stop high-yielding-well-secured-office-investment-sunderland - Singer Vielle Sales

Attractive, High Yielding Office Investment let to Nissan & Avant Homes

Investor House | Sunderland Enterprise Park | Sunderland | SR5 3XB

£1,300,000

subject to contract

EXCHANGED

Summary

  • Prominently situated on established business park

  • Secure income (Nissan & Avant Homes)

  • Adjacent to major new communications infrastructure

  • By Northern Spire, an iconic new landmark bridge which is set to transform and regenerate the surrounding area

  • Freehold

  • £1,300,000, subject to contract

  • 9.0% net initial yield

  • £88 per sq ft capital value

Location

Sunderland is located on the north east coast of England, approximately 19 km (12 miles) south-east of Newcastle upon Tyne and 21 km (13 miles) north-east of Durham.

The city benefits from good road communications being situated approximately 4.8 km (3 miles) east of the A19 which provides access to Newcastle upon Tyne to the north via the Tyne Tunnel and Middlesbrough and Stockton on Tees to the south. The A1(M) is approximately 13 km (8 miles) to the west, accessed via the A690 and A1231 dual carriageways.

Sunderland is connected to the national railway network with a fastest journey time to London King’s Cross of 3 hours 30 minutes. There are also regular direct services to Newcastle with a journey time of 30 minutes. The city is served by both Durham Tees Valley and Newcastle International Airports which provide services to all major European cities and various international destinations.

Situation

The property is well located within Sunderland Enterprise Park, an established office and business park approximately 4.8 km (3 miles) north-west of Sunderland city centre. Other nearby occupiers include Manpower, Berghaus, TSB, WeSwitch and The Institute for Automotive & Manufacturing Advanced Practice.

The property is immediately adjacent to the A1231 (Wessington Way) which connects with the A19 less than 1.6 km (1 mile) to the west and the A1(M) 8 km (5 miles ) to the west. Access to the property is via Colima Avenue.

The Hylton Riverside Retail Park is within short walking distance of the subject property, with occupiers on the park including Aldi, Pets at Home, B&M, Matalan, Argos, Costa and Greggs.

Northern Spire

The subject property is within close proximity to Northern Spire, an iconic new landmark bridge and the first to be built across the River Wear in the city for 40 years. The bridge will provide a vital new transport link that will help connect the Port of Sunderland and Sunderland city centre with the A19, the developing IAMP Enterprise Zone and the wider Tyne and Wear city-region.

The new bridge will cross the river from the A1231 Wessington Way on the north bank to join with the B1405 in Pallion on the south bank and will enable land along the south side of the river to be regenerated.

Northern Spire is expected to help bring major economic and regeneration benefits to Sunderland and the wider Tyne & Wear region. According to Sunderland City Council it will:

• Help create 6,000 new jobs at development sites like the former Vaux site, the old Groves Cranes site and Hylton Park along the riverside corridor in Sunderland.

• Establish a strategic public transport corridor connecting Washington, Nissan, the new Enterprise Zones and the A19 with the city centre and the Port of Sunderland

• Relieve congestion on and allow enhanced priority for public transport and cyclists across the Wearmouth and Queen Alexandra bridges.

• Make a major contribution to the regeneration of the city centre and the Port of Sunderland.

• Reduce journey times and improve journey time reliability for people travelling by car, public transport and by bike on routes across the city.

• Open up the Metro to thousands of residents and workers in the Castletown area who will be a short walk across the river from Pallion Metro station.

• Improve journey times along the existing A1231 Wessington Way by reducing the number of roundabouts and improving the road surface.

Northern Spire is Phase 2 of the Sunderland Strategic Transport Corridor, which is a five-phase road enhancement scheme to improve links between the A19 and Sunderland City Centre and the Port of Sunderland.

Phase 1, the city centre St Mary's scheme, is already complete, and works for Phase 3, joining the bridge to the city centre, are planned for Winter 2018/19.

Description

The property comprises a detached, single storey pavilion style office of brick construction beneath a pitched tiled roof, set within a landscaped environment.

The building was originally divided into 4 self-contained office suites but is currently arranged as two separate units.

Internally, the offices benefit from the following specification:

• Open plan layout
• Suspended ceilings
• Perimeter trunking
• Gas Central Heating
• Double Glazing
• Cat II lighting
• Male, Female and Disabled WC’s

The property benefits from 50 car parking spaces, providing a ratio of 1:27 sq m / 296 sq ft.

Accommodation

The property has been measured by Commercial Measured Surveys and provides the following accommodation:

Net Internal Areas
Unit 1 (Nissan Trading Europe Limited) 346.0 sq m 3,724 sq ft
Units 2,3a,3b&4 (Avant Homes) 1028.7 sq m 11,073 sq ft
Total   1374.7 sq m 14,797 sq ft

 

IPMS 3
Unit 1 (Nissan Trading Europe Limited) 353.2 sq m 3,802 sq ft
Units 2,3a,3b&4 (Avant Homes) 1046.3 sq m 11,262 sq ft
Total   11,262 sq ft 15,064 sq ft

The measured survey report is available to download and can be re-addressed to a purchaser.

Site

We estimate the site area to be approximately 0.51 hectares (1.27 acres).

A Phase I Environmental Risk Assessment was carried out by Delta Simons in May 2018 which concluded that “with regard to potential land contamination issues and associated environmental liabilities, in its current use, the Site represents an overall investment opportunity with a Low risk”. A copy of the report is available to download and is available for assignment to a purchaser.

