Springfield Drive Leatherhead Office Park Leatherhead KT22 7NL Alpha & Beta OFFICE INVESTMENT WITH FUTURE REDEVELOPMENT POTENTIAL
M23 J9 M3 LEATHERHEAD TOWN CENTRE A245 LEATHERHEAD Alpha & Beta RANDALLS RESEARCH PARK Cleeve Road (Secondary Access) Randalls Road (A245) LEATHERHEAD OFFICE PARK Springfield Drive (Primary Access) 02 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
Investment Summary Landmark headquarters business park located in Leatherhead, a core South East centre. Leatherhead s excellent road links, proximity to the, Central London and Heathrow and Gatwick Airports, as well as its strong professional employment base have made it an attractive and established location favoured by many multi-national occupiers. Alpha & Beta are prominently positioned in the centre of Leatherhead Office Park, the town s premier business park. Two self-contained office buildings arranged over ground and first floors totalling 43,423 sq ft. Modern, open plan floor plates capable of serving a wide range of occupier requirements. Exceptional car parking ratio of 1:167 sq ft. The large site extends to 3.7 acres and offers future redevelopment potential, subject to planning. Let to Kellogg Brown & Root Ltd (KBR) producing 674,000 per annum which equates to a low average rent of 15.52 per sq ft. Fixed uplift in 2020 as a result of a CPI linked rent review with a cap and collar of 1% and 5%. Kellogg Brown & Root Ltd is rated 5A1 by Dun & Bradstreet, representing a minimum risk of business failure. Alpha & Beta are let at a 50% discount to prime rents in Leatherhead thereby providing a low base for future rental growth. Offers are sought in excess of 7,900,000 (Seven Million, Nine Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level reflects an attractive net initial yield of 8.00% exclusive of purchaser s costs of 6.67% and a low capital value of 182 per sq ft. 03 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
DOWN UP OFFICE INVESTMENT WITH FUTURE REDEVELOPMENT POTENTIAL The Opportunity Alpha & Beta presents a rare win-win opportunity to a purchaser. In the event that KBR does not exercise its 2020 break option, the purchaser will receive an additional five years of income. If the break option is exercised, as well as receiving an attractive 12 month rent penalty, the purchaser will have the opportunity to redevelop the site to create two landmark headquarters office buildings and in doing so, potentially double the existing square footage yet maintain an attractive car parking ratio. A feasibility study has been prepared by Campbell Architects which identifies three options for Alpha & Beta; refurbishment, refurbishment and extension and new build. The vendor engaged with Mole Valley District Council prior to KBR renewing its current lease and the Council responded positively to the concept of development. The option highlighted below and overleaf is for a new build with the key features summarised below: Two new 3-storey office buildings with landscape features Total area of 84,000 sq ft (area gain of circa 40,500 sq ft) New 3-storey car park creating an overall ratio of 1:290 sq ft Redesign of the roads to announce the new buildings ORCHARD CLOSE NIA- 1350 m2 (14 531 ft2) NIA- 1350 m2 (14 531 ft2) s/s ARTIST S IMPRESSION PROPOSED SITE PLAN 04 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
05 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL CGI
Leatherhead Leatherhead is located within the Mole Valley District of Surrey, 26 miles south west of Central London. Strategically positioned adjacent to the, Leatherhead is home to a thriving business community and benefits from an affluent and skilled workforce. Leatherhead is a dominant office market and has attracted a number of blue chip multi-national companies to the area, providing UK headquarters offices for Unilever and CGI Logica whilst other high profile occupiers include Edif ERA, Wates Group, Exxon Mobil, Learning Tree, Merchant Navy Pension Fund, Police Federation and the NHS. (J9) 1 mile Guildford 26 mins Gatwick Airport 19 miles M23 (J8) 13 miles Croydon 36 mins Heathrow Airport 21 miles M3 (J2) 15 miles London Waterloo 45 mins Woking 15 miles London Victoria 45 mins Guildford 16 miles Gatwick Airport 45 mins Central London 26 miles High Wycombe Amersham M1 Watford Edgware A1(M) Barnet Enfield North Circular Cheshunt Loughton M11 Brentwood A244 A243 Maidenhead M4 Slough M40 Heathrow Harrow Wembley London White City West End Stratford Ilford City Romford Dagenham Pachesham Golf Centre A245 Bracknell Farnborough M3 Woking Weybridge Hounslow Twickenham Kingston-upon-Thames Mitcham Esher Brixton Wimbledon South Circular Epsom Banstead Croydon Caterham Bromley Sidcup Orpington M20 M26 Alpha & Beta A245 A245 J9 A243 Redhill A245 Farnham Guildford Dorking LEATHERHEAD Gatwick Crawley M23 East Grinstead Tonbridge Royal Tunbridge Wells LEATHERHEAD 06 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
