REVERSIONARY, LONG INCOME INDUSTRIAL INVESTMENT WITH FIXED UPLIFTS UPG Wales | Cwm Cynon Industrial Estate | Mountain Ash | CF45 4HL 02 UPG Wales | Cwm Cynon Industrial Estate

Investment Summary

• Strategically located in Mountain Ash, 3 miles north west of the A470; the primary spine road connecting Cardiff and the M4 Motorway to the Heads of the Valleys areas. • The property comprises a well specified warehouse of 62,125 sq ft with integral offices and generous loading areas on a site of 5.53 acres and low site cover of 25.8%. • Let to SPM Plastics Ltd which forms part of the wider United Plastics Group (UPG), established in 1954, with a global presence and sister-plants in Texas and Suzhou, China. • Long-term, secure income with a WAULT of 17.23 years to expiries (9.23 years to break option). • Low passing rent of £170,000 per annum (£2.74 psf). • Fixed rental uplifts to £185,000 per annum (£2.98 psf) in 2021 to be topped up and to £215,000 We are instructed to seek offers in excess of £2,390,000 (Two Million, Three Hundred and Ninety per annum (£3.46 psf) in 2026 with an open market review in 2031. Thousand Pounds), reflecting a Net Initial Yield of 7.25%, after deducting standard purchaser’s • There is a strong occupational story with the Tenant in full occupation and recently expanded by costs of 6.90% and a low Capital Value of £38 per sq ft. completing a 7,555 sq ft extension to the unit. The Net Initial Yield is based on the topped up income of £185,000 per annum. The Tenant has been in occupation since construction of the unit, i.e. over circa 23 years and has • A purchase at this level reflects a Reversionary Yield of 8.42% following the fixed rental uplift in 2026. further demonstrated its commitment to the location by signing a new 15 year reversionary lease commencing in 2021. Subject to Contract and Exclusive of VAT. 1 03 UPG Wales | Cwm Cynon Industrial Estate

Location

• Mountain Ash is a well-established industrial location in the South Wales area, located 7 miles • The RCT borough is well-connected and recorded over 2 billion road traffic kilometres across north of Pontypridd, 19 miles north of Cardiff and 12 miles south of Merthyr Tydfil. the borough in 2018 (Source: Welsh Government). This was the second highest traffic count in Wales, second only to Cardiff, and demonstrates its excellent connectivity. • Mountain Ash is located within the county borough of Rhondda Cynon Taf (RCT) and through its connectivity allows occupiers to benefit from a skilled employment pool across the wider area of • The town is strategically situated immediately off the A470, 3 miles to the south east which is the Merthyr Tydfil, Ebbw Vale, Pontypridd and Caerphilly areas. main spine road providing strong logistics and commuter connectivity between Cardiff and the M4 Motorway to the Heads of the Valleys areas. • The RCT borough is bounded by a total of 7 other counties including Cardiff, Bridgend, Caerphilly and the Vale of Glamorgan, amongst others and is thereby well placed to access the majority of the dense urban areas across South Wales. LEOMINSTER

DRIVE TIMES SAT NAV CF45 4HL 60 MINS

30 MINS 746,321 2,178,714 BRECON M50 GLOUCESTER CHELTENHAM

people people MERTHYR TYDFIL SWANSEA NEATH CWM CNON 30 min drive timepodcast 60 min drive time INDUSTRIAL ESTATE SWINDON

M49 NEWPORT 32 BRISTOL Severn Bridge CARDIFF toll abolished BRISTOL CHANNEL BATH from 2018 Car WESTONSUPERMARE

(Source: CACI) 04 BRIDGWATERUPG Wales | Cwm Cynon Industrial Estate

Situation & Catchment areas YEOVIL

The A470 corridor is a highly regarded commercial location that is Persimmon Homes is nearing completion north of the property bounded by the M4 Motorway to the south and the A465 Heads on a new build 110-unit residential scheme, providing longer-term of the Valleys Road to the north. Mountain Ash is ideally situated to potential for residential redevelopment on the subject property site. access this major arterial road infrastructure and is just 3 miles away EXETER Nearby amenities across Mountain Ash and the Cynon Valley from the A470. The Heads of the Valleys road to the north is nearing include Iceland, Asda, Tesco, Lidl, Halfords, KFC, McDonalds, the end of a significant £800m upgrade scheme, which will further Brewers Fayre, Home Bargains and Premier Inn. Nearby Aberdare improve accessibility and journey times to the Midlands areas. has a bustling retail parade with a number of local and national Construction has also recently commenced opposite the property traders including Santander, Barclays, Principality Building Society, on the new Mountain Ash Cross Valley link bridge. This is a multi- Boots, Peacocks, Argos, New Look, Wilko, Greggs, Subway and million pound highways scheme that will see a road bridge built from Papa John’s, amongst others. Leisure and gym facilities within Cwm Cynon Industrial Estate to Miskin Road, providing a vital new the immediate proximity include the Abercynon Leisure Centre, link for traffic travelling between the A4059 and B4275. Completion Mountain Ash Golf Club and Whitehall Golf Club. is due in 2020. The new Mountain Ash Cross Valley link bridge 05 UPG Wales | Cwm Cynon Industrial Estate

