INVESTMENT OPPORTUNITY - MULTI-LET OFFICE IN SOUTHWARK GREAT SUFFOLK STREET SOUTHWARK LONDON SE1 0BB

Transcription

1 INVESTMENT OPPORTUNITY - MULTI-LET OFFICE IN SOUTHWARK GREAT SUFFOLK STREET SOUTHWARK LONDON SE1 0BB

2 EXECUTIVE SUMMARY Virtual freehold office building in core Southbank location. Rapidly changing location with good rental growth potential. Modern building constructed in 2007 open plan floors with air conditioning and lift access. Currently multi-let on a floor-by-floor basis to 4 tenants under 5 occupational leases. The ground floor unit comprising 981 sq ft is vacant and will be subject to a vendor s rent, rates and service charge guarantee for a period of 12 months from completion Current rent passing 335, per annum reflecting only psf overall. Reversionary to approximately 383,975 per annum ( psf overall) after settlement of reviews by June Future potential for change of use to residential (subject to planning) Seeking offers in excess of 5,750,000 exclusive, reflecting a capital value of only 551 psf. Based on the current net income of 323, per annum the quoting price reflects a net initial yield of 5.31% reversionary to approximately 6.10% by June 2015.

3 1 to GREAT SUFFOLK STREET LOCATION 57 Great Suffolk Street is located in the heart of dynamic Southwark, just to the south of Union Street and close to the junction with Pocock Street. Great Suffolk Street runs between Southwark Street to the north and Borough High Street to the south. The property is approximately 300m south east from Southwark Underground Station which gives rapid access to the West End and Docklands. Communications are therefore good with nearby Southwark Station providing Jubilee Line services. The building lies midway between London Bridge Station (Northern and Jubilee lines) and Waterloo Station (Northern, Jubilee & Bakerloo lines) which are both within a short walking distance (c. 10mins) and also provide access to the over ground rail network. In addition, Blackfriars Station has been redesigned with new platforms on the bridge and a new pedestrian entrance from the Southbank Riverwalk. In the longer term both London Bridge and Waterloo have major redevelopment plans which will further enhance this district as a core office district with excellent rail communication links. STRAND London Eye London Aquarium County Hall WATERLOO BRIDGE Hayward Gallery Southbank Centre TEMPLE YORK ROAD RIVER THAMES National Theatre WATERLOO LAMBETH NORTH LOWER MARSH WESTMINSTER STAMFORD STREET WATERLOO ROAD Oxo Tower WATERLOO EAST The Young Vic Theatre THE CUT The Old Vic Theatre BRIDGE ROAD BLACKFRIARS ROAD BLACKFRIARS BRIDGE SOUTHWARK POCOCK ST QUEEN VICTORIA STREET BLACKFRIARS SOUTHWARK STREET GREAT SUFFOLK STREET UNION STREET LOMAN ST GREAT SUFFOLK STREET BOROUGH ROAD LOMAN STREET Tate Modern Shakespeare s Globe K BRIDGE ROAD MARSHALSEA RD SOUTHWAR BOROUGH MANSION HOUSE SOUTHWARK BRIDGE UNION STREET CANNON STREET RIVER THAMES Southwark Cathedral Borough Market BOROUGH HIGH STREET GREAT DOVER STREET CANNON STREET LONG LANE MONUMENT LONDON BRIDGE The Monument TOOLEY ST. LONDON BRIDGE ST. THOMAS STREET The Shard Nearby rail stations are: Southwark (0.3 miles) London Bridge (0.6 miles) Borough (0.4 miles) Lambeth North (0.6 miles) Elephant & Castle (0.6 miles) Blackfriars (0.7 miles) Waterloo & Waterloo East (0.6 miles) Crown Court GREAT SUFFOLK POCOCK STREET STREET El Sub Sta Moonra St Geo

4 THE AREA OFFERS AN ECLECTIC MIX OF BARS, RESTAURANTS, HOTELS AND SHOPS IN A VIBRANT LOCATION. GREAT SUFFOLK STREET

5 30 St. Mary s Axe Globe Theatre 20 Fenchurch Street Tate Modern Blackfriars Station The Blue Finn Building The Shard Southwark Cathedral London Bridge Station Borough Market Southwark Street Palestra Union Street Borough Tube Station Southwark Tube Station GREAT SUFFOLK STREET

