FOR SALE PRIME MULTI-LET CITY CENTRE OFFICE & LEISURE INVESTMENT

Transcription

1 FOR SALE PRIME MULTI-LET CITY CENTRE OFFICE & LEISURE INVESTMENT

2 INVESTMENT SUMMARY Leeds is the third largest city in the UK The building has undergone an extensive 5m refurbishment programme including new VRF comfort cooling system 2 Exceptional Grade A BREEAM Excellent offices 6 open market lettings in the last 12 months demonstrating the quality of the building Tenants include Standard Life, UBS, Gateley Plc, Tattu and Manahatta 59,059 sq ft of accommodation over ground and nine upper floors Freehold Current passing rent of 1,368,867 per annum with a rental tone of only per sq ft Prime headline rents in Leeds now per sq ft WAULT to expiry of 9.25 and to break of 7.75 We are instructed to seek offers in excess of 19,700,000 (Nineteen Million Seven Hundred Thousand Pounds), subject to contract and exclusive of VAT A purchase at this level reflects a Net Initial Yield of 6.51% assuming purchase costs of 6.75% and a low capital value of only 333 per sq ft Based on our opinion of ERV, this reflects a reversionary yield of 6.67% 3

3 WELLINGTON PLACE RAIL STATION PRINCES EXCHANGE CENTRAL SQUARE CITY SQUARE TORONTO SQUARE 4 5 MINERVA PARK ROW PARK SQUARE EAST PARADE Leeds Leeds is the third largest city in the UK and the principal city of the Yorkshire and Humberside region. The City is home to a population of approximately 770,000 people and 2.2 million people within a 30 minute drive-time. Government investment into the Northern Powerhouse will see the City s partnership with Liverpool, Manchester, Newcastle and Sheffield transform Leeds into a truly global city.

4 6 ECONOMY LEEDS IS THE UK S LARGEST CITY REGION AND ECONOMY OUTSIDE LONDON, ECONOMICALLY BIGGER THAN NINE EU COUNTRIES, WITH A GVA OF 60.5 BILLION ECONOMY GENERATING 5% OF THE UK S ECONOMIC OUTPUT. The City is widely recognised as the UK s main financial and business services centre outside the City of London. This sector generates over 13 billion every year with currently over 250,000 people employed. The city region has the largest workforce outside of London and is the fastest growing in the North of England. The working age population is set to increase by 26% between 2006 and 2031 demonstrating the high levels of growth expected. Over the last 20 more jobs have been created in Leeds than any other UK city outside of London. This trend is to continue as Leeds will see the second largest increase in jobs in core cities between 2013 and Leeds is home to eight universities giving the largest concentration of universities in Europe, producing some 36,000 graduates a year. Over 35% of the working population is educated to degree level and the University of Leeds features in both the World and European rankings. Leeds has seen significant inward investment in recent with the completion of Land Securities 350 million Trinity Leeds scheme, the opening of Leeds City Council s 13,500 capacity 60 million First Direct Arena and Hammerson s 150 million, 452,000 sq ft retail and leisure scheme, Victoria Gate, anchored by John Lewis. Most recently, Leeds highlight commercial transaction has been the 380,000 sq ft pre let of offices in Wellington Place to the Government Property Unit Hub. This transaction is predicted to bring 6,000 civil servants into Leeds City Centre by 2020 and is the largest pre-let transaction outside London in the past BILLION FASTEST GROWNING MORE JOBS CREATED 36,000 STUDENTS 35% OF 560 WORKERS MILLION GENERATED IN THE FINACIAL AND BUSINESS SERVICES SECTOR PER YEAR. CITY REGION IN THE NORTH OF ENGLAND. IN LEEDS OVER THE LAST 20 YEARS THAN ANY OTHER UK CITY OUTSIDE OF LONDON. A YEAR GRADUATE FROM ACROSS LEEDS 8 UNIVERSITIES. ARE EDUCATED TO DEGREE LEVEL. OF INWARD INVESTMENT AT TRINITY LEEDS, FIRST DIRECT ARENA AND VICTORIA GATE.

