Headquarters office building let to Capita

Transcription

1 Headquarters office building let to Capita Britannia House Leek Staffordshire ST13 5RE Secure 20 year income with index linked uplifts

2 Investment summary Headquarters office building let to Capita Business Services Ltd; previously the HQ for Britannia Building Society. Good quality largely open plan, air conditioned offices comprising 92,344 ft (NIA) constructed in the early 1990 s. 579 car spaces providing an excellent ratio of 1:159 sq ft Located in the historic town of Leek in Staffordshire approximately 9 miles north east of Stoke and 25 miles south of Manchester. To be let on a new 20 year full repairing and insuring lease. Subject to 5 yearly rent upward only reviews linked to RPI. Capped at 3% and compounded annually Lease to Capita Business Services Ltd - D & B 5A1 and a major constituent part of FTSE 100 parent company Capita Plc. Initial rent 750,000 per annum ( 8.12 per sq ft overall) Seeking offers in excess of 11,726,000 (Eleven Million Seven Hundred and Twenty Six Thousand Pounds) to show a net initial yield of 6.0% (net of 6.6% costs) subject to contract and exclusive of VAT. Assuming purchaser`s costs of 6.6% and annual RPI increases at say 2.5%, a purchase at this level would reflect the following attractive yield profile: Rent Passing Running Yield Year 1 750, % Year 5 848, % Year , % Year 15 1,086, % 2 Britannia House Leek Staffordshire ST13 5RE

3 Location Leek is an attractive and historic market town in Staffordshire with a population of approximately 18,768 (2001 census). The town is situated on the south west border of the Peak District National Park. The town is approximately 14 km (9 miles) north-east of Stoke on Trent, 19 km(12 miles) south of Macclesfield, 40 km (25 miles) south of Manchester city centre and 61km (38 miles) north west of Nottingham. By Train Fastest Journey Times Macclesfield to: Manchester London Euston Stoke on Trent to: Manchester Birmingham London Euston 23 minutes 1 hour 47 minutes 40 minutes 49 minutes 1 hour 31 minutes Source:thetrainline.com By Car Miles Hanley/Stoke on Trent 11 Macclesfield 12 M6 (via A500) 18 Manchester Airport 25 Manchester 33 Nottingham 43 Source:Googlemaps Leek is located at the intersection of the A53, A520 and A523. The A53 is the main routeway serving the town and gives access to Newcastle-under-Lyme, Stoke on-trent and the M6 at junction 15 via the A500. Access to the national rail service is via Stoke on Trent (12 miles) or Macclesfield (12 miles) both of which provide a direct service to London. The nearest airport is Manchester Airport approximately 43 km (27miles) to the North West. Major occupiers in the town include Adams Food which is the UK`s largest supplier of hard packed cheese, Croda Chemicals Leek Ltd and close by Alton Towers which employs a considerable number of local people. In recent years both Sainsbury s and Waitrose have developed new supermarkets in the town demonstrating the strength of the local demographic. The town is well known for its Antique Shops. Manchester M50 M6 Macclesfield A537 A536 A500 A53 M6 Stafford A537 Leek Peak District National Park A50 Uttoxeter A51 A515 Britannia House Stoke-on-Trent A520 A38 Tamworth Sheffield A61 A1(M) A453 A452 Britannia M6 Toll House Leek Staffordshire ST13 5RE 3 M42 A52 Derby A515 Burton upon Trent A42 A38 M1 M69 M1 Nottingham M1

4 Situation The property is situated 1 km (0.62 miles) south of Leek town centre immediately adjacent to the A520 Cheddleton Road, which is one of the main link roads for Leek. The immediate surrounding area is mixed in use with local authority playing fields to the south, residential to the north, greenfields immediately to the west and Britannia Building Society`s original HQ office, Newton House, to the east. Further to the west lies the Barnfields Industrial Estate which has consent for a predominantly residential and leisure/tourist related development. Adams Foods modern manufacturing/packing plant is located alongside. There are proposals by the Local Authority to create a link road connecting the A520 to the A53 to the west. At this stage this is planned to run alongside Britannia House to the south. Approximately 1 mile north west of the property is a new Premier Inn Hotel. A53 A523 Thorncliffe Horton Rudyard Ball Haye Green Westwood Rd Leek Westwood Golf Club Longsdon Britannia House Bradnop A53 A523 A520 Cheddleton 4 Britannia House Leek Staffordshire ST13 5RE A520

