EMBANKMENT. Sovereign Street, Leeds LS1 4BP. Prime Office Investment Opportunity. Prime Office Investment Opportunity

Transcription

1 1 2 EMBANKMENT Soverein Street, Leeds LS1 4BP

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3 3 Investment Summary A prominent office situated in the popular southern Leeds Railway Station area which is home to many of Leeds larest corporate occupiers and recently announced as the location for the HS2 national railway link station. The corporate core south of Leeds City Railway Station is the pre-eminent extension to Leeds city office core with developments such as Bridewater Place, City Walk and Lateral. Occupiers in the immediate vicinity include KPMG, BDO, BT, Eversheds, Addelshaw Goddard and Asda HQ amonst many others. Freehold Refurbished office buildin oriinally constructed in the late 1980 s over round and three upper floors and recently refurbished, providin a total net internal floor area of 36,839 sq ft. Excellent car parkin ratio of 1:1,348 sq ft. Let on a sinle overridin headlease to Kelda Group Limited (previously Yorkshire Water PLC) for 20 years from 8 th April 1999, expirin 7 th April 2019, therefore havin approximately 6 years unexpired. The current passin rent is 733,000 per annum, with the next open market rent review due 8 th April 2014 providin a ood opportunity to improve the passin rent in the short term. The office accommodation is sub-let to 7 tenants on 8 leases with lease expiries between 2013 and We have been instructed to seek offers in excess of 7,920,000 subject to contract and exclusive of VAT. A purchase at this price reflects a net initial yield of 8.75% allowin for purchase costs of 5.80%.

4 4 GREAT GEORGE STREET WESTGATE ALBION STREET WOODHOUSE LANE MERRION ST TEMPLAR ST NEW BRIDGATE SOUTH PARADE THE HEADROW THE HEADROW ST PAULS STREET PARK PLACE YORK PLACE GREEK STREET INFIRMARY ST QUEBEC ST ELLINGTON STREET BOAR PARK ROW BRIDGATE GEORGE STREET P NEW YORK STREET P LANE P R I V E R A I R E WATER LANE CITY STATION NEVILLE STREET P SOVEREIGN ST HUNSET ROAD LEEDS BRDGE MEADOW LANE GREAT WILSON STREET THE CALLS DOCK ST WATERLOO STREET Not to scale: For Indicative Purposes Only LOCATION Leeds is the administrative, bankin and retail hub of Yorkshire and is one of the leadin professional and bankin centres outside London. It is the second larest metropolitan district in Enland with a population of over 750,000 and a catchment population of circa 1.3 million. Leeds is one of the leadin centres for financial related business services in the UK with major national and international firms includin Coutts, Allied Irish Bank, Bank of New York Mellon, BDO Stoy Hayward and Fortis Bank who have been attracted to the city. The city is also home to a number of lare call centres includin British Gas, Direct Line, Greenfla, GE Capital, O2 and Ventura while most of the reional utilities have their HQ s in the city. Leeds is strateically located approximately 312 km (195 miles) north of London, 71 km (44 miles) north-east of Manchester, 53 km (33 miles) north of Sheffield and 18km (11 miles) east of Bradford. The city enjoys excellent road communications with direct links to the M1, M62 and A1 motorways. Leeds Rail Station is one of the busiest in the country outside of central London, with over 900 trains and 50,000 passeners passin throuh the station every day. Services to London Kins Cross run every 30 minutes with a fastest journey time of approximately 2 hours. The recent announcement that Leeds will benefit from the hih speed rail extension HS2 is further positive news to the city. The HS2 terminal is proposed at New Lane to the South of the city centre and will link to the proposed Southern railway station entrance. Leeds Bradford International Airport is situated eiht miles from Leeds city centre, with daily flihts to a rane of national and European destinations and London Heathrow. There is substantial investment in the city centre at present includin the 350 million, Trinity scheme by Land Securities and the City Council s 13,500 capacity Arena, both under construction and due to complete in 2013.

