MARLBOROUGH HOUSE BRISTOL BS1 3NX
FREEHOLD WELL-SECURED OFFICE INVESTMENT WITH RESIDENTIAL CONSENT
1
M A R L B O RO U G H H O U S E
A RARE OPPORTUNITY Marlborough House offers a rare opportunity to purchase a prominent freehold City Centre office investment, secured to the excellent covenant of AXA until 24 December 2017 (approx 2 years unexpired), with the benefit of full Planning Consent for comprehensive conversion and extension into 106 residential apartments plus 37 secure basement car spaces and a ground floor retail unit.
2 Computer generated image is for illustration purposes only.
3
M A R L B O RO U G H H O U S E
EXECUTIVE SUMMARY • Bristol is an attractive and economically strong regional city, capital of the South West and the 7th largest city in England outside of London • Marlborough House is strategically positioned in a highly prominent city centre location, directly opposite the City’s main bus station and close to the Broadmead shopping area, the University of Bristol and the Bristol Royal Infirmary • The property is freehold and entirely let on a single effective FRI lease with surety from AXA UK PLC until 24 December 2017 at a rent of £723,500 pa, exclusive. No tenant security of tenure and no Compensation payable on expiry • Currently provides a good quality office building arranged over Ground – 6th Floor totalling 53,820 sq.ft (NIA) with 42 basement car spaces • The property benefits from full Planning Consent for a 106 residential apartment scheme totalling 58,039 sq.ft (Net Sales Area) plus a Ground Floor retail unit of 517 sq.ft, 37 secure basement car spaces and 156 cycle and 2 motor cycle spaces • Excellent residential capital and rental growth predicted • Offers are invited, subject to contract and exclusive of VAT, for the freehold interest.
4
5
M A R L B O RO U G H H O U S E
BRISTOL The thriving city of Bristol is the principle financial and commercial capital of the South West and the 7th largest centre in England outside of London.It has a resident population of 428,200 (Census 2011) with 555,000 people living within 10 km (6.25 miles) of the centre and around 1 million within the travel to work area. The population and number of households is predicted to grow by 5% between 2013-18 (Co Star). With a diverse range of public and private employers including finance, defence, aerospace, healthcare, Government and professional
6
services, Bristol is one of the largest employment bases for banking, finance and the insurance sectors outside of London. Major employers include Airbus, AXA, BAe Systems, Rolls Royce, Imperial Tobacco, Lloyds Bank, PwC, EE, BT, BBC, Hewlett Packard, the MOD, Friends Provident and Hargreaves Lansdowne. Currently boasting the 2nd strongest economy in England, measured by GDP per head (Barclays), the City was ranked 2nd only to Edinburgh in the UK in the 2010 UK Competitive Index. With over 160 companies establishing their national headquarters in the City, it has experienced the 7th highest growth of the number of new businesses in all UK cities and towns from 2004-13 (Centre for Cities/ONS).
Bristol was recently named a “Super City” (HSBC) due to its progressive attitudes towards digital communications, bio-technology and low carbon industries, and has also long been associated with the “Green” movement culminating in being granted the status of “European Green Capital 2015”. Bristol also has an impressive heritage and vibrant culture with a welldocumented maritime history, most notably the world renowned Isambard Kingdom Brunel and John Cabot. There are numerous museums, theatres and other tourist attractions including Brunel’s SS Great Britain and the Clifton Suspension Bridge. As well as the plethora of cafes, bars, restaurants and clubs the City is also home to the political artist Banksy
and Wallace and Gromit creators Aardman Productions, along with the BBC Natural History Unit, producers of exceptional programmes including Planet Earth. There is a thriving music scene and an Annual Balloon Fiesta, the largest outside of the USA. There are two outstanding universities – the University of Bristol and the University of the West of England – with a total of around 39,000 full time students. With excellent career opportunities and an attractive living environment, Bristol consistently retains a higher proportion of graduates than any other city in the UK and Bristol boasts the highest employment rate of all major UK cities at 79.2%.
