PRIME SOUTH EAST FREEHOLD OFFICE INVESTMENT PIONEER, CRAWLEY BUSINESS QUARTER, Manor Royal, CRAWLEY, RH10 9QL
INVESTMENT SUMMARY Crawley is located 30 miles south of London and has grown to become one of the South East s most established office locations. The town s excellent communications, proximity to Gatwick Airport and highly skilled workforce attract a range of multinational and corporate occupiers. Manor Royal is Crawley s principal office pitch situated mid-way between Crawley town centre and Gatwick Airport. Manor Royal is home to over 500 businesses and 30,000 employees and is subject to a Masterplan which provides a long term strategic framework to secure the continued success of the business park. The Crawley office market continues to show favourable signs of improvement. The Grade A vacancy rate in Crawley is currently less than 1% with prime rents now at 24 psf. The new Grade A schemes in Crawley will raise prime rents, but they will still offer a healthy discount to the Thames Valley and Western Corridor. Crawley Business Quarter provides an established business environment in the heart of the Manor Royal Estate. Built in 1999 and comprises a modern selfcontained office building totalling approx. 16,974 sq ft. Freehold. The property is let in its entirety, on a recently re-geared FRI lease, to Tokyo Electron Europe Limited for a term of 5 years from May 2014, expiring May 2019 (4.54 years term certain). The tenant is in full occupation. Passing rent of 330,000 p.a ( 19.44 psf). Quoting offers in excess of 4m, reflecting a NIY of 7.79% and a low capital value of 236 psf. 2
CRAWLEY Crawley is one of the principal commercial centres in West Sussex. The town is strategically located 32 miles south of Central London, 23 miles north of Brighton and 27 miles south east of Guildford. The town is only 4 miles south of Gatwick Airport, one of the world s busiest airports. The airport is one of the town s largest employers, generating around 23,500 jobs and a further 20,000 jobs through related activities. Following a change of ownership in 2009, Gatwick has invested over 900 million in upgrading its facilities with a total planned spend of 1.2 billion. In addition, in 2013, the Airport Commission shortlisted a second runway at Gatwick to help cater for the UK s runway capacity needs. A decision is expected in 2015. The town has a resident population of approximately 107,000 (2011 Census) and provides retail, service and administrative facilities to a wide catchment population. EACONSFIELD DENHEAD SLOUGH NG HAM A31 LTON BRACKNELL A3 Heathrow M3 M4 STAINES ESHER LONDON CROYDON A3 M25 DORKING GUILDFORD REIGATE A22 A24 M23 Gatwick CRAWLEY EAST HORSHAM GRINSTEAD A26 M20 SEVENOAKS BASILDON A13 A2 TILBURY ROYAL TUNBRIDGE WELLS MAIDSTONE SOUTHEND SHEERN M2 M20 ASHFORD A23 FIELD UCKFIELD LEWES TSMOUTH CHICHESTER WORTHING BRIGHTON NEWHAVEN EASTBOURNE HASTINGS GATWICK AIRPORT SUBJECT PROPERTY FLEMING WAY ABSTRACT DEVELOPMENT SITE CRAWLEY BUSINESS QUARTER MANOR ROYAL 3
COMMUNICATIONS ROAD Crawley has excellent road communications being strategically located within 2 miles of the M23 (Junctions 9 to 11), at its intersection with the A23 and A264. This provides direct access to Gatwick Airport, Brighton and the South Coast, as well as Central London and the M25 (Junctions 7 & 8) to the north. Destination Distance AIR Gatwick Airport is the UK s second largest and the sixth busiest international airport in the world and is pivotal to Crawley s economy. It has the busiest and most efficient single runway airport in the world, and handles 34 million passengers per year, flying to 200 destinations and 90 countries worldwide. RAIL Crawley benefits from extensive rail services being served by three mainline stations; Crawley in the town centre, Three Bridges to the east and Gatwick Airport to the north. All three stations provide frequent and direct services to London Victoria and London Bridge. Gatwick Airport is reached in just 10 minutes via the fastway Bus Service where the Gatwick Express train service runs a direct non-stop route every 15 minutes to and from London Victoria. Central London Gatwick Airport Crawley Town Centre Redhill Brighton M23 (Junction 10) M23/M25 interchange 32 Miles 4 Miles 2 Miles 9 Miles 23 Miles 2 Miles 12 Miles Destination London Victoria London Bridge Redhill Brighton East Croydon Journey Time (From Gatwick) 30 mins 28 mins 7 mins 27 mins 15 mins 4
