MULTI-LET MODERN OFFICE INVESTMENT WITH A STRONG COVENANT PROFILE, STRATEGICALLY LOCATED ON BUSINESS PARK

FOR SALE SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA EXECUTIVE SUMMARY

• Modern office building extending to 20,280 sq ft with a generous parking provision on an attractive riverside plot. • Multi-let to a strong tenant mix including G4S Secure Solutions and Washington Inventory Service Ltd. • WAULT of 5.15 years to lease expiry and 1.75 to break, providing excellent asset management potential through lease restructure. • Newly refurbished common parts with potential alternate use value through residential conversion • Rental income totalling £257,415 per annum. • Seeking offers in the region of £2.315M equating to a NIY of 10.5%, after deduction for standard purchasers costs of 5.8%.

SCOTSWOOD HOUSE TEESDALE SOUTH SOUTH BUSINESS BUSINESS PARK PARK THORNABY PLACE, STOCKTONSTOCKTON-ON-TEES ON TEES TS17 6SA LOCATION

Stockton-on-Tees is situated approximately 250 miles north of The town has an urbanB1275 area population of circa 85,000 people and a wider district London, 58 miles north of Leeds and 35 miles south of Newcastle population of approximately 190,000 people, with an estimated 350,000 living upon Tyne. The town is positioned at the intersection of the A19 within 6 miles of the town centre. and A66 Trunk Road, which provide easy access to the A1 (M), approximately 15 miles to the west. Travelling via the A19, it is Immediate access to the National Rail Network is provided by Thornaby Station, Scotland A106 possible to connect to Leeds, York, Durham and Newcastle within which is approximately two to three minutes’ walk from the Teesdale Business Park one hour’s drive time. and provides connections to Darlington and the East Coast Main Line. Glasgow Edinburgh In turn this provides direct services to London’s Kings Cross (2hours travel time) Stockton-on-Tees is an important sub-regional centre and is a major and Edinburgh (2 hours travel time). A17 focus for retail and leisure activity in the area. It is also an astutely Newcastle Riverside Park Rd Sunderland located commercial centre within both the immediate urban Carlisle Middlesbrough conurbation and the wider region of the North East of England.

ASHINGTON Leeds MORPETH Manchester Liverpool A106 A1(M) Nottingham A696 Newcastle Birmingham North Rd Airport A17 A68 Middlesrouh A19 TYNEMOUTH England Wales T e Port of Tyne e A66 s Hartington Rd Cardiff London A69 SOUTH B NEWCASTLE Bristol r SHIELDS id HEHAM UPON TYNE g e A A68 GATESHEAD 65 A19 SUNDERLAND A1 p pr North oa ch A1(M)63 Rd MIDDLESBROUH Newport Rd B651 CHESTER-LE-STREET SEAHAM A1032 Borough Rd A690 A1

DURHAM 62 Heywood St A167 A181 A1305 Uniersity A689 A106 A690 61 HARTLEPOOL B651

60 A688 A689 A66 Teesport B1272 A1305 A68 B1032 Alert Par 59STOCKTON A688 ueens 58 MIDDLESBROUGH Stockton Rd DARLINGTON Caus A172 B651 A66 A66 A171 West Lane 57 STOCKTON Hosital A66 56 Durham Tees Princeton Dr TEESDALE SOUTH Valley Airport Thornay A66 SCOTCH CORNER A19 BUSINESS PARK A1130 A1(M) B1032 A135 Teesside TS17 6SA Shoin Par

