Multi-let Business Park Investment Asset Management Opportunities with Strong Underlying Income Profile Surtees Business Park Stockton on Tees TS18 3HR On the instructions of the Joint Administrators of Surtees Business Park Ltd (formerly, Rokeby Developments Northern Ltd) (in Administration)
Investment Summary Surtees Business Park comprises a mix of modern (2006/2007 built) office accommodation totalling 77,940 sq ft of office accommodation, and an additional 0.73 hectares (1.80 acres) of development land. A current net receivable income of 942,799 per annum, with an estimated potential net receivable income of 1,056,914 per annum. 88.8% of the current income received is from Jacobs E&C Ltd, part of one of the world s largest providers of professional and technical services. Dun and Bradstreet Rated 4A1. Surtees Business Centre and 2A are let to a number of tenants on flexible short term lease agreements. The average weighted unexpired term is 3.85 years to break. The properties are offered on a freehold basis. Offers are invited in excess of 5,100,000 (Five Million, One Hundred Thousand Pounds) subject to contract and exclusive of VAT. This reflects an attractive net initial yield of 17.5% after allowing for purchaser s acquisition costs of 5.8% and a potential reversionary yield of 19.4% when fully let. Attractive capital value of 65 psf. Location Stockton on Tees is located within the Tees Valley approximately 36 miles to the south of Newcastle upon Tyne, 58 miles north of Leeds, 110 miles to the north-east of Manchester and 250 miles north of London. The town is a strategically located commercial centre within both the immediate urban conurbation and the wider region of North-East England. It has an urban area population of circa 85,000 people and a wider district population of circa 190,000 people, with an estimated 350,000 people living within six miles of the town centre. This plan is published for convenience of identification. Any boundaries shown are indicative only and should be checked against the Title Deeds. The plan is based upon Ordnance Survey Map with the permission of the Controller of H M Stationery Crown Copyright.
Communications By Road The town sits at the intersection of the A19 and A66 trunk roads and is within approximately 12 miles of the A1(M) allowing access to both regional and national road networks. Stockton is ideally situated to serve the densely populated Teesside conurbation. The area has an extensive bus network, with the route No 17 running directly past the properties and connecting the southern districts of Cleveland with both Stockton and Middlesbrough town centres. By Rail Stockton on Tees benefits from excellent rail links. Thornaby Rail Station lies adjacent to Teesdale Business Park and provides regular local services to Darlington and Middlesbrough. The nearest mainline service is from Darlington which is approximately 15 miles away. The service runs from London King s Cross (2.5 hour journey time) to Edinburgh (2 hour journey time). By Air Durham Tees Valley Airport is located approximately 6 miles to the west and provides domestic and international scheduled flights, principally on budget carriers and airfreight services.
Situation The area has attracted a number of national and international occupiers such as: Virgin Media Barclaycard Archers Law BHP Law BMW Mercedes Audi Lexus Land Rover The subject properties form part of Surtees Business Park which is situated to the south of Stockton town centre, and immediately south-east of the intersection of the A66 and Bowesfield Lane. Surtees Business Park sits within the north of the Bowesfield Business Park area, one of the superior commercial locations in the area comprising a number of offices, industrial units and prestige car showroom premises. Surtees Business Park benefits from easy access to a range of retail and leisure amenities including a number of gym operators in the area including Fitness First and David Lloyd Leisure Club. Also in proximity is Teesside Shopping Park, one of the UK s largest out of town retail destinations, as well as a UCI cinema nearby.