Leatherhead Office Park Alpha & Beta are prominently positioned in the centre of Leatherhead Office Park, the town s premier business park. Leatherhead Office Park comprises a number of high quality headquarters buildings set in an attractive landscaped environment. As a result of its excellent connections and attractive working environment, the Park has attracted a range of high profile occupiers including CGI Logica and Unilever who occupy a 175,000 sq ft premises as their UK headquarters. Leatherhead Office Park is just 1 mile north west of Leatherhead town centre which boasts a wealth of leisure and retail amenities including The Swan Shopping Centre, home to many national multiple retailers. To the east of Leatherhead Office Park lies Randalls Research Park, a mixed use business park comprising a variety of office, laboratory and warehouse functions. KBR, Unilever and CGI Logica run their own shuttle bus services providing a transport link between Leatherhead Office Park, the town centre and Leatherhead Station. Alpha & Beta Cobham Edif ERA Smithers Pira KBR CGI Logica KBR Unilever One Springfield Drive (speculative redevelopment) 07 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
Description Alpha & Beta were constructed in the 1980s and comprise two self-contained office buildings arranged over ground and first floors totalling 43,423 sq ft. The buildings are of concrete and steel frame construction with brick clad elevations and both benefit from a full height central atrium. The accommodation provides modern, open plan floor plates offering the flexibility to be let as a whole, as individual buildings or on a floor-by-floor basis, thereby capable of serving a wide range of occupier requirements. The internal specification includes: Comfort cooling Part raised/solid floors 8 person passenger lift in each building (provision for additional lifts) Male, female and disabled WCs Shower facilities The tenant has recently made a number of improvements to the building including new cabling and will be installing new fire systems throughout as well as upgrading the toilet facilites. Car Parking Accommodation The property has been measured by CBRE Ltd in accordance with the RICS Code of Measuring Practice (6th edition). The survey, which can be assigned to the purchaser, provides the following net internal floor areas: Alpha Floor Use Area (sq m) Area (sq ft) Ground Reception 76.5 823 Ground Office 971.3 10,455 First Office 966.7 10,405 Sub Total 2,014.5 21,683 Beta Floor Use Area (sq m) Area (sq ft) Ground Reception 76.5 823 Ground Office 971.1 10,453 First Office 972.1 10,464 Sub Total 2,019.7 21,740 Total 4,034.2 43,423 There are 260 on-site surface car parking spaces providing an exceptional overall ratio of 1:167 sq ft. EPC Alpha has an EPC rating of D (99) and Beta has an EPC rating of E (102). MODERN, OPEN PLAN FLOOR PLATES WITH AN EXCEPTIONAL CAR PARKING RATIO OF 1:167 SQ FT 08 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
09 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
El OFFICE INVESTMENT WITH FUTURE REDEVELOPMENT POTENTIAL Site Tenure El Sub Sta The property occupies a large site of 1.5 hectares (3.7 acres) offering future redevelopment potential, subject to planning. The site s principal access is via Springfield Drive accessed from Randalls Road (A245) with additional access via Cleeve Road. The land edged red on the adjacent site plan is held freehold. The land edged blue is held long leasehold for a term of 999 years expiring 16 May 2998 with an option to purchase the freehold any time after the 15th anniversary of the term. The vendor has not exercised this option. KBR Alpha Sub Sta Works 1141 1142 Tenancy Occupancy Beta 1140 Alpha & Beta are let in their entirety to