MANOR ROYAL & Crawley Business Quarter Manor Royal, one of the biggest business parks in the South East, covers an area of 593 acres and is home to approximately 500 businesses. Manor Royal Business Park was established in 1950 and is now a key economic hub within the South East, employing over 30,000 people having attracted inward investment and growth. Crawley Council has identified 380 acres of developed/developable land on the park as a major regeneration project by creating a planning Masterplan. The Manor Royal Masterplan was produced in June 2010 and provides a long term strategic framework to secure the continued success of the business park. This plan focuses on updating the infrastructure, facilities, sustainability and natural environment, accessibility and the enhancement of the business offer, which will establish it as a leading 21st century business park by 2026. The success of Manor Royal has attracted a number of retail and leisure operators. County Oak Retail Park is one of Crawley s most successful out of town parks. Other local amenities include a Tesco Express and Premier Inn and Ibis hotels. Major occupiers on Manor Royal include Virgin Atlantic, Doosan Power Systems, Siemens, Boeing Training and Flight Services, Thales, Grant Thornton and Vent Axia. Crawley Business Quarter (CBQ) comprises a large rectangular site extending to 26.7 acres (10.8 hectares) situated to the north of Manor Royal and south of Fleming Way in the heart of the Manor Royal Estate. CBQ provides mainly detached office accommodation set within a well maintained landscaped environment. Development pipeline The majority of business and occupational activity in Crawley has been focused away from the town centre, mainly on Manor Royal, with 89% of recent development being out of town. Gatwick Airport acts as a long term economic driver for the Crawley office market and the potential expansion from a second runway would boost the economic benefit and increase occupier demand significantly. Despite the current Grade A vacancy rate being less than 1%, Crawley s development pipeline is limited. Directly opposite Pioneer, Abstract Group are now on site to develop a 110,000 sq ft office on the last remaining plot on Crawley Business Quarter. The office, known as The Leonardo Building, is due for completion end-2015. In addition, Green Property has consent for a 110,000 sq ft office at Stellar Park known as Nova. The majority of development sites on Manor Royal have been sold to owner occupiers further compounding the imbalance in demand and supply. This imbalance, the lack of Grade A supply and improving economic conditions all support the case for refurbishment and repositioning opportunities in the Crawley market. For illustrative purposes only CGI of the Abstract office development opposite the property, known as The Leonardo Building. 5
DESCRIPTION Constructed in 1999, the property comprises a detached office building on ground and two upper floors with a plant room and storage area at roof level. The building is of steel framed construction under a pitched slate roof with brick and glazed cladding elevations. At the front of the building there are balcony areas at both first and second floor levels. The building provides predominantly open plan accommodation with the following summary specification; Four pipe fan coil air-conditioning Full access raised floors (150 mm void) Suspended ceilings with Category II lighting 10 person 800 kg passenger lift Aluminium framed double glazed windows WC s on all floors Carpeting throughout the office areas A total of 78 car parking spaces are on site providing an excellent car parking ratio of 1:216 sq ft ACCOMMODATION The property has been measured and we have been provided with the following net internal areas for the building. Floor/Description Area (sq m) Area (sq ft) Ground/Reception 63.7 686 Ground/Offices 463.6 4,990 First/Offices 524.4 5,645 Second/Offices 525.2 5,653 Total 1,576.9 16,974 TENURE Freehold. 6