7
M48
M5
M A R L B O RO U G H H O U S E
M4
A4 03 2
A38
M4 A46
RIVER SEVERN
M49
M5 M4
A38
M4 A4
2 03 A4
M5
BRISTOL
AE
LBOROUGH ST AR
LL HI L’S
IDR
BRI
CABOT CIRCUS
A3
8
UNIVERSITY OF BRISTOL
A46
M32 A4174
A46
A4
A4 20
IC H
M
ST M
HORFIELD RD
MARLBOROUGH HOUSE
A38
A4
IDR
BROADMEAD
BATH
A 42
0
A404 4
R
D Y RR PE
R UPE RT S T
A37
BALDWIN ST
ST
AN C H
AY OR W
TEMPLE
WAY
VIC TO RIA
QUEEN SQUARE Bristol Temple Meads
EXCELLENT CONNECTIONS
A PRIME LOCATION
ROAD
RAIL
AIR
The M4/M5 Almondsbury Interchange is located 4 miles to the north of the city centre and the M32 links the M4 (J9) directly into the centre. The M48 and M49 Motorways provide access to South Wales via the two Severn bridges.
Bristol is served by two mainline stations – Temple Meads in the City Centre and Bristol Parkway to the north of the City, close to the M4/M5 interchange and the M32 – and provides regular intercity services to London Paddington (fastest time of 98 minutes), Birmingham (82 minutes), Cardiff Central (46 minutes) and Manchester (178 minutes). Following the electrification of the line to Paddington in 2017, journey times will fall to less than 90 minutes.
Bristol International Airport is situated approximately 8 miles south of the city centre and is the fastest growing regional airport in the UK, providing regular domestic and international flights to over 122 destinations in 28 countries. The airport now serves over 6.2 million passengers per year and following the grant of planning consent in 2011 for further expansion and enhancement of Bristol Airport, is predicted to handle 10 million passengers by 2019/20.
Bristol is located approximately 115 miles west of London, 87 miles south of Birmingham, 80 miles north east of Exeter, 45 miles east of Cardiff and 12 miles north west of Bath.
8
Marlborough Street is a primary road linking the St James Barton roundabout/ Inner Distributor Road with the affluent suburb of Clifton approximately 1 mile to the north. The IDR links directly with the M32 approximately 400m from the property, while the St James Barton roundabout is adjacent to the City’s primary and extensive shopping facilities of Broadmead, including the Cabot Circus Shopping Centre. The recently built Bristol Magistrates Court and remodelled main city bus station are situated directly opposite the subject property with the Bristol Royal Infirmary and main Bristol University buildings about 200m and 800m distant, respectively.
Marlborough House occupies a mixed residential, student and commercial location. There is a 224 room Premier Inn and a 155 bedroom Holiday Inn virtually opposite and several student accommodation blocks close by including Blenheim Court and Cherry Court (Unite), with a 361 bed block to the rear operated by I.Q. Pay + Display parking is available nearby at Lower Maudlin Street with other NCP car parks within easy walking distance at Nelson Street (231 spaces), Rupert Street (483 spaces), St James Barton (290 spaces) and Trenchard Street (950 spaces).
The site would therefore be highly accessible and attractive location for students, Bristol University academic and administrative personnel, hospital staff and young professionals. The site enjoys a highly prominent, visible and extensive frontage to Marlborough Street with the benefit of a rear frontage to Charles Street providing rear servicing and access to the basement car park.
9
M A R L B O RO U G H H O U S E
Holiday Inn
10
Castle Park
Broadmead Shopping Centre
Debenhams
St James Barton Roundabout
Marlborough House Primark
Premier Inn
Bus Station
Magistrates Court
Bristol Royal Infirmary
Bristol University
11
M A R L B O RO U G H H O U S E
EXISTING BUILDING Marlborough House currently comprises a modern office building arranged over six floors with basement car parking and a Plant Room at 7th floor. Built in 1982 of frame construction, with brick and glazed curtain walling and cladding panel elevations under a flat roof, the property provides flexible open plan accommodation with suspended ceilings incorporating low glare lighting, air conditioning, perimeter and floor trunking, 2 x 12 person lifts (GF-6F), reception with glazed atrium, male and female WC accommodation, a recently installed new building management system and 42 secure basement car spaces. The existing property provides the following net internal office floor areas as measured in accordance with the RICS Code of Measuring Practice (6th Edition). Ground Floor
Offices
Ground Floor
Reception
First Floor
Offices
9,256 sq.ft
Second Floor
Offices
10,748 sq.ft
Third Floor
Offices
10,748 sq.ft
Fourth Floor
Offices
4,558 sq.ft
Fifth Floor
Offices
4,558 sq.ft
Sixth Floor
Offices
4,558 sq.ft
Seventh Floor
Plant
Total
9,182 sq.ft 252 sq.ft
53,820 sq.ft
NB. Total of 58,822 sq.ft if Lobby areas and the continuous perimeter air conditioning units are included.
