HIGH YIELDING SINGLE LET OFFICE INVESTMENT, LET TO GOVERNMENT ST CLARE HOUSE, PRINCES STREET, IPSWICH IP1 1LW
Investment Summary is the administrative centre for Suffolk and an expanding commercial centre some 66 miles (106 km) north east of London. Prominent site located on the town s inner ring road in close proximity to the town centre and prime retailing area Office building comprising 7,155.1 sq m (77,012 sq ft) with 32 car parking spaces Freehold Let to the Secretary of State for the Environment (HMRC) expiring 23rd July 2023, with a tenant s break clause dated 2nd April 2021 Current net rent of 695,000 per annum exclusive equating to a low rent of 9.02 per sq ft ( 97.13 per sq m) We are instructed to seek offers of 5,400,000 (five million, four hundred thousand pounds only) subject to contract and exclusive of VAT for our client's freehold interest. This reflects a net initial yield of 12.07% assuming purchaser s costs of 6.61% and a capital value of only 70.12 per sq ft. 2
King's Lynn A1156 Northampton M40 A1 M1 Luton Peterborough A1(M) A1(M) A14 LONDON A47 Bishop's Stortford M25 A14 Cambridge M11 Stansted A120 A12 A47 Colchester A14 A12 Norwich A140 Harwich A146 Lowestoft IPSWICH Felixstowe B1075 A137 A1214 A1022 B1075 B1075 A1022 IPSWICH A137 The Buttermarket A137 To A14 (J56) A1022 Neptune Marina A1071 B1075 A1156 University of Suffolk Not to scale. For indicative purposes only. Location is the largest town in Suffolk, and the administrative centre for the whole of the county, with a catchment population of 133,384 and an even larger estimated urban zone population of 275,000 (2011 Census). is located 66 miles (106 km) north east of London, 16 miles (25.75 km) north east of Colchester, and 10 miles (16 km) west of Felixstowe. is situated on both the A12 and the A14, which gives direct access to the M25 (Junction 28) to the south west and M11 (Junctions 8) also to the south west. The port of Felixstowe is 10 miles (16 km) to the south east via the A14. The town benefits from regular train services to London Liverpool Street station, which take approximately 1 hour 8 minutes. The line also links with Norwich (40 minutes), Colchester (19 minutes), Cambridge (1 hour 10 minutes) and Peterborough (1 hour 40 minutes). Stansted Airport lies approximately 45 miles (70 km) to the south west. It is 4th busiest airport in the United Kingdom after Heathrow, Gatwick and Manchester. Norwich Airport lies approximately 47 miles (75km) to the north providing both domestic and international flights. Situation St Clare House occupies a prominent site on the town s inner ring road close to the intersection of Princes Street (B1075) and Civic Drive and Franciscan Way to the north. To the south Princes Street links with Grafton Way (A137), the main route out to the south of the town. Town Football Club is situated 200 yards to the west of the property. The property sits within an established office location within easy reach of the town s extensive retail and leisure facilities. The main retail pitch is approximately 5 minutes walk giving access to Westgate Street, Tavern Street and Buttermarket, along with the two main shopping centres: Sailmakers and The Buttermarket, both of which have seen upgrades recently. The Buttermarket has undergone a huge 35m redevelopment to provide more leisure and restaurants, whereas the old Tower Ramparts had over 4m spent on upgrading and rebranding to become The Sailmakers. The town's leisure offering is at Cardinal Park, which sits approximately 3 minutes walk to the south of the property with occupiers including Cineworld, KFC, Ask, Frankie and Benny's, McDonalds and Starbucks. benefits from the University Campus Suffolk, a collaboration between the University of Essex and the University of East Anglia, which has contributed to s skilled labour pool and student economy. The town is home to key companies such as Willis Faber, AXA, BT, WNS and Churchill Insurance as well as public sector employers such as Suffolk County Council, Suffolk Police and Borough Council. 3
Observation Description The property comprises a purpose built office arranged over podium, mezzanine, ground and 11 upper floors. The entrance to the property is accessed via Princes Street with vehicular access from Chalon Street, off Princes Street. The building comprises a cast in situ concrete frame, clad with a glazed curtain wall and powder coated cladding panels, with brick cladding at lower levels. The flat roof is coated in weathered mineralized felt. The podium level was extended to provide a reception area at street level, with two escalators within the entrance taking visitors/employees up to first floor offices and to the main lifts to the upper floors. 98 Shelter 88 to 96 86 3.0m Shelter 3 to 5 Court Greyfriars 2 84 3.4m 51 House Internally, the specification includes the following: Suspended ceilings 100 CHALON Gas fired central heating 2 Recessed lighting Comfort cooling installed by the tenant as per the licence for alterations 2.7m 141 to 145 STREET 3 X 18 person passenger lifts 1 X goods lift Perimeter trunking Vehicular right of way in favour of Willis Faber PLC Building line not to be extended into this area 1 3.0m The building also provides car parking for 32 cars. Plant room to which Willis Faber PLC have a right of access Further details available on request. For indicative purposes only. CECILIA 4
