Investment Sale 252 Bouverie Square, Upper Third Street, Central Milton Keynes, MK9 1DZ High Yielding Refurbishment Opportunity
Investment Summary 2,072.72 sq m (22,311 sq ft) office building Good property fundamentals with open plan floor plates, raised floors and air conditioning Located in Central Milton Keynes, within the Central Business District Let to the Partners of Howes Percival LLP Solicitors until 24 March 2015 Current net income 376,142 per annum Sub-let in part Opportunity to comprehensively refurbish the property at lease expiry Freehold We are seeking offers in the region of 1,775,000 (One Million Seven Hundred & Seventy Five Thousand Pounds), subject to contract for the freehold interest. This reflects a NIY 20.03% assuming purchaser s costs of 5.8%.
14 A5 V6 V6 Marlborough St A422 Monks Way V6 Grafton Way A509 B4034 Dansteed Way B403 4 A509 Portway A509 Childs Way Upper Third St A422 Monks Way Marlborough St H6 Childs Way H6 Dansteed Way A422 Portway A509 H5 Childs Way Marlborough St Dansteed Way Brickhill St Brickhill St Portway H5 Tongwell St Tongwell St Childs Way H6 Brickhill St M1 H5 A509 H6 V11 London Rd A509 14 Chaffron Way Chaffron Way Crown Copyright 2012. All rights reserved. Not to scale. Location Milton Keynes is strategically located approximately 54 miles north west of London and 72 miles south east of Birmingham, within the County of Buckinghamshire. The town benefits from very good communication links, being adjacent to Junction 14 of the M1 Motorway and the A5. This infrastructure is further enhanced by Milton Keynes Central Railway Station, which provides a fastest journey time of approximately 35 minutes to London Euston and 55 minutes to Birmingham New Street. Situation The property forms part of Bouverie Square within the central grid of Milton Keynes. This is one of the principal town centre office locations being just ¼ mile from Milton Keynes Central train station and less than ½ mile from A509 (Portway); which connects to j14 M1. Nearby occupiers include Grant Thornton, Santander, MacIntyre Hudson and RBS. Bouverie Square is dominated by office buildings but also provides occupiers with other amenities including restaurants and bars. Description Forming part of the Bouverie Square development, the property is a modern 1980 s office building constructed over ground and two upper floors. Whilst currently in need of modernisation, the property has good underlying fundamentals with open plan floor plates, full access raised floors, air conditioning, lift access and male and female toilets to each floor. There are 11 allocated car parking spaces immediately to the front of the building with the right to additional spaces within Bouverie Square. Designated as a New Town in 1967, Milton Keynes has grown significantly over the years and is now home to a District population of some 207,057 persons. The town would be considered reasonably affluent, with 7.71% Symbols of Success, 39.22% Happy Families and 6.55% Suburban Comfort. Major employers in the town include Santander, John Lewis, Argos, Royal Mail and NHS, whilst Network Rail has recently relocated staff to its new HQ adjacent to Milton Keynes station. The property is suited to either single or multiple occupation and provides an excellent refurbishment opportunity before being returned to the leasehold or freehold market.