A684 A1 South

TEESDALE SOUTHA1130 BUSINESS PARK

SCOTSWOOD HOUSE A19 TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA SITUATION REGIONAL ECONOMY

Teesdale Business Park is situated to the southeast of Stockton town centre within the curve There is significant development taking place in Stockton-on-Tees and the surrounding area. of the River Tees and extends to over 700,000 sq ft of office, education, leisure and residential Directly east of Teesdale Business Park, a scheme is underway to bring 117 new homes to the city centre. space. It is estimated that 4,500 people are employed on the park and it is widely recognised as Working in partnership with the Stockton Borough Council and the Homes and Community Agency, the commercial heart of Teesside in addition to being one of the major business centres in the Housing is engaging with the local community to provide skills, employment and education north east. Major occupiers on the park include Inland Revenue, Santander, DVLA, Swift Insurance, opportunities to stimulate the on-going development of a sustainable and vibrant community in the area. Barclaycard, Siemens, Atkins, the Royal Bank of Scotland, First Choice Holidays plc., Cummins Ltd, Halcrow Group, Serco, Allied Bank and Bond Dickinson solicitors. Additionally, on the northern bank of the River Tees, Dunelm Homes have planning consent to develop 60 houses and 114 riverside apartments, increasing critical mass and adding further vibrancy to the ’s Queens Campus and Woolfson Research Institute are located on the estate, location. Such types of development are transforming the town centre with new and exciting places alongside Stockton Riverside College, creating demand for retail and leisure use alongside for people to live in the heart of Stockton, whilst expanding on the local talent pool for the surrounding residential accommodation, the conversion potential for which underpins capital values across business parks. Teesdale Park. On the opposite side of the River Tees on North Shore, Muse Developments in conjunction with Stockton Teesdale South is located at the south eastern edge of Teesdale Business Park, benefitting from Borough Council are currently developing a £300M mixed use scheme including commercial and an attractive vantage point over the River Tees and immediate access from the A66 and A130. residential accommodation. GVA are involved in advising Muse and we are aware that the scheme is A short walk north of the subject property leads to Stockton town centre which provides nearby targeting rents of £17 - £18 per sq ft for Grade A office space on a pre-let basis. The first office building amenities including a café, gymnasium and supermarket. extending to an area of 43,000 sq ft, has been pre-sold to Thirteen Group Housing Association for a price exceeding £165 per sq ft, with the ‘Fusion Hive’, a new innovation centre, also nearing completion.

Portrack Lane, a vibrant and popular business hub just northeast of the subject property, has a further 33 acres identified for expansion on the estate, adjacent to the A19 truck Road. Planning consent for a mix of B1, B2/B8 and A3 development totalling 240,000 sq ft has recently been granted.

SCOTSWOOD HOUSE

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA ROYAL MAIL ADMIRAL HOUSE NORTH SHORE DEVELOPMENT CUBIC STOCKTON TOWN CENTRE SANTANDER RBS

WHS ATKINS GLOBAL TEESDALE BUSINESS PARK

CASTLEGATE HM REVENUE & ALLIED BANK SHOPPING CENTRE CUSTOMS SAINSBURYS

DURHAM UNIVERSITY GROSVENOR CASINO MECCA BINGO

BRIDGE ROAD RETAIL PARK RIALTO COURT STUDENT RESIDENTIAL SCHEME TOWER HOUSE A1305

New residential development with consent for 174 dwellings

To A19 North & South

To A1 North & South A66

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA DESCRIPTION

Scotswood House comprises a modern office building of steel frame construction, with brick block walls and a pitched, hipped roof with tile covering.

The internal accommodation of the property is set out to provide a highly flexible cellular and open plan office arranged over ground and three upper floors around a central core, with suspended ceilings and modern recessed lighting. Heating is via perimeter radiators, with individual suites benefitting from tenant’s own air conditioning installation. Vertical access is via a passenger lift and stair to all floors, with fully refurbished common parts.

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA ACCOMMODATION

The property provides the following net internal areas:

Areas (NIA) Floor sq m sq ft

Ground 464.5 5,000

First 463.20 4,986

Second 491.81 5,294

Third 464.5 5,000

Total 1884.01 20,280

Scotswood House

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA TENANCY The property is subject to the following occupational leases:-

Tenant Location Size sq ft Term (years) Commencement Break Review End Rent Notes

Plimsoll Publishing Ltd Whole Ground 5,000 10 17/12/2011 16/12/2016 17/12/2016 16/12/2021 £76,500

Sayu Ltd Part First 2,669 5 01/10/2012 N/A 01/10/2017 30/09/2017 £35,200

Tenant receives 3 months’ rent free Tindles LLP Part First 2,317 9 11/06/2011 10/06/2017 11/06/2017 10/06/2020 £30,225 if break not exercised Scotswood House Scotswood

Washington Inventory Service Ltd Part Second 1,200 10 01/12/2011 30/11/2016 01/06/2016 30/11/2021 £13,200

Meeting Room Part Second 300 Communal meeting room for tenant use

Plimsol Publishing Ltd Part Second 1,394 10 24/03/2011 16/12/2016 16/12/2016 16/12/2021 £17,500

Rent is £13,145 until 20/3/16 Support IT (UK) Ltd Part Second 2,400 10 20/03/2015 20/03/2020 19/03/2025 30/06/2025 £26,290 Vendor to top up

G4S Secure Solutions (UK) Ltd Whole Third Plus Attic 5,000 5 01/09/2015 01/09/2018 01/09/2019 31/08/2020 £58,500 Third consecutive lease on this estate