6 DESCRIPTION GREAT SUFFOLK STREET IS A MODERN PURPOSE BUILT OFFICE BUILDING WHICH WAS CONSTRUCTED IN THE OFFICE ACCOMMODATION IS ARRANGED OVER THE FIRST TO FIFTH FLOORS AND THE GROUND FLOOR COMPRISES A SINGLE B1/A1 USE UNIT. The ground floor comprises a single unit the other three units have been sold off to individual long lease holders. At first floor level the demised floor plate encompasses the entire footprint of the whole building. The 2nd 5th floors are arranged vertically over part of the floor plate. The remainder of the building is in residential use, is held under a separate long leasehold and does not comprise part of the sale. SPECIFICATION Air-conditioning Perimeter trunking Floor to ceiling windows at front offering excellent natural light An 8-Person passenger lift Kitchen LG7 suspended lighting Disabled WC Generous floor to ceiling height Upper floors have far reaching views

7 ACCOMMODATION The property has been measured by Plowman Craven as follows: FLOOR UNIT SIZE (SQ FT) SIZE (SQ M) 5th J 1, th H 1, rd G 1, nd F 1, st E 4, Ground A TOTAL 10, The Plowman Craven Floor Area Survey Report is available to the purchaser with the benefit of a Duty of Care. GROUND FLOOR (981 sq ft / sq m) FIRST FLOOR (4,246 sq ft / sq m) TYPICAL UPPER FLOOR (1,295 sq ft / sq m) Office A Stairs Plant Lift Stairs Lift Office B Stairs Lift Great Suffolk Street Great Suffolk Street Great Suffolk Street N

8 PLANNING The building falls within the London Borough of Southwark. It is neither listed nor situated in a Conservation area. The upper floors are consented for B1 office use. The ground floor unit has consent for retail or office use. For further information please see TENURE Virtual freehold interest at a peppercorn rent. The building is held by virtue of six individual 999 year leases at peppercorn rentals. Effectively there is one lease per floor. The leaseholder passes on service charge and insurance costs to the occupational tenants where applicable. PODIUM LEASE There is an additional Lease from the Freeholder of the First Floor Podium at Great Suffolk Street which permits the Headlease holder to install and operate air conditioning units. The lease term is 999 years from 01-Jan The current rent is 1,400 per unit, subject to a minimum of 12,600 per annum. The rent is subject to fixed increase every 5 years and by June 2029 rises to 2,000 per unit, subject to a minimum of 18,000 per annum. From June 2034 for the remainder of the term the rent reduces to a peppercorn.

9 TENANCY The property is multi-let in accordance with the following schedule: FLOOR UNIT SIZE (SQ FT) TENANT 5th J 1,305 Just Health Communications Ltd LEASE START LEASE EXPIRY BREAK CLAUSE (6m notice) CURRENT RENT ( PSF) 50,895 ( 39.00) 4th H 1,307 HIV i-base n/a 28,000 ( 21.42) 3rd G 1,295 M-E Engineers Ltd n/a 48, ( 37.50) RENT REVIEW ERV n/a 50,895 ( 39.00) ,973 ( 39.00) n/a 50,505 ( 39.00) COMMENT 3 month rent deposit. 4 month rent free* + 3 months in 2018 if break not exercised. Rent deposit 14,859 Service charge cap 2.50 psf for first 5 years, then 3.50 psf. Rent deposit: 8,225 Schedule of condition. 7 month rent free.* 2nd F 1,299 Eyefix International Ltd n/a 26,000 ( 20.02) 1st E 4,246 M-E Engineers Ltd n/a 150,360 ( 35.41) ,362 ( 38.00) n/a 150,360 ( 35.41) Service charge cap 2.50 psf for first 5 years, then 3.50 psf. Rent deposit 5, Full reinstatement on expiry. 6 month rent free.* Ground A 981 Vacant n/a 31,880 ( 32.50) TOTAL 10, , ( 32.02) n/a 31,880 ( 32.50) 383,975 ( 36.63) Landlord to guarantee rent, rates and service charge for 12 months from completion All leases are outside the 1954 Act. * The vendor will top-up any unexpired rent free incentive.

