KINGS COURT LONDON ROAD, STEVENAGE, SG1 2NG FREEHOLD MULTI-LET M25 OFFICE INVESTMENT

Transcription

1 LONDON ROAD, STEVENAGE, SG1 2NG FREEHOLD MULTI-LET M25 OFFICE INVESTMENT

2 LOCATION INVESTMENT SUMMARY Stevenage is located adjacent to the A1 (M), 30 miles north of Central London. The property is situated within a minute walk from the train station, providing exceptional transport links into London with direct train services to London King s Cross in only 19 minutes. Comprising a substantially refurbished office building arranged over lower ground, ground and four upper floors and extending to approximately 6,946 sq ft NIA. Multi-let to four tenants, with an AWULT of 6.4 years to expiries and 4.0 years to breaks. Total passing rent of 616,010 p.a, equating to a low average office rent of psf on the income producing office space. Prime rents in Stevenage currently stand at circa psf, thereby providing excellent rental growth potential. Stevenage has a chronic shortage of quality office accommodation, with only one building in the town centre directly competing with Kings Court. Various asset management opportunities, to include letting the vacant office accommodation, re-gearing leases, and looking to explore future development potential to residential / alternative uses in the medium to long-term (subject to obtaining the necessary planning consents). Excellent town centre car parking ratio of 1:322 sq ft on offices and set within a site of circa 1.85 acres (0.5 hectares), providing a low site cover of only circa 20%. Freehold. Offers are sought in excess of 8,000,000 (Eight Million Pounds), reflecting a net initial yield of.3% and a net reversionary yield of 11.4% upon letting the vacant space at psf. (after allowing for usual purchasers costs of 5.80%). A purchase at this price reflects a low capital value of 118 psf overall, with new build residential values in Stevenage commanding values in excess of 420 psf. SUBJECT TO CONTRACT AND EXCLUSIVE OF VAT. 1, LONDON ROAD, STEVENAGE SG1 2NG

3 To Junction 8 A1(M) (2 miles). M1 (15 miles). Perfectly connected FORUM SHOPPING CENTRE Brickdale House: Office to residential conversion. 1 bed apartments achieving 420 psf.. A602 STEVENAGE WESTGATE SHOPPING CENTRE minutes walk to station A602 Cambridge (38 mins) Leeds (1hr 52 mins) Leeds (1hr 52 mins) MONKSWOOD RETAIL PARK To Junction A1(M) (0.5 miles). M25 (15 miles). Cambridge (38 mins) Stevenage N LO N O D Six Hills House: Office to residential conversion. D A RO (12 mins) Hatfield (16 mins) Finsbury Park London King s Cross within 19 minutes. An ideal base for both business and commuter. (20 mins) Piccadilly & Victoria Lines ROARING MEG RETAIL PARK King s Cross St Pancras (19 mins) Circle, Piccadilly, Hammersmith & City, Northern, Metropolitan & Victoria lines London King s Cross (19 mins) 2, LONDON ROAD, STEVENAGE SG1 2NG Welwyn Garden City Moorgate (38 mins) Northern line

