Portwall Place, Portwall Lane

Bristol BS1 6NA

Overview

AN OPPORTUNITY TO ACQUIRE A HIGHLY REVERSIONARY PRIME REGIONAL MULTI-LET OFFICE INVESTMENT

Bristol is the UK's 5th largest city with an urban population of 1.6m. It boasts a world class knowledge and financial based economy and is recognised as one of the UK's Creative/TMT hotspots.
  • Bristol is the regional and business capital of the South West of England. It is one of the UK's fastest growing cities economically, forecast to grow at 3% pa over the next 10 years and produces a current GVA of £14.31 billion.
  • Portwall Place is an imposing five storey landmark office building providing high specification Grade A office accommodation.
  • Situated in the heart of Bristol's Central Business District, Portwall Place is a short walk from Temple Quay and Bristol Temple Meads station.
  • The property has a Weighted Average Unexpired Lease Term of 5.0 years to expiry and 4.5 years to break.
  • High quality line up of tenants including DAC Beachcroft, AECOM and Smith & Williamson, all with D&B ratings of 5A1.
  • A total net lettable area of 162,230 sq ft (15,071.79 sq m) over ground and four upper floors with an excellent city centre parking ratio of 1:1,639 sq ft.
  • Bristol has witnessed record growth in Grade A rents of around 24% over the past two years.
  • The average rent across the office accommodation equates to £25.19 per sq ft, which provides a very low base for rental growth against current prime headline rents of £37.50 per sq ft.
  • The property currently produces a gross rental £4,074,392 per annum and net income of £3,891,892 per annum, after deduction of the head rent.
  • Recent £1m refurbishment to the reception, showers, changing facilities and cycle storage areas, creating a 'best in class' offer.
  • Availability in the city centre of Grade A accommodation is at an all time low of 15,000 sq ft and overall availability is just 3.25%.
  • The building has a BREEAM rating of 'Very Good'.
  • The property is held on a 150 year leasehold interest from 6th February 2006 at a passing rent of £182,500 per annum.
We are instructed to seek offers in excess of £66,300,000 (Sixty-Six Million, Three Hundred Thousand Pounds), subject to contract and exclusive of VAT, reflecting a net initial yield of 5.50% assuming purchaser's costs of 6.78%, reflecting a low capital value of £409 per sq ft.

Location

Bristol is the 5th largest conurbation in the UK and the capital of the South West. It has an estimated population of 463,400, which is expected to increase by 95,100 (21%) by 2041, this is significantly higher than the national average of 12%. The larger urban area population is estimated to be 1.6 million and is amongst the most attractive, successful and culturally prestigious cities in the UK, enjoying a rising profile within Europe and beyond.

Bristol has a relatively young population profile with the median age of people living in Bristol standing at 32.5 years compared to 40 years in England and Wales. Bristol has a higher percentage (54%) than the UK average (51%) in socio economic groupings of higher, intermediate and supervisory managerial, administrative and professional groups. Moreover, Bristol has a highly educated population with 49% having obtained a degree against a national average of 38%.

Bristol

ECONOMY & EMPLOYMENT
Bristol's economy showed strong resilience during the recession, achieving the highest annual GVA growth rate of all core UK cities (1998-2017 2.4% per annum) and has remained the most productive. The city's economy is now worth £14.31bn up from £13.67bn in 2015 and has the second highest number of business start-ups in the UK (81.7 per 10,000 working age population).

According to the 2019 Survey, Bristol has 247,100 working age residents, the equivalent to an employment rate of 77.6% which is the highest of all British Core Cities and 2.2% above the national average. In 2018 there were over 268,000 employee jobs in Bristol, an increase of 3.7% from 2016 levels and the 3rd fastest growing of all British Core Cities.

Its success is based on its world class knowledge economy based in aerospace, defence, engineering, ICT & electronics, financial services, media, creative and environmental industries, along with the global reach of its two universities. It is a popular relocation destination, supported by flourishing TMT, professional and financial services sectors.

The city has benefited significantly from relocations and expansion around occupiers including Dyson, Channel 4, Graphcore, OVO Energy, BT plc, Rolls Royce, Ministry of Defence, BBC, Airbus, Lloyds Bank, National Composite Centre and numerous large legal practices.

In 2017 Bristol was named as the only fast growing, globally significant tech cluster in the UK (McKinsey and Co) and the UK's largest digital cluster outside of London.

EDUCATION & CULTURE
The city benefits from two outstanding and significant universities, the University of Bristol and the University of the West of England, with the University of Bristol being the second most targeted university by employers in the UK. These contribute to Bristol's skilled labour pool, which has one of the highest retention rates in the UK. Most recently the University of Bristol incubator spin-out company Ziylo has been bought by global company Novo Nordisk for around $800 million.

Combined, the universities have a population of 54,000 students and the University of Bristol has significant growth projections and development has commenced on the University's new £350 million Temple Quarter Enterprise Campus adjacent to Bristol Temple Meads station, which is due to open in 2023. The new campus will include a digital innovation hub, a business school of the future and a new student village.