20,280 £257,415

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA COVENANT

Plimsoll Publishing Ltd – A specialist in the field of Washington Inventory Service Ltd – A leading global Tenant Location Size sq ft Term (years) Commencement Break Review End Rent Notes company and industry financial analysis, providing analysis inventory and data collection services company providing of businesses, competitors and market performance, physical inventory counting, merchandising and space Plimsoll Publishing Ltd Whole Ground 5,000 10 17/12/2011 16/12/2016 17/12/2016 16/12/2021 £76,500 exposing key trends and developments. optimization services to the majority of leading retailers worldwide. Sayu Ltd – A digital marketing agency providing a wide Sayu Ltd Part First 2,669 5 01/10/2012 N/A 01/10/2017 30/09/2017 £35,200 range of services including digital marketing campaigns, Support IT Ltd – Microsoft and Apple Certified Technicians technology solutions and web development projects to providing contract IT support for office networks as well as Tenant receives 3 months’ rent free Tindles LLP Part First 2,317 9 11/06/2011 10/06/2017 11/06/2017 10/06/2020 £30,225 if break not exercised thousands of businesses and website owners. consultancy on an individual basis. Tindles LLP – A firm of Chartered Accountants supporting G4S Secure Solutions Ltd – A leading global integrated Washington Inventory Service Ltd Part Second 1,200 10 01/12/2011 30/11/2016 01/06/2016 30/11/2021 £13,200 SME owner-managed businesses throughout the North security company providing integrated security services East and UK operating in a variety of sectors, with client and products, cash management solutions as well as care

Meeting Room Part Second 300 Communal meeting room for tenant use turnovers ranging from £25,000 to £40 million. and criminal justice sector services to a wide and diverse range of organizational bodies across 110 countries.

Plimsol Publishing Ltd Part Second 1,394 10 24/03/2011 16/12/2016 16/12/2016 16/12/2021 £17,500

We have detailed financial information for each tenant in the table below:- Rent is £13,145 until 20/3/16 Support IT (UK) Ltd Part Second 2,400 10 20/03/2015 20/03/2020 19/03/2025 30/06/2025 £26,290 Vendor to top up Shareholder’s Name Year End Turnover PTP Funds Creditsafe Rating G4S Secure Solutions (UK) Ltd Whole Third Plus Attic 5,000 5 01/09/2015 01/09/2018 01/09/2019 31/08/2020 £58,500 Third consecutive lease on this estate Plimsoll Publishing Ltd 31/12/2014 - - £752,571 75 (A) Very Low Risk 20,280 £257,415 Sayu Ltd 31/03/2015 - - £159,473 95 (A) Very Low Risk

Tindle’s LLP 31/03/2015 - - £112,666 73 (A) Very Low Risk

Washington Inventory Service Ltd 31/03/2015 £5.67M £143,371 £30,792 64 (B) Low Risk

Support IT (UK) Ltd 31/07/2014 - - £257,606 66 (B) Low Risk

G4S Secure Solutions (UK) Ltd 31/12/2014 £223.99M (£2.59M) £40.82M 55 (B) Low Risk

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA MARKET COMMENTARY

The regional office sector is currently benefiting from a trio of positive factors:

- Occupier demand is improving and corporate requirements are once again - Permitted Development Rights allowing conversion from B1 offices use to C3 focussing on the North East / Teesside region, due to low labour costs and sought dwelling houses has taken a significant proportion of low grade to good quality after skillsets (predominantly engineering, IT, sciences and chemical processing). secondary stock out of the market for good, placing further pressure on the already dwindling availability. Teesdale Business Park is host to Durham University’s - The recession saw all speculative development curtailed in the Teesside region. Stockton Campus and Stockton Riverside Collage, making it an ideal location for This has led to a shortage of good quality accommodation, which is now driving this activity and a number of conversion schemes have already completed. rental growth. Construction costs and land values have continued to rise and therefore speculative schemes are still unable to generate attractive appraisal outcomes, meaning that this shortage is likely to remain for some time.

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA COMPARABLE EVIDENCE – LETTINGS

Rents on Teesdale Business Park peaked in 2007, when they reached rates of £17.50 per sq ft for the smaller new build space of up to 5,000 sq ft, with £14.50 per sq ft generally accepted as the rental tone at the time. We are aware that some modern stock on the estate is currently let at rents of £18.30 per sq ft, rising to £20.00 per sq ft.

We have detailed rental evidence in the table below which we feel is broadly comparable to the subject property:-

Achieved Rent Property Size Comments (per sq ft)

New 3 year lease to MT Tower House, 1,547 sq ft £11.63 Training Solutions Ltd from Teesdale South January 2016.

Redheugh House, Let to For M Drywall on a new 1,115 sq ft £11.76 Teesdale South 3 year lease.

Let to DTA Consulting Tower House, 1,546 sq ft £11.65 Engineers for 5 years from July Teesdale South 2015 – no rent free granted.