4 LOCATION Stevenage is one of the key commercial centres in Hertfordshire, strategically located 30 miles north of Central London and 40 miles south-west of Cambridge. Hertfordshire is an affluent Home County with a working population (aged 16-4) of c. 523,0, and a very low unemployment rate of 1.4%. Stevenage is one of the key commercial locations in the County and boasts of excellent retail and leisure provisions, with numerous well known occupiers such as River Island, Curry s, Argos, H&M and Primark. The combination of the town s first-rate travel communications and access to an educated and affluent work force has seen it grow to become an ideal base for business and commuter, attracting an array of major corporates including Airbus, GSK, TalkTalk, Fujitsu, Betfair and The Wine Society. COMMUNICATIONS Road Stevenage is located directly east of the A1(M) between Junctions and 8, which offers a direct and easy route to the M25 (15 miles to the south), which in turn connects with the M1 (15 miles to the south west) and A12. The A505 is also close by, connecting with the M1. Rail Stevenage mainline railway station benefits from high speed intercity trains, offering direct links to Central London and fast and frequent services to London King s Cross (5 trains per hour and a fastest journey time of 19 mins) and direct connectivity to London s Underground network. Further afield, other direct services include Cambridge (38 mins) and Leeds (1hr 52 mins). Air Stevenage benefits from strong connections to a number of international airports to include London Luton (13 miles), London Stansted (26 miles) and London Heathrow (40 miles) A4 A40 A41 AMERSHAM M40 M MINUTES WALK TO STEVENAGE STATION MILES TO LONDON LUTON AIRPORT MINUTES JOURNEY TIME TO LONDON KING S CROSS MILES TO CENTRAL LONDON MILES TO HEATHROW AIRPORT A5 8 ST ALBANS 3 HEMEL HEMPSTEAD M STOCKLEY PARK 4 LUTON 19 A6 10a M1 9 WATFORD WEMBLEY HEATHROW 6 A505 LUTON HARPENDEN 5 4 A406 CHISWICK 1 HAMMERSMITH A1(M) 23 A1 6 BOREHAMWOOD STEVENAGE A A602 A414 M25 PADDINGTON WEST END CITY A10 25 A10 WELWYN GARDEN CITY HERTFORD 19 MINUTES TO KING S CROSS HATFIELD POTTERS BAR ENFIELD A406 LONDON KING S CROSS CANARY WHARF A120 CITY A414 HARLOW THE NORTH A602 LUTON (M1 J10) BISHOP S STORTFORD 1 2 M11 8 M25 ROMFORD A12 A1(M) STANSTED 8 GUNNELS WOOD RD A602 FAIRVIEW ROAD GUNNELS NORTH ROAD FAIRLANDS STEVENAGE CENTRAL LONDON (M25 J23) LYTTON WAY HIGH STREET WOOD ROAD OOD ROAD MARTINS WAY WAY SISH LANE ST T GEORGES GEORGES WAY SISH LANE STEVENAGE TOWN CENTRE LONDON RD SIX HILLS WAY A602 STEVENAGE HAS A LOW UNEMPLOYMENT RATE OF 1.4% (WELL BELOW THE NATIONAL AVERAGE OF 5.2%) 3, LONDON ROAD, STEVENAGE SG1 2NG

5 Kings Court occupies a prominent site in Stevenage town centre, only a short walk from the town s train station providing exceptional connections to Central London. Stevenage is home to an array of corporate occupiers including: SITUATION Kings Court is prominently situated only minutes walk south of the station, adjacent to London Road. The town centre is a 5 minute walk (0.4 miles) from the property, providing an array of retail amenities and leisure facilities, including Westgate and Forum Shopping Centres (featuring retailers such as H&M, River Island, Ernest Jones and Next). The surrounding uses to Kings Court mainly provide a mixture of offices and residential buildings. Major corporate occupiers within close proximity include Airbus, GSK, TalkTalk, Fujitsu, Betfair and The Wine Society. The property lies adjacent to Six Hills House residential development scheme; an office to residential conversion (under Permitted Development Rights) providing a total of 142 luxury one, two & three bed apartments. The scheme is currently under construction. COMMUTING COULD NOT BE EASIER WITH STEVENAGE TRAIN STATION A MINUTE WALK AWAY 4, LONDON ROAD, STEVENAGE SG1 2NG

