BRACKNELL A Prime Town Centre Multi-let Office Investment Opportunity

Transcription

1 BRACKNELL A Prime Town Centre Multi-let Office Investment Opportunity

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3 INVESTMENT SUMMARY Bracknell is an established south east office centre located within the heart of the Thames Valley. Arlington Square is Bracknell s prime office location, within minutes of the town centre which has recently benefitted from the opening of The Lexicon, a significant regeneration project. Excellent transport connections being 5 miles south of the M4 Motorway (Junction 10), 6 miles north of the M3 Motorway (Junction 3) and benefitting from direct mainline railway services to Central London. Freehold. Grade A office building totalling 67,376 sq ft (NIA) arranged over ground and four upper floors. 298 decked car parking spaces, providing an outstanding ratio of 1:226 sq ft. Multi let to six tenants providing a weighted average unexpired lease term of 7.2 years to expiries and 3.4 years to break options (on the let space). Current rental income of 1,510,870 per annum (including rental guarantees), equating to per sq ft overall. Recent comprehensive refurbishment to the reception, common parts and second, part third and fourth floors. Only 5,680 sq ft of vacant space (8% of total space) available on the top floor and ready for immediate occupation. This will be subject to a 12 months rent, rates and service charge guarantee. 60% of the property has been let in the past 12 months following a number of new lettings and expansion by existing tenants. PROPOSAL We are instructed to seek offers in excess of 21,800,000 for the freehold interest, subject to contract and exclusive of VAT, which reflects a net initial yield of 6.50% and a capital value per sq ft of 324 after allowing for purchaser s costs of 6.75%. 3

4 EAGLE HOUSE 84 apartments under construction 8 mins WINCHESTER HOUSE 311 apartments under construction 6 mins NHS HONEYWELL PREMIER INN HOTEL BREWERS FAYRE PUB 5 ARLINGTON SQUARE Paratus AMC Lloyd s Register CentriLogic InterCall ARLINGTON SQUARE Devonshire Way 4

5 THE PEEL CENTRE & THE POINT LEISURE COMPLEX WATERLOO BRACKNELL STATION READING 2 ARLINGTON SQUARE Regus Skimped Hill Lane (A329) 1 ARLINGTON SQUARE Specialist Computer Centre Novell Information Resources Jakks Pacific The Chartered Institute of Building EPICOR SOFTWARE THE GYM 5

6 BRACKNELL Bracknell is an established south east office centre strategically located within the Thames Valley, approximately 12 miles south east of Reading, 12 miles south west of Slough and 9 miles south west of Maidenhead. The town benefits from excellent transport connections being 5 miles south of the M4 motorway (Junction 10), 6 miles north of the M3 motorway (Junction 3) and benefitting from direct mainline railway services to Central London. Bracknell Forest has a district population of 113,000 (2011 Census) with a highly qualified and skilled labour force. The town s excellent communications, together with an affluent and skilled population has led it to become the principle high tech employment area in the UK attracting a wealth of major occupiers. Many of these organisations have chosen to locate their UK and European Headquarters in and around the town including 3M, Dell, Fujitsu, Honda Motor Europe, Honeywell and Hewlett-Packard. n n g d in or do pto xf ad on m O Re ll ha ra ut nt So Ce 19 mins 55 mins 58 mins 1 hr 10 mins ng 56 mins O 57 mins n do n Lo o n d lo or to er xf at W ng di d Pa di a Re n do n Lo 20 mins 1 hr k n d w ic te to ro w Lu ans at G St th ea H 27 mins 53 mins 57 mins 1 hr 21 Source: Google maps, National Rail 6

