500 Capability Green LUTON. Multi Let Value Add Opportunity

Transcription

1 LUTON Multi Let Value Add Opportunity

2 M25, CENTRAL LONDON M1 MILTON KEYNES, NORTHAMPTON, THE NORTH J10 M1 LUTON AIRPORT PARKWAY LUTON AIRPORT LUTON PARKWAY STATION 0.75 MILE AIRPORT WAY REXAM OAG AVIATION HANDELSBANKEN, CAFE SATIS SELEX GALILEO AB INBEV, WILLIAMS LEA STONEGATE PUB COMPANY LUMESSE ERNST & YOUNG ORACLE RANDSTAD ASTRA ZENECA IMPELLAM GROUP REGUS DAVID LLOYD LEISURE

3 INVESTMENT CONSIDERATIONS 25,717 SQ FT CURRENTLY VACANT AND WILL BE SOLD WITHOUT A RENTAL GUARANTEE - Landmark office building situated at the entrance to one of the M25s premier business parks - Excellent access to Junction 10 of the M1 motorway, Luton Parkway station and Luton Airport - Capability Green is home to many international companies including Astra Zeneca, Impellam Group, Selex Galileo, Oracle, Ernst & Young and Regus - Headquarters style office building extending to 79,977 sq ft - Multi-let to internationally recognised tenants Anheuser Busch, Williams Lea and Stonegate Pub Company - AWULT of 6.98 years to expiry and 3.23 years to break on the let element of the property - 2 floors totalling 25,717 sq ft are currently vacant and will not be subject to a rental guarantee car parking spaces which equates to a ratio of 1:212 sq ft - Freehold site extending to 5.1 acres - The current passing rent is 909, per annum reflecting a low average rent of per sq ft on the let space - The current estimated rental value of the property is per sq ft - There is currently no competing landlord space available on Capability Green - Numerous asset management opportunities to include the letting up of the vacant accommodation and the regearing of existing leases to significantly increase value and capture future rental growth - Offers are invited in excess of 14,500,000 (Fourteen Million, Five Hundred Thousand Pounds) for the freehold interest, subject to contract and exclusive of VAT Based on purchaser s costs of 6.73% a purchase price at this level reflects the following yield profile: Gross yield % Potential reversionary yield % (assuming an ERV of per sq ft on the vacant accommodation) Capital value per sq ft 1

4 LOCATION Luton is a long established commercial location approximately 30 miles north of London and 10 miles north of the M25 Motorway. The town is located 2 miles (3.2km) east of Junction 10 of the M1 Motorway. Road Luton benefits from excellent road links with the A505 providing access to the M1 and A1(M). Junctions 10 and 11 of the M1 are located circa 10 miles to the north of the M25 London orbital, linking Luton to the regional and national motorway network. ELSTREE & BOREHAMWOOD Thameslink Route Services Plusbus Mainline Rail Stations London Underground Tramlink Airport Crossrail Rail Luton Parkway Station is located less than a mile from Capability Green, providing direct services to Central London with a fastest journey time of approximately 20 minutes. There are regular Thameslink services to London St Pancras, Farringdon and Gatwick Airport as well as services to the Midlands and the North. Air London Luton Airport is located approximately 1 mile north east of Capability Green and is one of the UK s fastest growing airports, alongside the country s biggest base for private jet travel. The airport services over 80 national and international destinations including all major UK and European cities together with some intercontinental flights and carried 10.5 million passengers in Luton Airport is investing 110 million to transform the airport by As well as delivering major improvements for passengers, the proposed redevelopment will increase capacity from 12 million to 18 million passengers per year. A5 BEDFORD Birmingham Peterborough Cambridge MILTON KEYNES 8 14 HIGH M40 WYCOMBE Oxford 3 M4 A418 STOKENCHURCH Bristol LEIGHTON BUZZARD AYLESBURY A41 AMERSHAM MAIDENHEAD 2 10 BLETCHLEY A5 SLOUGH 6 5 Gatwick Airport A421 DUNSTABLE M A6 LUTON 10 9 M1 HEMEL HEMPSTEAD WATFORD UXBRIDGE HEATHROW A40 HITCHIN LUTON 1 A1 7 STEVENAGE A1(M) A502 WELWYN GARDEN CITY A406 4 M25 1 ENFIELD BARNET 1 A406 WEST END 25 CITY A10 1 STANSTED BISHOP S 8 AIRPORT STORTFORD HARLOW 27 M11 ROMFORD M25 2