5 Description Britannia House was constructed in the early 1990 s as a Headquarters office building for Britannia Building Society after they outgrew their existing accommodation Newton House situated to the east. The office building is constructed on three levels on a sloping site and comprises approximately 92,344 sq ft (NIA). The building was developed to a high specification with a steel frame construction clad in attractive buff coloured brickwork with double glazed aluminium windows under a combination of artificial pitched slate roofs and high level flat roofs. The building is designed as an H shape with two regularly shaped office wings and a central rectangular core. This enables easy sub-division but also provides large floor plates with excellent natural lighting. Internally the space is generally open plan which allows for excellent space efficiency and flexibility. On the lower ground floor are storage areas, meeting rooms, a communications hub, plant rooms, in addition to open plan offices. There are WC`s throughout and on the first floor is a large cafe/break out area which is currently being refurbished. The accommodation is well specified to include: Raised access floors Suspended ceilings with recessed lighting Two passenger lifts and six cores Large open and flexible floor plate with excellent natural lighting Fully air conditioned On site amenities include cafe, break out areas and kitchen. CCTV security Extensive landscaped grounds including a pond and gardens Bike and motorbike park Large power and backup provision. The site provides car parking for 579 cars including 27 visitors spaces to the front, giving an excellent car parking ratio of 1:159 sq ft. The building has a highly serviced electrical infrastructure with high voltage transformers, bespoke low voltage switchboards and distribution boards throughout the building. Two back up 600 kw generators to provide power in the event of failure. Two UPS systems are installed on site rated at 200 KW. There is a data centre within the main building with independent cooling. Britannia House Leek Staffordshire ST13 5RE 5

6 Local Development The Local Authority are pressing for a number of initiatives (as outlined in the Churnet Valley Area Masterplan (2014) reference Cornhill Opportunity Site) that once developed will have a beneficial effect on Britannia House. council-services/area-action-plans/churnet-valley-masterplan Barnfield Industrial Estate has outline planning consent for 175 houses, a marina, railway station, pub, restaurants and light industrial units. The Local Authority are keen to see the additional amenities proposed. The greenfield immediately to the rear is owned by the Local Authority along with Birchall Playing Fields. As part of the medium term plans for the area it is likely that some of these surrounding sites will be promoted as residential development opportunities. Newton House is the original HQ for the Britannia Building Society and comprises in excess of 190,000 sq ft. The property is now vacant and a mixed use development is planned for the site. Barnfields Industrial Estate LEEK Create Links to Leek town centre Zone 1 A new Link Road is planned to link the A520 to A53 with the first phase being part of Barnfield Hughes Ltd proposal above. This will provide a by-pass to Leek and allow improved access to Britannia House to the A53 which links to the Potteries & motorway network (M6 J15 is approximately 16 miles to the south west). Improve footpath links to Ladderedge Country Park Zone 4 Zone 2 Zone 3 Improve footpath links to Birchall playing fields Britannia House We believe that in the medium term there is strong potential for alternative uses on the Britannia House site. Due to the size there is potential for a residential led mixed use site incorporating leisure, A3 and retail uses, subject to planning. Key Roads Potential Road link Zone 1 & 4 Potentially suitable for commercial residential Zone 2: Tourist Hub Zone 3: Marina Biodiversity Alert Site Potential Railway 6 Britannia House Leek Staffordshire ST13 5RE

7 Site Tenure The property sits on a self contained site of approximately 8.6 acres (3.50 ha). The site density is approximately 24.65%. The extent of the site is shown edged red, for identification purposes only, on the OS plan below. Freehold Accommodation The property has been measured in accordance with the RICS code of measuring practice (Sixth Edition) and the approximate net internal floor areas are set out below: Area Use NIA Sq M NIA Sq Ft Lower Ground Offices ,760 Lower Ground Ancillary ,554 Ground Reception & Staff ,950 Entrance Ground Offices 3, ,861 First Offices 3, ,219 TOTAL 8,578,84 92,344 Britannia House Leek Staffordshire ST13 5RE 7