7 WOKINGHAM ROAD To M4, J10 via A329(M) To Reading & the West Western Road Easthampstead Road B3408 Downshire Way Downshire Way A329 BINFIELD ROAD B3408 B3018 SKIMPED HILL LANE SKIMPED HILL Bond Way High Street TOWN CENTRE A329 6 mins Market Street MILLENIUM WAY 1m sq ft of new leisure and amenity provision CHURCH ROAD A3095 WARFIELD ROAD A329 Park Road LONDON ROAD To Ascot & M25 J13 DOWNSHIRE WAY A329 To M4, J10 via A329(M) A3095 A322 8 mins Bracknell A3095 MILL LANE BAGS HOT ROAD To London Waterloo To M3, J3 DOWNSHIRE WAY Broad Lane M1 Luton Airport A1(M) Stansted Airport M11 Oxford M M25 Didcot 16 St Pancras International Newbury Reading 10 M4 A329(M) Bracknell Heathrow Airport Paddington Waterloo City Airport 3 M25 M3 Basingstoke Guildford Reigate 7 M23 A3 Gatwick Airport 7

8 BRACKNELL HAS CHANGED... Bracknell town centre has recently undergone a major 240 million regeneration project and now provides 1 million sq ft of newly developed retail and leisure accommodation - The Lexicon. The retail element of the scheme opened late in September 2017 and when fully complete the development will also provide up to 1,000 new homes, 3,500 car parking spaces and improved areas of landscaped public space. The regeneration is the result of The Bracknell Regeneration Partnership, a 50:50 joint venture partnership between Legal & General Capital and Schroder UK Real Estate Fund, together with Bracknell Forest Council. The project is one of the largest town centre regeneration schemes currently being undertaken in the UK and will improve the town centre and its amenities, significantly enhancing Bracknell s business and local community. 95% of the scheme has been let to date and anchor retailers include: Marks & Spencer 80,000 sq ft Primark 45,000 sq ft Waitrose 36,000 sq ft Next 27,600 sq ft Fenwick 80,000 sq ft H&M 28,000 sq ft 12-screen Cineworld Various restaurant operators including Wagamama, Nando s, GBK, Carluccio s, Pizza Express and Zizzi. Further details can be found by visiting 8

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10 ARLINGTON SQUARE Arlington Square is Bracknell s prime office location comprising four self-contained office buildings set within an attractive 22 acre landscaped urban park adjacent to the town centre. Developed between 1992 and 2008, Arlington Square provides approximately 330,000 sq ft of Grade A office accommodation with outline planning consent for a further 74,103 sq ft NIA. The Park is home to a variety of occupiers including Paratus AMC, Lloyd s Register, InterCall Conferencing, Regus, The Chartered Institute of Building, SCC, Progress Software, Quest Software, Micro Focus, IRi, App dynamics and Bridgethorne. These occupiers have been attracted by the quality of the working environment, exceptional town centre parking ratio and proximity to the range of amenities within the town centre, Peel Centre, Brewers Fayre Pub and Premier Inn Hotel. Arlington Square is prominently situated just off the roundabout of the A329 / A322, on the main western approach to the town and is accessed via Downshire Way. The A329 provides dual carriageway access to the A329(M) and the M4 (Junction 10) located 4 miles to the west. In addition, the A322 traverses the town southwards and provides access to the M3 (Junction 3) approximately 6 miles to the south. Further information is available at Specialist Computer Centre Novell Information Resources Jakks Pacific The Chartered Institute of Building 2 Regus 3 L&G Homes Progress Software Ivanti UK Bridgethorne Quest Software Saba Software 5 Paratus AMC Lloyd s Register CentriLogic InterCall 10

