Prime Reversionary East Midlands Logistics Investment Opportunity

Prime reversionary East Midlands logistics investment opportunity

PRIME REVERSIONARY EAST MIDLANDS 2 LOGISTICS INVESTMENT OPPORTUNITY

MacArthur Glen Normanton Brook Rd Berristow Ln Retail Outlet Village

Alloga

Alloga A38

Radius Systems Radius Systems

Alliance Healthcare

XPO Logistics

M1 South to M1 North to M1 Junction 28/A38 Junction 29

Investment Summary Location

• Prime distribution warehouse located within a strategic Amber Park occupies a strategic location just off and prominent location on Amber Park just off Junction Junction 28 of the M1 on the east side of the Motorway 28 of the M1 Motorway; at Sutton in Ashfield. • Modern distribution facility totalling 208,055 sq ft; The location benefits from excellent road communications as it lies at the intersection of the M1 motorway and the A38 • Let to Alloga UK Limited (Company Number: 03169255), trunk road. The A38 provides direct access westbound to who are the market leader in healthcare pre-wholesaling Derby, Burton on Trent, Birmingham and the South West; and benefit from an excellent covenant strength of 4A1 and Mansfield to the east. (D&B), indicating minimum risk of business failure; Amber Park is located sitting between the key centres of • Tenant has critical mass at South Normanton, occupying Nottingham 14 miles to the south, Derby 16 miles to the over 1m sq ft of accommodation across six buildings south west, and Sheffield 20 miles to the north. at Castlewood Business Park and Amber Park; East Midlands Airport is conveniently located 22 miles • Let on a new FRI lease from practical completion of the to the south, adjacent to Junction 24 of the M1 motorway. roof works (estimated July 2017), for a term of 10 years, The airport provides fights to more than 90 destinations with a tenant only break option on the fifth anniversary worldwide and handles more than 4.5 million passengers of the term (subject to a break penalty of £552,600); a year. East Midlands Airport is the UK’s busiest pure • Low initial contracted rent of £921,000 (£4.43 per sq ft); cargo airport and second only to Heathrow. It is the home to a number of leading freight operators including • Freehold investment; DHL, TNT, UPS and Royal Mail. • The subject property plays a central role for the tenant’s operations, providing office headquarters for the business, and provides a principal storage facility for their fulfilment process; • We are instructed to seek offers in excess of£14,380,000 subject to contract and exclusive of VAT, which reflects a net initial yield of 6.00% and a low capital value of £69 per sq ft. This assumes purchasers costs of 6.73%. 3

SHEFFIELDB6023 M1 Hilcote B6046 B6027

A619 Normanton Brook Rd Chesterfield Shirebrook J29 A1 A614 A38 Matlock A61 Mansfield A38 A617 Berristow Ln Alfreton J28 M1 A6 A38 A515 A60 J27 East Midlands A38 Designer Outlet Belper Hucknall A46 South J26 A52 DERBY Normanton NOTTINGHAM Castlewood J25 Business Park Beeston

A50 J24 J28 Barrow East B6019 upon Trent Midlands Airport J23a A46 A42 Loughborough M6 M1

SituationM42 J21

The property is prominently situatedM6 on9 Berristow Lane, the main arterial road through Amber Park, which forms one of Derbyshire’s key established industrial locations, along with the neighbouring Castlewood Business Park.

Access to Amber Park is provided from the A38 Mansfield M42 M6 Road, connecting with Junction 28 of the M1 J1Motorway9 within one mile to the south west. The MacArthur Glen East Midlands Designer outlet is located a short distance from the property on the junction of the B6046 and A38. The 140,000 sq ft 70 store scheme includes brands such as Nike, Adidas, Levis and M&S.

Destination Miles Km The situation of the property suits Alloga UK Limited well due to its excellent access to the UK motorway network Road via Junction 28 of the M1 Motorway, along with the quality M1 Motorway (J28) 0.9 1.5 of the available local employee skills. City Nearby industrial occupiers include Co-operative Food, Nottingham 14 22.5 Parker Knoll, Diversey and TDG. Derby 16 26 Sheffield 20 32 Birmingham 61 98 Air East Midlands Airport 22 35 ALLOGA UK LTD Amber Park 1 | Berristow Lane | South Normanton | DE55 2FH

