Oxford Business Park, Units A and B, Plot 7000

Oxford, Oxfordshire OX4 2ZY

Overview

  • Two prime industrial and logistics facilities extending to 92,618 sq ft.
  • Located on Oxford Business Park close to the Eastern Bypass A4142, providing excellent motorway access to the South East and the North.
  • Within Oxford's 'Golden Triangle' life science cluster.
  • Fully let to two tenants providing a WAULT of 13.55 years to expiry (13.03 years to break).
  • Total passing rent of £815,310 per annum (blended average rent of £8.80 per sq ft).
  • At review 90% of the income is subject to the higher of:
    - RPI (2% collar - 4% cap)
    - OMRV
    - Notional rent of a 20,000 sq ft unit.
  • Substantial landlord refurbishment in 2018.
  • Tenant currently undertaking extensive lab fit-out, reportedly at a cost of c. £17.50m.
  • Site extends to approximately 2.60ha (6.42 acres), providing a low site coverage of approximately 35%.
  • Freehold.
Offers are invited in excess of £13,900,000 which reflects an attractive NIY of 5.50%, assuming purchaser's costs of 6.72%. This reflects a price of £150 per sq ft.
A purchase at this level will reflect a minimum yield of 6.01% in 2023 given the RPI collar provided (i.e. 2.00% per annum) or a yield of 6.56% in 2023 given the RPI cap (i.e. 4.00% per annum).

Location

The property is located on Oxford Business Park (North), approximately 2.5 miles south east of Oxford city centre and adjacent to the A4142 Eastern Bypass, linking the city with the wider UK road network. The A4142 provides excellent access to the A40 and A34, both of which are less than 3 miles away, providing access to Junction 8 and Junction 9 of the M40, enabling access to the South East/London as well as the North.

Oxford railway station is 4.5 miles from Oxford Business Park, which provides frequent services to London Paddington and Reading, with journey times to London of approximately 56 minutes. There is also a direct service to Birmingham, connecting the two cities in just over an hour. In 2015, Chiltern Railways opened a new line at Oxford Parkway linking the city to London Marylebone with train times of 1 hour 3 minutes, adding an additional connection between the capital city and Oxford. Oxford is well positioned for air travel, with the two major airports, London Heathrow International and Birmingham International Airports, located approximately 45 miles south east and 66 miles to the north respectively.

Situation

The property is situated in an established commercial area, in close proximity to the BMW Group production plant as well as Horspath Industrial Estate and the out of town retail amenity provided at Oxford Retail Park. Further, Unipart head office and national distribution centre is located nearby. The Oxford Science Park is approximately 3.5 miles away, a key location to the bioscience cluster.

The subject property is accessed via the A4142 (Eastern Bypass) and is 0.2 miles from the Eastern Bypass roundabout. Alternatively, accessing the property from the city centre, the Cowley Road (B480) provides access towards Oxford Business Park and the Eastern Bypass.

Oxford Business Park

Originally developed by Goodman in 1992, the business park provides a high-quality mixed use environment covering a total site area of 88 acres. The park has over 65 occupiers, employing in excess of 5,500 people, and is home to a number of high-profile occupiers including BT, Harley Davidson, David Lloyd and British Gas.

Oxford City

In 2018, PWC named Oxford as the 'Top UK city for economic success' for the third year running.

The city is renowned as a major academic centre and home to two universities providing leading research bases: The University of Oxford and Oxford Brookes University. The city is at the core of the Oxfordshire economy, with traditional key industries such as motor manufacturing but with a developing economy based around the bioscience sector, IT services and R&D businesses.

There are currently approximately 35,000 students enrolled in full-time higher education at the two universities, providing an exceptional supply of good quality graduates for employment. The city is home to 4,730 businesses employing around 188,000 people. Of this figure, 46,000 people commute into the city for work, demonstrating the draw of Oxford as a city and growing economy.

The Oxford Life Sciences Cluster

Oxford is part of the life sciences 'Golden Triangle'. The term 'Golden Triangle' was initially used to describe the group of elite, research intensive universities: University of Oxford, University of Cambridge, Imperial College London, London School of Economics, University College London and Kings College London. However, the term has now been broadened out to describe the entire geographic cluster and its associated companies and industries.

The Oxford cluster is defined as a 20-mile radius from the city centre (taken as the Carfax Tower, Cornmarket Street). It is viewed as one of the world's leading centres for life and medical sciences and is regarded as one of the most mature clusters in Europe. Within this area, a wide range of activities from traditional drug discovery & development to digital health innovation are undertaken.

The life science sector in Oxford has seen unprecedented growth in recent years. This growth has come from not only an increased number of start-ups, but more developed companies. This is evidenced by Oxford University Innovation (OUI) producing a record number (24) of spin-out companies in 2018. The pipeline at the University of Oxford only looks to be getting stronger, with 440 invention disclosures and over 125 patents filed in 2018 alone.

Although the University of Oxford's company formation ability has been a big driver for growth in the cluster, we have seen an increasing number of companies move into the area as a way of accessing talent. For example, the American companies The Medicines Company and Vertex Pharmaceuticals both have significant presences in Oxfordshire with the purpose of attracting talent to the company.

Further information can be found within the marketing particulars.

Description

The property comprises two adjacent industrial units, which were originally purpose built specifically for Royal Mail Group in 1996.