Bristol has been identified by NESTA as among the UK's "creative hotspots", promoting innovation and economic growth.

Bristol has a long association with the 'green' movement and is proud of its status as the 'European Green Capital 2015', the only UK city to have been awarded the accolade.

Further information is available at:
www.bristoltemplequarter.com
www.bristolandbath.co.uk


ROAD
Bristol is strategically located at the junction of the M4 and M5 motorways, 118 miles west of London. The city centre benefits from excellent road communications being only 4 miles from the M4/M5 intersection. The M4 is the east-west axis from London to Cardiff, whilst the M5 is the north-south west axis from Birmingham to Exeter. The M48 motorway and Second Severn Crossing provide strong road links to Cardiff and South Wales and the M32 motorway spur links the M4 to Bristol City Centre.

RAIL
Bristol Temple Meads station is located centrally and within a 8 minute walk of the property. It represents part of the Great Western Mainline, providing regular direct intercity services to the UK's major cities and has recently undergone its largest modernisation since completion. The £5.5bn electrification of the Great Western Mainline between London Paddington and Cardiff completed in December 2019, reducing the journey time between Bristol Temple Meads and London Paddington by 14 minutes to 1hr 20mins and increasing capacity with an extra 15,000 seats during weekdays.

AIR
Bristol International Airport lies 8 miles south of the city centre and is serviced by a dedicated coach link. It offers direct flights to over 125 destinations throughout the UK, all of the major European economies and also the USA.

Bristol is strategically located at the junction of the M4 and M5 motorways.

Situation

Portwall Place is situated in Bristol's central business district, a short walk from Bristol Temple Meads station. The property fronts on to Portwall Lane and is prominently positioned directly opposite St Mary Redcliffe Church. Portwall Lane is a very popular thoroughfare and forms part of the 'Brunel Mile' which runs from Bristol Temple Meads to Harbourside via the historic Queen Square.

Portwall Place is in the heart of Bristol's core office district, where significant prime Grade A office developments include Temple Quay & Glass Wharf, One George's Square, Hartwell House, The Paragon, Bridgewater House, Aurora and Fermentation Buildings. Attracting occupiers including Ernst & Young, Barclays Wealth, Grant Thornton, EDF, Oracle, Smith & Williamson, Simmons & Simmons, DAC Beachcroft, Channel 4 and Historic England.

Immediately to the east of Portwall Place is Nord's 'One Portwall Square' scheme, an exciting new 33,750 sq ft office development being constructed and already part prelet to AHMM architects.

Directly north of Portwall Place is CEG's 'Aspire' office development, where they plan to deliver 200,000 sq ft of high quality Grade A office accommodation.

Major infrastructure works are ongoing to realign key parts of the road and pedestrian network around Temple Circus to open land for high quality development of office space and to reduce the impact of traffic.

Key local projects include the proposed 44,000 sq ft of Grade A office space at Engine Shed II and associated public realm works, which will greatly enhance the setting of Portwall Place, Redcliffe Way and surrounds towards Bristol Temple Meads station.

Description

Portwall Place

Portwall Place is an impressive five storey landmark office building, benefitting from an attractive design with large glazed atria providing very bright and modern office accommodation.

The building provides accommodation of a high quality Grade A specification, with floorplates suitable for single or multiple occupation. The building provides some of the largest floorplates available in Bristol. The building has attracted a variety of high quality tenants and is an excellent choice for companies seeking regional/national headquarters or those considering a relocation outside of London.

The building provides a total net internal area of approximately 165,272 sq ft over ground and four upper floors, of which 160,962 sq ft is office accommodation. The property provides floorplates up to 39,479 sq ft.

The landlord has recently completed a comprehensive refurbishment and reconfiguration of the ground floor reception creating 'best in class' amenities including café, cycle storage and shower/changing facilities at a cost of over £1 million.

Portwall Place is within the heart of Bristol's core office district.

Specification

The Specification includes:
  • Impressive double height fully glazed reception area
  • Two full height fully glazed internal atria
  • Excellent natural light
  • Four (16 person) passenger lifts servicing each floor
  • 4-pipe fan coil air conditioning
  • Metal tiled suspended ceilings
  • Recessed lighting LG7/2005
  • Full access raised floors (150 mm void)
  • Refurbished and extended shower facilities and lockers (16 showers)
  • Refurbished and extended provision of secure bike racks
  • BREEAM rating of 'Very Good'
  • Floor plates up to 39,479 sq ft
  • Floor to ceiling heights are typically 2.7 metres
  • Significant roof terraces to the fourth floor
  • Service lift located within the core
  • CCTV security system
  • 24 hour fully manned concierge style reception
Full details of the specification are available upon request.

The property provides 99 car parking spaces, with 73 standard spaces and 26 designated disabled spaces providing an excellent ratio of 1:1,639 sq ft.

There are also around 278 bicycle spaces (including lockers with capacity for 16 folding bikes) and 38 motorcycle spaces.

