ENERGY-FROM-WASTE SECURE LONG INCOME FACILITY INVESTMENT OPPORTUNITY WITH ANNUAL UNCAPPED WILTON INTERNATIONAL I TEESSIDE I TS6 8JB RPI RENT REVIEWS 1 Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB Investment Summary
• Opportunity to acquire a site containing a state of the art energy-from-waste facility operational since 2016 offering a secure inflation linked income stream • Located on the Wilton International site on Teesside, one of the largest key manufacturing locations in the UK at circa 2,000 acres and home to a number of international companies • Situated on the northern border of the site, the subject property occupies a site of 17.68 acres (7.15 hectares) • Let to Sembcorp Utilities (UK) Ltd (Man. Co.) for a term of 60 years from 23rd December 2013, providing 54.5 years to expiry. There is a tenant break on 22nd December 2043 (24.5 years unexpired term certain) • The site is sub-let to Merseyside Energy Recovery Ltd (Op. Co.) on co-terminous terms • Underlying waste management contract with Merseyside Recycling & Waste Authority with a minimum of 24 years remaining • Merseyside Energy Recovery Ltd is owned by SUEZ Recycling and Recovery UK, Sembcorp Utilities UK and I-Environment Investments Ltd a subsidiary of Itochu Corporation • The current passing rent is £642,025 per annum, which is subject to annual RPI linked rent reviews • New long leasehold interest of 250 years at a peppercorn rent
We are seeking offers in excess of £11,460,000 (Eleven Million Four Hundred and Sixty Thousand Pounds) subject to contract and exclusive of VAT. A purchase at this level would reflect a Net Initial Yield of 5.25% assuming actual purchasers costs of 6.70%. Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB
2 A69 A69 NEWCASTLE UPON TYNE Haltwhistle NORTH SEA Location SUNDERLAND
A1(M) Alston The Wilton International site is located on Teesside, a A19 conurbation surrounding Middlesbrough and the River Tees Stanhope A167 in North East England, which includes Billingham, Redcar, 60 ENERGY-FROM- A689 WASTE FACILITY Stockton-on-Tees and Thornaby. Teesside is one of the UK’s M6 DURHAM major exporting regions and is home to a large number of A66 A688 59 A66 technologically intensive activities, scientific development A1(M) A66 A174 57 MIDDLESBOROUGH A171 A66 and service providers. DARLINGTON A19 A685 A172 Teesport is located 2 miles north of the facility. It is a major Richmond Gothland deep sea complex and a national hub for trade, handling Hawes SCARBOROUGH 28 million tonnes of freight per year. The port supports the A19 A1(M) movement of international imports and exports throughout Masham A170 A170 M6 the north of the UK. 50 A64 A687 A65 Grassington A61 A19 HARROGATE A166 A65 A59 A59 Situation YORK A164
The subject facility is located on the northern border within A19 A689 the Wilton International site, occupying plot W11, a site of 17.68 A689 Greatham NORTH SEA acres (7.15 hectares). The facility is easily accessed from the Wolviston A174, which links directly to the A19. The A19 dual carriageway A19 provides direct access to Newcastle upon Tyne in the north Billingham and York in the south, the A66 dual carriageway provides A1042 direct access to the A1(M) linking Middlesbrough to the national RIVER TEES TRUNK RD Kirkleatham A1085 motorway network. ENERGY-FROM- WASTE FACILITY A174 A19 A66 A66 Lazenby Stockton-on-Tees Durham Tees Valley Airport (Formerly Teesside A1053 A174 International Airport) lies 20 miles to the west offering flights Dunsdale to over 200 destinations across the UK and worldwide. MIDDLESBOROUGH A66 A174 Darlington Train Station is located 25 miles to the west A172 Ormesby which provides a shortest journey time of 2 hours 30 mins A19 to London Kings Cross. A174 A171 Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB
3 ENERGY-FROM- WEST NIPPON BIFFA REDCAR BULK EAST GATE GAS POLYMERS TERMINAL SABIC GATE SEMBCORP WASTE FACILITY SIRIUS ENSUS UTILITIES UK LTD TEESPORT HUNTSMAN LOTTE MINERALS
SOUTH WILTON SOUTH EAST A1053 A174 GATE CENTRE GATE 4 Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB Wilton International
BACKGROUND Wilton International is one of the UK’s leading manufacturing sites. At almost 2,000 acres, the site in North East England is one of the largest industrial locations in the UK. High quality products made at Wilton are of national importance and generates hundreds of millions of pounds in export revenues for the UK economy each year. Due to substantial historic investment in on- site utilities infrastructure Wilton is able to offer manufacturing and industrial occupiers some of the lowest cost power and heat in the UK. An increasingly green multi-company manufacturing site, Wilton boasts a number of major international companies such as: Sembcorp Utilities UK, SABIC UK Petrochemicals, Huntsman Polyurethanes, Lotte Chemical UK, CropEnergies Ensus, Nippon Gas, Biffa Polymers, Sirius Minerals and UK Wood Recycling. Over the years, these companies have invested over £2 billion in moving to and expanding their operations in the area. The region contributes more than £10 billion to the national economy every year. The Tees Valley is also a major centre for the offshore wind supply chain and home to a nationally important logistics hub to support international trade moving goods in and out of the UK. Wilton International is a leader in sustainable power production featuring biomass and energy from waste assets as well as bioethanol for greener road fuel. 5 Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB Site W11, Energy-from-Waste Facility
Click here for a link to a video about the site. HISTORY In 2013, Merseyside Recycling & Waste Authority (MRWA) awarded its £1billion, 30-year Resource and Recovery Contract for the Merseyside and Halton Councils to a consortium led by SUEZ UK to divert waste away from landfill and convert it into energy.