11 3 ARLINGTON SQUARE Constructed in 2001, 3 Arlington Square extends to approximately 67,376 sq ft (NIA) arranged over ground and four upper floors. The building provides highly specified flexible Grade A office accommodation with the ability to sub-divide floor plates. The building is of steel frame construction benefitting from a triple height reception area with brickwork elevations, framed curtain glazing and reconstituted stone cladding. 3 Arlington Square has recently benefitted from a comprehensive refurbishment to the reception, common parts and second, part third and fourth floors. The newly refurbished office accommodation includes new metal ceiling tiles, carpet tiles and LED lighting. Floor Sq ft Sq m Ground - Reception Ground - Offices 12,980 1,206 First - Offices 13,192 1,226 Second - Offices 13,172 1,224 Third - Offices 13,666 1,270 Fourth - Offices 13,633 1,267 Total 67,376 6,261 > Triple height reception > Full access raised floors > LED/CAT II lighting > Suspended ceilings > Four pipe fan coil air conditioning > Clear floor to ceiling height of 2.7m > Three 13 person passenger lifts > Male, female and disabled toilets on each floor > Shower facilities > Excellent car parking ratio of 1:226 sq ft (298 spaces) 11

12 FLOOR PLANS GROUND FLOOR Ground Floor FOURTH FLOOR Fourth Floor Plans for indicative purposes only, not to scale. 12

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14 TENANCY The property is multi-let to six tenants providing a weighted average unexpired lease term of 7.2 years to lease expiries and 3.4 years to break options. Approximately 8% of the property is vacant and ready for immediate occupation. The vacant accommodation will be covered by a vendor s rent, rates and service charge guarantee for 12 months. Any outstanding rent free will also be topped up by the vendor. Floor Area (sq ft) Tenant Lease Start Lease End Rent Review Reception 733 Ground 12,980 Quest Software 16/02/18 15/02/28 16/01/23 (UK) Ltd Part 1st 8,743 Ivanti UK Ltd 20/01/12 19/01/22 - Part 1st 4,449 Bridgethorne Ltd 01/03/14 01/03/24 01/03/19 2nd 13,172 Ivanti UK Ltd 01/09/17 31/08/27 01/09/22 Part 3rd 6,675 Saba Software 08/11/17 07/11/22 - (UK) Ltd Part 3rd 6,991 Progress Software Ltd 05/02/16 04/02/26 05/02/21 Part 4th 5,680 Vacant Part 4th 7,953 Legal & General Homes 08/03/17 07/03/27 08/03/22 Communities Ltd 67, yrs * psf excludes reception area TENURE Freehold. El Sub Sta Honeywell House 14 For illustrative purpose only. 14

15 Lease Break Rent ( pa) Rent ( psf) Comment 15/02/23 298, Rent commencement 10/05/2019, a further 6 months rent free or 3 months rent penalty at break , Tenant benefitting from 12 months half rent from 25/03/ ,440 rent deposit held. 01/03/19 93, /01/ , Tenant benefitting from 12 months half rent until 31/08/ ,711 rent deposit held. RPI linked uplift, collar and capped at 2-4%. 07/11/20 163, Tenant benefitting from 16 months half rent until 07/03/2019, a further 4 months rent free if break not exercised. Guarantee from Saba Software Incorporation. 05/02/21 160, Tenant to benefit from 6 months rent free if break not exercised. Guarantee from Progress Software Corporation. 139, month rent, rates and service charge guarantee. 08/03/22 182, Tenant benefitting from 34 months rent free, 17 months rent penalty if break exercised. Guarantee from Legal & General Capital Investments Ltd. 3.4 yrs 1,510, * COVENANT INFORMATION Tenant Accounting Turnover Pre-Tax Profit Tangible Net D&B Comment Year to Worth Rating Legal & General Homes O2 Lower than average risk of Communities Ltd business failure Legal & General Capital Dec-16-9,315, ,727,000 5A1 Minimum risk of business failure Investments Ltd Progress Software Ltd Nov-16 22,935,000 2,421,000 7,460,000 3A1 Minimum risk of business failure Saba Software (UK) Ltd May-16 16,609, ,277 2,820,615 2A1 Minimum risk of business failure Ivanti UK Ltd Dec-16 30,268,564 1,002,358 6,348,663 2A1 Minimum risk of business failure Bridgethorne Ltd Mar-17 4,317, , ,000 A2 Lower than average risk of business failure Quest Software (UK) Ltd Feb-17 44,883, ,000-25,029,000 N2 Lower than average risk of business failure 15