Description Surtees Business Park is a complex of four office buildings and an area of development/expansion land (partly unmade ground and partly a temporary car parking area). We have been instructed to market three of these buildings, known as Surtees Business Centre, Building 2A/2B and Phoenix House, further expansion land and a purpose built football pitch and pavilion. The three buildings offer an approximate Net Internal Area of 7,240.90 sq m (77,940 sq ft) of high quality office accommodation which fronts on the A66 and the River Tees, set within an attractive landscaped environment. There are approximately 426 car parking spaces on site. The premises has an excellent parking space: floor area ratio of approximately 1 to 183 sq ft. Building 2A, 2B & Phoenix House These buildings were constructed between 2006 and 2007 providing high quality modern open plan office accommodation. The buildings are of steel frame construction, metal and glazed cladding beneath pitched metal panel clad roofs. Buildings 2A and 2B are semi-detached and Phoenix House is a self-contained headquarters building. The buildings are all arranged over three floors and are similarly specified to include: Lifts Comfort cooling Raised access floors Modern high specification lighting Double glazed tinted windows To the rear of Phoenix House there is a detached pavilion building providing access to astroturf which is leased to Jacobs E&C Ltd. Surtees Business Centre Surtees Business Centre sits at the entrance to Surtees Business Park at Bowesfield Lane, with great prominence to Queen Elizabeth Way. The building dates from the 1970s. The office accommodation is split over ground and first floors, with storage in the basement. It is arranged to provide office space ranging from 100 sq ft to 977 sq ft. The building is a traditional brick built two storey building with a painted stone facade and dedicated on-site parking. The property has the following internal specification: Broadband Meeting rooms 71 telephone lines 24 hour security and CCTV Manned Reception Fully Furnished Offices (subject to requirements) Communal lounge, kitchen and break out space on each floor Development Land There is an area of further development land located adjacent to Phoenix House amounting to 0.73 Hectares (1.8 Acres). Planning consent was granted for the construction of 3,530 sq m (38,000 sq ft) of office accommodation arranged in three buildings. The consent has subsequently lapsed. Interested parties should make their own enquiries with the local planning department.
Floor Areas The property has been measured on a Net Internal Area basis in accordance with the RICS Code of Measuring Practice (6th Edition) and from this we calculate the approximate areas to be as follows: Description Use Sq m Sq ft Surtees Business Centre Site Areas The total area amounts to approximately 3.35 hectares (8.26 acres). Tenure Multi-Let Office & Ancillary 765.7 8,242 Unit 2A Office & Ancillary 869.9 9,364 Unit 2B Office & Ancillary 867.2 9,334 Phoenix House Office & Ancillary 4,738.1 51,000 7,240.9 77,940 The properties are available on a freehold basis. The area hatched green is not included as part of the sale. Tenancy Phoenix House Phoenix House is leased to Jacobs E&C Ltd with a guarantee from Jacobs Engineering Group Inc and Jacobs Engineering UK Limited. Phoenix House is one of Jacobs 3 main UK headquarters buildings, the others are located in Winnersh and Glasgow. The premises is let on 7 co-terminus FRI leases, with open market value rent reviews 5 yearly on an upwards only basis. The leases are for: Ground Floor, 1st Floor, 2nd Floor (Suite A), 2nd Floor (Suite B), 2nd Floor (Suite C), Pavilion & Football Pitch and 65 Car Parking Spaces. This leasing structure was put in place for the original leasee Aker Kvaerner Business Partner Limited. The original leases included break options personal to Aker Kvaerner Business Partner Ltd at the expiry of years 5, 6, 7, 8 & 9. When Jacobs Engineering Group Inc purchased various companies within the Aker Group the lease was assigned to Jacobs E&C Ltd. The break options are now void. Unit 2A/2B Unit 2A is part let to Highground Design with the remainder of the unit being vacant. Unit 2B is let to Jacobs E&C Ltd in its entirety. Surtees Business Centre The suites are occupied by standardised tenancy agreements outside of the security provisions of the Landlord and Tenant Act 1954. The flexible terms of the lease allow for the Landlord or Tenant to terminate the agreement on between one and three months notice. The tenants are responsible for keeping their suites in good repair. The costs of maintenance, services and utilities (excluding telephone lines) are included within the gross rent. The business centre has successfully continued to attract occupiers over other competing properties. The current vacancy offers an excellent opportunity for an opportunistic investor to add value through active asset management strategies. Development Land A portion of the development land is currently leased to Vianet for the purpose of temporary car parking. Expenditure Over the last 3 years the monthly expenditure for Surtees Business Centre and 2A has averaged out at 9,510, providing a yearly average of 114,115. Further details can be provided upon request. Assuming the property is fully let the annual income would be 243,871. There is a potential net income of 129,756 per annum from the Surtees Business Centre and 2A.
