High Yielding Industrial Investment Opportunity
Unit 16, Edgemead Close | Round Spinney Industrial Estate | Northampton | NN3 8RE
subject to contract
Freehold industrial / warehouse investment
Established commercial location
Let to established tenant
Active management opportunities
£1,970,000, subject to contract
9.0% Net Initial Yield
Low capital value of £50 per sq ft
Northampton is located approximately 106 km (66 miles) north west of Central London, 88 km (55 miles) south east of Birmingham, 59 km (37 miles) south of Leicester and 88 km (55 miles) west of Cambridge.
The town benefits from good road communications with Junction 15 of the M1 Motorway approximately 6.4 km (4 miles) to the south, accessed via the A45, Junction 15a some 6.4 km (4 miles) to the south-west and Junction 16 approximately 8 km (5 miles) to the west, accessed via the A4500. The M1/M6 Motorway Interchange is approximately 29 km (18 miles) to the north-west.
In addition, the town is connected to the national railway network with a fastest journey time to London Euston of 55 minutes. Direct rail connections are also provided to other regional centres including Birmingham, Nottingham and Milton Keynes. London Luton Airport is approximately 61 km (38 miles) to the south-east and Birmingham International Airport is approximately 72 km (45 miles) to the north-west.
Northampton is located at the heart of the UK, with unrivalled national and international transport links. The town has been identified by Government as a key area for economic growth and was singled out in a recent Experian report as the best place in the UK to do business, the only place in the country to score 19 out of a possible 20 points across four critera: Number of start-ups, rate of insolvencies, level of financial health and business turnover. Northampton has also recently been rated in the UK’s top ten places to work based on factors including average house price, wage and available jobs. (Source: www.northamptonez.co.uk).
The property is situated on the established Round Spinney Industrial Estate and is accessed via Edgemead Close, at its junction with Stone Circle Road. The A43 is immediately to the west and provides access to Junction 15 of the M1 Motorway to the south. Northampton town centre is approximately 6.4 km (4 miles) to the south-west. Other occupiers in the immediate vicinity include TNT, Winged Aviation, Simply Furniture, Euro Towers Ltd, XCAM and AGC Automotive.
The area is to benefit from a significant road improvement scheme with the A43 set to become a dual carriageway all the way between the A45 and the A14. Due to the scale of the scheme this will be achieved in phases. Phase 1A comprising improvements to the Round Spinney roundabout has already been completed which has increased capacity at this junction and improved traffic flow. Construction of Phase 1B linking Round Spinney to Moulton is expected to commence in 2017/18. Phase II, linking the Moulton roundabout to the Holcot/Sywell roundabout to the north, has already been approved with works due to commence in October 2016. This scheme will be a significant improvement on the current infrastructure linking Northampton and Kettering. For further information click here.
The property comprises a detached industrial warehouse unit built in the mid-1980’s. The unit is of steel portal framed construction with block work and corrugated steel elevations under a twin pitched corrugated steel roof with skylights. Internally, the warehouse benefits from two level-access loading doors and an eaves height of approximately 6 metres (20 feet). There are two storey ancillary offices to the eastern elevation which benefit from perimeter trunking, suspended ceilings and Category 2 lighting. Externally, there is a yard area to the north of the building and staff & visitor car parking is provided in front of the western elevation. There is a secure, gated entrance to the property via Edgemead Close.
The property has been measured by BKR Floor Plans and provides the following Gross Internal Area;
|Ground Floor||Warehouse||3,199.57 sq m||34,441 sq ft|
|Offices||226.87 sq m||2,442 sq ft|
|First Floor||Offices||237.18 sq m||2,553 sq ft|
|Total||3,663.60 sq m||39,436 sq ft|
A set of floor plans is available to download and the measured survey report is available for assignment to a purchaser.
We understand the Rateable Value for the property is currently £122,000.
The Uniform Business Rate is 48 pence per pound for 2015/2016.
We estimate the site area to be approximately 0.87 hectares (2.15 acres), providing a site cover in the order of 42%.
A Phase I Environmental Risk Assessment was carried out by WSP in September 2016 which concluded that “the site represents a low risk with respect to potential contaminated land liability issues” and “no further contaminated land assessment work is considered necessary for the current ongoing commercial use of the site”. A copy of the report is available to download and is available for assignment to a purchaser.