16 OCCUPATIONAL MARKET COMMENTARY BRACKNELL OVERVIEW Bracknell has been one of the M4 s leading office locations since the 1980s. Total office stock is 4.8 million sq ft. This has dropped from 5.6 m sq ft in the last two years due to office buildings being sold for conversion to residential use. Bracknell has seen no new speculative development since 2009, with consistent strong levels of take up there is now a shortage of supply forecasted for 2019/2020. SUPPLY At present, there is 439,000 sq ft of available office accommodation in Bracknell, equating to a vacancy rate of 9.1%, 1.5% below the South East average vacancy rate of 10.6%. Prime supply is restricted to 55,500 sq ft in 5 buildings. The remaining available accommodation is typically made up of older refurbished 1980 s/1990 s stock. TAKE-UP Average take up in Bracknell over the last 10 years is 151,100 sq ft per annum, the 5-year average is 167,200 sq ft per annum. Take up in Bracknell in 2017 reached 248,000 sq ft, the highest level since The majority (65%) of take up in the last 6 years has been from companies already based in Bracknell, however a very significant proportion (35%) has been companies moving to Bracknell. This is due to Bracknell being seen as an excellent value location in the Thames Valley. Whilst headline rents have been suppressed by an oversupply in the last 5 years, the predicted shortage in supply in 2019/2020 provides undoubted scope for rental growth to 30 per sq ft plus, which would still be good value when compared to other key M4 office centres like Reading ( psf), Maidenhead ( psf), Slough ( psf), Windsor ( psf) and Staines ( psf). Take-up has traditionally been for Grade A New or Grade A accommodation, with 69% of all take-up over the last 10 years falling into this category. During the last 5 years, Grade B take-up has further reduced and only accounts for 9% of all take-up. The average size of take-up in Bracknell has remained constant for the last 10 years, with the 10-year average being 14,600 sq ft which is in line with the floor plates provided by Building 3. RENTS Prime headline rents in Bracknell currently stand at per sq ft, still significantly below their historic peak and at a marked discount to competing centres such as Reading and Maidenhead. However, due to improved demand and reduction in quality stock prime headline rents in the town have increased at an average of 5.7% per annum over the last 3 years. Date Property Tenant Size Rent Term Years sq ft psf (Break) Jan-18 Capitol Techtronix 9, (5) Jan-18 3 Arlington Square Quest Software 12, (5) Dec-17 Maxis JDA 22, (5) Dec-17 Maxis Panasonic 41, (5) Dec-17 Maxis Riverbed Technologies 16, (5) Nov-17 3 Arlington Square Saba Software 6, (3) Sep-17 Capitol Software AG 8, (3) Sep-17 3 Arlington Square Ivanti 13, (5) Jul-17 Maxis Mitie 7, (5) Mar-17 3 Arlington Square L&G Homes 7, (5) 16

17 MAP ILLUSTRATING CURRENT PRIME HEADLINE OFFICE RENTS COMPARED WITH PREVIOUS PEAK HEADLINE OFFICE RENTS Current Headline Historic Headline Reading M4 10 Wokingham M Slough Uxbridge Maidenhead Bracknell Bracknell Staines Heathrow Weybridge Wembley Richmond Kingston upon Thames Shepherd s Bush Chiswick Wimbledon Hammersmith City M Farnborough Woking Leatherhead 7 A3 Farnham Guildford Reigate M23 Gatwick BRACKNELL PRIME HEADLINE RENTS ACHIEVED Capitol 3 Arlington Square Maxis psf psf psf 1 Arlington Square One Station Square Columbia Centre psf psf psf 17