8 8 Britannia House Leek Staffordshire ST13 5RE

9 Tenancy The property will be let to Capita Business Services Ltd by way of a new full repairing and insuring lease for a term of 20 years without break, from completion of the sale. The lease will incorporate 5 yearly index linked rent reviews and the lease will be drawn on the following principal terms: Tenant Term Initial Rent Rent Review Repair Yielding Up Alterations Alientation Capita Business Services Ltd Ltd. 20 years from completion without break. 750,000 per annum ( 8.12 per sq ft) The rent will be reviewed every five years based on annually compounded increases in line with the Retail Price Index and subject to a collar and cap of 0% and a cap of 3% respectively. The lease will be drawn upon full repairing and insuring terms. The building will be delivered up in good repair, in line with the repairing obligations and in substantially the same configuration as at lease start. Minor non-structural internal alterations will be permitted without the need for Landlord s consent. Other internal alterations to be permitted, subject to Landlord s consent, not to be unreasonably withheld. External and structural alteration to be permitted, subject to Landlord s consent, not to be unreasonably withheld. The tenant will be allowed to sub-let in whole or in part on market terms without the need for Landlord s consent. Any sub-leases will be drawn outside the Security of Tenure provisions of the L&T 1954 Act and for a term expiring no later than 3 days before the end of the Headlease. A sub letting to Co operative Bank will be in place at completion for a term of 10 years with break at year 5 and after 7.5 years. Britannia House Leek Staffordshire ST13 5RE 9

10 Floor plans and Sub Tenancy Capita purchased the Co op Banks mortgage business in July Under the new arrangements Capita will operating in this capacity from the first floor and lower ground floor. The Bank occupy approximately 38,320 sq ft on a sub-lease for a term of 10 years from 11 August 2015 with tenant breaks after years 5 and 7.5. This will predominantly occupy the ground floor with the break out area on the first floor and storage and communications rooms on lower ground being shared. Capita intend to utilise the property in future to service other high profile contracts for national clients. This will establish a diverse and dynamic client base within this key contact centre and indicates Capita`s long term commitment to the site. Lower Ground Ground Floor First Floor 10 Britannia House Leek Staffordshire ST13 5RE

11 Market commentary Leek has a relatively limited office market with Macclesfield and Hanley/Stoke on Trent being the nearest established office centres. Rents vary considerably in both towns from 7.50 per sq ft to per sq ft. The majority of accommodation in Hanley/Stoke is available in smaller suites and is inferior in quality to Britannia House Date Address Town Area Sq Ft Rent per Sq FT Tenant Term Comments March 2015 Churchill Chambers Macclesfield 8, FAF Daniels 5 years 1991 town centre office with 25 cars. Nov 2014 Pinewood Court Macclesfield 6, Unknown Modern out of town office Historic Bennett House Hanley 46, Sec for State (Courts) 2002 out of town office building March 2014 Entrust Business Centre Stafford 40, Entrust Supplier Services Ltd 30 years Available Tythrington Business Park Macclesfield Up to 24,343 Up to (Headline) Pre let of new air conditioned office/training building in Stafford town centre with 150 cars. Available - Modern Business Park accommodation non air conditioned. Secure Office Investment Market Demand for secure, long dated income producing assets, remains strong, particularly where combined with indexed linked uplifts. Examples of recent transactions include: Date Address Town Area Sq Ft Tenant Price Yield Comments Feb 2015 Cathedral Quarter Blackburn 28,130 Blackburn Council 9.15m 4.6% Pre let on 25 years RPI linked lease. New office building July 2015 Centrica Talbot Rd 92,000 Centrica 17.01m 7.0% 10 years from March 2015 on 1980`s contact centre. Manchester June 2015 Aviva HQ York 94,848 Aviva 28.1m 5.21% 1990`s office building let for 25 years with open market reviews. March 2014 Crick Howell House Cardiff 114,000 Welsh Assembly 40.5m 5.36% 18 years unexpired. Modern office building subject to RPI reviews. Dec 2013 O2, Preston Brook Daresbury Cheshire 158,471 Capita 27m+ 5.95% 1990`s purpose built contact centre. 20 year RPI linked lease. Britannia House Leek Staffordshire ST13 5RE 11