THE PROPERTY Train Station Suffolk Borough Council Borough Council Football Club PRINCES ST. PRINCES ST. TAVERN TAVERN STREET STREET TAVERN STREET BUTTERMARKET BUTTERMARKET For indicative purposes only. Suffolk Life Group Franciscan House 5
Accommodation The property has been referenced by Lane and Frankham. We understand that the property has been measured in accordance with the Code of Measuring Practice (6th Edition) on a Net Internal Area basis as shown below: Floor Plan The floor plan below illustrates the layout for the third to the ninth floors. Floor Use Sq M Sq ft Basement Storage 5.8 62 Ground Common 93.0 1,001... Reception Upper Ground Ancillary 21.5 231 Upper Ground Office 599.4 6,452 First Office 640.4 6,893 Second Office 639.0 6,878 Third Office 649.9 6,995 Office 12.26 54.79 Fourth Office 649.9 6,995 Fifth Office 649.9 6,995 Sixth Office 649.9 6,995 Seventh Office 649.9 6,995 Eighth Office 649.9 6,995 Ninth Office 649.9 6,995 Site Area The site extends to 0.175 hectares (0.43 acres). Tenure Freehold Tenancy The property is let on Full Repairing and Insuring terms to the Secretary of State for the Environment by way of a reversionary lease expiring 23rd July 2023. The lease provides for a tenant only break clause on the 2nd April 2021 with 9 months written notice. The current passing rent is 695,000 per annum equating to 9.02 per sq ft ( 97.13 per sq m). The next rent review is on 1st August 2018 and is reviewed to Open Market Value. The building is occupied by HMRC, who have been in occupation since 1988. Tenth Office 651.1 7,008 Eleventh Office 48.6 523 Overall Total 7,155.1 77,012 6
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Market Commentary There has been a significant amount of new development and investment in the town centre over recent years including a 4m refurbishment of the Sailmakers Shopping Centre as well as the Waterfront Development at Neptune Quay. The Buttermarket Shopping Centre is currently undergoing a 35m redevelopment to provide a 16 screen cinema and a variety of new food and beverage offerings. Total office stock in is approximately 3.3 million sq ft. Take up is currently running at around 140,000 sq ft per annum, which is significantly higher than the average since 2008 (90,000 sq ft) and above the long term average that was trending at around 120,000 sq ft per annum. In 2015, take up was 142,000 sq ft (186% increase on 2014). Approximately 80% of take up is in the town centre market rather than out of town. Town centre prime rents are at 18.00 per sq ft, with a range of rents from 11.00-12.00 per sq ft for Grade B accommodation and circa 8.00-10.00 for Grade C space. There have been a handful of pre-lets including the Birketts LLP deal at 148 Princes Street which has been agreed at 18.00 per sq ft and Connexions 159 is being marketed at 18.00 per sq ft, setting record rents for. We understand that Borough Council has detailed planning consent for a new Grade A office at 88-96 Princes Street, opposite the property. Once the building has been 50% pre-let, work will start on site. We are aware of the following recent leasing transactions in town centre: Address Size Lease Term Tenant Rent Date... (sq ft) (Tenant break) psf Crown House 3,046 10 years Derivco Ltd 11.85 Feb 2016 Crown Street (year 5) Crown House 1,252 5 years Verastar Ltd 11.50 Jan 2016 Crown Street (year 3) 141-145 Princes Street 53,100 25 years Birketts LLP 18.00 Sep 2015. Pre let. Due to complete Q2 2017 St Vincent House 5,244 5 years Craft Media Ltd 10.25 May 2015 Cutler Street Fraser House 5,200 9 years Suffolk CC 12.50 Nov 2014 Museum Street St Vincent House 4,119 5 years Morgan Sindall Plc 10.41 Oct 2014 Cutler Street 8
Investment Market Commentary Investor appetite for UK offices remains strong, encouraged by improving occupier markets and a shortage of good quality stock. This has been further exacerbated by the removal of stock for conversion to residential under permitted development rights. Demand is particularly strong for opportunities that offer shorter term income with longer term redevelopment options. St Clare House offers a short term income let to a strong covenant and a very attractive income yield. We are aware of the following recent investment transactions: Address Size Lease Term Price Yield Date... (sq ft) (years) Vincent House 55,513 1.47 5,300,000 8.41% Under offer. May 2017 (Quoting) Felaw Maltings 108,879 4.90 8,400,000 9.25% Under offer ahead of (Quoting) asking terms. May 2017 1 & 2 Bracknell Boulevard 71,488 3.1 to break 10,500,000 11.6% December 2016 Bracknell 8 to expiry Sold to private Israeli... Part vacant 38,329 sq ft Regus Atterbury Lakes 33,506 c. 5 years 7,000,000 9.17% December 2016 Milton Keynes 9