12
13
M A R L B O RO U G H H O U S E
CONSENTED SCHEME Full Planning Permission has been granted for the comprehensive conversion, extension and remodelling of the property into 106 residential apartments and a self-contained retail unit fronting Marlborough St, all arranged over Ground – 7th Floor with 37 car spaces. The total residential Sales floor area is 58,039 sq.ft (5,392 sqm), (including a store of 183 sq.ft), arranged as 21 studios, 47 x 1 bedroom and 38 x 2 bedroom apartments. The Consent is subject to a S106 Agreement for a) the provision of 6 affordable units and b) a fee for the maintenance of the tree adjacent to the main entrance. Copies of the Planning Consent, the S106 Agreement, a detailed schedule of apartment floor areas and floor and elevational plans are available to interested parties via the dataroom website. With circa 1 million sq.ft of secondary office space removed/being removed from the Bristol office market for development and/or conversion into other uses including residential, student accommodation and hotels, some parties may wish to consider retaining the building in its current Use and refurbish and extend the property as an Office building with on site car parking.
7TH FLOOR
6TH FLOOR
5TH FLOOR
4TH FLOOR
3RD FLOOR
2ND FLOOR
NOTE This layout is the first floor plan which shows a typical layout. Full floor plans can be provided on request. 14
1ST FLOOR
GROUND FLOOR
15
M A R L B O RO U G H H O U S E
EPC The existing building has a D (86) rating. The proposed development has been designed to comply with Sustainability and Energy efficiency standards.
TENURE Freehold.
TENANCY The entire property is let to Winterthur Financial Services UK Limited, guaranteed by AXA UK Plc, on an effective FRI lease for a term expiring 24 December 2017, at a current rent of £723,500 pa, exclusive. The lease is excluded from the security of tenure provisions under the Landlord and Tenant Act, 1954 and no Compensation will be payable to the tenant at expiry. The lease is drafted on an internal repairing basis with decoration and external repairs, lifts and mechanical and electrical equipment, and management fees payable via an RPI increasing capped Service Charge. The audited Service Charge Costs for 2014, and the budgeted figure for 2015, are below the cap and so NO current Service Charge shortfall. The tenant chose not to exercise a break option effective from 25 December 2015. In return the tenant is granted a 4 month rent free period from this date.
COVENANT The property is let to Winterthur Financial Services UK Limited with surety from AXA UK Plc. Winterthur and AXA UK form part of the global AXA Group. Summary financial information is set out below.
Winterthur Financial Services UK Limited (Co. no. 00823355) In 2011 the Wealth Management business in a number of Winterthur funds were transferred to AXA Wealth Limited. Financial Year Ending
31/12/2013 £ '000
31/12/2012 £ '000
31/12/2011 £ '000
Turnover
£218,497
£287,709
£ 295,192
Pre Tax Profits
(£28,767)
n/a
(£33,042)
31/12/2013 £ '000
31/12/2012 £ '000
31/12/2011 £ '000
n/a
n/a
n/a
£199,000
n/a
(£57,000)
£4,852,000
£4,715,000
£4,661,000
AXA UK Plc. (Co. no. 0297724) Financial Year Ending
Turnover Pre Tax Profits Net Worth
Further information is available at www.axa.com.en/publications/annual reports/archives
AXA Group reported a strong performance for the first half of 2015 setting a new half year record with Euro 3.1 billion in underlying earnings. Total Revenues increased by 2% driven by growth in all business lines – Life & Savings, Property & Casualty and Asset Management. The Chairman added that “the Group remains very well positioned to successfully conclude its Ambition AXA plan this year, demonstrating once again the pertinence of our business model in an environment characterized by low interest rates and market volatility”. 16
17
M A R L B O RO U G H H O U S E
