net initial yield of 7.25% and a capital value of 84 per sq ft after allowing for the usual purchaser s costs of 5.80%. Based on our opinion of estimated rental value the reversionary yield will be 7.87% in May 2016.

3 M M25 M2 M25 M25 M25 M25 M11 A1 M M1 M1 M4 A406 A4 A205 A4 A406 A406 A406 A406 A130 A130 A414 A414 A414 A1114 A13 A13 A13 A12 A12 A10 A10 A1 A10 A10 A13 A2 A2 A2 A2 A2 A20 A20 A12 A12 A12 A12 A1020 Brentwood Chelmsford Southend -on- Sea West Horndon South Ockendon Billericay Rayleigh Southend Airport Gatwick Airport City Airport Epping Loughton Woodford Watford Enfield Barnet Wembley Heathrow Airport THE PROPERTY Romford Dagenham Port of Tilbury Grays Stratford Croydon Lewisham Dartford Wimbledon Twickenham Brentford Cheshunt Upminster A102 A13 A316 A3 A214 A24 A23 A A41 A5 A501 A40 A Stansted Airport River Thames River Thames River Thames River Thames DP World Gateway Basildon LOCATION

4 LOCATION BASILDON Basildon is located in Essex within the South East of England, and is one of the key industrial locations in the eastern M25 region. Basildon is a major business centre in Essex, with a population of circa 175,000 and the second largest economy along the eastern section of the river Thames after Canary Wharf. The town employs some 77,000 people. In total there are over 6,500 VAT registered business enterprises trading in the Basildon Borough. Together they form a major business hub in South Essex. Basildon is home to internationally renowned and highly successful advanced manufacturing and engineering companies including: Ford Motor Company Ltd New Holland Agriculture Selex ES Honeywell/MK Electric Gardner Aerospace Konica Minolta The town has a three major industrial areas with large distribution occupiers such as: Argos Amazon Yodel NYSE Michelin Distribution DB Schenker Kent Foods Ltd Great Warley Warley Childerditch Ln A128 Ingrave Herongate A128 Dunton Wayletts THE PROPERTY W Mayne Little Burstead A176 High Rd A129 A1235 Crays Hill A1235 Bramston Link Christy Way Hornsby Sq Seax Way Sylvan Way Fenton Way Sable Way Victoria Park Fenton Way 29 M25 Warley Street Little Warley Hall Ln Childerditch Ln Thordon Ave Tilbury Rd A128 West Horndon Dunton Lower Dunton Rd W Mayne Langdon Hills A176 A176 H Laindon A176 Basildon A1 W Mayne Bramston Way Hornsby Way THE PROPERTY W M A128 Buxton Link Durham Rd North Ockendon Bulphan A13 Fobbing W Mayne

5 SITUATION ANTON FORD Michelin THE PROPERTY DB SCHENKER JOHNSON CONTROLS The property is situated on the Juniper West Estate within the established Southfields Industrial Estate approximately one mile from the which links to Junction 29 of the M25 approximately seven miles to the west. Nearby occupiers include DB Schenker, Johnson Controls, Anton, D.H Industries, Michelin Distribution Centre, Ford and JW Froehlich.

6 COMMUNICATIONS ROAD RAIL Basildon benefits from excellent road communications. The and A13 dual carriageways provide direct access to Central 30 miles west and the M25 Motorway at Junction 29, 11 miles west and Junction 30, 15 miles south west. The A130 is situated to the north of the town and provides links with Chelmsford and Stansted Airport to the north. AIR Basildon mainline rail station provides direct access to Fenchurch Street, with an approximate journey time of 34 minutes. SEA The property is 8.8 miles north of DP World s new Thames Gateway Port which is the UK s newest deep sea port able to handle the biggest container ships in the world. A number of large ports are in driving distance of the property as follows: Basildon has a number of airports options within easy reach. AIRPORT DISTANCE PORT DISTANCE Southend Airport 16 Miles Thames Gateway 8.8 Miles City Airport 26 Miles Port of Tilbury 12.5 Miles Stansted Airport Heathrow Airport 34 Miles 48 Miles Harwich International Port Port of Felixtowe 62 Miles 70 Miles Gatwick Airport 50 Miles Port of Dover 78 Miles

7 PROPERTY OVERVIEW

8 PROPERTY OVERVIEW DESCRIPTION WAREHOUSE SPECIFICATION The property, completed in 2003, is a self-contained distribution warehouse used as the occupier s UK Headquarters. The property provides accommodation over ground and a first floor totalling approximately 41,396 sq ft (3, sq m) GIA. The building is of steel portal frame construction across two bays with high quality offices at first floor level. The tenant has carried out a number of modifications to the premises including the installation of offices at ground floor level and air conditioning throughout the offices. They have also added showrooms, reception, a large mezzanine in the warehouse and racking. The mezzanine measures approximately 7,901 sq ft (734 sq m) GIA and is not rentalised. 8m (24ft) eaves height to the underside of the haunch 37.5 kn sq m floor loading Sodium Lighting Approximately 15% translucent roof panels 3 dock level loading doors 1 level access loading door External lighting to the yard 40m deep loading yard OFFICE SPECIFICATION Raised floors Double glazing Suspended ceilings with category II Lighting Gas central heating Carpet tiles The unit benefits from 47 designated parking spaces to the front of the unit.