PRIME REVERSIONARY EAST MIDLANDS 4 LOGISTICS INVESTMENT OPPORTUNITY

Description Site

The property is a 208,055 sq ft modern distribution The property occupies a site of approximately warehouse completed in 1997. 12.96 acres (5.24 ha) with a low site density of 37%. The warehouse is of steel portal frame construction, with profile steel clad elevations. There is a three storey office to the rear of the property. Accommodation The building benefits from the following specification: • 48 metre self-contained yard • 10 Dock level access loading doors The property has been measured on a Gross Internal Area basis in accordance with the RICS Property Measurement • 4 Level Access loading doors (1st edition), and provides the following approximate areas: • 11.8 metre eaves height • c.250 car parking spaces Description sq m sq ft • 20 trailer parking with 7 further HGV spaces The property has substantial tenant fit out, including a high Warehouse & Office 18,551 199,681 security vault and chilled areas, which are to be fully reinstated First Floor offices 389 4,187 at lease expiry. The property will also benefit from a new roof, which is currently under construction, and is due to complete Second floor offices 389 4,187 in July 2017. The new roof is being replaced due to the strict requirements of the tenant’s operations. Full construction Total 19,329 208,055 warranties will be made available to the purchaser.

48m

N 5

Tenure

The property is held on a freehold basis.

Tenancy

The property is currently let in its entirety to Alloga UK Limited (Company number: 03169255), who have been in occupation of the building since it was built in 1997.

Alloga UK Limited have entered into a new reversionary agreement for lease on full repairing and insuring terms for a term of 10 years from practical completion of the roof works (estimated July 2017). There is a tenant only break option on the fifth anniversary of the term, subject to 6 months notice, providing 5 years unexpired term certain to break. The tenant is obliged to pay a capital sum of £552,600 if the break option is exercised.

The new contracted rent is £921,000 per annum (£4.43 per sq ft). The rent benefits from an upwards only rent review on the 5th anniversary of the term. There is no rent free period at the commencement of the new lease. ALLOGA UK LTD Amber Park 1 | Berristow Lane | South Normanton | DE55 2FH

PRIME REVERSIONARY EAST MIDLANDS 6 LOGISTICS INVESTMENT OPPORTUNITY

Covenant

Alloga UK Limited (Company number: 03169255) (“Alloga THE PHARMACEUTICAL PRE-WHOLESALE MARKET UK”) is a pre-wholesaling and contract logistics company, with a client list including 20 of the 50 largest blue-chip The UK pharmaceuticals market is a highly regulated pharmaceutical companies in the UK, and is the market market, where the stock must be stored under licensed leader in healthcare pre-wholesaling within the UK. conditions. Furthermore, there are strict regulations that determine the temperature range, and security provisions Alloga UK is one of only three specialist pharma pre- that certain products must be stored at. Alloga UK is wholesalers in the UK, and has experienced significant a sophisticated and complex business operating a seamless growth over the last five years. Today, the company fulfilment chain of 6 buildings in South Normanton. employs 850 employees and has six warehouse facilities, all located in South Normanton, Derbyshire , from which Due to the sensitive nature of many of the products Alloga UK distributes globally. being handled, Alloga UK have made several investment commitments to the buildings they occupy and would The company is a member of Walgreens Boots Alliance, find it both expensive and technically difficult to which is the first global pharmacy-led, health and wellbeing simply move to a “standard” logistics unit. enterprise in the world, employing over 400,000 people across 25 countries, and is the largest retail pharmacy, health and daily living destination in the USA and Europe, and is: ALLOGA UK – ACCREDITATION • The global leader in pharmacy-led, health and wellbeing MHRA (Medicines and Healthcare products Regulatory retail with over 13,200 stores in 11 countries Agency) and Home Office-approved and GDP- compliant, Alloga UK’s extensive list of accreditations and licences • One of the largest global pharmaceutical wholesale and allows Alloga UK to offer a comprehensive service portfolio distribution networks with over 390 distribution centres designed to optimise client supply chains. The company is delivering to more than 230,000+ pharmacies, doctors, also ISO accredited for ISO 9001: 2008 Quality Management health centres and hospitals each year in 20 countries Systems, ISO 14001: 2004 Environmental Management Systems, and most recently ISO 22301: 2012 Societal • One of the world’s largest purchasers of prescription Security - Business Continuity. drugs and many other health and wellbeing products. Alloga UK have a Dun & Bradstreet rating of 4A1, indicating a minimum risk of business failure. The company has produced the following headline figures over the past 3 years demonstrating impressive and consistent sales growth:

31 Aug 15 30 Sep 14 30 Sep 13

Sales Turnover £59,496,000 £55,760,000 £50,018,000

Pre-Tax Profit £14,677,000 £14,269,000 £12,438,000

Tangible £19,240,000 £18,636,000 £22,551,000 Net Worth 7

Occupational Market Commentary

In the UK, overall, occupational demand for modern and well located logistics facilities remains strong. This is principally being driven by the response to changing consumer shopping patterns and the increased demand for new and expanding e-commerce and discount retailing platforms, as well as a resilience in UK manufacturing particularly in Automotive, Aviation and Pharmaceutical industries. The East Midlands as a whole continues to be one of the UK’s strongest performing logistics markets with high levels of take-up and historically low availability driving strong rental growth over the last three years. The following rental comparables below demonstrate rental levels in the immediate location, but wider East Midlands rents are now £6.25 - £6.50 per sq ft.