Major South Wales Industrial Occupiers - North of the M4

A465 A40 A40 A465 A470 GTEKT CONTINENTAL TEVES LTD A465 TENNECO LTD SHARP CLINICAL SERVICES A40 DHL SUPPLY CHAIN A465 MERTHYR TYDFIL A4042 AMNITEC A48 SEKISUI ALVEO A449

AVON ENGINEERED RUBBER LTD IG DOORS LTD SHOWA UK LTD ABINGDON FLOORING LTD A465 A48 WILD WATER GROUP SAFESTYLE UK PLC CWM CNON SPM PLASTICS INDUSTRIAL ESTATE ROCIALLE BRITISH AIRWAYS HAWKER SIDDELY SWITCHGEAR A470 SEDA UK LTD SMURFIT KAPPA LTD A4042 CHEPSTOW A449 TRANCEND PACKAGING A466 SWANSEA DRIVE MEDICAL BEATUS CARTONS PONTYPRIDD M48B TECHNIGLASS UK WINDOW GROUP M48 A38 ECYCLE ROYAL MAIL PETERS FOOD BEARMACH ENSINGER LTD A470 CAERPHILLY NEWPORT PEACOCKS ROYAL MINT LTD GE AIRCRAFT ENGINE YODEL SERVICES LTD A38 ROCKWOOL LTD 30 M49 FAREVA 32 A432 A48 35 A470 34 33 A38

A4232 CARDIFF A4 M32 A4174

A4232 A369 A420 BRISTOL A370 A4 A370 A4174 A37

A38 A39 LEOMINSTER WORCESTER

SAT NAV BRECON M50 CF45 4HL

A470 GLOUCESTER CHELTENHAM A465 A465 MERTHYR TYDFIL SWANSEA NEATH 42 CWM CNON SWINDON INDUSTRIAL ESTATE A470 26 M49 NEWPORT 32 33 BRISTOL CARDIFF BRISTOL CHANNEL BATH WESTONSUPERMARE

BRIDGWATER 06 UPG Wales | Cwm Cynon Industrial Estate A303 Connectivity YEOVIL

South Wales and the Cardiff Capital Region is an area thriving on TrainRail ShipSea its rapid connectivity both domestically and internationally by • Mountain Ash has a well-connected regional station with A30 • SouthEXETER Wales also has significant shipping infrastructure. Associated road, rail, sea and air. CarRoad frequent connections to Cardiff Central Railway Station. British Ports have ports in Cardiff, Barry, Newport, Port Talbot and • Cardiff Central Station offers onward intercity services with Swansea which collectively handle more than 12 million tonnes of • Linked to major national road infrastructure via the A470 to journey times of 2 hours to London and Birmingham New cargo per annum. the M4 Motorway providing onward access to Cardiff city Street. In addition, Milford Haven is the 3rd largest port in the UK and has the centre and the other major South Wales cities of Newport • • Journey times will compress to just 1 hour 40 minutes to largest energy port, handling over 30 million tonnes of cargo per year. and Swansea. London following completion of electrification works by the • The A470 leading from Junction 32 of the M4, is the main end on 2019 which form part of the £5 billion South Wales Distance by road Train times from Cardiff arterial route from Cardiff to the South Wales Valleys areas Metro project. and the Heads of the Valleys (A465) road which has recently Cardiff 19 miles Bristol 50 mins • The project also includes replacement of the entire rail fleet, undergone £800m improvement works to create a new Newport 27 miles Birmingham 119 mins electrification of the Valleys lines and extended services. London 127 mins dual-carriageway, better connecting the Heads of the Valleys PlaneAir Swansea 34 miles areas to the Midlands. Bristol 57 miles Manchester 190 mins • The Severn Bridge tolls were also abolished in December • Cardiff International Airport is located 29 miles south of Birmingham 115 miles Journey times to London will 2018 which has boosted industrial occupier confidence in Mountain Ash and provides direct flights to an ever-expanding Reading 123 miles compress by circa 20 minutes the region. array of global destinations. London 164 miles following electrification. 07 UPG Wales | Cwm Cynon Industrial Estate