9 PROPERTY OVERVIEW ACCOMMODATION TENANCY TENURE The building has been measured on a Gross Internal Area basis in accordance with the RICS Code of Measuring Practice (6th Edition). The areas are as follows: FLOOR SQ M SQ FT Warehouse 3, ,008 The Modular Heating Group Plc (co no ) from 19th May 2006 for a term of 10 years on FRI terms. The tenant signed a reversionary lease on the 1st October 2010 extending the lease by 4 years to expire on the 18th May When the reversionary lease starts in May 2016 the tenant will receive a rent free period up to the 19th August This will be topped up by the vendor. Freehold EPC RATING The property has an EPC rating of C-75 First Floor Offices TOTAL ,388 3, ,396 The current rental income is 266,869 pa equating to 6.45 per sq ft ( per sq m). The next rent review is on the 19th May 2016 on an upwards only basis to open market rental value.

10 TH E S I TE SITE AREA SERVICE CHARGE The property sits on a regular site measuring approximately acres (0.71 hectares) and therefore the building has a site coverage of approximately 49%. The estate has a service charge that is 100% recoverable from the 4 occupiers and the current service charge budget for the 1st April 2016 to 31st March 2017 equates to a 0.26 per sq ft.

11 COVENANT INFORMATION ABOUT THE TENANT The Modular Heating Group Ltd have reported the following financial results: The lease was originally granted to The Modular Heating Group PLC (co no ) who have since changed their name to The Modular Heating Group Ltd. COMPANY NUMBER TURNOVER DEC ,109 DEC 2013 DEC ,887 1,010,537 The company has been in operation since 1987 and specialise in the wholesale of radiators and boilers nationwide from this property. The tenant employs approximately 50 staff at the location. The firm have a D&B rating of 1A1 and are considered low risk. More information on the firm can be found at their website: PRE-TAX PROFIT 21,060 40, ,695 NET WORTH 992, ,889 1,546,010 MHS Radiators (Holdings) Ltd have a Dun & Bradtreet Rating of 2A1 with a minimum risk of business failure and have reported the following financial results: The ultimate parent company of The Modular Heating Group Ltd is MHS Radiators COMPANY NUMBER DEC 2014 DEC 2013 DEC 2012 (Holdings Ltd) (co no ) who are registered at the same address. They are not a guarantor to the lease. TURNOVER 5,501,944 6,028,590 6,401,307 PRE-TAX PROFIT 74,089 81, ,563 NET WORTH 1,893,587 1,837,339 2,374,235

12 MARKET INFORMATION OCCUPATIONAL MARKET Basildon is a major industrial hub on the east side of and is suffering from a lack of supply of prime modern product similar to most industrial markets around the M25. We believe prime rents are now between 7.00 to 7.50 per sq ft and are trending higher. Void levels are very low and new build or modern warehouse availability is very limited. Rental growth prospects should be positive in the short term with similar sized buildings in the east markets such as Dagenham, Barking and West Thurrock heading towards rents of 8.50 to 9.00 per sq ft.

13 MARKET INFORMATION INVESTMENT MARKET The industrial market has shown strong rental growth in key locations in the South East and Midlands areas. This has strengthened strong investor demand towards the sector with record levels of transaction volumes seen over the past 3 years in the UK. With the more pressure on rents around the area driven by internet fulfilment and population growth, the sector should continue to provide rental growth and strong investor demand. Prime distribution yields reached circa 5% NIY in Q and prime industrial estates in the South East reached as low as 4.5% NIY in prime markets. Comparable investment transactions of note PROPERTY SIZE (SQ FT) TERM REMAINING TENANT PRICE NET INITIAL YIELD CAPITAL VALUE (PER SQ FT) DATE Maidstone - Vantage Point - Snodland 77,841 5 Years XPO Logistics 6.945m 6.08% 89 Jan 2016 Mitcham - 15 Ellis Road 32, Years Premier Foods 4.935m 5.41% 151 Dec 2015 Basildon - Bas55 Paycocke Road 58,000 Freehold Sale Wolseley UK 5.00m N/A 86 Aug 2015 Basildon - Watkins Close 37, Years Activair UK Ltd 3.545m 6.51% 93 April 2015 Basildon - Festival Way 61,162 9 Years P2P Mailing Ltd 4.765m 6.25% 76 Dec 2014 Basildon - Unit 1, Watkins Close 57, Years Yodel 4.882m 6.90% 65 Dec 2013

14 FURTHER INFORMATION VAT PROPOSAL We understand the property will be treated as a Transfer of a Going Concern for VAT purposes. Offers are invited in excess of 3,480,000 (Three Million Four Hundred & Eighty Thousand Pounds) for the freehold interest, subject to contract and exclusive of VAT. A purchase at this level would reflect an attractive net initial yield of 7.25% and a capital value of 84 per sq ft after allowing for the usual purchaser s costs of 5.80%. We believe the property is reversionary to 7.00 per sq ft and therefore off this purchase price a reversionary yield of 7.78% may be achievable at the next rent review in May 2016.

15 OUR TEAM CONTACT DETAILS WEBSITE ACCESS For further information, or to arrange an inspection of the property, please contact either: Details for this opportunity can be downloaded from Richard Peace MRICS Mike Burden MRICS e: t: +44 (0) m: +44 (0) e: t: +44 (0) m: +44 (0) Kimmeridge Real Estate Limited 5 South Molton Street,, W1K 5QE Kimmeridge Real Estate Ltd on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: 1. The particulars are produced in good faith, but are a general guide only and do not constitute any part of a contract. 2. No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatsoever in relation to this property. 3. The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. 4. Nothing in these particulars should be deemed a statement that the property is in good condition, or that any services or facilities are in working order. 5. Unless otherwise stated, no investigations have been made regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required. Publication Date: Feb 2016