The contract provides services and facilities to MRWA on behalf of the Metropolitan Boroughs of Liverpool, Knowsley, St Helens, Sefton and Wirral, as well as the Unitary Authority of Halton Borough Council which, between them, serve a population of approximately 1.5 million.
Notice to proceed was granted in December 2013 for the £250 million energy-from-waste facility and it was completed and fully operational by the end of 2016. The construction activities were managed by joint venture company CNIM Clugston Wilton Ltd. 6 Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB
PROCESS Residual household waste minus elements capable of being recycled are brought to Teesside from a purpose rail The EfW Process hub and rail loading waste transfer station at the existing (Direct Combustion) Potter Group Rail Freight Terminal at Kirkby in Knowsley on Merseyside. The waste containers that arrive by train are placed onto a tilter that discharges the waste into the reception pit. Waste is then mixed by the grab cranes and loaded into a combustion unit and boiler.
The combustion unit and boiler walls have inset water pipes, this water when heated turns to steam which drives the turbine creating heat & electricity. Steam is also piped direct to other local Wilton International locations.
The process generates flue gases and fly ash, which go through a filtering and air quality control system. The fly ash is taken to a specialised landfill site with the bottom ash used in the construction industry as road aggregate. The air quality control system tests the gases before they are released and the ‘smoke’ produced is almost entirely clean water vapour.
Wilton has the capacity to process more than 430,000 BOTTOM ASH B.A. PRE TREATMENT WATER TANK - FIRE PROCESSING PLANT STORAGE SPRINKLER SYSTEM tonnes of waste per year, diverting more than 92% of INCINERATOR residual waste from landfill. The energy that it produces BUILDING reduces the consumption of fossil fuels offsetting around 127,000 tonnes of CO2 emissions a year. It generates B.A. BELT steam for surrounding industries and 49 MW of electricity CONVEYOR a year, enough to power around 63,000 homes. COOLING TOWERS WASTE RECEPTION
TURBINE EMISSIONS HALL CHIMNEY TREATMENT BOILER HALL 7 Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB
THE RESULTS Operational Trading Summary The facility makes a major contribution to the Merseyside Energy Recovery Ltd (MERL) is the In the management accounts above it is worth power needs of local manufacturing. About operating company for the site. The highly cash noting the following: half of the steam generated is used by the generative process creates impressive revenue businesses on Wilton International site. Unitary Income – This refers to gate fees streams underpinned by the waste contract Providing energy as steam as well as electricity received from Merseyside local authorities for with MWRA and the utility offtake agreement is more efficient, which means that more the waste received and processed at the site. with Sembcorp. MERL has been structured as energy from the waste is used productively. IFRIC 12 Revenue Allocation – This is an a project financed entity with substantial loans The rest of the steam is used in a turbine to accounting entry and is a non-cash item. in place which funded the project, with the site generate electricity, which can be distributed rent liability sitting at the top of the payment Electricity Revenues – These are revenues to businesses on Wilton International site or fed waterfall hierarchy ahead of servicing debt. received by MERL as a result of selling power into the National Grid. generated to Sembcorp Utilities (UK) Ltd under Profit and Loss Forecast - ending 31st the Power Purchase Agreement (PPA) that The household waste diverted from landfill March 2019 is in place. is being put to good use – powering the local economy and avoiding more than 127,000 £’000 Final Position Other Income – This is primarily the recharge 2018/19 tonnes of carbon emissions each year, of costs incurred and is allowable under the Unitary Income 45,513 compared with landfilling. This steam and MERL contract. IFRIC 12 Revenue allocation (33,215) electric power is a valuable resource as well as O+M – The operations and maintenance Electricity Revenues 9,859 a sustainable energy substitute for fossil fuel. contractor for the plant is Suez UK. Other Income 4,261 Construction Margin 119 Concession Interest Income 19,077 45,614 Direct Costs O&M Charges (15,797) Total Direct Costs (15,797) General and Admin Fees (182) Insurance (1,481) Lifecycle costs (6,598) Amortisation Intangible Asset (1,495) Other G&A Costs (4,036) Total G&A (13,792) Profit before Interest and Tax 16,025 8 Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB Tenure Tenant Covenants
