Modern Industrial InvestmentFORMER FREUDENBERG UNIT, SILVERFOX WAY, NEW YORK INDUSTRIAL ESTATE, TYNE & WEAR NE27 0QH

FOR SALE

•Modern industrial investment opportunity in an establishedcommercial location

•Excellent access to the national road network and Port of Tyne

•1997 build modern warehouse, providing approximately 34,407 sq ftof accommodation with an attractive site coverage ratio of 32%

•Let to the strong covenant of Ford Component Manufacturing Ltd,with excellent value-add opportunities through lease re-gear

•Rent passing of £162,000 (£4.70 per sq ft) per annum

•Offers sought at £1,600,000, equating to a net initial yield of 9.57%,allowing for purchaser’s costs at 5.8%.

Investment Summary

SOUTHAMPTON BRIGHTON

PLYMOUTH

BIRMINGHAM

STOKEON TRENT

NOTTINGHAM

LEICESTER

LONDON

SHEFFIELDLIVERPOOL

MANCHESTERHULL

YORKLEEDS

DURHAM

SUNDERLAND

NEWCASTLEUPON TYNE

EDINBURGHGLASGOW

CARDIFF

A1

A1

A1(M)

M1

M4

M6

M1

A1(M)

A19A66A66

M62

Newcastle is the regional capital of theNorth East. The city lies 98 miles north ofLeeds, 104 miles south of Edinburgh and277 miles north of London. Newcastlehas a resident population of around283,000 people with 1.4m people within12 miles of the city centre. The residentpopulation of North Tyneside is 191,255persons (Source: 2001 Census).

By road, Newcastle has direct accessvia the A1 south to Leeds and north toEdinburgh. Road communications viathe A19 to the south have beensignificantly improved by the recentdualling of the Tyne Tunnel which wascompleted in 2012 and involved theintroduction of a second tunnel.Newcastle is on the East Coast main railline with a fastest journey time to LondonKings Cross of 2 hours and 50 minutesand 1 hour 20 minutes to Edinburgh.

The Tyne and Wear Metro light railwayprovides 40 million public journeys peryear on a network of 46 miles, linking citycentre Newcastle to outlying suburbsand nearby Gateshead andSunderland. Combined with regular busservices throughout the city, Newcastle ishost to an excellent public transportnetwork.

Newcastle International Airport, locatedto the west of the city, has daily flights toStansted, Heathrow and Gatwick withjourney times of less than 1 hour. Otherdomestic destinations include Belfast,Bristol, Exeter, Jersey and Southampton.In 2000 the airport completed a £27mredevelopment of Terminal 1 increasingcapacity to 4.8m passengers per year.

Location

The city has experienced a significantincrease in investment over recentyears. Projects include the QuaysideRegeneration, the new Baltic Centre forContemporary Art, the Angel of theNorth, the Grainger Town Project and theGateshead Millennium Bridge. Mostrecently, Barratt Homes has beenchosen as the development partner tobring forward a £450m regeneration ofNewcastle’s Scotswood Estate and workhas commenced on the Stephenson’sworkshop site behind Central Station,which will provide high quality officesand a hotel.

In addition, the ‘Science City’ schemeon the former Scottish and NewcastleBrewery site in the city centre will provideup to 1 million sq ft of space to houseleading-edge scientific research,teaching and business facilities. Thisforms part of a £250m proposal to

regenerate the City’s western fringewhich has the potential to be one of thelargest inner city regeneration projects inthe UK.

The commercial focus for the city hasshifted towards the service sector withcompanies such as BA, Procter &Gamble, EE, Tesco Bank and otherssetting up significant call centreoperations. The region has continued toexperience a high level of overseasinvestment, recently demonstrated byNissan completing a 400,000 sq ftextension of their plant at Washingtonand Hitachi starting work on a largefacility for the construction of railcarriages in County Durham.

Major companies that have asignificant presence in the city includeSitel, Santander, Deloitte, Sage Group,PiceWaterhouse Coopers, Virgin Money,Barclays and Lloyds Banking Group.

Newcastle Economy Overview

Cobalt Business Park

A1058 Coast Road

Silverlink

River Tyne

A191

Silver Fox Way

Norham

Road

West ChirtonIndustrial Est

Tyne Tunnel

Tyne TunnelTrading Estate

New YorkIndustrialEstate

A19

A19

To Newcastle City Cente ➔

➔

South

➔

North

The subject property is situated withinHadrian Industrial Park which is part ofthe wider New York Industrial Estate area,located approximately 6 miles to thenorth east of Newcastle city centre in anestablished industrial and commercialarea.

New York Industrial Estate is well situated,with excellent access to the A19 and inturn the national road network. Anextensive bus network serves the areaincluding the industrial and office parksnearby, with links to Nexus MetroServices throughout North and SouthTyneside.

The subject property is situated towardsthe northern end of the New York Estatewith access from Silverfox Way. Theestate comprises predominantly1990’s/2000 build industrial units ofvarying sizes from small light industrialstarter workshops to large high bayindustrial units of up to 80,000 sq ft.

