Quayside (DAS House, North Quay House and South Quay House), Temple Back

Bristol BS1 6NH

Overview

  • Bristol is the regional and business capital of the South West of England and one of the UK's major commercial and financial centres. It is the UK's 5th largest city with an urban zone population of 1.6m residents.
  • Quayside is located within the heart of the Central Business District and Temple Quarter, a major commercial and residential growth area for the city, and a short walk from Bristol Temple Meads station.
  • Major employers in the vicinity include PwC, Ernst Young, Burges Salmon, Royal Bank of Scotland, Osborne Clarke, Deloitte, OVO Energy and various large government departments.
  • Quayside is a collection of three prominent office buildings, ranging from four to seven storeys, that provides around 96,347 sq ft of net lettable accommodation and 57 secure car parking spaces.
  • Quayside provides good quality highly flexible accommodation with floorplates ranging between 5,512 sq ft and 8,355 sq ft and an excellent parking ratio of 1:1,655 sq ft.
  • The principal tenants, DAS Insurance, DAS Legal and Unite Integrated Solutions account for 93% of the income.
  • The properties provide an average weighted unexpired lease term of 4.43 years to expiry and 4.26 years to break.
  • The current passing rental is £1,833,781 per annum, equating to a low average rent of £19.43 per sq ft, offering the platform for significant reversionary income.
  • Bristol's occupational market continues to see an imbalance between landlord and tenant and has witnessed Grade A rents increase from £28.50 per sq ft to £35.00 per sq ft since late 2017, an increase of 23%.
  • Quayside provides a very exciting opportunity to reposition this prime waterfront located asset through the significant opportunities for income growth by way of rent reviews, refurbishment, redevelopment, leasing and regears.
  • Freehold.
  • We are instructed to seek offers in excess of £25,000,000 (Twenty-Five Million Pounds), subject to contract and exclusive of VAT for our client's freehold interest.
  • A purchase at this level would reflect an overall net initial yield of 6.87%, assuming standard purchaser's costs of 6.76%. This reflects an overall capital value of £260 per sq ft.

Location

Demographics

Bristol is the 5th largest conurbation in the UK and the capital of the South West. It has an estimated population of 456,000 and a larger urban zone with an estimated 1.6 million residents and is amongst the most attractive, successful and culturally prestigious cities in the UK, enjoying a rising profile within Europe and beyond.

According to the 2011 Census, Bristol has a high proportion of working age people (71%) against a UK average of 63%, and this figure has increased by 21% since 2001. Furthermore, 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%.

Economy and Employment

Bristol's economy showed strong resilience during the recession, achieving the highest annual growth rate of all core cities (1998-2006 at 6.2% 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 third highest number of business start ups in the UK (94.2 per 10,000 working age population).

According to the 2017 survey, Bristol has 237,500 working age residents, the equivalent to an employment rate of 77.2%, which is the highest of all British core cities and 2.8% above the national average. Between 2011 and 2015, the number of employee jobs in Bristol grew by 10.8%, 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 a flourishing TMT, professional and financial service sectors.

The city has benefited significantly from relocations and expansion around occupiers including 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 c.$800 million.

Combined, the universities have a population of 52,000 students and the University of Bristol has significant growth projections. 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 2022. 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.

Situation

Road

Bristol is strategically located at the junction of the M4 and M5 motorways, 118 miles west of London and 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 6 minute walk of the property, providing regular direct intercity services to the UKs major cities. The mainline to London Paddington is currently undergoing electrification works costing more than £4.8bn, which are due to go operational in Q4 2019 and will reduce the journey times to London by around 20 minutes as well as provide significantly more capacity.

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.

Description

A collection of three very prominent buildings fronting Temple Way, Temple Back and the Floating Harbour directly opposite Temple Quay.