Description

• The property comprises a well specified, 2-bay, industrial warehouse of steel portal frame • The Tenant’s fit-out of the unit includes the installation of plastic injection moulding equipment construction with profile steel clad elevations beneath a pitched roof. The property was with automated capabilities. Fit-out also includes four gantry cranes comprising a 3, a 12 and two constructed in the mid 1990’s and comprises an open warehouse area with good minimum 16 tonne gantry cranes. In addition, the tenant has built two additional external storage units to eaves height of 7.43 metres, rising to 9.68 metres at the apex. house materials and goods inwards functions of approximately 2,776 and 8,327 sq ft each. • The unit has three dock levellers and one up and over door leading on to a large yard/circulation Both storage units each have a roller shutter door. area with plentiful car parking. The property is located within a securely fenced and gated • The larger storage unit was recently completed in July 2019 with a new concrete floor slab with boundary and is monitored via CCTV. good height of 5.6 metres to the minimum eaves, rising to 9.26 metres at the apex, and • The unit sits on a generous site of 5.53 acres (low site cover of 25.8%). The site benefits from all associated external groundworks to create loading areas. mains services including gas. • Externally, the Tenant has also installed a 30 tonne granular material silo. • The Tenant is fully committed to the location, are in full occupation and have heavily invested in updating its onsite equipment to expand its specialist capabilities and the fit-out of the unit to accommodate its occupation. 08 UPG Wales | Cwm Cynon Industrial Estate

EPC Tenancy Tenure

The building has an EPC rating of D(78). A copy of the report is The property is let to SPM Plastics Ltd (Reg No: 03933216) on Freehold. available upon request. two successive FRI leases with the existing lease commencing on 24th December 2011 and expiring on the 23rd December 2021 Accommodation at a rent of £170,000 (£2.74 psf). The Tenant has signed a 15 year reversionary lease to commence thereafter from the 24th December The unit comprises a total Gross Internal Area of 62,125 sq ft 2021 at a rent of £185,000 per annum (£2.98 psf), expiring on the (5,771.55 sq m). The property has been measured in accordance 23rd December 2036. The Vendor will top up the current rent to with the RICS Code of Measuring Practice. the initial reversionary lease rent of £185,000 per annum.

The additional storage areas are Tenant improvements and are The reversionary lease provides for a fixed rental uplift on the excluded from the GIA area. 24th December 2026 to £215,000 per annum (£3.46 psf). There is a subsequent open market rent review on the 24th December 2031.

There are Tenant only break options on the 24th December 2028 and 24th December 2031, subject to 6 months’ prior written notice. 09 UPG Wales | Cwm Cynon Industrial Estate

Covenant Profile

SPM Plastics Ltd forms part of United Plastics Group (UPG), who are one of the world’s leading single SPM Plastics were acquired by UPG in 2000 with its headquarters situated in Houston, Texas and source suppliers for high volume, precision plastic injection moulding, value-added assemblies and Mountain Ash forms part of a global supply chain with another sister-plant located in Suzhou, China. contract manufacturing. UPG provides a holistic service from initial concept design, prototyping, The Mountain Ash plant employs over 160 staff members and operates 24 hours, 5 days a week. tooling design to manufacture and supply. UPG itself was formed in 1954. The Group manufactures high-performance engineering resins with a particular focus on specialising UPG is a portfolio company of Turnspire Capital Partners LLC which invests in market-leading within the data centre, automotive, healthcare, energy and industrial sectors globally. UPG products industrial companies where they seek to add value through sustainable growth and a hands-on are sold to over 40 global blue chip companies and the organisation holds an order book from an operationally focussed approach, rather than simply through financial leverage. The expansion impressive list of international organisations including GE Healthcare, Bosch, IBM, Hewlett Packard, strategy forms two parts; firstly through organic growth and secondly via select acquisitions. Toyoda Gosei, and Schlumberger, amongst others. SPM Plastics Ltd (Reg No: 03933216) have a Dun & Bradstreet rating of 2A2 and Fame credit score of UPG’s Clients 95% ‘Secure’. The Tenant’s last 3 years published accounts highlight the following results:

Year ending 31st Year ending 31st Year ending 31st December 2018 December 2017 December 2016 £GBP £GBP £GBP