Tenancy Schedule Tenant Name Property Unit Size Description Contracted out of the 1954 Act Least Start Expiry Date Next Review Rent psf Rent pa Jacobs E & C Limited Phoenix House 51,000 Whole Building, CPK & Pavilion No 31/01/2008 30/01/2018 31/01/2013 15.57 794,000 Jacobs E & C Limited Unit 2B 9,334 Whole Building No 03/07/2008 02/07/2013 15.49 144,553 VACANT Unit 2A 3,128 Ground Floor N/A VACANT Unit 2A 3,128 First Floor N/A Highground Design Unit 2A 581 Part Second Floor Yes 30/09/2012 29/09/2015 14.50 8,425 VACANT Unit 2A 2,228 Part Second Floor N/A Cognition Media Surtees Business Centre 254 Suite 1 Yes 30/09/2011 15/03/2013 21.00 5,332 Cognition Media Surtees Business Centre 211 Suite 2 N/A 0.00 0 Roseworth Groudworkers Limited Surtees Business Centre 361 Suite 3 Yes 30/09/2011 15/03/2013 15.97 5,760 1st Choice Energy Surtees Business Centre 285 Suite 4 N/A 18.92 5,400 Dickinson Media Surtees Business Centre 304 Suite 5a Yes 30/09/2011 15/03/2013 18.75 5,700 Call 4 Credit Ltd Surtees Business Centre 241 Suite 5b Yes 30/09/2011 15/03/2013 14.94 3,600 VACANT Surtees Business Centre 182 Suite 6 N/A VACANT Surtees Business Centre 184 Suite 7 N/A VACANT Surtees Business Centre 188 Suite 8 N/A Cognition Media Surtees Business Centre 185 Suite 9 Yes 30/09/2011 15/03/2013 21.23 3,936 Andrea Rowntree Surtees Business Centre 111 Suite 10 Yes 30/09/2011 15/03/2013 19.45 2,160 Cognition Media Surtees Business Centre 551 Suite A1 Yes 30/09/2011 15/03/2013 20.99 11,571 Primetech Global Limited Surtees Business Centre 245 Suite 11 Yes 30/09/2011 15/03/2013 21.00 5,137 Dyslexia Action Surtees Business Centre 149 Suite 12 Yes 30/09/2011 15/03/2013 20.86 3,117 VACANT Surtees Business Centre 148 Suite 13 Yes Skanska Surtees Business Centre 274 Suite 14 Yes 30/09/2011 30/04/2013 15.78 4,320 Skanska Surtees Business Centre 977 Suite 15 Yes 30/09/2011 15/03/2013 21.00 20,523 Comprex Limited Surtees Business Centre 187 Suite 16 Yes 30/09/2011 15/03/2013 29.87 5,592 Graham Moore Surtees Business Centre 184 Suite 17 Yes 15.65 2,880 Robertson Simpson Chadwick Surtees Business Centre 186 Suite 18 Yes 16.65 3,091 North East Financial Limited Surtees Business Centre 406 Suite 19 & 20 Yes 14.02 5,688 DBA HR Solutions Surtees Business Centre 229 Suite 21 Yes 30/09/2011 15/03/2013 18.00 4,128 Vianet Expansion Land - Car Parking No 14/04/2012 13/04/2015 12,000 Total 1,056,914 Average Annual Expenditure 114,115 Net Income 942,799 * Interested parties should request the most up to date tenancy schedule.
