FOR SALE Prime Modern Well Let Investment Opportunity Industrial & Office Investment

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, NE11 0JL INVESTMENT SUMMARY

• Prime commercial location in the North East • 42,429 sq ft of modern industrial and office accommodation built in 2011 • 11.5 years term certain to Borgwarner Gateshead Ltd • Passing rent of £310,000 per annum • Long leasehold with 115.5 years unexpired at a peppercorn rent • Total site area of 2.58 acres

• We are instructed to seek offers of £4,150,000 (Four Million One Hundred and Fifty Thousand Pounds) subject to contract and exclusive of VAT. This reflects aNet Initial Yield of 7.00%, assuming purchaser’s costs at 6.55%

Borgwarner Research & Development Centre

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 02 BLYTH

MORPETH

A193

A189

CRAMLINGTON

A1

A193

A19 A190

A192 PONTELAND A19

NEWCASTLE A189 OTTERBURNINTERNATIONAL LOCATION AIRPORT A1056 ABERDEEN KILLINGWORTH A191

A696 A1

A191 SILVERLINK A1058 Road A189 Rail The property is located on Team Valley Trading Estate, GLASGOW A1058 EDINBURGH A193 regarded as the prime commercial location in the North East, A69 A1 HEXHAM A187 M6 NEWCASTLE A187 located on the south bank of the , approximately CARLISLE A69 TYNE TUNNEL A19 NEWCASTLE MIDDLESBROUGH A193 3 miles to the south of and 1 mile A194 A66 CENTRAL STATION A186 south-west of Gateshead town centre. The estate is directly A1(M) B6317 A1300 RIVER TYNE LEEDS A695 accessible from two junctions of the A1 dual carriageway. MANCHESTER A1018 M1M1 PRUDHOE GATESHEAD LIVERPOOL SHEFFIELD METROCENTRE A184 A184 A184 M6 M1 By rail the East Coast mainline links Newcastle directly with

A1(M) A19 and Edinburgh with the fastest journey time to BIRMINGHAM A694

M1 A1(M) London Kings Cross approximately 2 hours 40 minutes A194(M) M40 M11 A1231 CARDIFF A1 and to Edinburgh 1 hour 40 minutes. BRISTOL M4 LONDON A692 A1231

WASHINGTON

A1(M) The estate is located 10 miles to the south-west of Newcastle CONSETT DURHAM & SOUTH TEAM VALLEY A1018 International Airport, which provides daily flights to the TEESSIDE & SOUTH A690 principal domestic destinations and major European centres.

East Coast Mainline To A1(M) Durham & South

Earlsway Eleventh Avenue Ninth Av

Queensway North SAINBURY’S Seventh Avenue Queensway South First Avenue MAINGATE Eastern Avenue Third Avenue Eleventh Avenue Eleventh Avenue Fifth Avenue Kingsway North Kingsway South Team Valley Trading Estate Marquis Way

Princesway Princesway RETAIL

Sixth Avenue is regarded as the prime

Eigth Avenue WORLD Fourth Avenue Second Avenue Avenue Tenth Western Avenue Western Dukesway Dukesway commercial location in the A1 North BORGWARNER

& Newcastle A1 West Dukesway North East Airport

A692

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 03 1 BORGWARNER 5 Omega Plastics 9 Homes & 12 Sainsbury's 2 Retail World 6 Graphic Packaging Communities Agency Screwfix 3 Eighth Avenue East 7 BT Fleet 10 HSS Hire Wolseley SITUATION 4 Eighth Avenue West 8 Bestway 11 Express Engineering Howdens

The property occupies a prominent corner position 12 2 on the junction of Princesway and Eighth Avenue, SOUTH with immediate access onto Kingsway South, A1 the main thoroughfare through Team Valley. NORTH Directly opposite the subject property on Eighth Avenue, 1 3 4 6 planning permission has recently been obtained for two EIGHTH AVENUE modern high specification industrial units totalling DUKESWAY PRINCESWAY a combined 90,000 sq ft. 5 Team Valley Trading Estate covers an area of approximately 700 acres (283 ha), with 7 million sq ft of accommodation and is home to in excess of 600 local 7 and multinational companies. A number of well-known occupiers are located on the estate, including; DHL, Royal Mail, Howdens, Sainsburys, HSS Hire, Express Engineering, Omega Plastics, Screwfix and Wolseley. 8

The 25,000 plus workforce of Team Valley are well served by Retail World, located at the southern end KINGSWAY SOUTH of Team Valley. It is one of the twenty largest retail parks 9 in the UK and is occupied by M&S Simply Food, Homebase, B&M Bargains, Poundland, Sports Direct, Wren Kitchens and McDonald’s.