Kellogg Brown & Root Ltd (KBR) on two separate co-terminus leases for a term of 10 years commencing on 29 September 2015 and expiring on 28 September 2025. This provides a WAULT of 9.5 years to expiry (4.5 years to break). The leases are subject to an internal schedule of conditionand are outside the L&T Act 1954. The tenant has an option to determine the leases on 28 September 2020 subject to 12 months notice and a rent penalty of 674,000 plus VAT. The combined passing rent is 674,000 per annum which equates to a low average rent of 15.52 per sq ft. There is a rent review in the fifth year of the term linked to the Consumer Price Index (CPI) with a cap and collar of 1% and 5%. KBR originally occupied Alpha & Beta 20 years ago and the buildings are currently used by specific project/contract teams. KBR occupy three other buildings on Leatherhead Office Park demonstrating its commitment to the locality. Hill Park Court, which comprises two self-contained headquarter office buildings, is KBR s UK headquarters and is owner-occupied. Milton House where there is a lease expiry in 2017 and a passing rent of 22.00 per sq ft creates potential consolidation opportunities into Hill Park Court or Alpha & Beta. KBR 0m 25m 50m 75m Hill Park South ORCHARD CLOSE Ordnance Survey Crown Copyright 2016. All rights reserved. Licence number 100022432. Plotted Scale - 1:1750 El Sub Sta This plan is published for the convenience of identification only and although believed to be correct is not guaranteed and it does not form any part of any contract. Crown Copyright. All rights reserved. Licence Number LIG0074. LARGE SITE EXTENDING TO 3.7 ACRES OFFERS FUTURE REDEVELOPMENT POTENTIAL, SUBJECT TO PLANNING FOR ILLUSTRATIVE PURPOSES ONLY The Axis Centre 6 10 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
Covenant Profile KELLOGG BROWN & ROOT LTD Kellogg Brown & Root Ltd, trading as KBR, is one of the world s premier engineering service companies. Formed in 1998 following the merger of M.W. Kellogg and Brown & Root Engineering, KBR has operations in 40 countries, employs 25,000 people and is listed on the New York Stock Exchange. Kellogg Brown & Root Ltd is rated 5A1 by Dun & Bradstreet, representing a minimum risk of business failure. Their most recent financial results are summarised below: 31/12/2014 31/12/2013 31/12/2012 Sales Turnover 515,451,000 563,671,000 643,680,000 Profit Before Taxes 93,635,000 106,097,000 136,104,000 Tangible Net Worth 1,132,742,000 1,042,819,000 948,564,000 Net Current Assets 1,146,235,000 1,038,939,000 938,090,000 KBR ORIGINALLY OCCUPIED ALPHA & BETA 20 YEARS AGO AND OCCUPY THREE OTHER BUILDINGS ON THE PARK 11 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
Leatherhead Office Market TAKE UP & AVAILABILITY Leatherhead is an established South West office location with a total stock of approximately 2.7 million sq ft. Annual take up in 2015 was 22% up on 2014 and in line with the 10 year average demonstrating the continued strength of the market. There is currently 80,000 sq ft of named requirements for Leatherhead. Supply is limited to approximately 145,000 sq ft, representing a low overall vacancy rate of circa 5%. In 2012, Unilever took a pre-let of its 175,000 sq ft headquarters building on the Park, reinforcing the Park s reputation as a major regional office centre. RENTAL VALUES & GROWTH Prime rents in Leatherhead have remained at a consistent level of 26.00 per sq ft over the past five years and favourable signs of improvement have led to an increase in headline rents to 28.50 per sq ft in recent months. Quoting rents for refurbished accommodation at The Square have increased to 31.50 per sq ft following the recent letting of 3 The Square (17,260 sq ft) to Rawlinson & Hunter at a headline rent of 28.25 per sq ft. Prime rents in neighbouring centres such as Weybridge and Esher are now well established at 35.00-36.00 per sq ft. The occupational outlook for Leatherhead in 2016 is therefore positive with prime office space in the town still offering a significant discount to competing towns in the region. Rising rents, together with a reduction in incentive packages being offered to tenants, means that Leatherhead is expected to benefit from future rental growth on a net effective basis. DEVELOPMENT PIPELINE The South West region is currently suffering from a lack of supply of