5 5 CGI - proposed new southern entrance to Leeds Railway Station SITUATION The property occupies a prominent position on The Embankment, Soverein Street beside the River Aire. Situated within the popular south station corporate office core, nearby occupiers include Eversheds, British Telecom, BDO Stoy Haywood, Asda, Addelshaw Goddard and RBS. Leeds Railway Station and the main retail district of Leeds are situated only 250 m to the north via Neville Street. Access to the buildin will be futher enhanced by the proposed new southern entrance to the station due to complete in No. 2 The Embankment overlooks the River Aire and is accessed from Soverein Street that joins Neville Street and is the principal hihway from Leeds City Centre to the M621 motorway. In the last decade the southern side of the city has provided a number of mixed use developments includin Bridewater Place, Brewery Wharf, Clarence Dock, Granary Wharf, City Walk, The Mint, and Lateral. The recent KPMG pre-let at the Soverein Street development is directly opposite the property and will further enhance the surroundin area when complete in 2014.

6 3 6 DESCRIPTION Freehold office buildin oriinally constructed in the late 1980 s and recently benefittin from refurbished reception, common areas and third floor suite. The office premises are arraned over round and three upper floors, with a separate entrance providin a self contained riverside suite. The flexible floor plates provide open plan office accommodation with the followin specification: Approximate floor to ceilin heiht of 2.4m Central as fired boiler heatin system Full access raised floors/floor boxes Air conditionin 2 x passener lift access to all floors Cat 2 Lihtin There are 28 secure courtyard car parkin spaces, accessed from Soverein Street providin an excellent parkin ratio of 1:1,316 sq ft. Demise Area (sq ft) Area (sq m) Riverside Suite 6, Ground Floor 3, First Floor 11,800 1, Second Floor 11,700 1, Third Floor 3, Total 36,839 3, NEV PITT m 26.5m 29.3m 1 The Embankment 2 The Embankment Victoria Bride 30.2m Crown Copyriht - licence no Based on Ordnance Survey Not to Scale - For Identification Purposes Only.

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8 8 TENURE The property is held freehold. TENANCIES Let on a sinle overridin headlease to Kelda Group Ltd (previously Yorkshire Water PLC) for 20 years from 8th April 1999, expirin 7th April 2019, therefore havin approximately 7 years unexpired. The current passin rent is 733,000 per annum, with the next open market rent review due 8th April 2014 providin a ood opportunity to improve the passin rent in the short term. The office accommodation is sub-let to 7 tenants on 8 leases with lease expiries between 2013 and The current rent passin of the sub tenancies is 697,025 with passin rents averain exclusive of parkin analysed at 2,000 per space. Please refer to the tenancy schedule below;

9 9 Tenancy Schedule Floor Tenant Lease Term Riverside Suite Part Ground Floor (front) Part Ground Floor (rear) Part First Floor (rear) Part First Floor (front) Part Second Floor (front) Part Second Floor (rear) Part Third Floor (front) Part Third Floor (rear) McLaren Dick & Co Ltd Greory Properties Ltd Thomson Group Plc. (now AWD) Thomson Group Plc. (now AWD) National Insurance & Guarantee Corp Ltd (RBS) Last Cawthra Feather Surfachem Group Ltd Vion Food UK Ltd Start Date Expires Rent Review Area (sq ft) Cars Rent pax Jun-91 2-Jun Jun-11 6, ,000 Comments Au Au-16 2, ,012 Tenant option to break Au 2012 (bein revised to 8 April 2014 subject to 6 months notice i.e. by 8th Oct 2013) Proposal to increase rent to 52,000 at Sep Dec Feb-13 1, , Oct Dec Feb-13 2, , Sep Sep-12 9, , May May May-14 3, ,525 6 months rent free / rent increases to 61,050 at 3rd Nov 2012 Break option 3 may 2014 if exercised 30,525 penalty if not exercised further 3 month rent free 9 07-Sep April May-15 8, ,550 Rent Commencement 14 Auust Mar Mar Mar ,098 Tenant not exercised option to break 14 Mar 2013 If not exercised further 2 months rent free at 4th anniversary Vacant 2,439 1 Fully refurbished floor Total 36, ,025

10 10 COVENANT KELDA GROUP LTD is the holdin company of Yorkshire Water and associated companies and has a Dun & Bradstreet ratin of 5A1 reflectin a minimum risk of business failure. Fiscal Non consolidated GBP 31 Mar 2012 (000 s) Fiscal Non consolidated GBP 31 Mar 2011 (000 s) Fiscal Non consolidated GBP 31 Mar 2010 (000 s) Sales Turnover 6,064 5,799 4,300 Profit / (Loss) Before Taxes 61,186 45, ,515 Tanible Net Worth 816, , ,924 Net Current Assets (Liabilities) (246,883) (245,146) (230,109)