Neighbouring occupiers in the estateinclude Freudenberg, RamageTransport, Pipe Center (Wolseley), NolatoJaycare, Virgin Media and ElanderGraphics among others.

The wider commercial hub incorporatesthe Silverlink retail and leisure parks andCobalt business park, providingemployment for circa 15,000 peopleand featuring a large number of majornational and international occupiers,including Apple, H&M, EE, Fujitsu,Santander, Hewlett Packard and BalfourBeatty.

Nearby West Chirton Industrial Estate,situated immediately to the south eastof New York Industrial Estate, comprisesa range of small starter units to largeheavy storage and manufacturing unitsconstructed between the 1970’s and1980’s. Unit sizes on this estate aregenerally slightly smaller and dated incomparison to the subject property.

TYNEMOUTH

A19

SOUTH SHIELDS

A19

H

SILVERLINK BUSINESS

PARK NORTHSHIELDS

WALLSEND TYNE TUNNEL

A1058

COAST RD

M

M

M

M

M

M

MM

M

M

M

M

M

M M

M

A1NORTH

NEWCASTLECITY CENTRE

WHITLEYBAY

NEW YORK RD A191 RAKE LANE

A192

COBALTBUSINESS

PARK

NORTH TYNESIDE HOSPITAL Situation

National Grid

CMR

ShiremoorFarm Pub

Shell

MetroMold

Vauxhall

VictorProducts

Pipe Center(Wolseley)

RamageTransport

Virgin

TaylorFoods

Nolato Jaycare

Dalesman

Unika Ferrograph

RosewoodPackaging

Fuda

Elfab

Drain Center(Wolseley)

MonitorCoatings

Liveasy

Rosen

Lilley &Gillie

Kirkdale2000

Elanders

Freudenberg

The subject property comprises a rectangular modern warehousing unit of steelframe construction, built in 1997. The building envelope comprises insulatedcomposite cladding above blockwork lower wall. The unit is surmounted by apitched roof with a composite cladding covering, with an eaves height of 6.1m.

Internally, the property is arranged over a reinforced concrete slab and split toprovide a production area, garage and stores and a 2-storey office administrationblock. Loading access is provided by up and over roller shutters.

The office area benefits from a good quality fit out including suspended ceilings withrecessed fluorescent lighting, central heating and double glazing. The siteincorporates a large service yard secured by perimeter fencing and 66 car parkingspaces. The site coverage ratio of 32% provides good storage and vehiclecirculation space.

Floor Use Areas

Sq m Sq ft

Ground Production Area 2,590.42 27,884

Ground Offices 253.43 2,728

First Offices 256.22 2,758

Ground Garage, Stores & Service Building 96.34 1,037

Totals 3,196.41 34,407

Description

TenureThe property is held on a long leasehold for 125 years from 6 February 1997 at a peppercorn rent.

Covenant InformationFord Component Manufacturing Ltd arean award winning, highly successfulspecialist in the precision machiningand pressing of components for theaerospace, defence and industrialmarkets. The company was establishedin 1910 and offers products and toolingexpertise that few firms can matchworldwide. Within the North Shields unit,Ford provide surface treatments tometal components for the automotiveindustry. Their principal customer,Freudenberg, occupy another unit onthe same estate, allowing for costsynergies and a just in time approach tobe adopted.

The company has an average 3 yearturnover of £5.08M and a current networth of £1.33M. Over the last twoperiods Ford have incurred significantlyhigher costs than usual, relating to thesetup of their new, efficient zincphosphating line within the North Shields

unit, alongside the dismantling of asecond zinc phosphating line for whichthey have not yet realised salerevenues. These costs are now fullycleared and the company expects apositive bottom line impact of circa£250k per annum as a result.

Additionally, Ford have increased theirpresence in non-European exportmarkets and a number of agreementshave recently been signed, generatingadditional potential revenue of £400kper annum. Organic sales growth is alsoanticipated and deliveries for ordersexpected in the latter half of 2014 havenow commenced.

We are aware that the tenant is activelypursuing a lease extension anddiscussions are underway to this effect,showing the clear intent of FordComponent Manufacturing to continuetheir occupation within the unit on along term basis.

TenancyThe property is fully let to FordComponent Manufacturing Ltd until 25March 2018. The initial rent is £81,000p.a. increasing to £162,000 p.a. on 8April 2016. The vendor will top-up the

rent during the half rent period to£162,000 (£4.70 per sq ft) per annum.

The lease is drawn on fully repairing andinsuring terms.

The occupational market throughoutthe North East improved considerablyduring early 2014 and we expect this tocontinue throughout the year. Keyareas such as the automotive andoffshore sectors have seen significantgrowth.

The A19 corridor in particular ishistorically strong and highlycompetitive, with the New York IndustrialPark and surrounds forming thecommercial focal point for the NorthTyneside region. Lack of newdevelopment through the recessionhas caused an imbalance in the netsupply/demand position and theavailability of good quality, mid-sized tolarger industrial stock is now becomingrestricted.

Nissan, whose main UK facility islocated on the A19, account for 1 in 3new cars produced in the UK and theirexpansion in production has seensignificant take up from their supplychain over the last 12 – 18 months.