12 Capita is the UK`s leading providers of Business Process Outsourcing and Integrated Professional Support Service Solutions. Covenant Information Capita PLC has been part of the FTSE 100 Top Listed companies since 2002 and employs 68,000 people. In the full year 2014, underlying revenue increased by 14% to bn (2013: bn). Underlying operating profit rose by 11% to m (2013: m), and pre tax profit rose by 13% to 535.7m (2013: 475.0m). Capita Business Services Ltd (CBSL) is a major, wholly owned, subsidiary of Capita PLC. CBSl runs all of Capita`s outsourcing contracts and is one of the most significant companies within the Capita Group, For the year ending 31 December 2014, CBSL reported a 13.5 % increase in revenue to over 1.21 bn. In July 2015 Capita secured the contract to manage the Co-operative Banks mortgage processing and administrations business, Capita Business Services Ltd are rated as 5A1 (minimum risk of business failure) by Dun & Bradstreet. The latest accounts reported by CBSL are summarised as follows: 31/12/ s 31/12/ s 31/12/ s Turnover 1,210,422 1,066,320 1,010,059 Pre tax profit 215, , ,302 Tangible Net Worth 490, , ,444 Net Current Assets (Liabilites) 345, , ,390 VAT VAT 12 Britannia House Leek Staffordshire ST13 5RE

13 Britannia House Leek Staffordshire ST13 5RE 13

14 VAT We understand that the property is currently unelected for VAT and therefore VAT will not be payable on the purchase price. VAT will not be charged on the rent. If a purchaser chooses to elect the property the rent will be treated as VAT inclusive, since the tenant, as a financial service cannot recover VAT. EPC The building has an EPC rating of F A copy of this is available upon request. Investment Rationale High profile, well specified, purpose built HQ office building. Very attractive setting on the edge of the Peak District National Park and close to the historic market town of Leek. Secure tenant Capita Business Services Ltd with long term commitment to this site. New 20 year FRI lease with five yearly reviews linked to RPI providing guaranteed performance. Low rental and capital value equating to 8.12 and 126 per sq ft respectively. Excellent car parking of 1:159 sq ft. A short distance from both Macclesfield and Stoke on Trent railway stations providing direct routes to London and Manchester. Substantial medium term redevelopment potential with the local authority initiatives to encourage residential, tourism and employment uses in the town. Proposal We are instructed to seek offers in excess of 11,726,000 (Eleven Million Seven Hundred and Twenty Six Thousand Pounds) subject to contract. Assuming purchaser`s costs of 6.6% and 5 yearly annually compounded RPI increases of say 2.5%, a purchase at this level would reflect the following attractive yield profile: Rent Passing Running Yield Year 1 750, % Year 5 848, % Year , % Year 15 1,086, % Further Details Floor plans, draft lease, sub lease information and company accounts are available on the marketing website: 14 Britannia House Leek Staffordshire ST13 5RE

15 Further information: Andrew Mitchell Telephone: Mobile: Andrew Richardson Telephone: Mobile: Capita 65 Gresham Street London EC2V 7NQ Capita 8 th Floor The Observatory Manchester M2 1HL andrew.richardson@capita.co.uk Note: Capita Symonds Ltd ( CSL ), trading as Capita, part of The Capita Group Plc, for itself and as agent for the vendors or lessors (the Seller ) of this property, gives notice that (1) These particulars do not constitute any part of an offer or a contract(2) Whilst every attempt has been made to ensure accuracy, this cannot be guaranteed and, therefore (save as set out at (6) below), (a) all statements and descriptions in these particulars as to this property are made without responsibility or liability on the part of CSL or the Seller, (b) no such statements or descriptions are to be relied on as statements or representations of fact (c) all measurements are approximate and no responsibility is taken for any error, omission or misstatement and (d) any intending purchasers or lessees must satisfy themselves by inspection or otherwise as to the correctness of each of the statements, particulars (3) The Seller does not make or give, and neither CSL nor any of its employees or agents makes or gives nor has any authority to make or give, any representation or warranty whatsoever in relation to this property. (4) Unless otherwise stated, all prices and rents are quoted exclusive of VAT and no statement is made as to the incidence of VAT. (5) No liability is accepted and no representation is made by either CSL or the Seller in respect of the presence, condition, adequacy or usability of any telecommunications or computer systems or equipment at the property, any software loaded thereon, or any related cabling or infrastructure. (6) Nothing herein shall exclude any liability which either the Seller or CSL would otherwise have for any fraudulent concealment or for any statements made fraudulently by it, its employees or agents September Designed and produced by Capita s Real Estate Graphic Design.