5 HS2 The proposed HS2 line will be a fundamental driver of economic growth for Leeds, increasing capacity and reducing journey times to London to 82 minutes. The proposed new platforms are set to adjoin the existing station, creating the largest station in the North. HS2 is forecast to deliver 19,700 potential new jobs and boost the Leeds City Region economy by 7.8 billion a year. Road Leeds is strategically located approximately 312 km (195 miles) north of London and 71 km (44 miles) north-east of Manchester. The City has excellent road communications being located just 6 miles (9.6 km) from the apex of the M1/M62 motorway intersection, providing direct access to the east and west coast conurbations. The A1 trunk road, connecting London with Edinburgh, passes approximately 10 miles (16 km) to the east of the City. EDINBURGH GLASGOW M74 A1 8 CONNECTIVITY 9 MANCHESTER LIVERPOOL M56 LEEDS BIRMINGHAM M62 M1 SHEFFIELD NOTTINGHAM M6 M1 M40 A1 HULL Rail Leeds City station has undergone a modernisation programme with the opening of the new 20 million south entrance in January. It is the third busiest rail station in the UK outside of central London with an estimated 100,000 passengers using it daily. The Station provides direct rail routes to national destinations and to London (Kings Cross) with a normal fastest journey time of approximately 2 hours. Air Leeds Bradford International Airport is situated approximately 9 miles north of the City Centre providing international and domestic flights to over 65 locations. The airport currently caters for around 3.7 million passengers per annum (2016) and this is forecast to expand to approximately 8 million passengers by The airport has trebled in size since 1996 and its continued expansion is a key factor in the development of the Leeds economy. British Airways have recently opened four daily flights to London. BRISTOL M4 LONDON M5

6 MILL HILL MINERVA MANAHATTA SITUATION The property is situated on East Parade in the heart of the city s professional district, within 2 minutes walk of Leeds Rail Station and the City s retail core. Occupiers in the immediate vicinity include HSBC, Zurich Insurance, All Bar One, Pret A Manger, Redmayne Bentley LLP and Stewarts Law. Minerva occupies an enviable location at the centre of the newly redeveloped Bond Court providing new public realm complemented by the new Dakota Deluxe Hotel and newly refurbished Capitol House and 9 Bond Court. The micro location is undoubtedly the prime leisure location with some of Leeds finest bars and restaurants including Alchemist, Neighbourhood, Liquorist and Blackhouse complementing the award winning Tattu and Manahatta located within Minerva. 1 IBERICA 2 STOCKDALES 3 SAN CARLO 4 SUKHOTHAI 5 THE LIQUORIST 6 GINO D ACAMPO 7 LE CHALET 8 THE LOST AND FOUND 9 WAGAMAMA 10 BAR SOBA 11 GUSTO DAKOTA HOTEL 12 NEIGHBOURHOOD 13 DAKOTA DELUXE 14 ALCHEMIST 15 MANAHATTA 16 ALL BAR ONE 17 DIRTY MARTINI 18 TATTU 19 BLACKHOUSE 20 LA BOTTEGA MILANESE 21 BOND COURT 22 PRET A MANGER TATTU T PAUL S ST RK PLACE K PLACE TON ST MINERVA AIRE ST INFIRMARY ST QUEBEC ST TORONTO ST Traditional Office Quarter BEDFORD ST GREEK ST RUSSELL ST PARK ROW LEEDS CITY STATION LOWER BASINGHALL ST BISHOPGATE ST NEW STATION ST Retail Quarter ALBION ST COMMERCIA BOAR LAN SWINEGATE REIG LA BOTTEGA MILANESE

7 Minerva House is arranged over ground and nine upper floors. In 2016, the building underwent a 5m refurbishment programme to include full height glazing in part, a stunning new reception and Grade A offices benefitting from the following specification:- DESCRIPTION BREEAM Excellent VRF comfort cooling - full replacement of system in 2016 New high quality reception designed by Katharine Pooley LED lighting Metal suspended ceiling tiles High quality WC and shower facilities The ground floor leisure units have been fitted out to an exceptional standard by the operators. 12 We spent a lot of time looking for new office space in Leeds that will be our permanent home as our business grows. We needed an excellent location in the heart of Leeds, a building and office space with a high quality finish and appearance our clients would enjoy coming to and a flexible space that we could work with to our specific design requirements. Minerva offered all of this along with a professional and friendly management team who have bent over backwards to accommodate and support us. UBS 13 1,050 sq.ft 1,520 sq.ft 2,550 sq.ft TYPICAL FLOOR PLATE SPLIT OPTIONS