18 INVESTMENT MARKET COMMENTARY Investor demand is currently exceptionally strong for prime multi-let offices within the South East, with very limited prime stock available. The table below highlights the recent investment transactions in the Thames Valley and Bracknell in particular, with 2 transactions in Arlington Square itself in the past year: Date Property Size Tenant Term Rent Price Cap Yield Purchaser (sq ft) Certain ( psf) Val ( psf) Jan-18 Imperial Place, 224,963 Multi-let 4.7 years ,500, % Fprop Borehamwood (8 tenants) (7.6 years) + 11% vacant Jan-18 One City Park, 77,934 Legal & General 9.0 years ,045, % Eastleigh Hove Assurance (6.0 years) Borough Council Society Limited Dec-17 No 2 Arlington 88,537 Regus 8.3 yrs ,500, % Epsom & Ewell Square, Bracknell Borough Council Nov-17 Maple Court, 71,902 Hilton 9.8 years ,750, % Sidra Capital Watford Worldwide Ltd (4.8 years) Nov-17 One Station 42,425 Multi-let 7.3 years ,000, % Standard Life Square, Bracknell (4 tenants) (5.7 years) + 13% vacant Nov-17 Columbia 54,291 Multi-let 3.1 years ,500, % CLS Holdings Centre, Bracknell (10 tenants) +21% vacant Aug-17 1 Arlington 84,583 Multi-let 5.8 years ,100, % Capital London Square, Bracknell (6 tenants) (4.4 years) + 7% vacant Jul-17 The Rivers, 104,181 Multi-let 14.2 years ,500, % Darin Partners Rickmansworth (3 tenants) (6.9 years) Jul-17 The Pinnacle, 41,721 Multi-let 8.2 years ,450, % Standard Life Reading (6 tenants) (3.2 years) + 22% vacant 18

19 MANAGEMENT The service charge budget for Building 3 for the year ending 31st December 2018 totals 576,567, which reflects a rate of 8.65 per sq ft including 1.85 per sq ft for plant replacement works. The Park service charge budget for Building 3 for the year ending 31st December 2018 totals 49,172, which reflects a rate of 0.74 per sq ft. VAT The property is elected for VAT and therefore VAT will be payable by the purchaser, unless the sale is structured as a Transfer of Going Concern. EPC The property has an EPC rating of D(93). A copy of the EPC and Recommendation Report is available on request. PROPOSAL We are instructed to seek offers in excess of 21,800,000 for the freehold interest, subject to contract and exclusive of VAT, which reflects a net initial yield of 6.50% and a capital value per sq ft of 324 after allowing for purchaser s costs of 6.75%. CONTACT SIMON BLAND T: E: simon.bland@realestate.bnpparibas JAMES GOODWIN T: E: james.goodwin@realestate.bnpparibas JOHN KNIGHT T: E: john.knight@realestate.bnpparibas BNP Paribas Real Estate gives notice to anyone who may read these particulars as follows: 1. These particulars are prepared for the guidance only of prospective purchasers. They are intended to give a fair overall description of the property but are not intended to constitute part of an offer or contract. 2. Any information contained herein (whether in the text, plans or photographs) is given in good faith but should not be relied upon as being a statement or representation of fact. 3. Nothing in these particulars shall be deemed to be a statement that the property is in good condition or otherwise nor that any services or facilities are in good working order. 4. The photographs appearing in this brochure show only certain parts and aspects of the property at the time when the photographs were taken. Certain aspects may have changed since the photographs were taken and it should not be assumed that the property remains precisely as displayed in the photographs. Furthermore no assumptions should be made in respect of parts of the property which are not shown in the photographs. 5. Any areas, measurements or distances referred to herein are approximate only. 6. Where there is reference in these particulars to the fact that alterations have been carried out or that a particular use is made of any part of the property this is not intended to be a statement that any necessary planning, building regulations or other consents have been obtained and these matters must be verified by any intending purchaser. 7. Descriptions of a property are inevitably subjective and the descriptions contained herein are used in good faith as an opinion and not by way of statement of fact. Designed and produced by tlgd.co.uk. February

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