A new long leasehold interest will The occupational lease is to Sembcorp Utilities (UK) Limited (as tenant) for a term SEMBCORP UTILITIES (UK) LTD be created between Sembcorp expiring 22nd December 2073 (providing circa 54.5 years to expiry), subject to a tenant Sembcorp Utilities (UK) Ltd are part of the Singapore-based Sembcorp Utilities (UK) Ltd and the only break option on 22nd December 2043 (providing circa 24.5 years to break). We set Industries Group. Sembcorp Industries is a leading energy, marine and purchaser for a term of 250 out the principal terms of the lease as follows: urban development group, operating across multiple markets worldwide. years at a peppercorn rent. Demise Plot 11, Wilton International Sembcorp Industries has total assets of over S$23 billion and over 7,000 Sembcorp Utilities (UK) Limited Tenant employees. Listed on the main board of the Singapore Exchange, it is Term A new term from the investment sale to run co-terminously with a component stock of the Straits Times Index, several MSCI and FTSE sub-tenancy term to break indices, as well as the SGX Sustainability Leaders Index and the Dow Tenure Structure Current Rent £642,025 per annum Jones Sustainability Asia Pacific Index. Break Clause The Tenant may determine the lease on the 30th anniversary of the term Sembcorp Utilities commencement and each subsequent anniversary of that date by serving Sembcorp Utilities (UK) Ltd generates and supplies energy to major not less than 12 calender months prior written notice (UK) Limited industrial firms at the Wilton International manufacturing site on Teesside. (FH) Rent Review Uncapped RPI linked reviews on 1st January each year They deliver secure and reliable supplies of electrical power, steam, Liability The Tenant will be liable to pay the Purchaser any and all principal rent water and other services to customers. They are responsible for the received from the Sub-Tenant but will not guarantee any payments management of the site and will also retain the Freehold interest. Purchaser (250 year LLH) MERSEYSIDE ENERGY RECOVERY LTD Sub-Tenant Merseyside Energy Recovery The sub-tenancy is to Sita Sembcorp UK Limited (renamed as Merseyside Energy Limited is the operational Recovery Ltd) for a term expiring 22nd December 2073 (providing circa 54.5 years to company responsible for I-Enviorment Sembcorp Utilities Investment expiry), subject to a tenant only break option on 22nd December 2043 (providing circa operating the site. They were (UK) Limited 24.5 years to break). We set out the principal terms of the lease as follows: appointed by Merseyside 20% (Tenant) Recycling and Waste Authority Demise Plot 11, Wilton International (MRWA) to divert this waste Tenant Sita Sembcorp UK Limited (company renamed Merseyside MERSEYSIDE 40% from landfill. ENERGY Energy Recovery Ltd) RECOVERY Merseyside Energy LTD Term 60 years from 23rd December 2013 The consortium consists of three Recovery Ltd (MERL) Current Rent £642,025 per annum companies – SUEZ Recycling (Sub-Tenant) 40% Break Clause The Tenant may determine the lease on the 30th anniversary of the term and Recovery UK, Sembcorp commencement and each subsequent anniversary of that date by serving Utilities UK and I-Environment not less than 12 calender months prior written notice Investments Ltd, a subsidiary Rent Review Uncapped RPI linked reviews on 1st January each year of Itochu Corporation. 9 Energy-from-Waste Facility WILTON INTERNATIONAL I TEESSIDE I TS6 8JB Data Room Contacts
Access to a secure data room is available upon For further information please contact: request under NDA. Charles Fletcher +44 (0) 20 7861 1450 +44 (0) 7838 575 063 VAT [email protected]
The property will be elected for VAT. David Goatman +44 20 7861 5109 +44 7825 120 534 [email protected] Proposal Kristian Otto +44 (0)20 7861 1677 We are seeking offers in excess of £11,460,000 (Eleven Million Four Hundred and Sixty +44 (0) 7773 258 932 Thousand Pounds) subject to contract and [email protected] exclusive of VAT. A purchase at this level would reflect a Net Initial Yield of 5.25% assuming actual purchasers costs of 6.70%.
KnightFrank.co.uk 55 BAKER STREET LONDON W1U 8AN
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. June 2019. carve-design.co.uk 14189