The Green, Aldermaston

The Green, Easter Park
ALDERMASTON RG7 2PQ
MODERN THAMES VALLEY MULTI LET OFFICE INVESTMENT
Investment Summary
nModern multi let South East office campus
nFreehold
nCentrally located between Reading, Bracknell and Newbury
in the heart of the Thames Valley
nComprises 2 courtyard developments of 11 two storey office units
built in 2008 and totalling 46,173 sq ft
nExcellent car parking ratio of 1:230 sq ft, with planning consent
for a further 24 spaces
nHigh specification accommodation with BREEAM ‘Very Good’ Rating
nCurrently 82% let to 6 tenants on 8 tenancies producing £474,483
per annum, equating to a low overall rent of £12.50 per sq ft on the
let accommodation
nWeighted average unexpired lease term to expiry of 5.8 years
and 4.7 years to breaks
nExcellent asset management opportunities with the potential to
increase the current income by £106,000 per annum, upon letting
the vacant accommodation
nVendor to provide an effective 18 months rates and service charge
guarantee on the vacant accommodation
nWe are seeking offers in excess of £5,000,000, subject to
contract, reflecting a net initial yield of 9%, after allowing for the
usual purchaser’s costs at 5.80%, rising to 11% upon letting the
vacant accommodation. This equates to a very low capital value
per sq ft of £108.
Location
Aldermaston is located 52 miles west of Central London, within the West Berkshire countryside
between Reading (11 miles), Bracknell (18 miles) and Newbury (11 miles).
OXFORD
16
A34
LONDON
A4
Aldermaston is recognised internationally as the headquarters of the UK’s Atomic Weapons
Establishment. The AWE employs approximately 4,000 people and is involved in the design and
manufacture, as well as the dismantling and decommissioning of redundant nuclear weapons.
8/9
15
M4
READING
M4
13
12
10
11
A4
2
NEWBURY
Aldermaston benefits from excellent transport communications being within close proximity to
the M4 Motorway (junction 12) approximately 6 miles to the north and M3 Motorway (junction 6)
approximately 11 miles to the south.
The M4 motorway provides a direct route to Heathrow Airport (38 miles) with Gatwick and Luton
Airports being within a radius of 70 miles.
M25
M40
A4074
A322
ALDERMASTON
TADLEY
A339
3
Heathrow
Airport
WOKING
A33
A340
M3
A34
M25
BASINGSTOKE
6
A3
A331
FARNHAM
GUILDFORD
8
A31
By rail, Aldermaston station, which is situated 3.6 miles north of The Green, provides an hourly
train service to Reading with a journey time of 17 minutes and a total journey time to London
Paddington of 50 minutes.
A24
HORSHAM
9
A3
SOUTHAMPTON
Situation
RO
NG
RE
AD
I
LA
NE
RED LANE
G
RO
A
D
AWE
IN
The Green is prominently situated just off Benyon Road at the entrance to the estate. The two
courtyards are on either side of the main access road within Easter Park, which leads to the
industrial accommodation at the rear of the estate.
RED
RE
A
D
The Green at Easter Park is the third phase of the Easter Park development, which comprises
approximately 240,000 sq ft of high quality office and industrial accommodation set over a 20 acre
site. The mix of accommodation within the park allows tenants the flexibility to occupy both office
and industrial units within close proximity of each other. The park has a mixture of ownerships with
some individual units sold off to owner occupiers.
AD
Easter Park is situated to the east of Aldermaston and just off the A340 (Reading Road), which
provides a link between Reading and Basingstoke.
The Green
Aldermaston
NS ROAD
WELSHMA
Description
Accommodation
The Green, which was developed in 2008, comprises
two courtyard developments of two storey modern office
accommodation and associated car parking.