8 14 15

9 TENURE Freehold 16 17

10 TENANCIES AND ACCOMMODATION The property is multi-let in accordance with the tenancy schedule below and produces a current rental income of 1,368,867 per annum. Following the most recent letting to Gateley Plc, in our opinion the building has an ERV of 1,401,750 per annum ( per sq ft on the office accommodation and including rental increases). The WAULT to expiry is 9.25 and to break is Office Income 1,150,867 (84.07%) Leisure Income 218,000 (15.93%) 47,039 sq ft 12,020 sq ft 18 DEMISE TENANT RENT /SQFT RENT PA AREA SQ FT START DATE EXPIRY DATE NEXT REVIEW BREAK DATE COMMENTS Basement and Ground Floor Basement and Ground Floor First Floor Suite A ARC Inspirations Limited Tattu Manchester Limited CDI Anderserlite Limited , ,000 Bst 990 GF 2,470 Mezz 1,375 Bst 2,355 GF 2,990 Mezz 1,840 13/01/ 12/01/ /13/ /01/ /02/ 08/02/ /02/2022 Rent free period until 09/05/2018 landlord to top up. 5 months rent reviews ,975 1,950 12/03/ /05/ /05/2018 Further increases 03/2019 to 42,900 & 03/2020 to 47,775 First Floor Suite B BNP Paribas ,750 1,561 30/01/ /01/2020 First Floor Suite C Second Floor Suite A Invenia Resourcing Limited Standard Life Investments ,926 1,547 01/12/ /11/ /11/2019 Break requires a minimum of 9 months notice. Rent free period from 01/12/2019 to 15/03/2021 if break not exercised ,783 2,684 16/12/ /12/ /12/ /12/2020 Rent free from 16/12/2020 to 15/03/2021 if break not exercised. Second Floor Suite B FRP Advisory LLP ,190 2,718 12/09/ 11/09/ /09/ months rent free at start of lease then half rent from 12/01/2018 to 11/07/2019 Landlord to top up. Half rent from 12/09/2022 to 11/09/2023 if break not exercised. Third Floor Suite A Sentio Partners LLP ,700 2,599 16/08/ 15/08/ /08/ /08/2022 Rent free period until 14/08/2018. Landlord to top up. 19 Third Floor Suite B Proact IT UK Limited ,700 2,750 29/09/ 28/09/2022 Existing rent is 36,750 pa. Rent increases to 63,700 on 29/09/2019. Landlord to top up. Fourth Floor Suite A AJG ,250 2,500 26/02/ /02/ /02/ /02/2023 Rent free period 15 months. Landlord to top up. Fourth Floor Suite B Vacant ,625 2,825 Fifth Floor Suite A Vacant ,000 2,680 Fifth Floor Suite B Stowe Family Law LLP ,459 2,631 04/05/ /05/ /05/2021 Sixth Floor Gateley Plc ,100 5,284 30/04/ /04/ /04/2023 Landlord to provide 18 month rent, Business rates and service charge guarantee. Landlord to provide 18 month rent, Business rates and service charge guarantee. Currently under offer. 4 months rent free. Landlord to top up. Tenant receives 2 months rent free if break not exercised. Service charge free until earlier of 01/05/2020 or tenant occupation. Rent free until 01/05/2020. Landlord to top up. Seventh Floor Gateley Plc ,450 5,298 30/04/ /04/ /04/2023 Rent free until 01/08/2019. Landlord to top up. Eighth Floor Suite A UBS AG ,709 2,682 26/01/ /01/ /01/ /01/2020 Eighth Floor Suite B Gateley Plc ,400 2,536 30/04/ /04/ /04/2023 Rent free until 01/08/2019. Landlord to top up. Ninth Floor Gateley Plc ,850 4,794 30/04/ /04/ /04/2023 Rent free until 01/08/2019. Landlord to top up. CCTV Evans Dakota Hotels Ltd Peppercorn TBC 12/04/2027 Totals 1,368,867 59,059 The vendor requires the purchaser to enter into a lease to allow the adjacent hotel estate to record CCTV for the benefit of good management. Rent excluding guarantees on vacant space 1,231,242 per annum