Address Tenant Size (sq ft) Rent (psf) Term Date Castlewood Business Park, South Normanton Alloga 219,954 £4.75 20 (15 TOB) Feb 2016 Castlewood Business Park, South Normanton Parker Knoll 99,201 £5.30 20 (15 TOB) Nov 2015 Investment Market Commentary

The property presents a modern, institutionally specified and prominently situated logistics unit, let to a strong tenant with good prospects for rental growth. The tenant is wedded to South Normanton as a location due to its proximity to the national motorway network, the robust local employment pool, and the five further warehouses which the tenant occupies in the immediate vicinity. The sector remains competitive for an opportunity of this calibre as set out below:

Size Passing Unexp Initial Date Address Term Tenant Price (sq ft) Rent (pa) (years) Yield 5100 Cross Point Business Park, £862,324 Jan 17 146,701 8 TNT £14,980,000 5.40% Coventry, CV2 2SZ £5.88 psf Wakefield Europort, Express Way, £572,660 Dec 16 119,997 6.25 One Stop £9,760,000 5.50% Normanton, WF6 2TZ £4.77 psf G2, Grange Park, Northampton £1,203,042 Yusen Dec 16 208,999 10 £20,500,000 5.50% NN3 2AY £5.76 psf Logistics Unit 1, Banbury Cross, Southam £1,222,104 The Dec 16 238,208 10 £21,300,000 5.37% Road, Banbury, OX16 2SN £5.13 psf Entertainer £868,634 Nov 16 Cosford Lane, Valley Park, Rugby 145,989 5 DHL £15,000,000 5.43% £5.95 psf Amber Park, South Normanton, £835,000 Alloga Nov 16 187,014 8 £13,600,000 5.75% Derbyshire, DE55 2DT £4.46 psf (UK) Ltd £1,041,250 Aug 16 Union Square, Trafford 175,000 10 Amazon £19,250,000 5.05% £5.95 psf £2,474,041 Aug 16 Kingston Park, Peterborough 549,787 8.7 Amazon £42,900,000 5.60% £4.50 psf £1,402,209 Aug 16 Trafford Park, Manchester 311,602 1.75 Kelloggs £23,500,000 5.90% £4.50 psf ALLOGA UK LTD Amber Park 1 | Berristow Lane | South Normanton | DE55 2FH

PRIME REVERSIONARY EAST MIDLANDS 8 LOGISTICS INVESTMENT OPPORTUNITY

VAT Website Access

The transaction will be considered as Details for this opportunity can be Proposal a Transfer of a Going Concern (TOGC). downloaded from www.kimmre.com/sales. We are instructed to seek offers in excess of £14,380,000, subject Energy Transaction to contract and exclusive of VAT, Performance Structure which reflects a net initial yield of 6.00% and a low capital value Certificate It is envisaged that, due to the ongoing works to the roof, the transaction will of £69 per sq ft. This assumes A copy of the Energy Performace be subject to a conditional exchange, purchasers costs of 6.73%. Certificate is available upon request. to be completed on commencement of the new lease.

Contact Details

DISCLAIMER For further information, or to arrange an inspection of the property, Kimmeridge Real Estate Ltd on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: 1. The particulars are produced in good faith, but are please contact either: a general guide only and do not constitute any part of a contract. 2. No person in the employment of the agent(s) has any authority to make or give any representation or Matthew McGrail MRICS Mike Needham MRICS warranty whatsoever in relation to this property. 3. The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. 4. Nothing e: [email protected] e: [email protected] in these particulars should be deemed a statement that the property is in good condition, or that any services or facilities are in working order. 5. Unless otherwise stated, t: +44 (0) 20 7952 6102 t: +44 (0) 20 7952 6295 no investigations have been made regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations m: +44 (0) 7870 555725 m: +44 (0) 7903 136 242 if required. Publication Date: March 2017. carve-design.co.uk 12813