6 DESCRIPTION Kings Court was constructed in 1989 and has been substantially refurbished in recent years. The property comprises an office building arranged over lower ground, ground and four upper floors. The property is arranged in an L shape configuration, and is set within its own self-contained 1.85 acre site. The building is of reinforced concrete frame construction and extends to approximately 68,104 sq ft NIA. Over the last 5 years the property has benefitted from substantial refurbishment works to the M&E including full replacement of the chillers, boilers and BMS, as well as all the fan coil units throughout the property (including upgraded controls). Furthermore, in September 2015 the 3rd and 4th floors were fully refurbished, which included a full strip out of both floors, the installation of new ceiling tiles and lighting, as well as a thorough cosmetic redecoration throughout. Internally, the office floors provide modern, open plan and flexible office accommodation (suitable for single or multi-occupation), and benefits from the following specification: Four pipe fan coil air conditioning Fully accessible raised floors Suspended ceilings with recessed lighting 3 x 8 person, 630 kg passenger lifts EPC Rating of D (98) Floor to ceiling height of 2.65 metres Male, Female and Disabled WC s on each floor The property benefits from 209 car parking spaces, providing an excellent town centre car parking ratio of 1:322 sq ft on offices. 5, LONDON ROAD, STEVENAGE SG1 2NG

7 Drain ACCOMMODATION The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and the approximate Net Internal Areas are as follows: SITE The site extends to approximately 1.85 acres (0.5 hectares), providing a low site cover of only c. 20%. uli) Posts Floor sq ft sq m Fourth 12,040 1,118.5 Third 12,040 1,118.5 Second 12,040 1,118.5 First 12,040 1,118.5 Ground 11,298 1,049.6 Lower Ground, Reception Total 6,946 6,312.2 MP.25 Six Hills House FB Kings Court KINGS ROAD LONDON ROAD The property has also been measured in accordance with IPMS. Further details available on request. Head Post Office Vacant 3rd floor - fully refurbished. Mast (Telecommunications) Not to scale. For indicative purposes only. Typical floor plan TENURE Freehold. 6, LONDON ROAD, STEVENAGE SG1 2NG

8 TENANCY The property is multi-let to 4 tenants in accordance with the tenancy schedule below. It has been confirmed that Hertfordshire County Council (2nd Floor) will vacate the property on expiry of their lease (Mar-16), as such no value has been attributed to their demise. Therefore, the total passing rent is 616,010 p.a, equating to a low average rent of psf on the income producing office space. The AWULT of the property is 6.4 years to expiries and 4.0 years to breaks. SERVICE CHARGE The service charge budget for the year ending 30th June 2016 is 49,1. Further information is available on request. Demise Tenant Area (Sq ft) Lease Start Lease Expiry (Break) Rent Review Date Rent (psf) Rent (pa) Comments Fourth Floor Du Pont (U.K.) Ltd 12,040 21/08/ /08/2025 (20/08/2020) 20/08/ ,023 Open market UORR. 3 month rent penalty on excercising break. Stepped rent until 20/08/201, to be topped- up to 156,023 by the Vendor. Service charge cap at 90,013 p.a + RPI, reflecting s/c shortfall of 23 p.a. Third Floor VACANT 12,040 Fully refurbished accommodation. Second Floor Hertfordshire County Council 12,040 19/12/ /03/2016 Hertfordshire County Council will not renew their lease upon expiry. No rent has been apportioned to this tenant. First Floor Towergate Underwriting Group Ltd 12,040 20/02/ /02/2023 (19/02/2018) 19/02/ ,320 Open market UORR. Service charge cap at 101,800 p.a + RPI. Ground and Lower Ground UIA (Insurance) Ltd 19,140 29/09/ /09/ /09/ ,000 Rent free period until 29/06/2016 to be topped-up by the Vendor. Car Park UIA (Insurance) Ltd - 01/01/ /12/201 23,000 UIA hold a license granting the right to park 30 cars. This can be terminated at any point during the time period, by either party at not less than 1 months written notice. Car Park Du Pont (U.K.) Ltd - 08/10/2015 -,66 Du Pont hold a licence granting right to park 10 cars. This can be terminated at any point by either party at not less than 1 months written notice. TOTAL 6, ,010, LONDON ROAD, STEVENAGE SG1 2NG