BRISTOL RESIDENTIAL MARKET Central Bristol has experienced an increase in popularity over the past decade. The growth in convenient city living has dramatically changed the landscape of the City in terms of infrastructure and amenities available. The trend towards city living is particularly evident in the younger and professional groups. The housing market remains strong in the city centre reflecting: High employment particularly in the professional, scientific & technology, IT, finance and insurance service sectors Continuation of the Help-to-Buy programme Mortgage rates remaining at historically low levels Substantial student numbers in the city centre are fuelling further capital and rental growth A huge driver of the trend in city living is the ease of access to transport, and proximity to shopping, location of jobs, cultural and social facilities. This trend looks set to continue. The immediate area around the subject property has experienced considerable development in recent years, particularly residential and student accommodation apartment blocks, as well as the new Magistrates Court, remodelled main bus station and major improvements to the Bristol Royal Infirmary. Close by, the opening of Cabot Circus shopping centre in 2008 has greatly improved and enhanced shopping facilities in Bristol. The central Bristol market has seen a dramatic increase in demand coupled with a shortage of supply. This is predicted to continue and to generate further excellent growth in residential sales and letting levels. Prime property price growth has outperformed the wider prime market in the UK so far (Knight Frank, 2015). The number of potential buyers has risen but stock levels are failing to keep pace. This is exerting upward pressure on prices. Prime property values rose by 2.4% in the first 6 months of 2015, and 5.1% on an annual basis. (Knight Frank). By comparison, over the same periods the UK rose by 1.8% and 2.3%, respectively. Hometrack report that Bristol, as one of the UK’s biggest cities, will record one of the highest percentage increases in residential values for 2015 at 9.7% with an average price of £235,400. We anticipate this development will prove particularly attractive to Bristol University staff and students, BRI hospital staff, young professionals and first time buyers.
18
19
M A R L B O RO U G H H O U S E
PRIVATE RENTED SECTOR The private rented sector (PRS) is now the second largest rental provider in England, second only to the social rented sector. There are now 4.4 million privately rented households equating to 19% of all households (DTZ – now C&W ). This trend in an increasing proportion of rented stock is anticipated to continue. Total returns on PRS over the past two years have outperformed many other property sectors producing 13.5% and 15.2% (IPD). Rental value growth averaged 3.5% across the UK in 2014 as demand increased. The PRS is now worth an estimated £839 billion, but institutional investors account for just 2%. Residential investment is fast becoming an accepted and attractive institutional asset class and this investment drive will fuel a significant rise in the private rented residential sector over the next few years, and become closer to the more typical levels of private rented property presently seen across Continental Europe and North America. Savills forecast residential values in the South West Region to increase by 19.9% over the 5 year period 2015 – 20. This is one of the highest predicted regional growth rates in the UK. Furthermore, recent changes in Stamp Duty and reduction in tax relief for Buyto-Let investors will further exacerbate the lack of available rental properties.
VAT The property is not elected for VAT and under the terms of the Lease the property cannot be elected before expiry.
PROPOSAL Offers are invited, subject to contract and exclusive of VAT, for this valuable freehold interest, subject to the existing lease to Winterthur/ AXA and with the benefit of the residential Planning Permission.
20
21
M A R L B O RO U G H H O U S E
CONTACT For further information, to arrange an inspection and to gain access to the data room, please contact the joint agents:
Kieran Mitchell Jackson Criss E: kieranm@jacksoncriss.co.uk T: 020 7637 6857
Martin Blake Andrews & Partners E: mblake@andrewsonline.co.uk T: 0117 946 1799
James Read Andrews & Partners E: jread@andrewsonline.co.uk T: 0117 946 1799
MISREPRESENTATION ACT: Messrs Jackson Criss and Andrews & Partners, for themselves and for the vendors or lessors of this property, whose agents they are give notice that (i) the particulars are set out as a general outline only for guidance of intending purchasers or lessees, and do not comprise part of an offer or Contract, (ii) all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details, are given in good faith and are believed to be correct, but any intending purchasers or tenants should not rely on them as statements or representations of fact, but must satisfy themselves as to the correctness of each of them, (iii) no person in the employment of Jackson Criss and Andrews & Partners has any authority to make any representation of warranty whatsoever in relation to this property. January 2016.
22
23
24
jacksoncriss.co.uk