11 10

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 04 DESCRIPTION

The property was built in 2011 at an approximate cost of £5.2 million and comprises a modern detached two storey steel framed office building and separate industrial unit with profile metal cladding. The main specifications include;

• Industrial unit with half cover mezzanine installed by the tenant which incorporates offices, kitchen and wcs

• Eaves height to front of 4.9m (16ft) and to the rear of the industrial unit 5.8m (19ft)

• Enclosed yard of approximately 600 sq m

• Detached Grade A office accommodation with raised floors, suspended ceiling, LED lighting, air conditioning, passenger lift and double height reception

• Tarmacadam surfaced car parking area for 77 vehicles giving a favourable car parking ratio of 1:305

• High level of landscaping

• The tenant has undertaken alterations to the offices and the warehouse under licence including constructing stores and a water tank in the warehouse yard, installation of a half cover mezzanine floor and an impressive office fit-out. The estimated cost of the works is around $4 million

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 05 DESCRIPTION

INDUSTRIAL UNIT INDUSTRIAL UNIT

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 06 ACCOMMODATION

The property comprises the following floor area:

SQ M SQ FT Office Ground 1,060.60 11,416 Reception 38.80 418 First Floor 1,089.40 11,725 Total Net Internal Area 2,188.80 23,559

Warehouse Gross Internal Area* 1,753 18,880 Total 3,941.80 42,429

*The tenant has constructed a mezzanine floor to the rear section of the warehouse totalling 865 sq m (9,310 sq ft) which is excluded in the above areas.

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 07 SITE AREA

Site extends to approximately 2.54 acres (1.04 ha) providing a site coverage of approximately 42%.

TENURE The property is held long leasehold for 125 years from 9 February 2011 at a peppercorn. There are approximately 115.5 years unexpired. Permitted User for Use Class D1, B1, B2 and B8 (excluding cash and carry).

TENANCY The whole property is underlet to Borgwarner Gateshead INDUSTRIAL UNIT Ltd (formerly known as Sevcon Ltd) on a 15 year full repairing and insuring lease from March 2017 subject to a photographic schedule of condition, at a passing rent of £310,000 pa. There is no option to break, providing 11.5 years term certain. There are five yearly rent reviews to market rent on an upwards only basis.

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 08 COVENANT

Borgwarner Gateshead Ltd are part of Borgwarner Inc, a large American automotive industry components and parts supplier, known for being market leaders for their powertrain products. They are world renowned for their clean and efficient solutions for combustion, hybrid and electric vehicles. They have manufacturing and technical facilities in 62 locations in 17 countries and employ approximately 27,000 people worldwide. Borgwarner Gateshead Ltd design, develop and sell microprocessor based controls for zero mission and hybrid electric vehicles. The subject premises form an important Research & Development facility for the group.

The lease was originally taken by Sevcon Ltd following relocation from older accommodation elsewhere on Team Valley. Borgwarner Massachusetts Inc acquired Sevcon Ltd on 21st January 2018 and changed the Sevcon company name to Borgwarner Gateshead Ltd on 1st February 2018.

The latest accounts for Borgwarner Gateshead Ltd are for year ending December 2018, which we have summarised below.

Year to Shareholder’s Date Turnover Pre Tax Profit Funds 31/12/2018 £27,660,168 -£15,214,078 -£769,615 31/12/2017 £26,292,724 -£17,664,197 -£22,478,292 31/12/2016 £17,636,126 -£2,485,834 £1,306,510

The notes to the 2018 accounts indicate Borgwarner Massachusetts Inc injected £25 million into Borgwarner Gateshead Ltd in 2018. The group anticipate feeding work into the Gateshead business from its various international group companies across the world.

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 09 OCCUPIER MARKET

The North East region and particularly the Newcastle & Gateshead area have benefitted from strong industrial demand and take up levels over the past few years. The area’s positive supply/demand dynamics have pushed average rents up, with growth outpacing most other parts of the North East of . Expectations of further positive demand combined with a relatively quiet construction pipeline suggest that vacancies will remain low and prospects for growth remain favourable.

Recent comparable lettings are summarised below.