Both units are of steel portal frame construction with profile metal cladding, low level brick and block work elevations.

Unit A was substantially refurbished in 2018 which included upgrading the level access arrangements, increasing yard depth and new office accommodation. The tenant is currently part way through their extensive fit-out works which are being carried out under a Licence for Alterations, further details of which can be subsequently provided.

The Unit offers a high-quality warehouse/industrial space to the following specification:

  • Entrance to offices via glazed reception
  • 8m eaves
  • 6 dock level loading doors
  • 6 electrically operated level access loading doors
  • HGV parking
  • 45m yard depth from the eastern boundary
  • Main mezzanine situated in the southern end of the warehouse abutting the office element
  • Secure self-contained yard accessed via a gated entrance
  • Fully fitted offices
  • 131 spaces for car parking
Unit B was constructed for Royal Mail vehicle maintenance. The unit benefits from 6m eaves, 12 level access loading doors, with two-storey integral offices provided at the southern end of the building. Car parking is provided to the rear and side of the unit, with the yard located immediately in front of the unit.

Accommodation

The property has been measured in accordance with the RICS Code of Measuring Practice (6th edition). Further information can be found within the schedule below.

Site

The site extends to approximately 6.42 acres (2.60 ha).

Site coverage is approximately 35%.


Tenure

Freehold.

Tenancy

Unit A
Let to Oxford Biomedica (UK) Ltd on a 15-year FRI lease from 2018, expiring 11th September 2033. The passing rent is £730,310 per annum (£8.75 per sq ft) subject to 5-yearly reviews on an upwards only basis to the higher of: (1) the open market rent; (2) the notional rent would be assessed on amongst other property specific provisos, a 20,000 sq ft GIA; or (3) in line with RPI, subject to a collar and cap of 2.00%-4.00% respectively, compounded annually.

The tenant benefits from a period of half rent payable (i.e. £365,155 per annum) for the period until 30 June 2020, which the vendor will top up.

A further period of half rent is payable by the tenant from 12th September 2028, expiring on 11th September 2029. This will not be topped up by the vendor.

The landlord holds a rent deposit of £3,000,000 held in an interest bearing bank account, the interest is to be paid to the tenant annually, except if in arrears and will be transferred to the purchaser.

Further information can be found within the Tenancy Schedule link below.

Unit B
Let to Royal Mail Group Ltd on a 10-year lease from 30th June 2017, expiring 29th June 2027. The passing rent is £85,000 per annum (£9.31 per sq ft) which is subject to upward only open market rent review in June 2022. There is a tenant only break option in June 2022, subject to 6 months' notice.

Royal Mail has been in occupation of Unit B since 1996.

Further information can be found within the Tenancy Schedule link below.


Covenant Information

Oxford BioMedica

'Oxford BioMedica is one of the largest listed biotechnology companies in the UK attracting significant inward investment'

Oxford BioMedica is a specialist biopharmaceutical company, based in Oxford, working in advanced therapy viral-vectors. The company's roots are in the University of Oxford. The company offers vector manufacturing and development services and retains rights to proprietary drug candidates. The company specialises in the manufacture and development of lentiviral vectors. A lentiviral vector is a delivery vehicle to insert, modify or delete genetic material from inside a cell. Lentiviral vectors are a vital component in the growing field of gene and cell therapy. Oxford BioMedica estimates that the lentiviral vector market alone will be worth $800m by 2026. Lentiviral vectors are very difficult to produce, and there are few organisations in the world that have the expertise to make them in commercial quantities at clinical grade, increasing the demand on those that have both the expertise and the capacity.

Oxford BioMedica is listed on the London Stock Exchange (LSE: OXB). The company's market capitalisation at time of writing is £550m (July 2019), making it one of the largest listed biotechnology companies in the UK. In the company's 2018 annual report, it was reported that annual gross income increased by 72% to £67.9m, revenue increased by 78% to £66.8m and as of 31st December 2018 the company had cash of £32.2m. To strengthen the company's financial position, in May 2019 the company announced that Novo Holdings had invested £53.5m. The proceeds from the transaction will be used to repay the existing debt facility with Oaktree Capital Management in full and to further develop the LentiVector platform and the proprietary product portfolio.

Further information can be found within the Schedule link below.

Royal Mail Group Ltd

Royal Mail Group Ltd is a wholly-owned subsidiary of Royal Mail plc and is the UK's main postal service provider. Royal Mail has been a constituent of the FTSE 250 London Stock Exchange since October 2013.

Further information can be found within the Schedule link below.


VAT

The property is elected for VAT and it is envisaged that the sale will be treated as a Transfer of a Going Concern.

OCCUPATIONAL MARKET COMMENTARY

Further information can be found within the marketing particulars.

INVESTMENT MARKET COMMENTARY

Further information can be found within the marketing particulars.

EPC

Unit A - B (30)
Unit B - D (88)

DATA ROOM

Access to the data room is available upon request.

Proposal

Offers are invited in excess of £13,900,000 which reflects an attractive NIY of 5.50%, assuming purchaser's costs of 6.72%. This reflects a price of £150 per sq ft.

A purchase at this level will reflect a minimum yield of 6.01% in 2023 given the RPI collar provided (i.e. 2.00% per annum) or a yield of 6.56% in 2023 given the RPI cap (i.e. 4.00% per annum).

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NET INITIAL YIELD:
5.5%
PRICE:
£13,900,000
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