DAS House

DAS House provides a total net internal area of approximately 45,656 sq ft over ground and six upper floors, with floor plates up to 8,355 sq ft.
  • Double height reception
  • Four pipe fan coil air conditioning
  • Full access raised floors (150 mm void)
  • Typical floor to ceiling heights of 2.65m
  • Suspended ceilings incorporating LG3 compliant lighting
  • Two (8 person) passenger lifts servicing up to the fifth floor with the sixth floor via the staircase
  • Male, female and disabled WC facilities
  • Shower/locker facilities
  • 26 external and secure car parking spaces (1:1,729 per sq ft)
  • Secure motorbike and bicycle parking

South Quay House

South Quay House provides a total net internal area of approximately 27,078 sq ft over ground and three upper floors, with floor plates up to 6,819 sq ft.
  • Four pipe fan coil air conditioning
  • Full access raised floors (150 mm void)
  • Typical floor to ceiling heights of 2.65m
  • Suspended ceilings incorporating LG3 compliant lighting
  • Two (8 person) passenger lifts servicing each floor
  • Male, female and disabled WC facilities
  • Shower/locker facilities
  • 14 secure basement car parking spaces (1:1,926 per sq ft)
  • Secure motorbike and bicycle parking

North Quay House

North Quay House provides a total net internal area of approximately 23,613 sq ft over ground and three upper floors, with floor plates up to 5,696 sq ft.
  • Four pipe fan coil air conditioning
  • Full access raised floors (150 mm void)
  • Typical floor to ceiling heights of 2.65m
  • Suspended ceilings incorporating LG3 compliant lighting
  • Two (8 person) passenger lifts servicing each floor
  • Male, female and disabled WC facilities
  • Shower/locker facilities
  • 17 secure basement car parking spaces (1:1,321 per sq ft)
  • Secure motorbike and bicycle parking

The buildings are arranged around a secluded secured courtyard and are of steel frame construction with brick elevations and powder coated steel framed double-glazed windows. The buildings are arranged over four to seven storeys totalling 96,347 sq ft, providing flexible floorplates between 5,512 sq ft and 8,355 sq ft. Each building has a separately accessed secure ground floor or basement car park.

Accommodation

The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and provides a total net internal floor area of 96,347 sq ft (8,950.84 sq m).
The property has also been measured in accordance with the new RICS Property Measurements (1st Edition) which incorporates the new International Property Measurement Standards (IPMS).
The property on this basis has a net internal floor area of 98,027 sq ft (9,107.02 sq m).
A copy of the measured survey is available in the data room and capable of being assigned and relied upon by the purchaser.


Tenure

The property is held freehold under title numbers AV154293 (DAS House), BL76297 (South Quay House) and AV178349 (North Quay House).

Tenancy

The property is let to five tenants: DAS Services Limited, DAS Law Limited, Unite Integrated Solutions plc, Development Initiatives Poverty Research Limited and LIGS Limited with a weighted average unexpired lease term of 4.43 years to expiry and 4.26 years to break. The contracted passing rent is £1,833,781 per annum, equating to an overall rent of £19.43 per sq ft.

The passing rents range from £16.02 per sq ft to £22.11 per sq ft.

The leases to DAS Services Limited and DAS Law Limited contain no yielding up provisions, as such the tenants are not required to put the property in any better condition than evidenced in the Schedules of Condition. At lease expiry, the tenants will only be required to remove those items not itemised within the lease documentation.

Further information can be found in the Schedule below.

SERVICE CHARGE

Quayside has an estate service charge account and separate service charge accounts for each building.

The service charge accounts for the year ending 31st December 2018 are as follows:
  • DAS House £438,558 (£9.76 per sq ft)
  • South Quay House £188,161 (£6.98 per sq ft)
  • North Quay House £162,005 (£7.22 per sq ft)

The DAS House service charge account is currently operated on the basis the tenants floor power and cleaning is charged through the account, which is planned to continue post sale.

Further information on the service charge accounts is available within the data room.

OCCUPATIONAL MARKET

Further information can be found within the marketing particulars.

INVESTMENT MARKET

Further information can be found within the marketing particulars.


