Rolls-Royce, Learning and Development Centre

Derby, Derbyshire DE24 9BD

Overview

  • A purpose-built learning and development centre forming part of the Rolls-Royce campus, south of Derby city centre
  • Conveniently located 8 miles from Junction 24a of the M1 Motorway and 2.2 miles from the A50 dual carriageway
  • A modern standalone property of 124,539 sq ft (11,570 sq m) comprising office, warehouse and exhibition space
  • Let to Rolls-Royce plc on a 25 year fully repairing and insuring lease expiring 7th December 2025 providing approximately 6.52 years unexpired
  • Passing rent of £830,729 per annum (£6.67 per sq ft)
  • Fixed increase in December 2020 to £939,894 per annum (£7.55 per sq ft)
  • Globally recognised brand with a low risk 5A1 covenant rating
  • Tenant option to purchase the Property or renew for a further 25 years upon expiry of the term
  • The tenant has invested heavily in the site, including the construction of a 40,580 sq ft extension in 2012, demonstrating their commitment to the property. The extension was constructed by the tenant, under their Licence for Alterations with suitable reinstatement provisions in place
  • Site area of 9.66 acres (3.91 hectares)
  • Freehold
Offers are sought in excess of £9,250,000 (Nine Million Two Hundred and Fifty Thousand Pounds) for the freehold interest, subject to contract and exclusive of VAT.
A purchase at this level reflects a Net Initial Yield of 8.42%, increasing to 9.52% in December 2020, assuming purchaser's costs of 6.69%, and a low capital value of £74 per sq ft.

Location

Derby is one of three key cities located within the East Midlands, approximately 15 miles west of Nottingham, 30 miles north west of Leicester and 125 miles north west of London.

Connectivity

Road
Derby benefits from excellent road communications, with the A52 running through the city, linking Nottingham to the east and Stoke-on-Trent to the west. The Derby Southern Bypass (A50) runs to the south of the city providing quick access to the M1 Motorway and in turn the north and south of the UK.

Rail
Derby is served by three railway stations: Derby Midland, Peartree and Spondon. Derby Midland station serves as one of the country's major hubs providing direct services across the UK including Edinburgh and Glasgow to the north as well as London and Penzance to the south.

Air
East Midlands Airport is located approximately 12 miles south-east of Derby city centre, and is the UK's busiest pure cargo airport and second only to Heathrow handling over 328,000 tonnes of cargo every year. Birmingham Airport, 42 miles south of Derby, provides direct flights to over 150 destinations across the globe.

Situation

The Property is situated within an established industrial area approximately 3.5 miles south of Derby city centre, the majority of which forms the Rolls-Royce campus. The campus is home to Rolls-Royce's Civil Aerospace and Nuclear operations and employs around 14,000 people.

The Property is accessed from Wilmore Road which leads to the A514, approximately 0.5 miles to the east, connecting the city centre to the north. Heading west on Wilmore Road leads onto Infinity Park Way, the site of the proposed Infinity Park, a 100 acre commercial and technology park where Rolls-Royce is one of the leading joint venture partners.

The Derby Southern Bypass (A50) is 2.2 miles to the south and allows Junction 24a of the M1 to be reached within a 12-minute drive time. Other major nearby occupiers include Bombardier and Toyota.

Description

The Rolls-Royce Training Centre was originally built in 2000 and was extended by the tenant in 2012 to incorporate the Apprentice Academy.

The original building extends to 124,539 sq ft across three storeys, comprising workshop/warehouse space and office accommodation. Training facilities and meeting rooms are provided across all floors, accessed via a central staircase, around a central open lightwell with a large conference centre on the ground floor and reception area to the front of the Property.

The workshop area to the north of the unit is formed in four bays, with three 6 metre high bays and one 10 metre high bay constructed of steel portal frame and profiled steel roof. The 6 metre high bays benefit from two overhead electric loading doors and floor loading of 20kN/m2 whilst the 10 A view of The Street metre high bay has one overhead electric loading door, two 10 tonne overhead gantry cranes and floor loading of 35kN/m2. This area sits behind the exhibition space and can be accessed internally via The Street, a double height corridor also utilised as a break out space.

The Apprentice Academy, which was built by the tenant, extended the Property by a further 40,580 sq ft. This provides accommodation across three storeys and includes a double height workshop with 7 metre eaves, constructed of steel portal frame with steel composite cladding panels and flat roof. Internally, the Academy includes a staff canteen, a workshop area, mezzanine offices to the north of the building and plant deck to the south. Access to the Academy is via the main central staircase as well as a link bridge at first floor level and lift facilities.

Generally, the Property as a whole is finished with suspended ceilings, LED lighting, raised flooring with carpet/vinyl finishes to the classroom and circulation areas to upper floors and carpet/ceramic tiles to 'The Street' and workshop areas. Services include refrigerant heating/cooling, ventilation to office training rooms, sprinklers and Category L1 fire alarms.

