INVESTMENT OPPORTUNITY Tyne River House TheFOR Watermark, , SALE NE11 9SZ

High Yielding Single Let Office Investment INVESTMENT SUMMARY

• Located on The Watermark Business Park, Gateshead’s • Freehold premier out of town office location. • Tenant has committed circa £2.35 million to the building through an • Tyne River House comprises a modern 2,786 sq m (29,999 sq ft) extensive refurbishment and fit out, comprising a new VRF heating and purpose built stand-alone office building with extensive parking cooling system, lighting, suspended ceilings and speedgate turnstiles. provision (1:269 sq ft). • Annual rent of £423,080 (£14.10 psf). • Excellent transport connections sitting adjacent to the bus and rail • We have been instructed to seek offers in excess of £3,610,000 for our interchange and a two minute drive to A1 junction 71, providing clients’ freehold interest. A purchase at this level reflects an attractive rapid access to the wider region. NIY of 11.00% and a low capital value of £120 psf assuming purchasers • Fully let to Teleperformance Limited on a new 10 year FRI lease costs of 6.509%. from 15 November 2016 with approximately 9.76 years remaining (4.76 to break). 2 A1

ALNWICK

ASHINGTON

MORPETH

A1(M) LOCATION A696

A68 Newcastle Airport A19

Port of Tyne Tyne River House is located on the NEWCASTLE A69 SOUTH A69 UPON TYNE Watermark Business Park which lies within SHIELDS the Metropolitan Borough of Gateshead. GATESHEAD Gateshead has a population of 200,500 Tyne River people extending to 1,075,000 people in House Intu the wider conurbation. The town A68 Metrocentre Port of Sunderland ABERDEEN 65 A19 is situated immediately south of Newcastle upon Tyne, 98 miles north of Leeds and 106 Trading Estate miles south of Edinburgh. CHESTER-LE-STREET 63

GLASGOW The Watermark Business Park is located EDINBURGH A1(M) to the north of Gateshead between the A1 M6 62 Port of Seaham south bank of the and the Intu CARLISLE A69 NEWCASTLE GATESHEAD Metrocentre. Tyne River House benefits MIDDLESBROUGH A66 from excellent transport links to the regional A19 DURHAM road network as a result of its proximity to A1(M) YORK LEEDS MANCHESTER and the Metrocentre. M1 LIVERPOOL SHEFFIELD A181 The A1 Western bypass bounds the A689 A167 61 Metrocentre to the west, whilst the Blaydon M6 M1 A1(M) A690 A19 HARTLEPOOL

Bridge to the west of The Watermark directly BIRMINGHAM A688 Port of Hartlepool connects Gateshead to Newcastle. M1 A1(M) M40 M11 The area of Gateshead is well served by 60 BRISTOL M4 LONDON public transport with Newcastle Central, A688 A689 a main station on the East Coast Mainline connecting the city to London in 2 hours A68 and 50 minutes, and Edinburgh in 1 hour 30 59 minutes. Tyne & Wear benefits from excellent A688 MIDDLESBROUGH transport connections via its Metro system, 58 which comprises 60 stations throughout DARLINGTON Newcastle, Gateshead, Sunderland, North A171 A66 and . The system is the A66 second largest in the UK behind the London 57 Durham Tees Valley Airport Underground. Newcastle International Airport, A66 provides daily scheduled flights to both 56 domestic and international locations.

SCOTCH A19 CORNER 3 A1(M)

A684

A19 DENTON ROAD WESTGATE ROAD

A1

Tyne River House A1 NORTH

SCOTSWOOD ROAD

TH E W AT ERM E WA ARK RIVERSID Y A1 River Tyne S 1 C 14 O T R S IV A1 W E O R O S Y D I A V D W I E E MANDALE WAY A694 E W W D I Metro A S Y B I Retail River Derwent G ASDA D Park R E H PINETREE WAY ID A Metro S ND G Y D N R Park West I IVE L

L

O H

Marriott Hotel CO IKEA LL AY Intu IERY ROAD MARCONI W Metrocentre ROAD C D LO G ST U C RD N .M N K G IC WELLINGTON O H S M L IG AE T L O R ’S I W L NEWCASTLE

AY N

L

MARKET LANE

CITY CENTRE R

T R S O

O (1.3 miles) T A

N A O D

A694 FR D D A A1 O R R E T A W A184 T EN DEW MARKET LANE

ELLISON ROAD SITUATION A1 SOUTH

The property is located on the Watermark Business Park in Gateshead on the Due to the scale of the Metrocentre development, connectivity to the local area south bank of the River Tyne. The Watermark scheme, developed in 2002 is unrivalled and has seen extensive investment in recent years. The A1, which by City and Northern, comprises 220,000 sq ft of modern, out of town office bounds the Metrocentre to the west, has recently undergone an extensive accommodation. The park was built in three phases of which the subject £61 m upgrade, whilst both Bus and Rail services run every 8 – 12 minutes to property forms the larger footprint buildings. The two other phases comprise Newcastle and the wider area. smaller, self-contained office buildings at Bankside, Keel Row and Staithes, offering accommodation ranging from 750 sq ft – 4,000 sq ft. The Watermark is prominently situated close to the Intu Metrocentre, the largest shopping centre in Europe. The centre features over 300 shops, 60 restaurants, an extensive neighbouring retail warehouse offering and IMAX cinema.