Tenant Information Jacobs E&C Ltd Jacobs E&C Ltd has a D&B credit risk rating of 4A1. Jacobs E&C Ltd forms part of Jacobs Engineering Group Inc which employs over 60,000 employees worldwide and with annual revenues in excess of $10 billion is a Fortune 500 company. Jacobs Engineering Group Inc is one of the world s largest and most diverse providers of technical, professional and construction service, including all aspects of architecture, engineering and construction, operations and maintenance, as well as scientific and speciality consulting. They have a broad client base including industrial, commercial and government clients across multiple markets and geographies. Jacobs E&C Ltd acquired part of the Aker group which serves the international oil, gas, energy and process industries. The Process and Construction operations transferred to Jacobs in 2010 which included approximately 4,500 employees globally. Jacobs has since moved other group companies into the building such as Mouchel which is a leading infrastructure and business services group which provides a variety of services across the highways and transportation, local government and utilities markets. The tenant will shortly be incorporating its Northallerton offices within Phoenix House further cementing their commitment to this location. Jacobs E&C Limted s financial results are as follows (Company Registration No. 4967961): 2011 (000s) 31st December 2010 (000s) 31st December 2009 (000s) Turnover 100,494 91,862 71,315 Pre-Tax Profit 8,498 6,288 3,158 Net Worth 32,183 28,092 21,327 All of the leases are subject to a guarantee from Jacobs Engineering Group Inc whose financial results are as follows (registered in Delaware D-U-N-S number 074103508). 2012 $ (000s) 2011 $ (000s) 2010 $ (000s) Turnover 10,893,778 10,381,664 9,915,517 Pre-Tax Profit 593,336 516,661 391,934 Stockholders Equity 3,722,473 3,312,988 2,859,048 All the leases are subject to a second guarantee from Jacobs UK Limited (previously Jacobs Engineering UK Ltd, Company Registration No. 2594504) whose financial results are as follows: 2011 (000s) 2010 (000s) 2009 (000s) Turnover 609,953 561,399 704,377 Pre-Tax Profit 4,523 6,128 21,849 Net Worth (77,922) (83,831) (61,534)
Investment Rationale We believe this opportunity is an attractive investment for the following reasons: Attractive High Yielding Investment NIY Significant Asset Management Opportunities Modern Units Strong Underlying Income Profile Capital Allowances We understand that there are no transferable capital allowances available. Tenancy Negotiations The landlord is currently in negotiations with Jacobs to extend their lease on 2B by 5 years from July 2013, with 6 monthly break options from July 2016. The landlord is also in negotiations with a potential new tenant for 2A. More details can be provided on request. Plant & Machinery None of the systems or equipment have been tested by Cushman & Wakefield and purchasers may wish to make their own investigations to check that they are in working order. VAT We understand this property has been elected for VAT which will therefore be chargeable on the sale price unless the transaction can be treated as a Transfer of a Going Concern (TOGC). Proposal We are instructed to seek offers in excess of 5,100,000 (Five Million, One Hundred Thousand Pounds) subject to contract and exclusive of VAT for a freehold interest. A purchase at this level would reflect a net initial yield of 17.5% after allowing for purchaser s costs of 5.8%. INVESTMENT SALES GROUP CONTACTS Surtees Business Park Stockton on Tees TS18 3HR For further information or to arrange an inspection please contact: MIKE BURDEN Tel: 020 7152 5086 Fax: 020 7152 5190 Email: mike.burden@eur.cushwake.com ADAM MCMILLAN Tel: 020 7152 5332 Fax: 020 7152 5190 Email: adam.mcmillan@eur.cushwake.com TOM HESP Tel: 020 7152 5132 Fax: 020 7152 5190 Email: tom.hesp@eur.cushwake.com Cushman & Wakefield LLP 43/45 Portman Square, London W1A 3BG www.cushmanwakefield.com February 2013 The Energy Performance Certificates for these buildings are available to download from the property website MISREPRESENTATION ACT 1967 and PROPERTY MISDESCRIPTIONS ACT 1991 Cushman & Wakefield LLP (and their joint agents if appointed) for themselves and for vendors or lessors of this property whose agents they are, give notice that: (1) The particulars are produced in good faith, are set out as a general guide only and do not constitute any part of a contract. (2) No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatever in relation to this property. (3) This property is offered subject to contract and, unless otherwise stated, all rents are quoted exclusive of VAT. (4) Nothing in these particulars should be deemed to be a statement that the property is in good condition or that any services or facilities are in working order. (5) Unless otherwise stated, no investigations have been made regarding pollution or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required. Photography, Print & Design by Plus Art Ltd 0115 972 4000
www.cushmanwakefieldinvestmentsales.co.uk/cw/surteesbusinesspark Energy Performance Certificates Surtees Business Centre Unit 2A Unit 2B Pavilion Phoenix House