High Yielding Industrial and Office Headquarters Investment LOEWY HOUSE & WINCHESTER HOUSE 11 & 11A Aviation Park West Bournemouth International Airport Christchurch BH23 6EW
INVESTMENT SUMMARY Opportunity to acquire two high yielding headquarters buildings on an established business park. The properties are strategically located on Aviation Business Park adjacent to Bournemouth Airport, which has undergone a 45m upgrade and will benefit from a further 40m investment by 2021. The properties benefit from exceptional multi-modal connectivity with strong links to the A348 linking the M27 and M3 motorways. The properties comprise 43,495 sq ft across an office and industrial/manufacturing unit. Loewy House is a 26,386 sq ft office, let to 4Com Plc, benefiting from 150 car parking spaces (1:176 sq ft). Winchester House is a 17,209 sq ft industrial and manufacturing facility, let to Aeroflex Hose and Engineering Ltd, benefitting from 50 car parking spaces (1:344 sq ft). The total passing rent is 510,000 per annum, equating to 16.11 psf at Loewy House and 5.23 psf at Winchester House. Both tenants have been in occupation as sub-tenants since 2010 and 2011 and recently re-geared on new five and ten year leases respectively, providing an AWULT of 4.93 years to breaks and 7.95 years to expiries. Both tenants use the buildings as their UK headquarters. 125 year long leasehold interest from 15 August 1996 at a peppercorn rent, providing an unexpired term of 104 years. Offers sought in excess of 5,320,000 (Five Million, Three Hundred and Twenty Thousand Pounds), subject to contract and exclusive of VAT for our client s long leasehold interest. A purchase at this level equates to an attractive net initial yield of 9.00% assuming standard purchaser costs of 6.60% and a low capital value of 122 psf. 2
LOCATION SITUATION - AVIATION PARK WEST The properties lie within the borough of Christchurch on the South Coast of England in the county of Dorset, approximately 154 km (96 miles) south west of Central London, 10 km (6 miles) east of Bournemouth and 42 km (26 miles) south west of Southampton. Christchurch adjoins Bournemouth to the west and the New Forest to the east. Christchurch is a submarket of Bournemouth and Poole, which forms one of the largest and most affluent conurbations on the South Coast providing a diverse mix of manufacturing and service businesses with significant focus on marine technologies, aerospace and engineering. The properties are strategically located adjacent to Bournemouth Airport within Aviation Park West. Aviation Park West forms part of the wider Aviation Business Park, which comprises 80 hectares (200 acres) of land and buildings allocated for employment uses. The business park is home to over 200 individual businesses including both non-aviation and airport related occupiers, across industrial, office, open storage and hanger uses. Aviation Business Park is home to a number of major occupiers including Meggitt Plc, AS Engineering, Cobham Aviation Services, Honeywell and AIM Aviation. A433 A429 M4 Swindon J15 A34 Maidenhead A406 Chippenham J13 Reading Slough M4 Heathrow M25 Marlborough Newbury Wokingham Bracknell Broml A350 Croydon A346 Epsom Woking Sutton Basingstoke M3 A34 M25 Farnborough Warminster Guildford A24 M23 Andover A303 A31 Gatwick Godalming Crawley A3 A22 Winchester Salisbury Horsham M3 Shaftsbury A36 A272 A272 A350 A354 A338 Southampton Chichester A31 M27 A27 Brighton Portsmouth Bognor Regis A35 Bournemouth Poole A35 A341 A3049 A341 A347 A338 BOURNEMOUTH Parley Lane Aviation Park West BOURNEMOUTH AIRPORT A338 B3073 CHRISTCHURCH 3
CONNECTIONS By Road By Train By Air The properties are accessed via Chapel Gate from Parley Lane. The A338 dual carriageway is located approximately 3 miles to the east and provides a direct link to the A31 and onwards to the M27. Alternatively, access to the A31 and M27 can be gained via the A348 and A347. The M27 links to the M3, providing a connection to the M25 and Central London. The closest mainline station to the property is Christchurch railway station (5.4 miles to the south) and is on the South West Trains London Waterloo to Weymouth line with a fastest journey time to London Waterloo of 1 hour 45 minutes. Other destinations include Southampton Central, Bournemouth