Town Centre Master Plan The Town Centre Master Plan was adopted in 2013 and is a 15 year plan to enhance, remodel and develop town centre in order to regenerate and renew the regional centre. There has been significant redevelopment with an additional 400,000 sq ft of retail, between the existing retail pitch and the Waterfront in the following schemes: The Waterfront - adjacent to the upgraded marina, has transformed the former industrial area into a commercial area with university accommodation, residential units and A3 units. The Link - providing offices, retail, leisure and a hotel with multi storey car park on a 2.75 acre site. Cornhill - the main retail pitch will be redeveloped to enhance the town's core The Westgate Centre - will provide a new retail scheme of circa 150,000 sq ft Residential Development As part of the Town Centre Master Plan, 700 homes per year are to be developed up until 2027 with a large proportion of these dwellings focused around the town centre. According to the Master Plan, town centre locations reduce the need to travel by car due to close proximity to employment, retail, leisure activities and transport hubs. The town provides competitively priced residential property with a commuting time to London of c. 1 hour, generating demand from owner occupiers and buy-to-let investors. Residential capital values in are robust and offer a significant premium to the current low capital value at St Clare House of 70.12 psf, based on the quoting terms. We are aware of the following residential properties currently on the market: Address Number Size Price Capital Value... of Beds (sq ft) (psf ) Regatta Quay 1 540 195,000 361 Key Street Cranfields Mill 2 508 159,000 313 College Street Orwell Quay 2 708 210,000 297 Churchmans House 2 828 245,000 295 Portman Road The property would lend itself well to residential development, subject to the necessary planning consents and change of use. Prospective purchasers are advised to make their own enquiries. 10
Investment Rationale The property is let at a low rent of 9.02 psf. There is significant opportunity to refurbish and re-let at a higher rent, with recent lettings in the town achieving 12.00-18.00 per sq ft. Convert to alternative use, subject to the necessary consents Redevelop the site Opportunity to purchase at a very low capital value of 70.12 psf Undoubted covenant High yielding at 12.07% based on the quoting terms The tenant is investing significant sums of money refurbishing parts of the accommodation. EPC Rating An energy performance certificate has been produced, giving the property a rating of C71. VAT The property has been elected for VAT and therefore will be treated as a TOGC. Proposal We are seeking offers of 5,400,000 (five million, four hundred thousand pounds) subject to contract and exclusive of VAT for our client's freehold interest. This reflects a net initial yield of 12.07% assuming purchaser s costs of 6.61%. This equates to a capital value of only 70.12 per sq ft. Further Information Should you have any queries or wish to make an inspection, please contact: Lucy Young DDI: 020 7297 6278 lucy.young@bidwells.co.uk Kat Ilett DDI: 020 3761 3633 katherine.ilett@bidwells.co.uk Andrew Groves DDI: 020 7297 6274 andrew.groves@bidwells.co.uk Bidwells 25 Old Burlington Street London W1S 3AN Tel: 020 7493 3043 May 2017 11
Bidwells 25 Old Burlington Street London W1S 3AN Tel: 020 7493 3043 bidwells.co.uk IMPORTANT NOTICE RELATING TO THE MISREPRESENTATION ACT 1967 Bidwells LLP act for themselves and for the vendors of this property, whose agents they are, give notice that: These particulars do not form part of any offer or contract and should not be relied upon as statements or representatives of fact. Bidwells LLP have no authority to make or give in writing or verbally any representation or warranties in relation to the property. Any areas of measurements or distances are approximate. The text, photographs and plans are for guidance only and are not necessarily comprehensive. No assumptions should be made that the property has all necessary planning, building regulation or other consents. Bidwells LLP have not carried out a survey, nor tested the services, appliances or facilities. Purchasers must satisfy themselves by inspection or otherwise. In the interest of Health & Safety, please ensure that you take due care when inspecting the property. Bidwells LLP is a limited liability partnership registered in England & Wales (registered number OC344553). Registered head office is Bidwell House, Trumpington Road, Cambridge CB2 9LD, where a list of members is available for inspection.