Accommodation

The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) by Pure Real Estate Service Ltd and provides a total net internal floor area of 165,272 sq ft (15,354.3 sq m).

The property has also been measured in accordance with the RICS Property Measurement (6th Edition) which incorporates the International Property Measurement Standards (IPMS 3), which replaced the RICS Code of Measuring Practice (6th Edition) on 1st January 2016. The property on this basis has a floor area of 171,544 sq ft (15,937.0 sq m)

A schedule of Accommodation can be viewed within the link below.


Tenure

The property is held long leasehold under title number BL91560 from The Trustees of St Mary Redcliffe Church Lands Charity for 150 years from 6th February 2006, at a passing rent of £182,500 per annum.

The rent is reviewed 5 yearly to 5% of the then rack rent of the property or the rent payable immediately before the relevant review date, whichever the higher. The February 2016 rent review has not been instigated by the landlord and we do not believe there is evidence to substantiate an increase.

Tenancy

The property is let in accordance with the Tenancy Schedule found within the link below, which produces a gross income of £4,074,392 per annum and net current income receivable of £3,891,892 per annum. The rental reflects a very low average rent for the offices of £25.19 per sq ft.

All leases are drawn on effective full repairing and insuring terms via a service charge contribution.

A schedule of Accommodation and Tenancies can be found within the link.


Covenant Information

The main tenants are DAC Beachcroft, Smith & Williamson, AECOM, Tilney and OPUS providing a Weighted Average Unexpired Lease Term of 5 years to expiry and 4.5 years to break.

DAC Beachcroft and 25 Moorgate Ltd (Smith & Williamson) account for circa 75% of the current contracted income and have approximately 4.9 years unexpired. 85% of the income is also derived from covenants with a Dun and Bradstreet rating of 5A1, representing a minimum risk of business failure.

Further information can be found within the marketing particulars.

Development Projects

Bristol has undergone and continues to see a significant amount of investment in major mixed-use developments encompassing uses such as offices, residential, build to rent, purpose built student accommodation and major infrastructure.

Occupational Market

Further information can be found within the marketing particulars.

Investment Market

Further information can be found within the marketing particulars.

VAT

The property is elected for VAT purposes and therefore it is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

Service Charge

All leases are drawn on effective full repairing and insuring terms via a service charge contribution.

The service charge budget for the year ending 31st December 2020 is £942,630 equating to £5.91 per sq ft. In addition the tenant's electricity is metered and payable through a separate service charge schedule, which is budgeted at £355,000 for the year ending 31st December 2020.

Further information on the service charge accounts is available upon request.

ASSET MANAGEMENT OPPORTUNITIES

There are a number of potential asset management opportunities, with 80% of the current income subject to review or renewal within the next 3 years, as well as the potential to re-gear a number of the existing leases to capture the reversion, enhance the receivable income and the expiry profile.

Capital Allowances

Capital Allowances are available and further information is available upon request.

Warranties

A full set of collateral warranties is available and can be assigned to the purchaser.

ENVIRONMENTAL PERFORMANCE

The property has been assessed with a BREEAM rating of 'Very Good'.

The Energy Performance of the property has been assessed, a copy of which is available within the data room.

Data Room

Data room access can be provided upon request, which contains the following information:
  • Title Documents
  • Occupational Documents
  • Measured Survey
  • Management Information
  • EPC
Please register at www.portwallplacebristol.com to access the data room.

Investment Rationale

  • Prime location within the heart of the Central Business District close to Queen Square, Temple Quay and Bristol Temple Meads station.
  • Multi let building with multiple lease events providing opportunities for refurbishment, reletting and/or lease regears whilst maintaining core income.
  • Landlord's recent £1 million refurbishment works to the reception, cycle storage, showers and changing facilities, creating a 'best in class' offer.
  • The building provides high quality flexible floorplates popular with tenant requirements.
  • With average rents of £25.19 per sq ft and Bristol prime rents now at £37.50 per sq ft, the property is highly reversionary.
  • Bristol has the lowest availability on record, currently standing at 3.25% of total stock.
  • Bristol has witnessed exceptional rental growth with Grade A rents increasing by around 24% in the past two years.
  • c.85% of the current income is derived from covenants with Dun & Bradstreet ratings of 5A1 representing a minimum risk of business failure.
  • Bristol has one of the most diverse employment bases including some of the largest floorspace occupied by the banking, legal and TMT sectors in the UK outside London.
  • Bristol has benefited significantly from relocations and expansion around occupiers including Rolls Royce, Ministry of Defence, BBC, Airbus, Lloyds Bank, Channel 4, Dyson, Graphcore, Ultraleap and numerous large legal practices.

Proposal

We are instructed to seek offers in excess of £66,300,000 (Sixty-Six Million, Three Hundred Thousand Pounds), subject to contract and exclusive of VAT for our client's interest.

A purchase at this level would reflect an overall net initial yield of 5.50%, assuming standard purchaser's costs of 6.78%. This reflects a low capital value of £409 per sq ft.

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NET INITIAL YIELD:
5.5%
PRICE:
£66,300,000
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