The property has been measured in accordance with the RICS
Code of Measuring Practice (Sixth Edition) and comprises a net
internal area (NIA) as shown below:
Specification
Unit
Sq ft
Sq m
1
3,478
323.08
2
2,621
243.52
3
2,171
201.69
4
2,551
236.97
5
3,392
315.13
6
3,060
284.29
7
n Full access raised floors
n Open vaulted ceilings to first floor
n Highly efficient ground source heating and cooling
n Suspended ceilings and LG3 lighting
n Disability Discrimination Act compliant
2,539
235.85
8
4,996
464.18
9
7,283
676.61
10
5,956
553.30
11
8,126
754.97
46,173
4,289.58
The Green, Easter Park, Aldermaston RG7 2PQ
29
28
26
8
Total NIA
n Passenger lifts in larger buildings
41
In keeping with the surrounding location, an environmentally
responsible approach has been taken with the design of the
project and the scheme has achieved a BREEAM “very good”
standard.
n Split level windows
Pinelands Caravan
Park
n Full height glazing
12
10
In addition to the excellent car parking ratio, there is scope to
increase by a further 24 spaces. Full planning consent can be
provided upon request.
18
20
14
n Generous car parking ratio (1:230 sq ft)
11
8
El
Sub
Sta
7
Path
5 to
9
LB
El
Energy Performance
15
O
NY
BE
N
A
RO
k
ac
Tr
46
D
The offices have an EPC Rating of B. Individual certificates are
available upon request.
4
47
1 to
1.22m
BB
Sub Sta
50
Easter Park
40
Site
Balancing Pond
41
Issues
to
21
42
17
The site is broadly level and extends to an area of approximately
2.177 hectares (5.38 acres).
33
to
39
El
22
t
ns
Co
Co
&
2
Sta
32
Sub
Tenure
The property is held freehold.
Tenancies
The property is currently let to 6 tenants on 8 separate leases, producing £474,483.25 per annum, with an average weighted unexpired lease
term to expiry of 5.8 years and 4.7 years to breaks. All leases are effectively drawn on full repairing and insuring terms.
Unit
Area
(Sq ft)
1
3,478
Mercury Computer Systems Limited
2
2,621
Vacant
3
2,171
System Mechanics Limited
4
2,551
Vacant
5
3,392
Atkins Limited
6
3,060
Vacant
7
2,539
iKnowledge Consultancy Limited
5
17-May-2013
16-May-2018
£28,853
£11.36
14
8
4,996
Anesco Limited
10
15-Mar-2013
14-Mar-2023
£57,420
£11.49
23
9
7,283
Anesco Limited
10
15-Mar-2013
14-Mar-2023
£81,939
£11.25
32
10
5,956
Anesco Limited
10
21-May-2014
14-Mar-2023
£68,771
£11.55
26
6 month rent free period from lease
commencement. Vendor to top up.
11
8,126
Elliott Turbomachinary Limited
15
27-Aug-2010
24-Dec-2025
(25-Dec-2020)
£100,000
£12.31
34
6 months notice required for break option.
Total
46,173
£474,483
£12.51
208
Tenant Name
Term
(Years)
Lease
Start Date
Lease End
Date (Break)
Rent
(Per Annum)
Rent
(Per Sq ft)
6
11-Sep-2009
10-Sep-2015
£62,500
£17.97
n/a
5
20-Jul-2012
19-Jul-2017
£30,000
£13.82
01-Apr-2014
31-Mar-2019
(31-Mar-2017)
£45,000
£13.27
n/a
The current service charge budget for the year ending 24th March 2015 is £30,468 per annum, equating to £0.66 per sq ft.
Comments
17
10
n/a
5
Parking
Spaces
10
Vendor to provide 18 months rates
and service charge guarantee.
Rent deposit held of £5,000.
12
Vendor to provide 18 months rates
and service charge guarantee.
16
6 months notice required for break option.
14
Vendor to provide 18 months rates
and service charge guarantee.
Covenant
Anesco Limited
(Company no. 07443091) – 44% of income received
Atkins Limited
(Company no. 00688424) – 10% of income received
Anesco is the UK’s leading energy efficiency services company,
helping businesses, local authorities and homeowners reduce
their carbon emissions. The Green is their Registered Office.