11 COVENANT STRENGTHS We set out below financial summaries of the main tenants where available from Dun & Bradstreet and Creditsafe. Standard Life Investments Limited (SC123321) (now Aberdeen Standard Investments) is one of the world s largest investment companies managing 583bn of assets. Tattu Manchester Limited ( ) is a modern Chinese restaurant brand with locations in Manchester and Leeds. 31/12/ , , ,611 31/12/ , , ,108 31/12/ , , ,412 31/12/ /12/ (175) 31/12/ (26) The company has a D&B Rating of 5A1 and represents 5.07% of the contracted income Tattu has a D&B Rating of C3 and represents 9.25% of the contracted income. Gateley Plc ( ) was founded in 1808 and in 2015 was the UK s first commercial law firm to become a publicly-quoted company admitted to trading on the AIM market of the London Stock Exchange. FRP Advisory LLP (OC355680) is a specialist business advisory firm with 18 offices located throughout the UK /04/ 74,050 13,391 6,053 30/04/ 40,145 1 (1,194) 21 30/04/ ,017 11,116 6,731 30/04/ ,240 (1) (731) 31/10/ ,960 2,928 2,179 30/04/ , The company has a D&B Rating of 2A1 and represents 34.5% of the contracted income. The company has a D&B Rating of N2 and represents 4.95% of the contracted income. Proact IT UK Limited ( ) is Europe s independent data centre and cloud services provide employing over 800 people in 15 countries across Europe and North America. UBS AG (FC021146) provides a broad range of financial services such as Asset and Wealth Management and Investment Banking in over 50 countries. 31/12/ ,405 2,639 5,035 31/12/ ,481 2,080 2,985 31/12/ ,262 1,067 2,603 31/12/ ,762,926 1,407,876 41,240,595 31/12/ ,762,126 1,661,598 41,373,459 31/12/ ,570,721 1,746,110 32,053,041 The company has a D&B Rating of 2A1 and represents 4.9% of the contracted income. The company has a Creditsafe Rating of A73 and represents 5.06% of the contracted income. ARC Inspirations Limited ( ) was established in 1999 and now operates 15 bars and restaurants across the Yorkshire region and Manchester. Stowe Family Law LLP (OC331570) is a solicitor practice providing a range of legal services such a Divorce settlements, Children s Law, Wills and Tax. 02/04/ 22,249 (592) (684) 31/03/ , /30/ ARC Inspirations have a D&B Rating of N3 and represents 7.55% of the contracted income. The company has a D&B Rating of H3 and represents 4.97% of the contracted income. 31/03/ 9,082 3,429 2,142 31/03/2016 6,788 2,203 1,547 31/03/ ,035 Financial information for the additional tenants is available upon request.

12 OFFICE MARKET HEADLINE RENTS Leeds has witnessed the fastest rate of private sector jobs growth in the UK over the last decade and the market continues to exhibit growth characteristics with employment in Leeds forecast to grow by 10.4% over the next 10 higher than the rate for the UK and core cities. Prime headline rents in Leeds are currently per sq ft set in Q4, a significant discount and occupational saving compared to Manchester at per sq ft and Birmingham at per sq ft. The current passing rent of Minerva is only psf. Growth in the financial and business services sector is expected to be 21% over the same period, consolidating Leeds ranking as the largest centre for financial services outside London. The City is host to 20 FTSE 100 Company HQs and in excess of 30 national and international Banks. Building Rent psf Tenant Area Lease Terms Building Date Central Square PWC 11,599 Confidential Central Square January The emerging digital technology sector will be a key driver of this growth with initiatives such as the Digital Enterprise Programme and Leeds selection as one of few UK Gigabit Cities attracting more inward investment. Leeds is at the forefront of the digital revolution with BT, EE, Cable & Wireless and O2 all having a major presence in the region. The region is also home to the highest concentration of internet and telecommunications providers in the UK. Central Square Sky 26,000 6 Queen Street Burberry 45,000 No1 Whitehall Riverside Aviva 6, year lease, break at year year lease, break at Year 10 5 year lease, break at Year 3 Central Square August 6 Queen Street June No1 Whitehall Riverside June 9 Bond Court Carter Jonas 4, year lease, break at Year 5 9 Bond Court April Take-up SQ.FT. 9 Bond Court Stewarts Solicitors 5, year lease, break at Year 5 9 Bond Court April , , , , , , , ,000 TAKE-UP The 10 year average for Leeds city centre is 536,000 sq ft with take-up in 2015 exceeding 680,000 sq ft. Whilst 2016 saw the effects of the political and economic events with a more subdued 430,000 sq ft. has seen the highest take up on record with in excess of 1M sq ft. Even without the Government Hub pre-let at Wellington Place take up exceeded the 5 and 10 year averages. 10 Year Average Q Prime Rent ( ) Leeds Birmingham Bristol Cardiff Edinburgh Glasgow Manchester Historically, Leeds occupational demand has been driven by existing occupiers relocating and upgrading. More recently we have seen notable examples of new entrants to Leeds and occupiers choosing to expand as businesses seek to take advantage of the high quality labour pool and comparatively cheap occupational costs. Both PWC and Sky have taken an additional space, 26,000 sq ft and 11,600 sq ft respectively at Central Square, Equifax have relocated from Bradford taking 19,784 sq ft at Wellington Place and Burberry have taken 45,000 sq ft in 6 Queen Street on a rising rent from per sq ft to per sq ft. The flexible floor plates of Minerva House are ideally suited to the Leeds Market. In, 41.7% of lettings were 5,500 sq ft or below. To highlight this, Minerva House has secured 6 open market lettings in the last 12 months , % 1.7% 1.6% 100, , , , , , , , , , ,000 NEW BUILD GRADE A OFFICE SUPPLY There is currently only 290,000 sq ft of new build Grade A space available in Leeds City Centre and a proportion of this is already under offer with a high probability that the prime headline rent will increase above psf Q1 Q2 Q4