9 COVENANTS UIA (Insurance) Ltd (D&B Rating O 1) UIA (Company No. AC000532) is a mutual insurance company with more than 100 years experience providing high quality insurance products to members of selected trade unions and other not-for-profit organisations. Kings Court, Stevenage is the company s headquarters, with over 100 employees working from the premises. Du Pont (U.K.) Ltd (D&B Rating 5A 1) Du Pont (Company No ) is a world class science and engineering firm, providing innovative products, materials and services to a diverse market place including agriculture, nutrition, electronics and communications, safety and protection, home and construction, transportation and apparel. The company, over 200 hundred years old, now operates from over 90 countries worldwide. Kings Court, Stevenage is the company s UK headquarters. 31 Dec 2014 (000 s) 31 Dec 2013 (000 s) 31 Dec 2012 (000 s) Sales Turnover 19,95 23, ,18 Profit / (Loss) Before Taxes Tangible Net Worth Net Current Assets (Liabilities) 19,85 12,411 16,581 5,138 59,22 50, ,85 111, ,250 Source: Dun & Bradstreet. Towergate Underwriting Group Ltd (D&B Rating 5A 2) Towergate Underwriting (Company No ), founded in 199, is Europe s largest independently owned insurance intermediary company. The company has over 4,000 staff, based across more than 100 offices in the UK, and offers an unrivalled range of general and specialist insurance products. 31 Dec 2014 (000 s) 31 Dec 2013 (000 s) 31 Dec 2012 (000 s) Sales Turnover 201,142 22, ,981 Profit / (Loss) Before Taxes Tangible Net Worth Net Current Assets (Liabilities) ( 159,892) 9,910 24,802 0,159 1,12 143,5 56, , ,59 Source: Dun & Bradstreet. 8, LONDON ROAD, STEVENAGE SG1 2NG

10 STEVENAGE OFFICE MARKET With prime rents at circa psf and a 19 minute service to Central London, Stevenage offers excellent occupier fundamentals at a more cost effective price to competing markets. The occupational market in Stevenage is characterised by a chronic lack of supply. Over the past 24 months supply has been eroded by 530,000 sq ft, currently at c. 220,000 sq ft, representing c. 2.5 years worth of supply, based on average annual take-up levels of 85,000 sq ft. Of this supply only 18,000 sq ft is available (in one building) which directly competes with Kings Court in terms of size and specification of accommodation offered, with the majority of remaining space being in smaller, inferior suites, often offered by way of less flexible, short term sub-leases. As a result of the continued steady demand and diminishing levels of supply, prime rents in the town have risen to circa psf. Occupiers will continue to be attracted to Stevenage due to the exceptional transport links into Central London and comparative good value with other northern M25 markets, as demonstrated in the map opposite. As such, Kings Court is well placed to capitalise on these strong market dynamics moving forward. STEVENAGE RESIDENTIAL MARKET Stevenage is an increasingly popular residential location. As well as being an excellent town to live in, it also benefits from exceptional transport links into Central London. A number of offices in Stevenage town have been redeveloped to residential use under the Governments Permitted Development Rights, with c. 400,000 sq ft being converted over the last 12 months alone. This has been predominantly driven by the high demand for 1&2 bedroom flats, as Stevenage offers the perfect commuter and business base for young professionals looking to buy in affordable locations with excellent connectivity to Central London. Stevenage s healthy economic and demographic environment underpins its strong housing market. Transactional activity has increased by 28% over the last year and average house prices have risen by over 12%. Brickdale House; an office to residential conversion in the town centre is commanding prices in excess of 420 psf for 1 bed apartments. PRIME HEADLINE RENTS Stevenage, as demonstrated in the map to the right, offers the same occupier fundamentals as competing markets, albeit at a more cost effective price. MILTON KEYNES psf 10 LUTON M1 9 HEMEL HEMPSTEAD psf psf 10a ST ALBANS psf STEVENAGE psf psf 6 A1(M) HATFIELD psf A10 M11 CAMBRIDGE psf M M psf WATFORD A1 M A406 1 CENTRAL L ONDON A406 1 A4 M psf UXBRIDGE 4 HAMMERSMITH psf Adjacent office to residential development: Six Hills House (CGI). 9, LONDON ROAD, STEVENAGE SG1 2NG