11 DLA Piper 2. City Square 3. Leeds City Railway Station 4. Proposed Southern Entrance to the Station 5. BT 6. Addleshaw Goddard 7. KPMG 8. Eversheds 9. Lloyds Bankin Group 10. Proposed HS2 Site 11. ASDA 12. Leeds City Office Park 13. City Walk 14. Hihways Aency 15. The Mint ASDA LEEDS OFFICE MARKET In the peak of the market in 2006/2007, Leeds city centre saw uptake of around 600,000 sq ft, out of town saw around 406,000 sq ft. In 2011 city centre uptake was 400,000 sq with a marinal improvement in 2012 of 406,000 sq ft, althouh still some 33% down from the peak. Sinificant deals worthy of note were Dickinson Dees takin 17,030 sq ft at No.1 Whitehall Riverside at a headline rent of per sq ft per annum. Medical Protection Society expanded within the city takin 63,500 sq ft in a freehold at No.2 and No.3 Victoria Place and importantly, No.1 Leeds on Whitehall Road filled up offerin some extremely competitive deals to Gratterpalm (18,800 sq ft at a per sq ft headline), Johnstone Publishin (33,800 sq ft) and Gaz De France (31,000 sq ft). Furthermore, Asda expanded their occupation in The Mint to 36,000 sq ft and in Q1 2013, 62,000 sq ft is expected to complete providin a ood basis for take up levels to improve on 2011/2012 levels. Despite the larer transactions outlined above, vast majority of the Leeds uptake is in the 2,000/5,000 sq ft and 5,000/10,000 sq ft size brackets that compliments the subject buildin iven the size of floor plates and layout. Grade A headline rents of 24.00/ per sq ft per annum continue to be achieved on a handful of quality buildins in the prime city centre includin 10 South Parade and Whitehall Riverside. Good quality Grade A space in the prime city centre is now extremely restricted with larer requirements lookin at desin and build opportunities, such as the site opposite the subject buildin where KPMG are understood to have pre-let 61,000 sq ft at 25 per sq ft. Indeed some of the best quality space that Leeds has had to offer over the past few years has really been in the 3 buildins on the city frine namely Broad Gate on The Headrow, The Mint on Sweet Street to the south and No.1 Leeds on Whitehall Road to the west of the city. Now that both The Mint and No.1 Leeds are almost fully let and supply of stock in the prime city core is much reduced, Leeds will inevitably see incentive levels reducin and headline rents slowly improvin.

12 12 EPC EPC ratin = C Full EPC available on request. VAT We understand that the vendor has elected to waive their riht to exemption to VAT. It is however intended that the sale will be treated as a Transfer of a Goin Concern (TOGC), subject to the purchaser havin the appropriate tax status and otherwise complyin with the requirements for TOGC status. Contacts For further information please contact: Simon Lister +44 (0) slister@savills.com Mark Wilson +44 (0) mkwilson@savills.com Ben Turtle +44 (0) ben.turtle@savills.ie INVESTMENT PROPOSAL We have been instructed to seek offers in excess of 7,920,000 (seven million, nine hundred and twenty thousand pounds) subject to contract and exclusive of VAT. A purchase at this price reflects a net initial yield of 8.75% allowin for purchase costs of 5.80%. Important Notice Savills, their clients and any joint aents ive notice that: 1. They are not authorised to make or ive any representations or warranties in relation to the property either here or elsewhere, either on their own behalf or on behalf of their client or otherwise. They assume no responsibility for any statement that may be made in these particulars. These particulars do not form part of any offer or contract and must not be relied upon as statements or representations of fact. 2. Any areas, measurements or distances are approximate. The text, photoraphs and plans are for uidance only and are not necessarily comprehensive. It should not be assumed that the property has all necessary plannin, buildin reulation or other consents and Savills have not tested any services, equipment or facilities. Purchasers must satisfy themselves by inspection or otherwise. Desined and Produced by Savills Marketin: February 2013