4 Team Valley Trading Estate A1 South

A1

J71

Intu Metrocentre A1 Bus and Rail A1 North interchange

A1114 Riverside Way

The Watermark

Tyne River House A1114 Riverside Way

Unrivaled amenities and transport connections River Tyne

5 DESCRIPTION

Tyne River House comprises a self-contained purpose built Grade A office building extending to 2,786 sq m (29,999 sq ft) over ground, first and second floors. The building benefits from an impressive specification following a £2.35m refurbishment. The refurbishment comprised £1.6m of landlord’s Category A works carried out by the tenant in lieu of a rent free period along with £750,000 of Category B works. In addition to the refurbishment, the tenant has committed £340,000 on new furnishings throughout the entire building. Following the works, the specification of Tyne River House now includes: - Impressive full height glazed atrium and reception - New high specification VRF heating and cooling system - 2 x 8 person passenger lifts - WCs and shower facilities on each floor - Suspended ceiling and recessed lighting - Fully accessible raised floors with 219 additional floor boxes installed - Frosted Privacy glass Typical Floor Plan

- Flexible L shaped configuration allowing for WC's future subdivision

- Butterfly speed gate turnstile entry systems Void Room - Dedicated training and meeting facilities Comms - New canteen and amenity space Comms WC's 6 Person Room Meeting Room

Externally the building occupies a Store generous site extending to 1.64 acres Breakout Area Cleaners with 120 car parking spaces equating to a parking ratio of 1 : 269 sq ft.

6 Person Meeting Room

6 ACCOMMODATION

We understand the property provides the following net internal floor areas:

Floor sq m sq ft

Ground 947.8 10,202

First 929.8 10,009

Second 909.3 9,788

Total 2,786.90 29,999

7 TENANCY

Tyne River House is let entirely to Teleperformance Limited on a new 10 year lease commencing 15th November 2016, at an annual rent of £423,080, reflecting £14.10 per sq ft. The tenant has an option to determine the lease on 15th November 2021 subject to no less than 90 days prior written notice. The lease is subject to an upward only rent review on the 15th November 2021.

Upon commencement of the lease, the tenant was granted a rent free period of 43 months, in return for a comprehensive refurbishment of the entire building. The tenants works are defined in the Licence to Alter dated 15th November 2016. This rent free is to be ‘topped up’ by the vendor.

TENURE

The property is held freehold, a copy of the Registered Title and associated Title plans are available upon request.

8 The tenant has committed circa £2.35m to the building through a comprehensive refurbishment

49 TENANT’S COVENANT

Teleperformance Limited Teleperformance Limited forms part of the global Teleperformance brand established in 1978. Worldwide, the company employs 190,000 people across 65 countries from 311 sites. In the UK, Teleperformance employs 8,000 people from 11 offices. They are the international frontrunner in outsourced omnichannel client liaison management, providing a wide range of business solutions for clients in multiple industries including retail, telecommunications, utilities and healthcare. Services provided encompass customer care, customer acquisition, social media, technical support, accounts receivable and back office. From Tyne River House, Teleperformance operate the UK customer contact center for a leading global technology company.

31/12/2015 31/12/2014 31/12/2013

Turnover £181,183,000 £174,523,000 £154,962,000

Pre Tax Profit £8,742,000 £9,301,000 £7,350,000

Shareholder’s Fund £43,555,000 £35,549,000 £28,396,000

10 OCCUPATIONAL MARKET

Supply and Availability The North East region provides a diverse range of accommodation ranging in size and quality to appeal to numerous occupiers, attracted by the relatively low occupational costs, accessibility of skilled workforce and high quality working environment. While Newcastle city centre comprises the principal in town office accommodation in the region, the out of town office market is made up of a handful of business parks throughout Tyne & Wear which continue to satisfy the demand further bolstered by severely constrained city centre supply. Due to the high demand for accommodation, the shortage of supply historically noted in Newcastle city centre has moved outward, with prime locations such as Cobalt Business Park now at 78% capacity (1,194,328 sq ft occupied) with only 337,148 sq ft remaining. Despite the widespread shortage of supply in the North East out of town market, there are no speculative developments anticipated to be on site within the next 12 – 24 months, increasing the demand for refurbished grade A accommodation. t of to off ta Take Up rall sq ft trasat mr of als Take up is dominated by the out of town sector which has accounted for circa 75% of take up since 2010. Despite a fall in total sq ft take up numbers throughout 2016, there was a notable rise in the 800,000 140 volume of transactions completed during the same period. This demonstrates the depth and varied nature of demand despite 600,000 105 market uncertainty surrounding the European Referendum, whilst also reflecting the general shortage in supply of 400,000 70 accommodation suited to larger requirements. 200,000 35 mr of ff a ff