11 INVESTMENT MARKET The South East office investment market experienced record breaking levels of turnover over the course of Total transactional volumes reached 3.5bn, eclipsing the previous peak of 3.1bn in This is testament to the continued strength and depth of demand for South East offices. Prime yields in the South East currently stand at 5.00% NIY, still well short of the 200 peak of 4.5% and up to 200 bps softer than Central London. Investor sentiment has continued to improve throughout 2015 & 2016, with continued demand for investments providing asset management opportunities (particularly those with underlying residential/alternative use value), and offices located in town centres which benefit from good connectivity. South East Offices were the best performing sector in 2015, with returns of circa 19% against an average of 15% amongst other property sectors (IPD) is set to perform in a similar vein, with South East Offices forecast amongst the best performing sector, albeit this time driven more by income returns and active asset management. Comparable investment transactions include: Date Address Tenant Term Certain Price NIY Capital Value (psf) Jan 16 Jan 16 Jan 16 Icon, Stevenage Bank House, Stevenage Jubilee House, Brentwood Vacant M n/a 134 Multi-let 4.8 years 3.25M 8.63% 16 Regus 4.4 years.55m 8.38% 183 Sep 15 Technology House, Hemel Hempstead Goodrich Control Systems 2.2 years 5.83M 8.1% 12 Aug 15 Nov 15 Jun 15 Central Court, Orpington Chancery House, Sutton Springfield House, Horsham Multi-let 3.5 years 10.30M 8.19% 149 Multi-let 4 years 10.65M 8.15% 189 Multi-let 5. years 3.12M 8.25% , LONDON ROAD, STEVENAGE SG1 2NG

12 VAT We understand the property will be treated as a Transfer of a Going Concern (TOGC) for VAT purposes. PROPOSAL Offers are sought in excess of 8,000,000 (Eight Million Pounds), reflecting a net initial yield of.3% and a net reversionary yield of 11.4% upon letting the vacant space at psf. (after allowing for usual purchasers costs of 5.80%). A purchase at this price reflects a low capital value of 118 psf overall, with new build residential values in Stevenage commanding values in excess of 420 psf. SUBJECT TO CONTRACT & EXCLUSIVE OF VAT. FURTHER INFORMATION For further information or to arrange an inspection, please contact the following: Charles Hobart charles.hobart@knightfrank.com Joe Jones joe.jones@knightfrank.com Jason Hobbs (Residential Development enquiries) jason.hobbs@knightfrank.com IMPORTANT NOTICE (1) Particulars: These particulars are not an offer or contract, nor part of one. You should not rely on statements by Knight Frank LLP in the particulars or by word of mouth or in writing ( information ) as being factually accurate about the property, its condition or its value. Knight Frank LLP has no authority to make any representations about the property, and accordingly any information given is entirely without responsibility on the part of the agents, seller(s) or lessor(s). (2) Photos etc: The photographs show only certain parts of the property as they appeared at the time they were taken. Areas, measurements and distances given are approximate only. (3) Regulations etc: Any reference to alterations to, or use of, any part of the property does not mean that any necessary planning, building regulations or other consent has been obtained. A buyer or lessee must find out by inspection or in other ways that these matters have been properly dealt with and that all information is correct. (4) VAT: The VAT position relating to the property may change without notice. Knight Frank LLP is a limited liability partnership registered in England with registered number OC Knight Frank LLP registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members names. March 2016., LONDON ROAD, STEVENAGE SG1 2NG