Turnover £10,933,000 £12,622,000 £11,839,000

Pre-tax Profit £443,000 £2,835,000 £836,000

Tangible Net Worth £1,706,000 £1,251,000 £268,000 10 UPG Wales | Cwm Cynon Industrial Estate

Investment Comparables

Capital Value Property Date Area Tenant WAULT Price Net Initial Yield Purchaser £ psf

Gwaelod y Garth Industrial Estate, October 2019 49,920 Multi-let 4.13 years £3,750,000 6.31% £75.12 Private Investor Cardiff

Booker Cash & September 2019 106,170 Giant Booker Ltd 5.75 years £8,540,000 7.10% £80.43 CCLA IM Carry, Cardiff

Reevesland South Somerset Industrial Estate, July 2019 74,923 Hasbro UK Ltd 4.5 years £2,780,000 6.98% £37.10 District Council Newport

London Road Industrial Estate, June 2019 45,977 Boots UK Ltd 3.2 years £2,080,000 7.25% £45.24 Private Investor Thetford

MGTS St Johns High Christopher Grey Dec 2017 61,569 Spear Group 7 years £3,655,000 7.37% £59.00 Income Property Court, Cwmbran Fund

Celtic Business Park, April 2017 48,157 Amazon 5 years £3,925,000 6.33% £82.00 Tilstone Investments Newport 11 UPG Wales | Cwm Cynon Industrial Estate

VAT

The property is elected for VAT and it is anticipated the transaction will be treated as a Transfer of a Going Concern (TOGC).

Investment Considerations

• The Tenant has been in occupation since practical completion of the unit, i.e. over circa • Well specified industrial warehouse comprising 62,125 sq ft. 23 years, and has invested heavily in the property in terms of expanding the unit, adapting • Situated within close proximity to the A470; the main spine road connecting the Heads of its fit out and updating specialist equipment. the Valleys area with the M4 Motorway and Cardiff. • Low rental tone of £2.98 psf, rising to £3.46 psf in 2026 and providing a Reversionary • The quoting price of £2,390,000 offers an attractive Net Initial Yield of 7.25% and a Yield of 8.70% at the quoting price, with strong prospects for further rental growth at the low capital value of £38 per sq ft which is under pinned by its vacant possession value subsequent review. through strong owner occupation demand. • Long term secure income stream with a WAULT of 17.23 to expiries (9.23 to break • This presents a rare opportunity to acquire a single-let unit to a global organisation with option) with the Tenant having compelling occupational ties through its significant guaranteed rental uplifts in a market characterised by pent up demand for industrial investment in the unit. investments and constrained by a lack of stock. • SPM Plastics forms part of a large international company, United Plastics Group, with additional facilities in the U.S and China. 12 UPG Wales | Cwm Cynon Industrial Estate

Proposal Further information

We are instructed to seek offers in excess of £2,390,000 (Two Million, Three Hundred and Ninety For further information or to arrange an inspection please contact: Thousand Pounds), reflecting a Net Initial Yield of 7.25%, after deducting standard purchaser’s costs of 6.90% and a low Capital Value of £38 per sq ft. Gareth Lloyd 029 2044 0141 The Net Initial Yield is based on the topped up income of £185,000 per annum. [email protected]

A purchase at this level reflects a Reversionary Yield of 8.42% following the fixed rental uplift in 2026. Elliot Evans Subject to Contract and Exclusive of VAT. 029 2044 0952 [email protected] www.knightfrank.com

Important Notice 1. Particulars: These particulars are not an offer or contract, nor part of one. You should not rely on statements by Knight Frank LLP in the particulars or by word of mouth or in writing ("information") as being factually accurate about the property, its condition or its value. Neither Knight Frank LLP nor any joint agent has any authority to make any representations about the property, and accordingly any information given is entirely without responsibility on the part of the agents, seller(s) or lessor(s). 2. Photos etc: The photographs show only certain parts of the property as they appeared at the time they were taken. Areas, measurements and distances given are approximate only. 3. Regulations etc: Any reference to alterations to, or use of, any part of the property does not mean that any necessary planning, building regulations or other consent has been obtained. None of the services or appliances have been tested and no warranty is given or is to be implied that they are in working order. A buyer or lessee must find out by inspection or in other ways that these matters have been properly dealt with and that all information is correct. 4. VAT: The VAT position relating to the property may change without notice. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members' names. October 2019 Brochure - October 2019 Photography - October 2019 K Designed and Produced by www.kubiakcreative.com 193809 10-19