Vantec, their main 3PL partner built a421,000 sq ft facility adjacent to theNissan plant last year and they nowoccupy over 1 million sq ft in variousbuildings around Washington. They alsohave current enquiries in the market fora further 400,000 sq ft of space.

Other areas of growth in themanufacturing sector have includedHitachi Trains who are building a400,000 sq ft unit train assembly facilityin Newton Aycliffe. Both Rolls Royce andBAE Systems have also recently had apurpose built manufacturing facilities inexcess of 300,000 sq ft constructed,replacing older factories and showingcommitment to the region.

The region’s Ports have also enjoyed aperiod of growth and have recentlyannounced plans to expand further.Port of Tyne, the region’s main northernport, is located within 5 miles of thesubject site and caters largely for bulkshipping with cars, coal and bio-massforming a large part of their business.

Occupational Market/Supply

ADDRESS DESCRIPTION LEASE TERM PRICE / DATE YIELD

Densitron Unit, New York Way, Modern, 37,700 sq ft unit on the same Let to Densitron Technologies PLC for 20 years from £1.65m 8.60%New York Industrial Estate estate as the subject. January 2003 at a rent of £150,000 per annum. Dec 2014

The tenant is not currently in occupation.

Gateway West, Newburn Riverside, Mixed use estate comprising 52,956 sq ft of Multi-let with 6.39 years WAULT to breaks across the estate. £12.75m 8.40%Newcastle Upon Tyne offices and 113,325 sq ft of industrial space. Average industrial rent is £5.40 per sq ft. Oct 2014

Located to the east of Newcastle Upon Tyne, adjacent to the A1

Booker Cash & Carry Warehouse, 77,810 sq ft warehouse operated as a cash Let to Booker Ltd for 25 years from Feb 1995 at rent £3.42m 7.7%First Avenue, Team Valley, and carry unit, located on premier industrial passing of £279,000 per annum, equating to July 2014Gateshead estate in the North East £3.59 per sq ft.

City & Northern Portfolio 7no. modern, mid-2000 build units over 3 WAULT of 5.5 years across the portfolio £5.43m 8.00%estates in Blyth, South Shields and , July 2014Gateshead with a total GIA of 99,722 sq ft

Units 1 & 2 Monkton Business Park, 2no. 2001 build units totalling 55,590 sq ft Let to Variable Messaging Signs and Ford Components Ltd £2.35m 8.24%Hebburn in a less prominent pitch with WAULT of 9.5 years. Total rent roll £204,800 July 2014

Units A & B, Hadrian Industrial Park, 2 industrial units constructed in late 1990s Unit A let to Freudenberg Technical Products £6.9m 8.25%New York, North Shields extending to 161,249 sq ft . until Dec 2024 at a rent passing of £232,000 per annum Mar 2014

on a site of 9.17 acres Unit B let to Elanders Graphics Ltd until October 2022at a rent passing of £370,000 per annum

Brake Bros, Bowburn North Modern double bay warehouse / distribution Let to Brake Bros Limited until November 2020, £1.46m 8.5%Industrial Estate, Co. Durham unit extending over 36,202 sq ft providing 7 years term certain. Feb 2014

Units 9-15, Belmont Industrial 5 modern industrial units Let to Jo Lee Crossfit, Durham Alloy Refurbishment & £1.22m 8.36%Estate, Durham situated on established industrial estate Customisation Ltd, Origin Automotive Ltd, Durham Pumps Feb 2014

with good access to A1(M) Ltd and Wilkinson Maintenance Ltd. Total rent passing is £107,900 (£4.11 per sq ft overall). AWULT is 4.5 years

Investment Market Recent sales evidence is summarised in the table below:

(7.00%apportioned toindustrial units)

AskingTerms

Our client is seeking offers of

£1,600,000 (One Million, Six Hundred

Thousand pounds) subject to contract

and exclusive of VAT for the long

leasehold interest.

A purchase at this price equates to a

net initial yield of 9.57%, allowing for

purchaser’s costs at 5.8%.

VATThe property has been elected for VATand it is envisaged that thetransaction will be treated as a ToGC.

EPCsThe property has an EPC rating of 56 –Band C

Misrepresentation Act The agents for themselves and for the vendors or lessors of this property whose agents they are give notice that: 1) The particulars are set out as a general outline only for the guidance of intending purchasers or lessees, and donot constitute, nor constitute part of, an offer or contract. 2) All descriptions, dimensions, references to condition andnecessary permissions for use and occupation, and other details are given without responsibility and any intendingpurchasers or tenants should not rely on them as statements or representations of fact but must satisfy themselves byinspection or otherwise as to the correctness of each of them. 3) No person in the employment of the joint agentshas any authority to make or give any representation or warranty whatever in relation to this property. November 2014

Designed & produced by Design 0191 284 9222 (Ref 6163)

If you require any further information orwould like to arrange an inspection pleasecontact one of the following:-

Luke SymondsTel: 0191 269 0095Email: luke.symonds@gva.co.uk

Simon BeanlandTel: 0191 269 0512Email: simon.beanland@gva.co.uk

(Please quote reference 7912)

Further Information