5 SITUATION A6 A505 FARLEY HILL LONDON ROAD LUTON THE MALL SHOPPING CENTRE TOWN CENTRE CUTENHOE ROAD PARK ST CRAWL EY GREEN RD WINDMILL ROAD AIRPORT WAY KIMPTON R OAD LUTON AIRPORT PARKWAY A505 AIRPORT WAY 1 MILE LUTON AIRPORT 1.5 MILES 2 MILES Capability Green is situated on the A1081 with dual carriageway access to Junction 10a of the M1 one mile to the south and is within 0.75 miles of Luton Parkway Station. On 20 July 2015 a 30 million improvement scheme at junction 10a was opened significantly improving access to Luton Airport and Capability Green. occupies a prominent location at the entrance to the park fronting one of the main boulevards in the park and the A1081. NEWLANDS ROAD 0.5 MILE M1 LOWER HARPENDEN ROAD Capability Green 10 M25 10 MILES LONDON ROAD 3

6 CAPABILITY GREEN Capability Green is one of the premier business parks within the northern M25, accommodating businesses such as Astra Zeneca, Impellam Group, Selex Galileo, Oracle, Ernst & Young and Regus. The park is now fully developed and totals approximately 1,000,000 sq ft of accommodation set in 85 acres. It was originally developed by Pillar Property and Haslemere Estates and has been designed and planned to provide a low density development, complemented by high quality landscaping. The park also benefits from a David Lloyd leisure club, a Jigsaw day nursery, an information centre, 24-hour security patrols and is monitored by a CCTV system. The provision of these facilities represent an important stage in the park s development, meeting the demands of occupiers and enable s the park to compete with major business parks in the western corridor. Rexam Salex Galileo & Telespazio Handelsbanken, Cafe Satis OAG Aviation Salex Galileo & Telespazio Ernst & Young /Oracle Randstad Lumesse Regus Impellam Group Astra Zeneca David Lloyd Marriott Hotels/ Wates/ Accord Holdings SITE PLAN 500 POSTCODE: LU1 3LS 4

7 5

8 DESCRIPTION was constructed in 1989 and provides 79,977 sq ft of Grade A office accommodation arranged on ground and two upper floors. The building is of steel frame construction with brick and stone clad elevations and sits on a site of approximately 2.06 ha (5.1 acres). Internally the building is designed as two L shaped blocks around a central full height atrium with the upper floors served by two x 10 person passenger lifts. The specification includes: - VAV air conditioning - Fully accessible raised floors - Suspended ceilings with recessed lighting - 2 x 10-person passenger lifts - WC and shower facilities on each floor - Full height central atrium The second floor south wing has been fully refurbished by the Vendor at a cost of 456,000. The fit out includes new metal suspended ceiling tiles, new LED lighting and new toilet facilities. The building affords excellent on site car parking with a total of 378 spaces which equates to a ratio of 1:212 sq ft. 6

9 2 ACCOMMODATION VACANT STONEGATE PUB CO A measured survey has been undertaken by Plowman Craven, which is provided within the data room and is capable of being assigned and relied upon by the purchaser. The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and provides the following net internal floor areas: 1 SOUTH WING DHL WILLIAMS LEA VACANT NORTH WING Floor Use NIA (sq ft) NIA (sq m) Second North Offices 12,515 1,162.7 Second South Offices 12,638 1,174.1 First North Offices 13,149 1,221.6 First South Offices 13,202 1,226.5 Ground North Offices 13,109 1,217.9 Ground South Offices 13,110 1,218.0 Ground Reception 2, TOTAL 79,977 7,430.2 (IPMS areas are available on request) SOUTH WING NORTH WING TENURE Freehold G AB INBEV AB INBEV SOUTH WING NORTH WING 7

10 8

11 9

12 TENANCY The property is multi-let in accordance with the following tenancy schedule, providing a WAULT of 6.98 years to lease expiries and 3.23 years to break on the let element of the property. The passing rent of 909, per annum equates to a low average rent of per sq ft. Demise Area (sq ft) Tenant Lease start Lease expiry Break option Months of notice Rent review Current rent PA Current Rent PSF Comments Ground 2,254 Reception Ground 26,219 AB InBev UK Ltd 17/06/ /03/ /03/ /03/ , First floor North Wing First Floor South Wing Second Floor North Wing 13,149 Williams Lea Limited 14/02/ /05/ /03/ /02/ , Floor area as stated in the lease 13,127 sq ft. Tenant break penalty of 112,500. Service charge cap of 7.50 psf subject to annual RPI increases. 13,202 VACANT Unrefurbished accommodation. 12,515 VACANT Fully refurbished accommodation. Second Floor South Wing 12,638 Stonegate Pub Company Limited 25/03/ /03/2020 None N/A None 234, TOTAL 79, ,