Rents Trasatos Ta q ft Ta Whilst headline rents in Newcastle city centre are 0 0 expected to step up to £25.00 psf in 2017, the out of 2013 2014 2015 2016 town office market remains at a significant discount. Rental levels now range from £10 per sq ft for secondary buildings up to £16.50 per sq ft for q ft Trasatos prime space, depending on quality, specification and location. 11 INVESTMENT MARKET

The out of town investment sector has increased in popularity in recent years as investors have been attracted by comparatively high yields on offer than would be achieved in other regional locations and the South East. We set out below a schedule of recent comparable transactions in the North East;

Address Tenant Date Price Yield Comments

Onyx House, Portrack Fully let to Onyx Group from Interchange Business Park, Onyx Group May 16 £1.3M 10.60% 2009 on a 10 year lease. Stockton on Tees

10 years expiring 2022 with break at year 5. (22 Royal Mail, Service Charge Royal Mail Jan 16 £4.15M 8.88% months term certain at point Doxford, Sunderland of sale). Passing rent of There is an estate service charge payable for the £390,000 per annum. upkeep of the estate which is proportioned on a floor area basis and is fully recoverable under the lease. Further information is available on request. Two modern pavilions offices Ashmore and Progress House, Siemens Plc let to Siemens Plc and Teesdale Business Park, & Johnson Oct 15 £3.25M 10.70% Johnson Matthey Plc. WAULT Stockton on Tees Matthey Plc of 6.4 years to expiry. VAT The property has been elected for VAT and therefore it is anticipated the sale will be treated as a transfer of a going concern (TOCG). Teesdale House, 10 year lease with break Teesdale Business Park NHS June 15 £1.55M 9.27% at 5. 3 years term certain Stockton on Tees at point of sale. EPC The property has an Energy Performance Rating of D(79). Copies of both certificate and recommendation 10 year lease expiring Fabricom report are available upon request. Q16 Quorum Business Park, December 2021. Tenant only Offshore Services Nov 14 £5M 9.40% break option in 2019 subject Limited to 6 months notice.

12 PURCHASE RATIONALE

- Fully refurbished building with minimal capital expenditure required moving forward. - Embedded tenant who have invested heavily in the building. This is Teleperformance Limited’s second consecutive lease, having been a tenant in the building since 2002 under previous names. - Asset management opportunities through removal of the tenant’s break clause, or lease regear.

- The property comprises one of only two buildings occupied by Teleperformance in the North East, of which Tyne River House offers better accessibility, a considerably superior car parking ratio and a lower occupational cost psf.

- Highly restricted development pipeline and huge shortage of large floorplate accommodation south of the River Tyne.

- Attractive income return and a low capital value psf reflecting a substantial discount to build cost.

PROPOSAL

We have been instructed to seek offers in excess of Three Million, Six Hundred and Ten Thousand Pounds (£3,610,000) subject to contract and exclusive of VAT. A purchase at this level would reflect a net initial yield of 11% and low capital value of £120 per sq ft assuming purchaser’s costs of 6.509%.

13 CONTACT

Peter Atkinson Katy Paxton Richard Wadham Tel: 0191 223 5715 Tel: 0191 223 5752 Tel: 020 7152 5923 Email: [email protected] Email: [email protected] Email: [email protected]

DTZ Debenham Tie Leung Limited (the “Agents”) give notice to anyone who may read these particulars as follows: (1) These particulars are prepared for the guidance only of prospective purchasers. They are intended to give a fair overall description of the property only and do not constitute any part of an offer or contract. (2) Any information contained in these particulars (whether in the text, plans or photographs) is given in good faith but should not be relied upon as being a statement or representation of fact or that the property is in good condition or otherwise nor that any services or facilities are in good working order. (3) The photographs appearing in these particulars show only certain parts and aspects of the property at the time when the photographs were taken. Certain aspects may have changed since the photographs were taken and it should not be assumed that the property remains precisely as displayed in the photographs. Furthermore no assumptions should be made in respect of parts of the property which are not shown in the photographs. Any areas, measurements or distances referred to herein are approximate only. (4) Where there is reference in these particulars to the fact that alterations have been carried out or that a particular use is made of any part of the property this is not intended to be a statement that any necessary planning, building regulations or other consents have been obtained and these matters must be verified by any intending purchaser. (5) No person in the employment of the Agents has any authority to make or give any representation or warranty whatsoever in relation to this property. (6) This property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. (7) Unless otherwise stated, no investigations have been made by or on behalf of the Agents regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations as required. March 2017

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