SETON HOUSE Denmore Road, Bridge of Don, Aberdeen, AB23 8JW

HIGH YIELDING PRIME HYBRID OFFICE/ INDUSTRIAL INVESTMENT SETON HOUSE INVESTMENT SUMMARY • Opportunity to purchase a long let business space investment situated in the Denmore Road, Bridge of Don, Aberdeen, AB23 8JW prime commercial location of Bridge of Don, Aberdeen; • The property comprises a modern hybrid industrial/office facility extending to 3,306.00 sq m (35,588 sq ft) together with 53 car spaces;

• Let to Sparrows Offshore Services Limited (D&B 4A2) on FRI terms until 11th August 2029;

• The property is held on a long ground lease, expiring 26th March 2134, at a current rent of £39,750 per annum;

• Current gross rent of £543,899 per annum producing a net rent of £504,149 per annum, following deduction of the ground rent;

• The lease incorporates provision of annual fixed increases of 3.00% per annum until 12th August 2024. There is also provision of 5 yearly rent reviews to the higher of open market rent or rent passing. The next market rent review is due as at 28th August 2019;

• The ground rent is reviewed 5 yearly with the next rent review due as at 27th March 2019.

Offers in excess of £5,940,000 (Five Million Nine Hundred and Forty Thousand Pounds Sterling) are sought for our client’s leasehold interest, subject to contract and exclusive of VAT.

A purchase at this level would provide a net initial yield of 8.00% rising to 8.26% as at 28th August 2017, after purchaser’s costs at 6.14%. Thereafter the following running yield profile is achieved assuming that a) there is nil uplift in the ground lease rent review and b) there is nil increase in the occupational lease open market rent review.

DATE GROSS RENT NET RENT RUNNING YIELD 28/08/2018 £577,022 £537,273 8.53% 28/08/2019 £594,333 £554,584 8.80% 28/08/2020 £612,163 £572,414 9.08% 28/08/2021 £630,528 £590,778 9.37% 28/08/2022 £649,444 £609,694 9.67% 28/08/2023 £668,927 £629,178 9.98% HIGH YIELDING PRIME HYBRID OFFICE/INDUSTRIAL INVESTMENT 28/08/2024 £688,995 £649,245 10.30% ABERDEEN

Aberdeen is Scotland’s third largest city, with a population of circa 222,800 (Source: 2011 Census) and a regional catchment of approximately 500,000 people. It is anticipated in the next 25 years that the city’s population will increase by approximately 21%, rising to circa 270,000 (Source: Aberdeen City Council).

Although Aberdeen is internationally important as a centre of expertise in oil and gas exploration and associated engineering firms, the city is the main administrative and financial centre for Aberdeen City and M Shire, and benefits from a diverse economy. Aberdeen is home to a number of major international businesses including First Group and Aberdeen Asset Management, as well as a strong service sector that includes Cothal A947 Potterton companies such as HSBC, Barclays, Lloyds Banking Group, RBS, KPMG, Deloitte, PWC and Ernst & Young.

A90 n P Wester eriphe rdeen ral Ro Home to Aberdeen and Robert Gordon Universities and a variety of world renowned research establishments, PROP SED Abe ute O Blackdog Aberdeen has a strong academic reputation with an enrolled student population of approximately 50,000.

B997 B999

Dyce ABERDEEN TRANSPORT CONNECTIONS A947 SETON HOUSE

ABERDEEN AIRPORT Located around 125 miles north of Edinburgh and 66 miles north of Dundee, Aberdeen benefits from an excellent Bridge RD ELLON A96 of Don

communication system with transport links by road, rail, air and sea to many of the major cities in the UK. A90 AUCHMILL ROAD A90 THE PARKWAY ROAD AIR Danestone The motorway network provides access to both the Aberdeen Airport is located 6 miles west of Seton Bucksburn north and south of the country. The A96 runs North House, with flights to a variety of UK & European

HILTON DRIVE

West to Inverness and the A90 south to Dundee, principal cities. The airport is undergoing ESPLANADE

A956 KING ST Perth (which connects to the M90), Edinburgh and improvement works to accommodate increasing Old Glasgow. passenger numbers and separately accommodates Aberdeen A90 the world’s busiest commercial heliport The AWPR is the new city bypass that has been A978 promoted by and funded by the Scottish A944 LANG STRACHT SEA ABERDEEN Government and the City of Aberdeen Council. A944 SKENE ROAD Aberdeen has one of the busiest commercial ports in HARBOUR the UK and is a vital resource for the North Sea Oil and Gas industry. 4.2 million tonnes of cargo are RAIL A90 Torry Aberdeen Railway Station is situated in the city handled to and from nearly 40 destinations and centre and is served by the main east coast rail Northlink operate passenger and car ferries to COUNTESSWELLS ROAD network with connections to all the main UK Orkney & Shetland. There are over 14,800 vessel destinations. Upon completion in 2018 congestion movements, 100,000 crew and 155,000 passengers Bridge within the city centre will be eased and journey times every year. The £330 million expansion of the of Dee Kincorth Bieldside RD WELLINGTON will fall throughout the area. harbour is scheduled to commence in 2017.