Anesco Limited had a turnover to the year ending March 2014 of
£106,654,000 and a net worth of £10,698,000. Their net worth
has seen a year on year increase for the past three years, up from
£6,396,000 in 2012, representing an increase of over 67%.
Atkins is one of the world’s leading design, engineering and
project management consultancies, with a turnover to March
2013 of £850,800,000; a pre-tax profit of £35,300,000; and a
net worth of £160,100,000.
Elliott Turbomachinery Limited
(Company no. 02132335) – 21% of income received
Elliott Turbomachinery designs, manufactures, services and installs
turbo machinery for prime movers and rotating machinery. They
are a global company with Headquarters in the US and Japan.
Aldermaston is their UK base; in addition to their offices at The
Green, they also occupy a service centre located in an industrial
unit at the rear of the park. Elliott Turbomachinery Limited had a
turnover to the year ending March 2013 of £42,271,000 and a
net worth of £16,082,000.
Mercury Computer Systems Limited
(Company no. 03420190) – 13% of income received
Mercury Computer Systems designs and builds processing
subsystems for commercial, defence and intelligence applications.
Whilst part of a larger American company, The Green is their
international Headquarters. Mercury Computer Systems Limited
has seen year on year growth of their net worth, from £329,000
for the year ending June 2011, to £526,000 for the year ending
June 2013.
System Mechanics Limited
(Company no. 03030744) – 6% of income received
System Mechanics provides big data applications and platforms
for high volume data as computer bureau processors. Their
Registered Office is at The Green. They had a net worth to
year end September 2013 of £1,134,000, which has remained
consistent over the last four years.
I Knowledge Consultancy Limited
(Company no. 07770099) – 6% of income received
iKnowledge works with consumer and defence clients on
their most difficult engineering and knowledge management
problems. They provide product lifecycle management
consultancy and training services in engineering consultancy and
systems risk management.
Occupational
Market Commentary
Investment
Market Commentary
Aldermaston lies roughly in the middle of a triangle formed
by the recognised commercial centres of Reading, Bracknell
and Newbury. As the South East office market continues to
strengthen, positive occupier sentiment has lead to a steady
take up across this market. This has been further accentuated
by a lack of Grade A accommodation.
The investment market in the South East has seen sustained demand for high quality offices.
Reading is the premier office location in the Thames Valley
with record rents expected to be set in excess of £30 per sq
ft on grade A buildings in 2014. Take up in Reading in 2013
recorded its highest level in seven years, with total activity of
480,000 sq ft, significantly ahead of the previous year’s figure
and 37% ahead of the 10 year average take up for the market.
The triangle of towns surrounding Aldermaston have seen an increase in demand and investment activity over the last 12 months,
in part due to increased confidence in the market, as well as infrastructure improvements at Reading Station. The buyer profile in
this area has also changed in line with the Central London market, showing an increased appetite from overseas investors resulting
in increased demand.
Prime Bracknell rents have now recovered to £20 per sq ft and
take up in 2013 was the highest on record since 2000, with
253,400 sq ft of activity.
The value of investments transacted in the Thames Valley during Q1 2014 totalled £124.89m, which is a significant increase on Q1
2013 (£79.06m). Furthermore, the value of office investments sold during 2013 exceeded £1.16bn, significantly ahead of 2012
(£680m); and the increase in volumes has been mirrored by an increase in the number of deals, of which there were 72 in 2013.
This has resulted in a sharpening of prime yields by around 75 basis points.
The Green, comprising high quality, energy efficient accommodation, with no immediate capital expenditure required, offers a
good example of self contained office accommodation within the Thames Valley. As a multi let office development passing off
recessionary rents and with potential for growth, we believe this offers a rare opportunity for a purchaser to undertake a number
of asset management initiatives in a tight supply market, providing excellent opportunities to deliver capital growth.
Key comparable transactions:
Newbury is witnessing a lack of Grade A availability, with
levels standing at 11,300 sq ft currently. Prime headline rents
increased by 3.1% to £16.50 per sq ft in the last year and are
forecast to grow further in the next 12 months.