Accommodation The property has been measured in accordance with the RICS Code of Measuring Practice and provides the following approximate Net Internal floor areas: Floor Sq M Sq Ft Reception 40.78 439 Ground Floor Offices 481.33 5,181 First Floor Office 763.47 8,218 Second Floor Offices 787.14 8,473 Total 2,072.72 22,311 Tenure Freehold Tenancy The property is let in its entirety to Bennett, Percival, Rowland & Bennion, trading as Howes Percival LLP. The lease is drafted on a Full Repairing and Insuring basis for a term of 25 years from 25 March 1990, expiring 24 March 2015 at a rent of 376,142 per annum ( 17.03 per sq ft). Tenant Covenant Howes Percival LLP is a commercial law firm based in Leicester, London, Manchester, Milton Keynes, Northampton and Norwich. Founded in Towcester in Northampton in 1790, the modern commercial firm of Howes Percival grew rapidly during the 1980s and now operates from six locations. We have had regard to a Graydon credit risk report for Howes Percival LLP (OC322781) which provides the following financial summary: Tenant Graydon Score Date Turnover Pre Tax Profit Net Assets Part of the ground floor and first floor have been sub-let to Denton Wilde Sapte until 24 March 2015 at a rent of 163,782pa. This lease is outside the Landlord & Tenant Act and the tenant is not in occupation. Howes Percival LLP 3B Good 30/04/12 16.138m 4.344m - 30/04/11 17.444m 4.290m 4.290m The first floor has been further under-let to Tickets.com Limited until 23 March 2015. The passing rent is 71,740 per annum ( 8.57 per sq ft). The lease is outside the Act. 30/04/10 17.938m 5.040m 7.980m For the year ending 31 December 2012, Tickets.com Ltd report a Turnover of 3.61m, Pre-tax Profits of 138,000 and Net Assets of 1.176m
Market Commentary In 2012 Milton Keynes captured one of the UK s largest office relocations when Network Rail opened their new HQ in Central Milton Keynes. Known as The Quadrant:MK, this 400,000 sq ft office building is home to over 3,000 staff and puts Milton Keynes at the centre of the country s railway operation. Considered one of the most significant office deals outside London and the South East in recent years, the town has seen a number of office requirements from Network Rail supply companies or complimentary occupiers who are now looking to locate in Milton Keynes as a result of this deal. Being situated within Central Milton Keynes and a short distance from the station, we are of the opinion that Bouverie Square is well placed to take advantage of demand resulting from Network Rail s 400,000 sq ft acquisition as well as a general upturn in market activity. There has been no speculative development within Milton Keynes for a number of years and as such there has been limited new Grade A product coming to the market. Pinnacle:MK would be considered the only genuine Grade A office space within Central Milton Keynes, with supply starting to diminish. Bouverie Square therefore provides an excellent opportunity to create Grade A office accommodation for the wider market or to suit a particular occupier requirement; either on a leasehold or freehold basis. Recent office transactions of note within Central Milton Keynes include: CBX II, Midsummer Boulevard, Central Milton Keynes: 7,500 sq ft office let at 16.25 per sq ft on a 10 years lease with tenant s option to break at year 5 401 Grafton Gate, Central Milton Keynes: 7,500 sq ft office let at 16.00 per sq ft on a 10 years lease with tenant s option to break at year 5 249 Midsummer Boulevard, Central Milton Keynes: 4,356 sq ft office let at 12.75 per sq ft on a 10 year lease with tenant s option to break at year 5 Phoenix House, Elder Gate, Central Milton Keynes: 12,300 sq ft office let at 14.50 per sq ft on a 10 year lease In light of the above, we are of the opinion that the property would command a headline rent in the region of 12.50 to 13.00 per sq ft once comprehensively refurbished. Asset Management We are of the opinion that there are a number of asset management opportunities to be explored upon or before lease expiry. These include: Negotiating a dilapidations settlement with the tenant Negotiating an early surrender with the tenant Refurbishing the building Relet the property as a whole or floor by floor Rebase the rent Negotiate a regear with Ticket.com Offer the property to the owner occupier market where there is a scarcity of available product Change of use to residential (subject to necessary consents)
Proposal We are seeking offers in the region of 1,775,000 (One Million Seven Hundred & Seventy Five Thousand Pounds) subject to contract for the freehold interest.this represents a net initial yield of 20.03% assuming purchaser s costs of 5.8%. VAT We understand that the property is elected for VAT. It is anticipated that the transactions can be treated as a TOGC. Contacts Lambert Smith Hampton Interchange Place Edmund Street Birmingham B3 2TA Lambert Smith Hampton Grant Thornton House 206 Silbury Boulevard Milton Keynes MK9 1LU Adam Ramshaw Sam Mountford 0121 237 2395 0121 237 2364 aramshaw@lsh.co.uk smountford@lsh.co.uk Charlie Lake Peter Williams 020 7198 2227 01908 544 904 clake@lsh.co.uk pwilliams@lsh.co.uk Further information on the property can be obtained from: Subject to Contract and Exclusive of VAT Lambert Smith Hampton September 2013 Disclaimer: 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 enter into any contract whatsoever in relation to the property in respect of any prospective purchase or letting including in respect of any re-sale potential or value or at all. (iv) Price or rent may be subject to VAT and any prospective buyer or tenant 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.