A956 A90 COAST ROAD

PROPOSED Aberdeen Western Peripheral Route NORTH DEESIDE ROAD LEGGART TERRACE A93 B9077

Cove Bay

SETON HOUSE Denmore Road, Bridge of Don, Aberdeen, AB23 8JW HIGH YIELDING PRIME HYBRID OFFICE / INDUSTRIAL INVESTMENT

l Route

C B 0 99 9 9 A

D Ferguson Group A O

M SETON HOUSE Topps Tiles A SITUATION

The property is situated on Denmore Road within the prime Business Space location of Bridge of Don, approximately

E B&Q

3 miles north of Aberdeen city centre. The property is accessed directly from Denmore road, which in turn, can be

9 easily accessed from the A90, the main arterial route connecting Aberdeen from the south. The property also

benefits from being just south of the ‘Northern Leg’ of the Aberdeen Western Peripheral Route (AWPR), where the

route re-connects the A90 at Blackdog.

The area is a well established, prime, industrial and commercial area with surrounding occupiers including Baker

Sparrows Engineering

and Operations

Hughes, Fugro Subsea Services Ltd, Craig International Supplies Ltd, Oceanscan Ltd, ATR Global Equipment

Specialists, DMC Technology, Harris Caprock, SEMCO, GE Oil and Gas, and Agronaught Marine.

Fugro Subsea

Sevrvices Limited

DESCRIPTION

Fugro Survey

The property comprises a modern hybrid industrial and office facility constructed in 2009.

The of the property benefits The of the property OFFICE ELEMENT WAREHOUSE ELEMENT Craig International

Supplies Limited

from the following specification: benefits from the following specification:

Oceanscan

• •

Floor to ceiling height of 2.75m; Steel frame construction separated into four

A Murcar Industrial Estate • sections; O Raised access floors; D

A E • Blockwork walls to dado level with composite O R • Suspended ceilings incorporating recessed R O sheet cladding to roof and walls; M N lighting and air conditioning units;

N O

E L

L • D ATR Group • Pitched roof incorporating translucent E Lift access to first floor; Head Office

0 roof lights; J2 Subsea Ltd 9 • Modern reception and waiting area; A • Four electric roller shutter doors; • Male, female and disabled toilet facilities on • Steel framed mezzanine; DMC Technology each floor. DE NMO • Eaves height of 9.50m. RE PLA CE

SETON HOUSE Denmore Road, Bridge of Don, Aberdeen, AB23 8JW HIGH YIELDING PRIME HYBRID OFFICE / INDUSTRIAL INVESTMENT N ACCOMMODATION

The building has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and we estimate the gross internal areas to be as follows:

DESCRIPTION AREA (SQ M) AREA (SQ FT) GROUND FLOOR OFFICE 696.23 7,494 FIRST FLOOR OFFICE 697.33 7,506 SETON HOUSE OFFICE TOTAL 1,393.56 15,000 WAREHOUSE 1,767.61 19,027 WAREHOUSE MEZZANINE 145.05 1,561

TOTAL GIA 3,306.22 35,588

There is provision for 53 car parking spaces.

The property also benefits from an external storage yard extending to approximately 1,214.00 sq m (13,068 sq ft).

Denmore Road

El Sub Sta TENURE

The property is held on a ground lease until 26 March 2134. The site extends to 0.61 Ha (1.50 acres) and the current passing rent is £39,750 per annum, reflecting £26,500 per acre per annum. Rent reviews are 5 yearly with the next review due as at 27 March 2019. We have not physically measured the site.

SETON HOUSE Denmore Road, Bridge of Don, Aberdeen, AB23 8JW HIGH YIELDING PRIME HYBRID OFFICE / INDUSTRIAL INVESTMENT TENANCY RENTAL ANALYSIS

The property is let in its entirety to Sparrows Offshore Our analysis of the passing rent on a GIA basis is as follows: Services Ltd until 11 August 2029 at a current passing rent of £543,899 per annum. AREA RENT PER SQ FT OFFICES c. £23.30 There are annual fixed increases of 3.00% per annum WAREHOUSE c. £8.75 compounded until 12th August 2024, which provides the following rental profile: MEZZANINE c. £5.00 YARD c. £1.50 DATE GROSS RENT NET RENT 28/08/2017 £560,216 £520,466 28/08/2018 £577,022 £537,273 28/08/2019* £594,333 £554,584 28/08/2020 £612,163 £572,414 28/08/2021 £630,528 £590,778 28/08/2022 £649,444 £609,694 28/08/2023 £668,927 £629,178 28/08/2024 £688,995 £649,245

Every 5 years the rent is also reviewed to the greater of passing and the open market rental value. The next review on this basis due as at 28th August 2019.