10 COVENANT M-E ENGINEERS LTD (CO. REG. NO ) c % of rental income D&B Rating: 1A1 Minimum Risk Tangible Net Worth: 830,189 (31-Dec-2013). M-E Engineers is a global mechanical and electrical engineering design firm, founded in 1981 whose portfolio includes some of the most recognized buildings in the world. For further information about ME Engineers please see their website EYEFIX INTERNATIONAL LTD (CO. REG. NO ) c % of rental income D&B Rating: G4 High Risk Tangible Net Worth: 10,617 (30-Sep-2013) Eyefix International UK Ltd specialises in Print Design, Printed Fabric Development and Production for Global Fashion and Homeware brands. Eyefix was founded with a focus of silk screen printing and now has a team of industry professionals assisting clients on everything from digital techniques through to CAD rework, Production and Trend consultancy. Eyefix has a substantial archive of print designs, with approximately 200,000 Vintage pieces and a growing Contemporary Collection. JUST HEALTH COMMUNICATIONS LTD (CO. REG. NO ) c % of rental income D&B Rating: 1A1 Minimum Risk Tangible Net Worth: 1,067,453 (31-Dec-2013). Just Health Communications are involved in public affairs, advocacy development, media relations or reputation management. They offer specialism across a multitude of communication channels. For further information about Just Health Communications please see their website: HIV I-BASE (CO. REG. NO ) c. 8.34% of rental income. D&B Rating: F3 Greater than average risk. Tangible Net Worth: 31,337 (31-Mar-2013) HIV i-base is a treatment activist group that is committed to providing timely and up to date information about HIV treatment to HIV positive people and to health care professionals. i-base is funded by restricted and unrestricted educational grants and support from charitable trusts, individual donations, commercial sponsorship, fund-raising events and from other sources. For further information about HIV i-base please see their website SERVICE CHARGE The freeholder is responsible for the maintenance, repair and cleaning of the exterior and common parts and charges this to the long leaseholder who is reimbursed this cost by the under tenants. The tenant s proportion of the service charge is calculated on a fair and reasonable basis. The freeholder recovers service charge based on the following percentages: Unit A 7.0% Unit E 33.0% Unit F 10.0% Unit G 10.0% Unit H 10.0% Unit J 10.0% The remaining 20% is charged to the other ground floor units. The service charge is currently running at approximately 1.75 per sq ft per annum (less on the ground floor where lift maintenance excluded): There are currently under lease service charge caps on the 2nd and 4th floors which increase to 3.50 psf and 3.00 psf respectively in Based on the latest service charge expenditure and budget forecast around 1.75 psf per annum there is currently no service charge shortfall borne by the long leaseholder while the property is fully let.

11 MARKET COMMENTARY Since the completion of the Jubilee Line Extension nearly 5 years ago, South Bank has become one of the key Central London office sub-markets. More recently Blackfriar s station has been extended over the Thames to be accessible directly from the South Bank. Waterloo remains London s busiest train station and coupled with London Bridge and Blackfriars, they service some 170 million commuters every year. Not surprisingly South Bank has been the focus of significant regeneration with a number of major redevelopments completed and many more proposed or under way. In terms of occupiers the area has become a focus for Media and Tech businesses and the sector is now dominating current demand, aided by its footloose nature and the attractiveness of competitive occupational costs in comparison to the City and West End markets. South Bank is a highly appealing location, well served by improvements to the nearby mainline rail stations, and it continues to provide solutions for occupiers struggling to find suitable product in Farringdon, Old Street and Shoreditch. SUPPLY AND DEMAND Southbank take-up surged in 2013 off the back of major pre-commitments by the likes of News International and Ogilvy & Mather. With the Q4 completion of the letting of 370,000 sq ft to Omnicom at Bankside, 2014 take-up is set to match the level seen in We expect transaction levels to be over 50% above the ten year annual average for the second year in succession. Other key relocations in 2014 have included HCA (69,000 sq ft The Shard) lawyers Howard Kennedy (54,000 sq ft - 1 London Bridge) and Ramboll UK (31,000 sq ft at 240 Blackfriars Road). This follows in the wake of significant relocations by UBM, legal firm Boodle Hadfield and retail giant Puma which has underlined the area s attractiveness to a wide variety of business sectors. Vacancy has tracked steadily downward as a result in spite of average annual completions of over 500,000 sq ft in each of the past three years. The current rate of 4.3% is the lowest level since 2009 and compares to the ten year quarterly average of 5.8% has seen the sharpest falls in vacancy for four years. Southbank Availability vs Take-up sq ft (Million) Take-up Availability * Year to date Source: Colliers International