and Basingstoke. Bournemouth Airport is a key national and international gateway to Southern England, located 4 miles to the north west of the town centre, serving c.600,000 passengers annually and flying to 25 international and national destinations. The airport underwent a 45m upgrade between 2007 and 2010 and contributes more than 24 million to the local economy. A338 3 miles 7 mins A31 Basingstoke 2.6 miles 7 mins 57 miles 1 hr 28 mins London Waterloo 106 miles 1 hr 50 mins Bournemouth Airport 2 miles 5 mins Southampton Airport 30 miles 35 mins M3 - J13 30 miles 33 mins M27 - J1 20 miles 24 mins Southhampon Central 25 miles 28 mins Heathrow International Airport 87 miles 1 hr 28 mins Bournemouth 54 miles 8 mins 4
AIM Aviation Shear Bros Transport Airtime Aviation City Link Open Yacht Systems Basepoint Business Centre Curtiss Wright Pilatus PC-1 Meggitt Plc Loewy House Winchester House Bournemouth Commercial Flight Training Honeywell Aerospace Babcock International 5
BOURNEMOUTH AIRPORT EXPANSION Bournemouth Airport is a key national and international gateway to Southern England, located 6 km (4 miles) to the north west of the town centre, serving around 600,000 passengers annually and flying to 25 domestic and international destinations. The airport is owned and operated by Manchester Airport Group (MAG) and underwent a 45m upgrade between 2007 and 2010. The airport contributes more than 24 million to the local economy and is ranked within the top 20 UK airports. Bournemouth Airport is also benefitting from 40 million of government investment to improve the surrounding road, cycle and bus network by 2021. The 60 acre site which adjoins Aviation Park will also provide 350 homes and a wealth of new amenity creating up to 10,000 new jobs, significantly improving the area. 6
DESCRIPTION SITE AREA The properties comprise Loewy House, an office built in 2002 and occupies the south west area of the site and Winchester House, an industrial and manufacturing facility built in 2002 and occupies the north east corner of the site. The properties benefits from 200 surface car parking spaces which are apportioned 150 to Loewy House and 50 to Winchester House respectively. The properties have a site area of 2.94 acres (1.19 hectares). Loewy House Total Area - 26,386 sq ft One 8 person passenger lift Raised Floors 150 demised car parking spaces 1:176 sq ft Suspended Ceiling Winchester House Total Area 17,209 sq ft Steel Portal Frame Construction Minimum Eaves Height 7.1m Sectional Up and Over Door 5.33m wide x 5.66m high Roof Lights 30% translucent daylight panels Office Accommodation 13% office content 7
EXISTING ACCOMMODATION AREA SCHEDULE A Plowman Craven measured survey is available upon request. Loewy House Net Internal Area Winchester House Gross Internal Area Floor Sq m (NIA) Sq ft (NIA) Sq m (IPMS 3) Sq ft (IPMS 3) Ground Floor Reception 57.1 615 57.5 619 Ground Floor Storage 5.9 84 7.0 75 Ground Floor Offices 969.2 10,432 1001.6 10,781 First Floor 978.8 10,536 1011.1 10,883 Second Floor 440.3 4,739 452.1 4,866 Total 2,451.3 26,386 2,529.3 27,224 Floor Sq m (GIA) Sq ft (GIA) Ground Floor Mezzanine 230.3 2,479 Ground Floor Compressor House 28.8 310 Ground Floor Offices 206.6 2,224 Ground Floor Warehouse 931.8 10,030 First Floor Offices 201.2 2,166 Total 1,598.7 17,209 8
TENURE SERVICE CHARGE The properties are held long leasehold for 125 years from 15 August 1996 at a peppercorn rent, providing an unexpired term of 104 years. The service charge budget for the year to 28 September 2018 is 47,785, equating to 1.10 psf. Further details are available upon request. TENANCY The properties are fully let to two tenants in accordance with the below tenancy schedule and benefits from an AWULT of 4.95 years to breaks and 7.95 years to lease expiries. Both tenants were previously in occupation as sub-tenants since 2010 and 2011 respectively and have recently re-geared on new five year leases. Demise Tenant NIA (sq ft) Lease Start Lease Expiry (Lease Break) Rent ( pa) Rent ( psf) Comments Winchester House Aeroflex Hose and Engineering Ltd 17,209 29/09/2017 28/09/2022 90,000 5.23 Full repairing and insuring lease. Three month s rent deposit equating to 22,500. Half rent for two months to be topped up by the vendor. Tenant has the right to use 50 car parking spaces on site. Tenant has been in occupation since 2011. Winchester House is the tenants UK headquarters. Loewy House 4Com Plc 26,386 29/09/2017 28/09/2027 (28/09/2022) 420,000 16.11 Full repairing and insuring lease. Rent deposit of 252,000. Six months rent free to be topped up by the vendor. Tenant only break option on the fifth anniversary with no less than twelve months notice. Tenant has the right to use 150 car parking spaces on site. Tenant has been in occupation since 2010. Loewy House is the tenants UK headquarters. Total 43,595 10/11/2016 510,000 9