RENTAL VALUE Favourable signs of improvement in the Crawley office market have led to an increase in headline rents in the current cycle to 24.00 per sq ft. This increase, together with a reduction in incentive packages being offered to tenants, means that Crawley is expected to benefit from future rental growth on a net effective basis. Date U/O Mar 14 Feb 14 Sept 14 Address Portland Building, High Street, Crawley Origin Two, High Street, Crawley Pegasus Two, Gatwick Road, Crawley Portland Building, High Street, Crawley Size (sq ft) Tenant Lease Term (Break) Rent (psf) 8,000 Confidential Confidential 24.00 11,000 ASB Law 12,700 Palmer & Harvey 10 years (5 years) 22.00 10 years 21.50 10,700 PWC 5 years 23.50 COVENANT Tokyo Electron Europe Ltd is a wholly-owned subsidiary of Tokyo Electron Ltd (TEL) which was established in 1963. TEL was the first company to introduce American semiconductor production equipment and integrated circuit testers to Japan. Since then the company has grown and now has about 80 offices in 16 countries that engineer, manufacture, sell and service wafer-processing or semiconductor production equipment as well as flat panel display equipment. Tokyo Electron Europe Ltd (the tenant) runs the European distribution function for its parent. Tokyo Electron is in the process of merging with Applied Materials Inc. and will re-brand their name and logo to Eteris. TENANCY The property is let in its entirety, on a recently re-geared Full Repairing and Insuring lease, to Tokyo Electron Europe Limited, for a period of 5 years commencing 6th May 2014 and expiring 5th May 2019 (4.54 years term certain), at a passing rent of 330,000 p.a ( 19.44 psf overall). A 12 month rent free period has been granted from 6th May 2014. The vendor will top this up from completion. Below is a summary of the tenant s financial covenant strength (company number 02923252). Year To Date Turnover Pre Tax Profit Shareholder Funds 31/03/2013 289,525,991 33,345,551 104,156,115 31/03/2012 376,933,522 54,096,135 88,250,583 31/03/2011 192,764,856 13,185,439 46,433,009 For additional information, please see www.tel.com. The tenant is in full occupation. 7
EPC The property has an EPC rating of D. A copy of the certificate is available upon request. VAT The property is elected for VAT and the purchase will be treated as a TOGC. PROPOSAL Offers in excess of 4,000,000 (FOUR MILLION POUNDS), subject to contract and exclusive of VAT, reflecting a NIY of 7.79% (assuming standard purchasers costs of 5.8%) and a low capital value of 236 psf. Contact Strictly via sole agents. For further information please contact: Mathew Finn mathew@finnandcompany.co.uk 1 Portland Place London W1B 1PN Tel: 020 7631 1202 Fax: 020 7637 1203 www.finnandcompany.co.uk Charles Curtis charles@finnandcompany.co.uk Ali Rana ali@finnandcompany.co.uk Misrepresentation Act: Finn & Company for themselves and for the vendors of these properties whose agent they are give notice that:1. These particulars do not constitute, nor constitute any part of the offer for sale or contract for sale. 2. All statements contained in these particulars as to these properties are made without responsibility on the part of Finn & Co or the vendors or lessors. 3. None of the statements contained in these particulars as to these properties are to be relied on as statements or representations of fact. 4. Any intending purchasers must satisfy themselves by inspection or otherwise as to the correctness of each of the statements contained in these particulars. 5. Any plans or photographs or drawings shown in these particulars are to enable prospective purchasers or tenants to locate the properties. The plans are photographically reproduces and therefore not to scale except where expressly stated. The plans or photographs or drawings are not intended to depict the interest to be disposed of. Where location plans are based on Ordnance Survey maps this is with the consent of HM Stationery Office, Crown Copyright Reserved. 6. No warranty or undertaking is given in respect of the repair or condition of the properties or any items expressed to be included in the sale. 7. Any properties or drawings of the relevant properties or part thereof or the neighbouring areas may not depict the properties or the neighbouring areas at the date a prospective purchaser or tenant inspects the brochure. Prospective purchasers or tenants are strongly advised to inspect the properties and neighbouring areas. 8. Finn & Company have not measured the properties and have relied upon clients information. Therefore Finn & Co give no warranty as to their correctness or otherwise and the purchasers must rely on their own measurements.9. All terms quoted are exclusive of value added tax unless otherwise stated. 10. The vendors do not give and neither Finn & Co nor any person in their employment has any warranty whatsoever in relation to these properties. 11. These details are believed to be correct at the time of compilation but may be subject to subsequent amendment. 12. These details were prepared as of March 2015