Fully let to Johnson Matthey Progress House, 14,150 £11.6. PLC for a term of 10 years from Teesdale Business Park sq ft Feb 2015.

Cedar House, 1,500 Let to Sanlam Life & Pensions £13.42 Teesdale Business Park sq ft UK Ltd on a new 5 year lease.

Tower House, 3 year lease to MT Training 1,157 sq ft £12.00 Teesdale South Solutions.

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA INVESTMENT COMPARABLE EVIDENCE

The regional office market in the North East has experienced strong momentum in the last 18-24 months due to improving market sentiment, large corporate lettings, as well as low vacancy rates against a backdrop of new rental benchmarks.

We are aware of the following recent comparable transactions which provide an overview of the North East market:-

Price Date & Property Description Lease Terms Comments NIY

Royal Mail Building, Doxford 36,350sq.ft office building Let to Royal Mail Group plc. for 10 £4.15M 1.8 years term certain. The tenant benefits International Business Park, constructed in mid 1990s over years from Nov 2012 at £390,000 pa, 8.88% from 9 months incentive if they do not break. Sunderland 3 floors. with tenant break option in Nov 2017. Feb 2016

15,964 sq ft office on Teesdale Fully let to NHS Property Services £1.55M Purchaser offered £1.6M (9.42%), however Teesdale House, Business Park, located centrally Limited with 3 years unexpired term 9.72% this was reduced by £50k to reflect vendors Teesdale Business Park on the estate. certain. June 2015 proposed timescales to completion.

98,268 sq ft multi-let office on 62% let to tenants including Secretary £4.75M Dunedin House, Significant capex required throughout the same estate as the subject, of State for the Environment, Atkins 8.54% triple net Teesdale Business Park common parts and office suites. constructed 1991. and RBS. August 2014

Mid 1990’s office building on 25 years to Environment Agency from Tyneside House, established business park £4.135M Located on eastern edge of late 1980’s early June 1995 at £350,000 pa (£12 per Skinnerburn Road, extending to 26,580 sq ft with 8% 1990’s city centre business park. Government sq ft) with 5 yearly OM rent reviews Newcastle Business Park garage store of 6,553 and 195 June2014 Tenant. Asking price was £3.675M. (6.25 years UT). CPS. Freehold.

SCOTSWOOD HOUSE TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA INVESTMENT CONSIDERATIONS VAT

We feel the following points are of significant relevance when assessing the The property has been elected for VAT and it investment:- is envisaged that the transaction will be treated • Prominent office investment strategically located on the best commercial as a TOGC. estate in Teesside. • Excellent transport provisions and in close proximity to a well-educated workforce pool and university campuses. EPC • Strong tenant mix including multi-national and blue chip occupiers, with EPC available on request. value add opportunities through lease restructuring. • Rental growth prospects with a number of approaching leases affording SERVICE CHARGE prospects for near term income development. The estate operates a service charge covering maintenance of common parts, building services and landscaping at a rate of £2.45 per sq ft, fully recoverable from tenants.

FURTHER INFORMATION

PROPOSAL We have been instructed to seek offers in the region of £2.315M (Two Million Three Hundred and Fifteen Thousand Pounds) subject to contract and exclusive of VAT. A purchase at this Luke Symonds Direct Dial: 0191 269 0095 level reflects anet initial yield of 10.5%, after a deduction for Email: [email protected] standard purchaser’s costs of 5.8%. Simon Beanland Direct Dial: 0191 269 0512 SCOTSWOOD HOUSE Email: [email protected] TEESDALE SOUTH BUSINESS PARK THORNABY PLACE, STOCKTON-ON-TEES TS17 6SA Lynsey Underwood Direct Dial: 0191 269 0093 GVA Grimley Limited Conditions under which Particulars are issued GVA Grimley Limited for themselves, for any joint agents and for the vendors or lessors of this property whose agents they are, give notice that: 1.) The particulars are set out as a general outline only for the guidance of intending purchases or lessors and do not constitute, nor constitute part of, an offer or contract. 2.) All descriptions, dimensions, references to condition and necessary permission for use and occupation, and other details, are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them as statements or representations of fact but satisfy themselves by Email: [email protected] inspection or otherwise as to the correctness of each of them. 3.) No person in the employment of GVA Grimley Limited or any joint agents has any authority to make or give any representation or warranty whatever in relation to this property. 4.) All rentals and prices are quoted exclusive of VAT. Reproduced by courtesy of the Controller of HMSO. Crown Copyright reserved. Licence No 774359. If applicable, with consent of Chas E Goad, Cartographers, Old Hatfield, Geographers A-Z Map Co Ltd and/or The Automobile Association. For identification purposes only. February 2016.

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