Externally, a concrete service yard surrounds the south and west sides of the unit with access to the rear and car parking to the north and east sides of the unit providing approximately 320 car and 40 motorcycles spaces.

Site Area

The Property provides a total site area of 9.66 acres (3.91 hectares).

Accommodation

The Property has been measured by Armada Surveys (March 2019) in accordance with the RICS Code of Measuring Practice (6th Edition). A Schedule of Accommodation can be found in the link below.

As part of the tenant's improvements, an extension was constructed in 2012 to house their Apprentice Academy totalling 40,580 sq ft. This is not rentalised.

Floor plans and a breakdown of NIA and IMPS 3 areas can be seen in the Measured Survey contained in the data room. The report is capable of being assigned to the Purchaser.


Tenure

The property is held freehold under the Title Number DY319017.

ENVIRONMENTAL

Ramboll have undertaken a Phase I Environmental Survey (March 2019). A low to moderate rating in relation to Environmental Risk has been ascribed. The report is capable of being assigned to the Purchaser.

BUILDING SURVEY

Black Cat have undertaken a Building Survey (May 2019) which is capable of being assigned to the Purchaser. Further information is available on request.

Tenancy

The Property is let to Rolls-Royce plc on a 25 year FRI lease expiring on 7th December 2025, providing 6.52 years unexpired. The current passing rent is £830,729 per annum, equating to £6.67 per sq ft with a fixed increase in December 2020 to £939,894 per annum, which equates to £7.55 per sq ft.

The lease contains an option for the tenant to renew on fixed terms or option to purchase at vacant possession value upon lease expiry.

Option to renew at lease expiry

  • Term of 25 years
  • Starting rent of £1,063,404 per annum (£8.54 per sq ft)
  • 5 year fixed rental increases (specified in lease template)
  • Tenant break options on 5th/10th/15th/20th anniversaries
  • Tenant option to purchase the freehold every fifth year

Option to purchase at lease expiry
  • Subject to 12 months' written notice
  • On the basis of open market value with vacant possession
  • Excluding 40,580 sq ft extension

Covenant Information

Rolls-Royce plc has a D&B rating of 5A1. A summary of their most recent accounting figures can be found in the Covenant Schedule link below.

Rolls-Royce plc is one of the world's leading industrial technology companies providing power solutions through creating original equipment. The business focuses on the development and manufacture of civil and defence aerospace, power systems, marine and nuclear, along with the maintenance, repair and overhaul of these and additional products and services.

One of the core businesses includes aerospace, producing both civilian and military aircraft engines with major products including engines used on Boeing and Airbus aircraft, with nearly 100 million flying hours earned, and providing engines to the RAF Tornado fleet since 1980.

Derby acts as the global centre of Rolls-Royce. The Learning and Development Centre provides Rolls-Royce staff, apprentices and students with a centre of excellence academy utilised across all Rolls-Royce divisions providing high-quality workshop, training rooms, conference and canteen facilities. In addition, the Aerospace Customer Suite provides high-quality VIP lounge and meeting room accommodation for investors and clients from across the globe.

OCCUPATIONAL MARKET COMMENTARY

Further information can be found within the marketing particulars.

INVESTMENT MARKET COMMENTARY

Further information can be found within the marketing particulars.


VAT

The Property is elected for VAT, which is payable upon the purchase price although the sale may be treated as a Transfer of Going Concern.

EPC

An Energy Performance Certificate has been undertaken (May 2019) providing a rating of D(90). Further information is available on request.

DATA ROOM

A data room containing copies of the lease and relevant legal documentation, environmental survey, building survey, management information and EPC is available. Please contact Cushman & Wakefield for access.

Vendor Summary

This property is being marketed for sale on behalf of Insolvency Practitioners and therefore no representations, warranties or guarantees in any respect can be given. The information in these particulars has been provided to the best of their knowledge but the Purchaser must rely solely upon their own enquiries. The Insolvency Practitioners are acting without personal liability.

INVESTMENT RATIONALE

  • Strong 5A1 covenant, situated within an established campus demonstrating Rolls-Royce's commitment to the area
  • Fixed increase in December 2020 provides an opportunity to increase the rent roll in the short term
  • Potential to increase the income stream upon expiry of the lease should the tenant choose to renew for a further 25 year term
  • Well maintained building with minimal risk of incurring vacancy costs

Proposal

Offers are sought in excess of £9,250,000 (Nine Million Two Hundred and Fifty Thousand Pounds) for the freehold interest, subject to contract and exclusive of VAT.

A purchase at this level reflects a Net Initial Yield of 8.42%, increasing to 9.52% in December 2020, assuming purchaser's costs of 6.69%, and a low capital value of £74 per sq ft.

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NET INITIAL YIELD:
8.42%
PRICE:
£9,250,000
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