13 OFFICE MARKET- INVESTMENT INVESTMENT PROPOSAL Date Property NIA Tenant April 2018 City Point, 29 King Street, Leeds Term Certain Rent Price Price Purchaser NIY CV 61,377 Multi-let m CBREGi 5.78% 424 VAT A VAT option to tax has been made on the property and it is envisaged that the sale will be treated as a Transfer of a Going Concern (TOGC) for VAT purposes. 24 Feb 2018 Jan 2018 Dec Dec Aug Aug July May Feb 6 Queen Street, Leeds 69,945 No 2 Capital Quarter, Cardiff 1 Portland Street, Manchester Park Row House, Leeds Part let to Burberry/ part Vacant 82,029 Multi-let 59,201 Multi-let 42,000 Multi-let 2 Quartermile, Edinburgh 58,840 Multi-let 19 Cornwall Street, Birmingham 1 East Parade & 8 St Pauls Street, Leeds 9 Bond Court, Leeds Toronto Square, Leeds 132,903 Multi-let 67,456 Multi-let 66,438 Multi-let 90,562 Multi-let 42% vacant m Mayfair Capital 5.42% c. 22.9m Tesco Pension Fund c.6.50% c m M&G 5.75% m Adapt 5.54% m UBS Asset Management 5.41% m Kier Property 6.77% m Schroders 6.75% m Canal & Rivers Trust 6.25% m JP Morgan 4.50% 245 EPC Available upon request. Proposal We are instructed to seek offers in excess of 19,700,000 (Nineteen Million Seven Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level reflects a Net Initial Yield of 6.51% assuming purchase costs of 6.75% and a low capital value of only 333 per sq ft. Based on our opinion of ERV this reflects a reversionary yield of 6.67%. Capital Allowances A joint election under s.198 Capital Allowances Act 2001 will be made for 1 for the general pool and 1 for the special rate pool on the sale of the Property. Service Charge 25 Minerva has a WAULT to expiry of 9.25 and to break of The service charge for 2018/2019 is currently 5.50 per sq ft. INVESTMENT RATIONALE & ASSET MANAGEMENT OPPORTUNITIES Prime location within CBD and 2 minutes walk from Leeds Rail Station No further capital expenditure required following extensive refurbishment Rental tone of per sq ft. offers excellent growth prospects against prime rents of per sq ft BREEAM Excellent offices Flexible floorplates well suited to market requirements Established identity as prestigious business address Bond Court environment now significantly enhanced with redevelopment or refurbishment of all surrounding properties and the public realm Attractive income yield compared to other asset classes Low capital value per sq ft

14 FURTHER INFORMATION For further information including access to the data room and viewing arrangements, please do not hesitate to contact one of the sole agents:- Mathew Atkinson Andrew Summersgill RICHARD HINDS DD: DD: DD: MISREPRESENTATION ACT: Jones Lang LaSalle for themselves and for the vendors or lessors of this property, whose agents they are give notice that: a) all particulars are set out as general outline only for the guidance of intending purchasers or lessees, and do not comprise part of an offer or contract: b) all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them as statements or representations of fact but must satisfy themselves by inspection or otherwise as to the correctness of each of them. c) no person in the employment of Jones Lang LaSalle has any authority to make any representation of warranty whatsoever in relation to this property. DS Emotion_4284_MAY18