Address Size (Sq Ft) Date Lease Length Rent pa Rent psf Tenant

Industrial

Unit 3, Dukesway Central, Team Valley, NE11 0PZ 18,000 08/19 10 years £135,000 £7.50 It’s All Good Ltd

5 Queensway North, Team Valley, NE11 0NY 28,946 09/19 10 years £174,200 £6.02 Network Rail

Unit 5, Queens Court, Team Valley, NE11 0BU 19,217 02/19 10 years £125,000 £6.50 Tructyre Fleet Management Ltd

Unit 1, Dukesway Central, Team Valley, NE11 0PZ 26,834 08/17 5 years £200,000 £7.45 It’s All Good Ltd

401 Princesway, Team Valley, NE11 0TU 46,550 08/16 10 years £279,400 £6.00 Worthington Armstrong

Offices

Weymouth House, Newcastle, NE4 7YG 30,439 09/20 10 years £456,585 £15.00 The Green Energy Advice Bureau

Richard Annand House, Durham, DH1 1TH 10,000 05/18 15 years £140,000 £14.00 Finchale Group

One Gosforth Park Way, NE12 8ET 11,784 10/18 10 years £150,000 £12.73 Parkdean Resorts

Honeycomb, The Watermark, Gateshead, NE11 9SZ 10,194 09/18 10 years £103,200 £10.32 Media Works

7-9 Crown Road, Sunderland, SR4 6UG 9,419 08/18 12 years £105,500 £11.22 Assytem

The overall rent equates to £7.30 psf which we consider offers scope for increase at rent review.

Modern industrial rents on Team Valley are at £6.00 psf or higher, with new stock quoting £7.50 psf. Asking levels on equivalent modern office space at Queen’s Park or Maingate, Team Valley, are at £13.00-£14.00 psf.

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 10 INVESTMENT MARKET

Lack of supply and increased rental growth has led to strong demand for industrial investments and well-let office properties in the North East, as demonstrated by the following transactions below.

Address Date Size (Sq Ft) Unexpired Term Price Yield Rent Review

Industrial 5 Queensway North, Team 9.01 to expiry 09/20 28,946 £2,520,000 6.50% OMR Valley, NE11 0NY (4.00 to break) 10A &10B Fourth Avenue, Team OMR or 1.50% pa U/O 51,805 10.59 £3,695,000 6.35% Valley, NE11 0TG compounded Unit A& Unit B Aquarius Park, U/O 34,934 4.59 (WAULT) £3,150,000 6.45% OMR Team Valley, NE11 0JS Unit 6, Queensway North, Team 01/19 18,278 5.25 £1,120,000 6.24% Fixed Uplift Valley Trading Estate, NE11 0NY Unit 3, New York Industrial Park, 12/18 72,388 13.75 £6,230,000 5.50% RPI Newcastle, NE27 0QF Unit 5 Gateway West, , 09/18 58,665 10.00 (5.00) £4,675,000 6.32% OMR NE15 8NX 401 Princesway, Team Valley, 03/18 46,550 8.42 £3,900,000 6.72% OMR NE11 0TU Offices Spectrum 4, Seaham Business OMR with fixed 09/20 35,000 14.25 £3,000,000 6.50% Park, Seaham, SR7 7TT uplifts Cobalt Business Park, Fixed 10% uplifts 07/20 77,500 15.00 £18,300,000 6.00% Newcastle, NE28 9EJ at years 5 and 10

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 11 EPC The property has been the following EPC ratings;

Office B(45)

Warehouse C(72)

Copies of each EPC certificate are available on request.

VAT It is anticipated that this transaction will be treated as a Transfer of a Going Concern.

PROPOSAL We are instructed to seek offers of£4,150,000 (Four Million One Hundred and Fifty Thousand Pounds) subject to contract and exclusive of VAT. This reflectsa Net Initial Yield of 7.00%, assuming purchaser’s costs at 6.55%.

BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL 12 CONTACT

Simon Beanland T: 0191 269 00512 E: [email protected]

Jamie Sim T: 0191 269 0062 E: [email protected]

0191 261 2321 avisonyoung.co.uk/15754avisonyoung.co.uk/0000

(1) Avison Young hereby gives notice that the information provided (either for itself, for any joint agents or for the vendors lessors of this property whose agent Avison Young s )in this brochure is provided on the following conditions: (2) The particulars are set out as a general outline only, for the guidance of intending purchasers and/ or lessees and do not constitute an offer or contract, or part of an offer or contract. (3) All descriptions, dimensions and references to this property’s condition and any necessary permission for use and occupation, and any other relevant details, are given in good faith and are believed to be correct. However, any intending purchasers or tenants should not rely on them as statements or representations of fact but satisfy themselves of their correctness by inspection or otherwise. (4) No person in the employment of Avison Young, or any joint agents, has any authority to make or give any representation or warranty whatsoever in relation to the property or properties in this brochure. (5) All prices quoted are exclusive of VAT. (6) Avison Young shall have no liability whatsoever in relation to any documents contained within the brochure or any elements of the brochure which were prepared solely by third parties, and not by Avison Young. September 2020.

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BORGWARNER PREMISES Princesway, Team Valley Trading Estate, Gateshead NE11 0JL