new Grade A office stock. Construction in Leatherhead has been severely constricted over the past decade, whilst numerous buildings have been taken out of the market and converted to residential under permitted development rights. The current lack of supply has provided rationale for a back to frame refurbishment and extension of One Springfield Drive at Leatherhead Office Park which will provide 40,000 sq ft of high quality accommodation. The development is due to be completed in Q4 2016 and quoting rents are expected to be in the region of 35.00 per sq ft. A lack of supply and development in the wider region has given confidence to developers to speculatively build in Weybridge (Velocity, 106,000 sq ft and Weybridge Business Park, 98,000 sq ft) and in Redhill (Prospero, 48,000 sq ft). 31.50 15.52 9% 22% 1:152 5% PRIME QUOTING RENTS CURRENT AVERAGE PASSING RENT INCREASE IN RENTS IN LAST 12 MONTHS INCREASE IN TAKE UP FROM 2014 ALPHA & BETA CAR PARKING RATIO LOW OVERALL VACANCY RATE 12 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
Investment Rationale Large, freehold site extending to 3.7 acres offering future redevelopment potential, subject to planning. Opportunity to redevelop the site to create two landmark headquarters office buildings, doubling the existing square footage yet maintaining an attractive car parking ratio. KBR have been on Leatherhead Office Park for 20 years and occupy three other buildings on the Park, demonstrating its commitment to the locality. Opportunity to remove the break option to improve the income profile. Leatherhead s excellent communications and access to an educated and skilled workforce make it a highly desirable location for occupiers. Strong fundamentals will continue to attract multi-national occupiers ensuring that Leatherhead remains a core South East centre for the foreseeable future. With no schemes likely to be speculatively developed in Leatherhead in the near future, a shortage of supply and good levels of demand, we expect continued rental growth in Leatherhead over the short to medium term. One of the best car parking ratios in the office market at 1:167 sq ft. Attractive initial yield and low capital value per sq ft. 13 Alpha & Beta, Springfield Drive, Leatherhead Office Park, Leatherhead, KT22 7NL
Springfield Drive Leatherhead Office Park Leatherhead KT22 7NL VAT Contacts We understand the property is elected for VAT. It is the intention of the parties that the transaction will be treated as a transfer of a going concern (TOGC). Proposal We are instructed to seek offers in excess of 7,900,000 (Seven Million, Nine Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level reflects an attractive net initial yield of 8.00% exclusive of purchaser s costs of 6.67% and a low capital value of 182 per sq ft. Noel Lander 020 7087 5336 07931 371825 noel.lander@eu.jll.com Laura Houghton 020 7852 4959 07738 625165 laura.houghton@eu.jll.com Tom Woolven 020 7087 5471 07525 872738 tom.woolven@eu.jll.com Maurice Johnson 01372 360190 07770 416220 maurice.johnson@hurstwarne.co.uk Nic Pocknall 01372 360190 07770 416219 nic.pocknall@hurstwarne.co.uk Nick Atkinson 01252 816061 07801 253129 nick.atkinson@hurstwarne.co.uk Disclaimer Jones Lang LaSalle Limited (JLL) for themselves and for the vendors or lessors of this property whose agents they are, give notice that:- a. the particulars are a general outline only for guidance and do not constitute, nor constitute part of, an offer or contract; b. all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are believed to be correct, but any intending purchasers, tenants or third parties should not rely on them as statements or representations of fact but satisfy themselves that they are correct by inspection or otherwise; c. no person in the employment of JLL has any authority to make or give any representation or warranty whatever in relation to the property; d. the photographs show only parts of the property as they appeared when taken; e. unless otherwise stated, all prices are quoted exclusive of VAT, if applicable; f. reference to any mechanical or electrical equipment or other facilities at the property shall not constitute a representation (unless otherwise stated) as to its state or condition or that it is capable of fulfilling its intended function; 2016 Jones Lang LaSalle IP, Inc. All rights reserved.