HYMATIC ENGINEERING MOONS MOAT NORTH INDUSTRIAL ESTATE,

Short Income Industrial Investment BURNT MEADOW ROAD MOONS MOAT NORTH with Significant Asset Management Opportunities REDDITCH B98 9HJ 2 HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

Investment Summary

• Located in a highly important and strategic industrial and warehouse territory in the Midlands • Situated on Moons Moat North Industrial Estate, the town’s principal business and industrial estate located 3 miles east of Redditch town centre • The property benefits from excellent transport links with access to the M42 Motorway 3 miles to the north • The property comprises a part single, part two storey office/ industrial buildings of 135,803 sq ft (12,617 sq m) and 507 car parking spaces • Site extends to 9.7 acres (3.92 hectares), providing a very low site coverage of only 27% • The property is let in its entirety to The Hymatic Engineering Company Limited for a term of 25 years from 19 March 1998 with lease expiry 18th March 2023 (2.5 years unexpired) • The Hymatic Engineering Company Limited are a wholly owned subsidiary of Honeywell International Inc, the global industrial conglomerate with NYSE Market Cap of circa $117bn • Total income of £582,000 pa, reflecting a low rent of only £4.28 psf • Local industrial occupiers include John Lewis, Amazon Inc (360,000 sq ft facility under construction), Lear Corporation, Thorlux Lighting & Morgan Advance Materials • Freehold • Significant asset management opportunities

We are instructed to seek offers in excess of £7,500,000 (Seven Million, Five Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level would reflect a Net Initial Yield of 7.27%, assuming purchaser’s costs of 6.66%. This pricing shows a low capital value of £55.22 per square foot. 3 HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

Location Situation

Redditch is a major town located approximately Redditch Railway Station provides services to The property is strategically situated occupying a 14 miles (22.5 km) south of Birmingham city centre, Birmingham New Street with a fastest journey time prominent position fronting Ravensbank Drive, with 13 miles (21 km) south west of Solihull and 25 miles of approximately 35 minutes. The total population vehicular access from Burnt Meadow Road to the (40 km) north east of Worcester. within the Redditch primary catchment is 85,000. south and Thornhill Road to the north. The property lies 3.2 miles (5.1 km) east of Redditch town centre. The town is situated approximately 3 miles south Birmingham Airport lies 20 miles (32 km) to of Junctions 2 & 3 of the M42 motorway accessed the north east of Redditch with a drive time of The wider area is a strategic and highly important via the A441 and A435. The M42 links to the M40 25 minutes and provides both domestic and industrial and warehouse territory. Notable at Junction 3a, 5 miles to the north east, providing international flights. occupiers in close proximity are John Lewis, Lear access to the South East, London and the wider Corporation, Thorlux Lighting, Morgan Advance motorway network. Materials plc and Amazon Inc (366,000 sq ft distribution facility under construction).

M6 M6 TOLL M42 A5 ICKNIELD ST A454 WOLVERHAMPTON SUTTON DAGNELL END RD COLDFIELD M69 NUNEATON BEOLEY HOLT END

A458 M6 BIRMINGHAM STOURBRIDGE A45 MOONS MOAT NORTH A442 COVENTRY M42 PAPER MILL DR A435 BURNT RAVENSBANK DR MEADOW RD M42 J2 J3 A46 A435 MOONS MOAT A448 SOUTH A4023 M40 A4023 ROYAL A423 A449 REDDITCH LEAMINGTON COVENTRY HWY SPA BATTENS DR

ALDERS DR M5 SOUTHAM ALCESTER LAKESIDE WORCESTER A429 WINYATES STRATFORD M40 WEST A435 UPON AVON A441 4 HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

A435  TO BIRMINGHAM TO ALCESTER 

REDDITCH GATEWAY (Under construction) AMAZON (Under construction) JOHN LEWIS A4023 LEAR CORPORATION

AMCO

TO REDDITCH 

BURNT MEADOW ROAD

HELLER MOONS MOAT NORTH MACHINE TOOLS INDUSTRIAL ESTATE

RAVENSBANK DRIVE

THORNHILL ROAD 5 HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

Description

The property dates from the mid 1980’s and comprises a landscaped campus of circa 135,803 sq ft (12,617 sq m) of accommodation in two distinct sections. Building One - occupied by Hymatic and Fresh (subtenant on the first floor office space), is accessed from the south of the site off Burnt Meadow Road. The building is of brick construction and comprises offices on ground and 1st floors with ground floor manufacturing space to the rear, totalling circa 96,000 sq ft with an eaves height of 5m. The roof was fully reclad in 2019 at significant cost. Building Two – occupied by Honeywell subsidiary, KAC Alarms, adjoins Building One to the north of the site and is accessed from Thornhill Road. The building comprises a warehouse and storage on the ground floor with offices on a mezzanine level, totalling circa 38,000 sq ft with an eaves height of 7.5m. The building is of more modern design and was refurbished in 2006. As an Aerospace and Defence related facility the Honeywell staff were all designated Key Workers, and the site continued to operate throughout the recent Covid-19 lockdown which began in March 2020. Externally, the site is landscaped with automatic barriers at both entrances and 507 car parking spaces. 6 HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