Tenure

Freehold (including a 999 year headlease which can be merged in the freehold reversion).

Service Charge

The tenants are required to contribute towards a service charge which for the year ending 31st December 2018 totals £16,035.  The Service Charge Accounts and Service Charge Budget are available to download.  

Tenancy

Unit 1 is let to Nissan Trading Europe Limited for a term of 5 years from 11th February, 2015, expiring on 10th February 2020. The current passing rent is £25,500 per annum (£73.70 per sq m / £6.85 per sq ft). The lease is inside 1954 Act protection.

The tenant has a right to use a designated area within the car park, plus a further two car parking spaces by way of a Licence.

Units 2,3a,3b & 4 are let to Avant Homes (England) Limited on an effectively Full Repairing and Insuring Lease for a term of 10 years from 4th August 2016, expiring on 3rd August 2026. The lease benefits from an upwards only rent review on 4th August 2021. There is a tenant’s break option on 3rd August 2021, subject to 6 months’ prior notice. The lease is inside 1954 Act protection.

The tenant has a right to use a designated area within the car park, subject to a minimum of 38 car parking spaces.

The current passing rent is £49,600 per annum (£48.22 per sq m / £4.48 per sq ft), rising to £99,200 per annum (£96.43 per sq m / £8.96 per sq ft) on 4th November 2018. In order that a purchaser does not suffer an income shortfall the vendor will top up the rent to £99,200 per annum on completion by way of an adjustment to the purchase price.


Therefore, an investor will benefit from a total income of £124,700 per annum.

Rateable Value

We understand the rateable value for the property is as follows:

Address Description Rateable Value
Avant Homes Offices and premises £104,000
Unit 1b Offices and premises £36,500

The Uniform Business Rate is 47.9 pence per pound for 2017/2018.

Covenant

Avant Homes (England) Limited (Co. No. 01043597), has reported the following figures:

    16 month period ended
  30th April 2017 30th April 2016
Revenue £291,100,000 £181,872,000
Pre-Tax Profit £36,562,000 £37,035,000
Net Assets £119,916,000 £73,206,000

In a trading update dated 30th April 2018, the company reported a 21% increase in Revenue to £447 million for the year to 27th April 2018 while the total number of completions grew 16% to 1,903. The business is on track to reach £500 million in turnover and build 2,000 new homes a year by the end of 2018, 12 months ahead of schedule. The business has now set a new target of constructing 4,000 houses per year by 2023 (Source: Insider Media Ltd).

Avant Homes is one of the UK’s leading privately-owned housebuilders, operating in Scotland, the north east of England, Yorkshire and the Midlands. With offices in each of those regions the company employs over 600 people. For further information please visit www.avanthomes.co.uk

Nissan Trading Europe Limited (Co. No. 02461565), has reported the following figures:

  31st March 2017 31st March 2016
Turnover €330,587,000 €257,262,000
Pre-Tax Profit €6,619,000 €5,988,000
Shareholders’ Funds €46,900,000 €41,957,000

Nissan Trading Europe Limited is an international trading company, supplying automotive vehicles, parts, machinery and materials within the automotive industry. The company has branches in Sunderland, Barcelona and Amsterdam. Sunderland and Barcelona primarily focus on the delivery of auto-component parts, chemicals and machinery either directly to the main Nissan production sites, or to the Tier 1 companies who themselves onward supply direct to the production sites. Amsterdam is involved in selling finished vehicles and service parts worldwide and to aid organisations such as the UN.

The ultimate parent and controlling party is Nissan Motor Co. Limited in Japan. Established in 1933, Nissan manufactures vehicles in 20 countries and areas around the world and offers products and services in more than 160 countries worldwide. For the nine-month period to 31st December 2017, the Group reported an operating profit of 364.2 billion yen (£2,447,059,800) on net revenues of 8.53 trillion yen (£57,313,070,000). For further information visit www.nissan-global.com.

VAT

The vendor has elected the property for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

Proposal

We are instructed to seek offers in the region of £1,300,000 (One Million, Three Hundred Thousand Pounds), subject to contract, reflecting a net initial yield of 9.0% and capital value of £946 per sq m / £88 per sq ft, assuming purchaser’s costs of 5.69%.

Investment Considerations

  1. An opportunity to acquire a freehold office investment;

  2. The property is let to two highly established tenants, providing secure income - Avant Homes (Net Assets £120 million) and Nissan Trading Europe Ltd (Net Assets €46.9 million);

  3. The property is situated in an established commercial location and in an area experiencing inward investment;

  4. The property benefits from being in close proximity to Northern Spire, an iconic new landmark bridge which is set to transform and regenerate the surrounding area;

  5. The property benefits from an attractive car parking supply;

  6. A purchase at the asking price reflects an attractive net initial yield.

Contact Us

Singer Vielle   +44 (0) 207 935 7200
Neil Singer neil@singervielle.co.uk +44 (0) 203 478 9120
Dale Henry dale@singervielle.co.uk +44 (0) 203 701 1356
Ed Jeffs ed@singervielle.co.uk +44 (0) 203 701 1353
Faye Langoulant faye@singervielle.co.uk +44 (0) 203 478 9122
Louanne Malan louanne@singervielle.co.uk +44 (0) 203 701 1386

Vendors Solicitor

Eversheds Sutherland +44 (0) 113 200 4802
Claire Burns ClaireBurns@eversheds-sutherland.com
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