13 COVENANT AB InBev UK Limited (company number ) D&B Rating: 5A 1 In October 2016 Anheuser-Busch InBev NV closed the biggest corporate takeover in UK history by paying $106 billion for SABMiller Plc to establish its position as the world s biggest brewer. AB InBev UK Limited is the UK arm of Anheuser-Busch, producing some of the world s best known brands, including Budweiser, Stella Artois, Corona, Bass and Boddingtons. The company employs around 1,000 people at UK breweries in Magor, Samlesbury and Mortlake. The company headquarters are in the subject property. Further information is available at AB InBev UK Limited Fiscal Non consolidated GBP 31 Dec 2014 (000 s) Fiscal Non consolidated GBP 31 Dec 2013 (000 s) Fiscal Non consolidated GBP 31 Dec 2012 (000 s) Sales Turnover 1,159,433 1,112,229 1,133,380 Profit / (Loss) Before Taxes 33,838 12,599 13,383 Tangible Net Worth 103, , ,535 Net Current Assets (Liabilities) 118, ,747 97,480 Williams Lea Limited (company number ) D&B Rating of 5A 1 Williams Lea Group is the leader in business and marketing services, helping organisations transform business processes and realise brand potential. Williams Lea is part of Deutsche Post DHL, the world s most powerful distribution and logistics company. The company has a global workforce of 8,000 employees in more than 650 locations in 195 cities around the world. Further information can be found at Williams Lea Limited Fiscal Non consolidated GBP 31 Dec 2014 (000 s) Fiscal Non consolidated GBP 31 Dec 2013 (000 s) Fiscal Non consolidated GBP 31 Dec 2012 (000 s) Sales Turnover 361, , ,862 Profit / (Loss) Before Taxes Tangible Net Worth Net Current Assets (Liabilities) 17,569 9,485 8,592 58,739 55,748 48,685 45,905 33,317 24,408 Stonegate Pub Co Ltd (company number ) D&B Rating of O Stonegate Pub Co operate over 660 pubs and bars across the UK. The company operates the Slug and Lettuce, Classic Inns, Yates s and Proper Pubs brands as well as numerous unbranded pubs, bars and restaurants. Further information can be found at Stonegate Pub Co Ltd Fiscal Non consolidated GBP 31 Dec 2012 (000 s) Fiscal Non consolidated GBP 31 Dec 2011 (000 s) Sales Turnover 484, ,671 Profit / (Loss) Before Taxes Tangible Net Worth Net Current Assets (Liabilities) 14,573 ( 24,447) 81,549 65,863 ( 14,004) ( 16,962) 11