COVENANT Aeroflex Hose and Engineering Limited 01506555 4Com Plc 06472837 Aeroflex Hose and Engineering Ltd is a market leader in the design, development and distribution of specialist hose assemblies for use in hostile and aggressive environments, supplying the industrial gas defence and commercial engineering markets worldwide. Aeroflex holds long term contracts with global gas producers and is the single source supplier to BOC, and also the MOD and other defence related industries. Winchester House has been Aeroflex Hose and Engineering Ltd s global headquarters since 2011 and accommodates 40 staff across management and manufacturing functions on site. Aeroflex is rated 2A2 by Dun & Bradstreet and provides the following reported accounts: 31/12/2016 31/12/2015 31/12/2014 Tangible Net Worth 1,574,785 1,345,613 1,110,374 Net Current Assets (Liabilities) 1,417,125 1,209,065 1,020,278 4Com Plc is a national provider of communication services including the provision of business phone systems, software, applications and broadband to SME s. 4Com Plc was established in 1999 and moved its UK Headquarters to Loewy House in 2010. The office accommodates over 300 members of staff across senior management, HR and administrative operations. 4Com Plc is rated N4 by Dun & Bradstreet and provides the following reported accounts: 30/06/2016 30/06/2015 30/06/2014 Sales Turnover 41,041,000 33,756,824 28,375,290 Profit/(Loss) Before Taxes (1,014,000) 417,254 220,284 Tangible Net Worth (9,952,000) (6,692,990) (5,104,236) Net Current Assets (Liabilities) (9,442,000) (7,654,408) (5,918,652) 10
EPC Both properties have an EPC rating of C. A full copy of the EPC is available upon request. VAT We understand that the property is elected for VAT. PROPOSAL We are instructed to seek offers in excess of 5,320,000 (Five Million, Three Hundred and Twenty Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level would reflect an attractive net initial yield of 9.00% and a low capital value of 122 per sq ft, assuming purchasers costs of 6.60%. CONTACT For further information or to arrange an inspection, please contact: Jason Nearchou T: 020 3486 3475 jnearchou@geraldeve.com Michael Riordan T: 020 7653 6828 mriordan@geraldeve.com Ross Cuthbert T: 020 3486 3479 rcuthbert@geraldeve.com Hettie Cust T: 020 3486 3484 hcust@geraldeve.com Conditions under which these particulars are issued: All details in these particulars are given in good faith, but Gerald Eve LLP for themselves and the Vendors/Lessors of this property for whom they act give notice that:- 1. These particulars do not and shall not constitute, in whole or in part, an offer or a contract or part thereof, and Gerald Eve LLP have no authority to make or enter into any such offer or contract. 2. All statements contained in these particulars are made without acceptance of any liability in negligence or otherwise by Gerald Eve LLP, for themselves or for the Vendors/Lessors. 3. None of the statements contained in these particulars is to be relied on as a statement or representation of fact or warranty on any matter whatsoever, and intending purchasers must satisfy themselves by whatever means as to the correctness of any statements made within these particulars. 4. The Vendors/Lessors do not make, give or imply, nor do Gerald Eve LLP or any person in their employment have any authority to make, give or imply, whether in these particulars or otherwise, any representation or warranty whatsoever in relation to the property. This statement does not affect any statutory rights you may have nor does it intend to limit Gerald Eve s liability which cannot be excluded or limited by law. Particulars issued October 2017. 11