Covenant Information

DAS Services Limited
DAS can trace its origins back to the Le Mans motor racing event in 1917, when a mutual company was set up under the name Defence Automobile et Sportive (DAS), offering insurance for motor accidents, fire and theft. Today DAS has grown to employ over 700 people across five UK locations and in 2018 wrote 7 million insurance policies. In addition to a team based in Bristol, DAS UK Group has sales offices in London and Manchester and a claims office in south Wales.
DAS UK Group is part of the international network of DAS companies owned by the ERGO Insurance Group, one of the major insurance groups in Germany and Europe. They, in turn, have been specialising in legal expenses products and services for more than 80 years.
DAS Services Limited (Company No: 03457887) has a Dun and Bradstreet rating of N1 which represents a minimum risk of business failure despite having negative financial strength.

DAS Law Limited
DAS Law Limited (Company No: 05417859) is part of DAS UK Group. DAS Law employs over 200 people and provides legal advice and support across a wide spectrum of issues ranging from employment matters and personal injury litigation, to commercial disputes.
DAS Law Limited has a Dun and Bradstreet rating of N1 which represents a minimum risk of business failure despite having negative financial strength.
Unite Integrated Solutions plc
Unite Integrated Solutions plc (Company No: 02402714) is the largest manager and developer of purpose built student accommodation, supporting the country's world leading higher education sector. The company provides over 50,000 students with accommodation each year in around 130 properties across 22 leading university towns and cities across the UK.
The largest fund managed by the company is the Unite UK Student Accommodation Fund (USAF) which is currently valued at £2.2bn.
Unite Integrated Solutions plc has a Dun and Bradstreet rating of N1 which represents a minimum risk of business failure despite having negative financial strength.

Development Initiatives Poverty Research Limited
Development Initiatives Poverty Research Limited (Company No: 06368740) is an independent international development organisation that focuses on the role of data in driving poverty eradication and sustainable development. Founded in the south west of England in 1993, they now have partnerships across the world with over 70 people working in Brazil, Kenya, Uganda, UK and USA.
The company's operations are funded through private foundations. These include the Bill and Melinda Gates Foundation, the William and Flora Hewlett Foundation and Omiduyar.
Development Initiatives Poverty Research Limited has a Dun and Bradstreet rating of N3 which represents an average risk of business failure and negative financial strength.

LIGS Limited
LIGS Limited (Company No: 00182469) was incorporated on 16th June 1922 with the registered office located in London. LIGS Limited is part of the Lockton Group which is the world's largest privately held independent insurance broker.
LIGS Limited has a Dun and Bradstreet rating of 4A1 which represents a minimum risk of business failure.


VAT

DAS House and North Quay House are not subject to an option to tax and as such VAT will not be payable on the purchase price. South Quay House is subject to VAT and therefore VAT will be payable upon the purchase price.

EPC

The Energy Performance Certificates ratings are as follows:
  • DAS House E107
  • South Quay - D89
  • North Quay - D99

Energy Performance Certificates are 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 Surveys
  • EPC
  • Management Information
  • Harbour Wall Survey

Full details can be found at: www.quaysidebristol.com

INVESTMENT RATIONALE

  • Prime waterfront location within the heart of the Central Business District adjacent to Temple Quay and close to Bristol Temple Meads Station
  • Multi-let with staggered lease events providing sequential opportunities to phase the refurbishment, redevelopment and reletting of the buildings whilst maintaining core income
  • Significant asset management opportunities including rent reviews, lease renewals, refurbishment and redevelopment
  • The buildings provide a good range of flexible floorplate sizes popular with tenant requirements
  • With average rents of £19.43 per sq ft, the property is highly reversionary
  • Very low capital value of £260 per sq ft compared with prime Grade A buildings now at £650 per sq ft
  • Bristol has the lowest availability on record currently standing at around 447,000 sq ft and 3.5%
  • Bristol has witnessed the fastest rental growth in its history with Grade A rents increasing by around 23% in 18 months
  • 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 and numerous large legal practices
  • Quayside provides a very exciting opportunity to reposition this prime waterfront located asset

Proposal

We are instructed to seek offers in excess of £25,000,000 (Twenty-Five Million Pounds), subject to contract and exclusive of VAT for our client's freehold interest.

A purchase at this level would reflect an overall net initial yield of 6.87%, assuming standard purchasers costs of 6.76%. This reflects an overall capital value of £260 per sq ft.

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NET INITIAL YIELD:
6.87%
PRICE:
£25,000,000
REGISTER INTEREST
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