14 LUTON OCCUPATIONAL MARKET Capability Green is a high quality business environment which is widely recognised as the leading business park in London s M1 corridor. The park extends to 85 acres and provides approximately 1 million sq ft of offices with additional health club and amenity offerings. The Northern M25 markets combined with London s M1 corridor have seen increased occupier demand in recent years with relocations out of London and expansions viewing the sub-market as a cost effective location with excellent connectivity to London, London Luton Airport, Stansted Airport and the North. This combined with the amount of office space that has been lost to residential conversions has seen constrained supply for quality office space increasing rents in Luton and the Wider markets. Headline Rents KEY Headline Rent 2016 A6 ( psf) Headline Rent 2014 ( psf) Growth (%) 10 HEMEL HEMPSTEAD A % WATFORD % 9 M LUTON % A10 A502 A1(M) WELWYN GARDEN CITY % A406 ST % 23 M25 25 BOREHAMWOOD % Market Commentary Luton has a total office stock of 3.3 million sq ft. Occupier take up for the year to date currently stands at 131,444 sq ft, which is 55% higher than the 5 year average and 18% higher than the 10 year average. Capability Green has dominated take up in Luton; over the past 5 years averaging approximately 64% of all transactions in the market over 5,000 sq ft. Total availability in Luton currently stands at 162,963 sq ft, of which, just 45,033 sq ft is regarded refurbished or Grade A space. The 3 most significant recent deals in Luton have all been on Capability Green and all taken refurbished Deals Date Property Tenant Size (sq ft) Terms Sep 16 1 Capability Green Axis Communication or Grade A space. These deals have seen rents increase to psf and incentives come in to as little as 9 months for a 5 year terms certain. The vacancy rate currently stands at 4.9%, which is below the M25 average of 5.5%. There is currently a good level of enquiries in the market that have included Luton within their search area, with approximately 107,500 sq ft of demand in the market. Of these, 5 requirements require over 10,000 sq ft. is currently the only landlord available space on Capability Green. has traditionally always achieved rents in line with prime rents on Capability Green representing strong rental growth prospects. 9, year lease with a break at year per sq ft with 9 months rent free. May Capability Green Randstad 28,000 7 year lease at per sq ft. Nov 15 1 Capability Green OAG Aviation Worldwide Feb Capability Green Micros (Oracle) Aug 14 Randstad Court Laporte Way Feb 14 DHL (Williams Lea) The 3 most significant recent deals in Luton have all been on Capability Green and all taken refurbished or Grade A space. These deals have seen rents increase to 22 psf and incentives come in to as little as 9 months for a 5 year terms certain. 8, year lease with a break at year per sq ft with 9 months rent free. 11, year lease with a break at year per sq ft with 12 months rent free. Civica UK Ltd 4, year lease with a break at year 5. Incentive unknown.. 13, year lease with a break option at the end of year psf. 21 months rent free. has traditionally always achieved rents in line with prime rents on Capability Green representing strong rental growth prospects. 12

15 INVESTMENT MARKET The South East office investment market continues to be the focus of significant investment. Investor demand remains strong for good quality, multi-let assets in core South East office locations offering asset management opportunities. As a result of strong take up levels, limited development and the removal of stock for conversion to residential use the occupational markets remain undersupplied resulting in positive rental growth forecasts in the short to medium term. The table below highlights the most recent office transactions in South East locations: Date Address Town Sale Price Yield (NIY) Term Certain Capital Value (per sq ft) Tenant Purchaser Sep 16 The Heights Harrow 8.53m 6.84% Multi-Let Private Investor Sep Clarendon Road Watford 8.00m 6.80% Multi-Let First Property Group Aug 16 4 Victoria Square St albans 16.30m 6.53% Multi-Let Knight Frank IM Feb 2016 Kings Court Brentwood 7.7m 7.43% Multi-Let Private Investor Feb Thames Valley Park Reading 25.86m 6.45% Mulit-Let Palm Capital Jan 2016 Walton Court Walton-On- Thames 20m VP VP 195 Vacant Private Purchaser Dec Clarendon Road Watford 8.85m 6.06% Regus Canada Life Dec & 2000 Cathedral Hill Guildford 38.97m 8.05% Alcatel Networks Europa Capital Oct 2015 Voyager Place Maidenhead 14.55m 10.20% Alcatel Networks Clearbell Oct 2015 Landmark Place Slough 19.05m 5.19% Multi-Let Hermes 13

16 LUTON, BEDFORDSHIRE LU1 3LS SERVICE CHARGE The current service charge equates to 6.95 per sq ft. Further information available on request. VAT The property has been elected for VAT purposes. It is anticipated that this will be a TOGC (Transfer of Going Concern). EPC The property has an EPC rating of D. A copy of the EPC rating is available on request. PROPOSAL Offers are invited in excess of 14,500,000 (Fourteen Million, Five Hundred Thousand Pounds) for the freehold interest, subject to contract and exclusive of VAT. Based on purchaser s costs of 6.73% a purchase price at this level reflects the following yield profile: Gross yield % Potential reversionary yield % (assuming an ERV of per sq ft on the vacant accommodation) Capital value per sq ft FURTHER INFORMATION For further information please contact: James Archibald jamesarchibald@brayfoxsmith.com Sim Khatkar simkhatkar@brayfoxsmith.com Tom Jansons tomjansons@brayfoxsmith.com brayfoxsmith.com Misrepresentation Act. These brief particulars have been prepared as agent for our client and are intended as a convenient guide to supplement an inspection or survey. Their accuracy is not guaranteed. They contain statements of opinion and in some instances we have relied on information provided by others, you should verify the particulars on your visit to the property and the particulars do not obviate the need for a full survey and all the appropriate enquiries. Accordingly, there shall be no liability as a result of any error or omission in the particulars or any other information given. Complied October 2016.