12 RENTS Headline rents have seen steady uplift during 2014 both the Blackfriars/Southwark and London Bridge micro markets. Deals at the Shard have reached 65 psf compared to a headline rate of 50 psf prior to its completion, although this rental level is not typical of the wider Southbank market. Lettings at 240 Blackfriars Road have confirmed Southwark prime rents at psf which constitutes annual uplift of 15%. Southbank Availability vs Prime rents Southwark Office Rental Growth Forecast Rental Forecasts (Average Rents) Years Growth pa 6.0% 5.5% 5.5% 4.5% 4.0% 5.1% RECENT INVESTMENT TRANSACTIONS psf sq ft (Million) PROPERTY PURCHASER SIZE (SQ FT) PURCHASE PRICE COMMENT 1 America Street & 29 Great Guildford St Standard Life (Dec-14) 90 Union Street CBREI (Sep-14) 47/49 Borough High St Cordea Savills (Q3-14) 39, m ( 769psf) NIY 4.77% 18, m ( 554 psf) NIY 4.4% 4, m ( 765 psf) NIY 3.74% - Single let to Average rent 38.83psf ( psf on best space) - Single let to Average rent 29.50psf - Tenant has indicated they wish to surrender - Multi let retail & offices - Expiries Average rent 25psf SunGard Court, 4/5 Paris Gardens Adjoining occupier (Aug-14) 48, m ( 572 psf) NIY 4.49% - Single let offices - Expiry Rent 27psf Source: Colliers International Prime rents Availability Unlike a number of other London submarkets where rental ceilings remain in place for Media and Tech companies, the Southbank has seen average rents paid by that sector rise substantially since Average rents paid by Media and Tech occupiers in Southbank have risen by 50% since 2011 which compares to Grade A rental growth of 27% and Grade B of 29% over the same period. The attractiveness of the area coupled with the belief that it can prove popular with both traditional core West End media occupiers, as well as those located in existing fringe areas, is proving correct. The Blue Building, 4/8 Whites Grounds TIAA Henderson (Jul-14) 8, m ( 498 psf) NIY 4.87% - Multi let offices - Expires 2015 to Average rent 25psf specification

13 VAT The building is elected for VAT and VAT will be payable on the purchase price. It is envisaged that the sale will be by way of a TOGC. PRICE Offers are sought in excess of 5,750,000 (Five million seven hundred and fifty thousand pounds) exclusive and subject to contract, reflecting a capital value of 551 psf. Based on the current net income of 323, per annum the quoting price reflects a net initial yield of 5.31% rising to approximately 6.10% by June 2015 after settlement of the two forthcoming rent reviews. FURTHER INFORMATION AND INSEPCTIONS The following data website holds relevant legal documents including: Title Deeds Plowman Craven Floor Area Survey Head leases Energy Performance Certificate Occupational leases For further information and to arrange a viewing please contact the sole selling agent, Colliers International. John Olney Direct: Mobile: john.olney@colliers.com Jonathan Evans Direct: Mobile: jonathan.evans@colliers.com Robert Johnston Direct: Mobile: robert.johnston@colliers.com Misrepresentation Act 1967 Colliers International for themselves and for the vendor of this property whose agents they are, give notice that: 1. These particulars do not constitute, nor constitute any part of, an offer or contract. 2. None of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact. 3. Any intending purchaser must satisfy himself by inspection or otherwise as to the correctness of each of the statements contained in these particulars. 4. The vendor does not make or give and neither Colliers International nor any person in their employment has any authority to make or give, any representation or warranty whatever in relation to this property. Finance Act 2013: Unless otherwise stated all prices and rents are quoted exclusive of VAT. The Business Protection from Misleading Marketing Regulations 2008: These details are believed to be correct at the time of compilation but may be subject to subsequent amendment. February Designed and produced by Cooper Rose