*There is a ground rent review due as at 27th March 2019. An uplift in the ground rent at this juncture will impact on the above yield profile. For the avoidance of doubt and as an illustration we have assumed the ground rent will remain at £39,750 per annum following the 2019 rent review.

Sparrows fully occupy the property.

SETON HOUSE Denmore Road, Bridge of Don, Aberdeen, AB23 8JW HIGH YIELDING PRIME HYBRID OFFICE / INDUSTRIAL INVESTMENT COVENANT

Sparrows supply their engineered products and services to a variety of industry applications and specialise in delivering structured and bespoke solutions in the safety critical areas of lifting and mechanical handling, cable and pipe lay, and fluid power. They employ over 1,650 employees worldwide and have over 40 years’ experience working in the energy industry.

The broad categories of products and services they offer include:

- Engineering support - Inspection & integrity management - Equipment manufacture, sale & rental - Training and competence assessment - Equipment & operations management - Parts supply

For further information, please refer to www.sparrowsgroup.com

The tenant, Sparrows Offshore Services Limited, has a D&B rating of 4A2 and a summary of the key figures from their last 3 years accounts is provided below:

FISCAL NON CONSOLIDATED GBP FISCAL NON CONSOLIDATED GBP FISCAL NON CONSOLIDATED GBP 31 DEC 2015 (000'S) 31 DEC 2014 (000'S) 31 DEC 2013 (000'S) Sales Turnover 136,800 140,108 126,708 Profit / (Loss) Before Taxes 1,877 (5,785) 6,341 Tangible Net Worth 22,497 4,992 9,441 Net Current Assets (Liabilities) 10,571 (6,185) 2,700

EPC POTENTIAL CASH ON CASH RETURNS

The property has an EPC ‘B’ rating. The table below illustrates potential gross cash on cash returns in excess of 10% per annum, subject to purchaser loan requirements. A copy of the EPC certificate is available upon request.

CAPITAL ALLOWANCES All in Interest Costs LTV The Purchaser will obtain the benefit of any available capital allowances. (assuming margin over 5 Year Swap Rate) 50% 50% 55% 55% Further information is available upon request. 1% amort p.a. Interest only 1% amort p.a. Interest only 3.50% 10.22% 12.00% 10.88% 12.83% VAT 3.75% 10.00% 11.78% 10.61% 12.56% 4.00% 9.78% 11.56% 10.34% 12.30% VAT will be applicable to the sale of the property, which will be 4.25% 9.55% 11.33% 10.07% 12.03% undertaken by way of Transfer of a Going Concern (TOGC).

SETON HOUSE Denmore Road, Bridge of Don, Aberdeen, AB23 8JW HIGH YIELDING PRIME HYBRID OFFICE / INDUSTRIAL INVESTMENT SETON HOUSE Denmore Road, Bridge of Don, Aberdeen, AB23 8JW

PRICE

We are instructed to seek offers in excess of £5,940,000 (Five Million Nine Hundred and Forty Thousand Pounds Sterling) for our client’s leasehold interest subject to contract and exclusive of VAT.

A purchase at this level would provide a net initial yield of 8.00%, rising to 8.26% as at 28th August 2017, after purchaser’s costs at 6.14%. Thereafter the following running yield profile is achieved assuming that a) there is nil uplift in the ground lease rent review and b) there is nil increase in the occupational lease open market rent review.

SIMON CUSITER JANEY DOUGLAS FURTHER INFORMATION Director, Capital Markets Surveyor, Capital Markets t: 0131 243 2203 t: 0131 301 6718 m: +44(0)7815 135 222 m: +44(0)7734 883 046 For further information or to arrange an accompanied inspection please contact: e: [email protected] e: [email protected]

MISREPRESENTATION ACT 1967: JLL for themselves and for the vendor(s) or lessor(s) of this property whose agents they are, give notice that: 1. These particulars do not constitute, nor constitute any part of, an offer or contract. 2. None of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact. 3. Any intending purchaser or lessee must satisfy himself by inspection or otherwise as to the correctness of each of the statements contained in these particulars. 4. The vendor(s) or lessor(s) do not make or give JLL nor any person in their employment any authority to make or give, any representation or warranty whatever in relation to this property. 5. Computer Generated Images are for indicative purposes only and do not necessarily represent the finished design specification. Finance Act 1989: Unless otherwise stated all prices and rents are quote exclusive of VAT. Property Misdescriptions Act 1991: These details are believed to be correct at the time of compilation but may be subject to subsequent amendment. April 2017. Alamo Design 01924 471114.