The property is let to Bourbon Automotive Plastics Northampton Limited, with surety from Bourbon Automotive Plastics Holding, for a term of 5 years from 29th February 2012, expiring 28th February 2017. The current passing rent is £190,000 per annum (£51.86 per sq m / £4.82 per sq ft). The lease is subject to a Schedule of Condition.
The lease is inside the Landlord and Tenant Act 1954 and therefore the tenant has security of tenure. The landlord served a Section 25 Notice on 25th August 2016, proposing a new tenancy for a term of 10 years at a rent of £220,000 per annum, subject to 5 yearly upward only rent reviews.
The tenant occupies a further unit on the same estate, in close proximity to the subject property on North Portway Close.
According to Knight Frank’s ‘Midlands – H1 2016’ report, prime headline rents in Northampton for units up to 50,000 sq ft are currently £6.25 per sq ft and prime headline rents for units over 50,000 sq ft are £6.00 per sq ft. The report comments that despite the EU Referendum there is still optimism in the market and deals have completed since the end of June 2016. It also states that the regional outlook is that stock levels are expected to diminish and landlords are set to benefit from rental increases at rent review / lease renewal. Following a period of sustained rental growth over the last two years, rental growth in secondary areas is anticipated.
In the Midlands, which is historically the dominant UK region accounting for 38% of national take-up, c.6m sq ft of industrial space was taken in H1 2016, up 33% on the same period last year. (Source: Knight Frank Logic: UK Overview – H1 2016)
Due to the distinct shortage of industrial/warehouse properties in Northampton, we believe the subject property offers good prospects for future rental growth.
Tenant - Bourbon Automotive Plastics Northampton Limited, (Co. No. 03385357) has reported the following figures:
|30th September 2015||30th September 2014|
|Pre-Tax Profits (Loss)||(£1,094,711)||£1,294,116|
During the last financial year, the company invested £1.51 million in capital equipment. Most of this was committed to new plant within the factory to support the growth of the business in the future.
Surety – Bourbon Automotive Plastics Holding (incorporated in France):
|30th September 2015||30th September 2014|
The ultimate controlling party is Plastiques du Val de Loire, a company registered in France and listed on the French stock exchange. Trading as Groupe Plastivaloire, the company was founded in 1963 and now has 25 sites worldwide, employing 4,500 people. Groupe Plastivaloire is one of the global players in the area of plastic injection moulding. With more than 50 years’ experience, extensive knowledge and state-of-the-art machinery, the family business has become the partner of choice for renowned companies in the automotive and other industries. BMW, Audi, Renault, Mercedes, Porsche, Toyota and Hyundai, among others, are part of the customer base. The company has also expanded the business into other industries such as aviation and consumer electronics.
In 2011, Group Plastivaloire acquired the Bourbon Group. Founded in 1920, Bourbon Group is a specialist in the design and manufacture of decorative parts and mechanisms for the automotive industry. As part of the agreement, Plastivaloire Group transferred its Automotive Plastics business to Bourbon, with the new entity being re-named Bourbon Automotive Plastics.
For the first 6 months of 2015-2106, Groupe Plastivaloire reported revenues of €285.3 million, up 24.2% on the same period in 2014-2015 and up 16.9% like-for-like. All Group sectors reported strong growth with the Motor Vehicle division accounting for 74% of the Group total. Non-motor vehicle revenues also continued to grow, increasing 50.7% to €46.3 million as production began on recent contracts. Plastivaloire confidently expects to see revenues exceed €540 million over the full 12 months of 2015-2016. For further information please visit www.groupe-plastivaloire.com.
The tenant also occupies another unit on the same estate, in close proximity to the subject property on North Portway Close.
The property has been registered for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).
We are instructed to seek offers in the region of £1,970,000 (One Million, Nine Hundred and Seventy Thousand Pounds), subject to contract, reflecting a net initial yield of 9.0% and a capital value of £538 per sq m / £50 per sq ft, assuming purchaser’s costs of 6.27%.
An opportunity to acquire a freehold industrial/warehouse investment;
The property is situated in an established commercial location;
The property is let to an established tenant who occupies a further unit on the estate;
The property provides asset management opportunities;
The purchase price reflects a low capital value of £538 per sq m / £50 per sq ft;
A purchase at the asking price will provide an investor with an attractive net initial yield;
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