Aldermaston trades at a discount to these centres, with the
current ERV being £13.50 per sq ft. Peak rents achieved in the
previous cycle were £18.00 per sq ft, providing an excellent
platform for potential growth as the supply of modern
accommodation diminishes further and competing centres
continue to see Grade A rents increase.
Date
Address
Available
Station Plaza, Theale
July 14
Quay Point, Portsmouth
June 14
Inspired, Bracknell
May 14
Term
Certain
Cap Val
PSF (£)
Price (£m)
Yield (%)
Comments
5
7.77
11.00
187
Modern office buildings in a nearby location.
9
6.25
6.55
119
Fully let 1980s office park.
5.6
13.2
4.98
162
Town centre multi let office, refurbished to a
Grade A standard. 40% vacant.
Anglo Office Park, Amersham
3
5.025
8.66
215
Modern multi let office park, fully let with a
similar AWULT.
Nov 13
100 Berkshire Place, Winnersh
4.75
12.1
7.27
238
Multi let office building on an office park
outside of Reading.
Apr 13
Units 15 & 40-50, Easter Park
5
7.28
9.69
70
Adjacent industrial estate
purchased by L&G.
Jan12
Estart, Easter Park
4.25
1.94
10.40
80
At the rear of estate purchased,
by London & County
Asset Management
The Green provides an opportunity to generate significant capital uplift with limited
requirement for further capital expenditure through the letting of the remaining
vacant space, currently totalling 8,232 sq ft (18%). Adopting an ERV in line with
recent transactions of £13.50 per sq ft this equates to a potential increase to the
annual income of £106,000 per annum.
VAT
The property is elected for VAT and it is the intention that the sale would be treated
as a Transfer of a Going Concern (TOGC).
Proposal
Offers are sought in excess of £5,000,000. A purchase at this price would
reflect an attractive net initial yield of 9%, after allowing for the usual purchaser’s
costs at 5.80%, and rising to 11% upon letting the vacant accommodation. This
equates to a very low capital value per sq ft of £108.
Further Information
For further information or to arrange a viewing, please contact:
Charlie Lake
Laura Sweet
clake@lsh.co.uk
+44 (0)20 7198 2227
lsweet@lsh.co.uk
+44 (0)20 7198 2393
Details also available on www.lshinvestmentsales.co.uk
Misrepresentation Act 1967: Lambert Smith Hampton Group Limited and its subsidiaries and their joint agents if any (“LSH”) for themselves and for the seller or landlord of the property whose agents they are give notice that: (i) These particulars are given and any statement about the property is made without
responsibility on the part of LSH or the seller or landlord and do not constitute the whole or any part of an offer or contract. (ii) Any description, dimension, distance or area given or any reference made to condition, working order or availability of services or facilities, fixtures or fittings, any guarantee or
warrantee or statutory or any other permission, approval or reference to suitability for use or occupation, photograph, plan, drawing, aspect or financial or investment information or tenancy and title details or any other information set out in these particulars or otherwise provided shall not be relied on as
statements or representations of fact or at all and any prospective buyer or tenant must satisfy themselves by inspection or otherwise as to the accuracy of all information or suitability of the property. (iii) No employee of LSH has any authority to make or give any representation or warranty arising from these
particulars or otherwise or ena must satisfy themselves concerning the correct VAT position. (v) Except in respect of death or personal injury caused by the negligence of LSH or its employees or agents, LSH will not be liable, whether in negligence or otherwise howsoever, for any loss arising from the use of
these particulars or any information provided in respect of the property save to the extent that any statement or information has been made or given fraudulently by LSH. (vi) In the case of new development or refurbishment prospective buyers or tenants should not rely on any artists’ impressions or architects’
drawings or specification or scope of works or amenities, infrastructure or services or information concerning views, character or appearance and timing concerning availability or occupation and prospective buyers or tenants must take legal advice to ensure that any expectations they may have are provided
for direct with the seller or landlord and LSH shall have no liability whatsoever concerning any variation or discrepancy in connection with such matters.
Lambert Smith Hampton: July 2014
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