Accommodation Site Area

The property has been measured in accordance with the RICS Code of Measuring The site extends to approximately 9.7 acres (3.92 hectares) and provides a low site density of only 27%. Practice (6th Edition) on a Gross Internal Area (GIA) basis, and provides the following approximate areas:

BUILDING ONE Sq Ft Sq M Ground Floor (Honeywell) Open plan Office 6,267 582 Reception 1,918 178 3 Meeting Rooms 806 75.36 Toilets & Stores 1,577 146.5 10,568 981.86 First Floor (Fresh Insurance - Sublet) Open plan Office 6,690 621.5 4 Meeting Rooms 1,529 142.14 Toilets & Stores 2,349 218.22 10,568 981.86 21,136 1963.72

Welfare Block (including Server Room & Meeting Room) 4,600 427.31

Honeywell Hymatic Main Block Offices, Parts Assembly, Machining Area 62,004 5,760.43

BUILDING TWO KAC Alarms (Honeywell subsidiary) Manufacturing Warehouse Ground Floor Manufacturing 28,102 2610.83 Mezzanine Office, Canteen & Stores 11,114 1032.58 39,216 3643.41 Logistics Stores Building A 6,340 589.03 Building B 2,507 232.97 8,847 822

TOTAL ACCOMMODATION 135,803 12,616.87

Site Area 9.7 acres Total Car Parking 507 vehicles 7HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

Tenure Covenant

Freehold. Title Number HW188402 The Hymatic Engineering Company Limited (company number Honeywell International Inc (ultimate owner of Tenant) has just 00331969) have a D&B rating of 3A2 and are a 100% wholly owned celebrated 100 years of being listed on the NYSE with a market subsidiary of Honeywell International Inc. Hymatic Engineering is capitalisation of $117 Billion (Sept 2020). Tenancy part of Honeywell’s Global Aerospace & Defence division within the Honeywell International Inc. is an American publicly traded, wider business. KAC Alarms operates under Honeywell’s Building multinational, conglomerate company headquartered in Charlotte, Technologies division. The property is let in its entirety to The Hymatic Engineering Company North Carolina, United States composed of four Business Groups Limited for a term of 25 years from 19 March 1998 with lease expiry The latest financial results for The Hymatic Engineering Company —Aerospace, Building Technologies, Performance Materials & 18th March 2023 (2.5 years unexpired). The lease is subject to five yearly Limited are set out below: Technologies (PMT), and Safety & Productivity Solutions (SPS) open market rent reviews. The passing rent is £582,000 per annum Year End 31/12/2019 31/12/2018 31/12/2017 — which produce aerospace systems, industrial products, and (£4.31 per sq ft), an increase in rent from £530,000 pa at last review. engineering services. Turnover £8,747,000 £9,385,000 £7,767,000 Office Sublet - Fresh Insurance Limited have sub-let 10,500 sq ft Honeywell is a Fortune 100 company. The company has a global Profit / (Loss) Before Tax £1,581,000 £1,633,000 (£878,000) at £49,000 per annum. The Fresh Insurance letting is co-terminus workforce of approximately 110,000, across 81 locations. with the Hymatic Engineering head-lease. Tangible Net Worth £8,828,000 £7,466,000 £5,141,000 8 HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

Midlands Industrial Rental Commentary

Industrial supply within the region currently stands at 7.19m sq ft, falling 17% from the peak of 8.68m sq ft reached in Q2 2019. Of the 40 units on the market last year, 35% were constructed speculatively, and all but 10 were under 200,000 sq ft. This suggests that the current demand is for units of a larger size, a significant shift from historical demad which saw just 39% of take-up for units under 200,000 sq ft. At 9.7 acres the subject property has the site area to facilitate a significant new development at lease expiry in this established industrial location, subject to planning. 2019 finished strongly with the largest distribution deal of the year with Amazon committing to 366,000 sq ft which is currently under construction at Redditch Gateway by Stoford. The Amazon/Stoford scheme is boosting local road infrastructure in preparation for increased distribution related traffic improving connectivity for the subject property. Regional snapshot for the Midlands for Q1 2020:

Stats Year-on-year change Recent Industrial Investment Comparables Date Address Sq Ft Tenant Term Price Yield Cap Val Take-up 3.9m sq ft 14.5  Subject Burnt Meadow Road, North Moons Hymatic Engineering 2.5 Supply 7.19m sq ft 5.4%  135,803 £7,500,000 7.27% £55 psf Property Moat, Redditch (Honeywell Inc) years Development pipeline 1.49m sq ft 77.4%  Jan 2020 27-29 Sherwood Road, 36,882 £3,700,000 6.6% £100 psf Quoting Grade A rent £6.95 per sq ft no change Thornhill Road Industrial Estate, 4.7 year Dec 2019 104,577 Multi-Let £6,850,000 6.29% £65.50 psf Vacancy rate 8.53% 90bps  Redditch WAULT South Moons Moat Industrial 3.52 The pandemic has emphasised the importance of logistics as the Dec 2019 141,571 Multi-let £11,200,000 6.05% £79 psf Estate, Redditch years backbone of our economy and occupiers are now racing to embrace further Ceva Logistics, Danny Morson changes in consumer expectations. In May 2020, e-commerce sales reached £2.19 Dec 2019 55,400 Ceva Logisitics 5 years £6,900,000 5.05% £125 psf Way, Tamworth billion vs £1.38 billion year on year. This resulted in a record online share (32.8%) of all retail sales. These market forces lead us to believe that last mile distribution Birmingham Road, Redditch Amazon (Funding – currently Jan 2019 366,414 20 years £79,000,000 4.53% £219 psf will continue to thrive & drive industrial trends in the future. Gateway under construction) Barberry 65, 100 Grosvenor Street, The industrial distribution sector is facing several challenges, especially with the Jan 2019 65,710 Mayflex 10 years £9,040,000 4.67% £138 psf Birmingham lack of development land in densely populated areas and increasing pressure to Ravensbank Business Park, reduced carbon emissions. Redditch is well placed to harness the demand from Dec 2018 91,465 Multi-let £7,000,000 £77 psf the Midlands and wider Birmingham metropolitan area. Redditch 9 HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

Planning

The property benefits from E, B2 & B8 planning use classes.

Asset Management Opportunities

This property has numerous significant asset management opportunities in the short to medium term which include: • Lease regear with the existing tenant – the tenant has been in situ for the last 40 years under alternating ownership, with significant specialist equipment onsite & specialist operating licences • Significant dilapidations claim on Hymatic Engineering lease expiry from the residue of the 25 year lease • Potential for wholescale redevelopment to create a modern distribution hub • Potential to carve up aspects of the site, the property has a number of car parks which could be redeveloped into new warehouses units to add density onsite • Rotate the focus of the site to last mile distribution to harness stronger rental demand & improved long term occupational flexibility • Explore potential for alternative use classes onsite (Office, Hotel etc.) STPP HYMATIC ENGINEERING (HONEYWELL INC) REDDITCH B98 9HJ

VAT Environmental Anti-money laundering Further information policy The property is elected for VAT, however it is A Phase I Environmental Assessment Should you require any further anticipated that the transaction will take place Report was undertaken by Wardell Armstrong In accordance with the Money Laundering, information on the property or wish to as a Transfer of a Going Concern (‘TOGC’). in September 2020. The site presents a low risk Terrorist Financing and Transfer of Funds arrange an inspection, please do not in its current use. A copy of the environmental (Information on the Payer) Regulations 2017, hesitate to contact: EPC report is available in the data room. the Purchaser will be required to comply with Martin Carey our Anti-Money Laundering policy. Further 020 7255 8085 A copy of the EPC is available upon request. Data Room details on request. [email protected] Data room access will be provided upon request. Jonny Doulton 020 7255 8099 [email protected]

Rebecca Harper 020 7255 8040 [email protected]

Rapleys LLP is registered as a Limited Liability Partnership in England and Wales. Registration No: OC308311. Registered Office at 33 Jermyn Street, London SW1Y 6DN. A full list of Members is available on our website or at any of our offices during normal business hours. Rapleys LLP operates an Environmental Management System which complies with the requirements of ISO 14001:2004. Regulated by RICS. Any maps, site plans or aerials are for identification purposes only and should not be relied upon for accuracy. Reproduced by permission of Geographers A-Z Map Co. Ltd. Licence No. Purchase price A0203. This product includes mapping data licensed from Ordnance Survey – © Crown Copyright 2001. Licence No. 100017302 and © Crown Copyright. All rights reserved. We are instructed to seek offers in excess of £7,500,000 (Seven Million, Five Hundred Licence No. ES 100004619. Misrepresentation Act: These particulars are produced in good faith and believed to be Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level correct. Neither Rapleys, their joint agents (where applicable) or their client guarantees their accuracy and they are not would reflect a Net Initial Yield of 7.27%, assuming purchaser’s costs of 6.66%. intended to form any part of a contract. No person in the This pricing shows a low capital value of £55.22 per square foot. employment of Rapleys or their joint agents has authority to give any representation or warranty in respect of this property. All prices or rents are quoted exclusive of VAT. carve-design.co.uk 14816/8 October 2020