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Accommodation
The property has been measured by BKR and provides the following floor areas:
| Basement | 88 car spaces | |
| Ground Floor | 10,365 sq ft | 962.91 sq m |
| First Floor | 10,496 sq ft | 975.08 sq m |
| Second Floor | 10,493 sq ft | 974.80 sq m |
| Third Floor | 676 sq ft | 62.80 sq m |
| Total Net Internal Area | 32,030 sq ft | 2,975.59 sq m |
The floor plan and measurements will be assigned to the purchaser on completion at a cost of £1,945+VAT.
Site
A Phase I Environmental Report of November 2022 by Avison Young is provided in the data room. The report concludes that the site represents a “Low/Moderate Environmental Risk” and will be assigned to the purchaser on completion at a cost of £2,500 + VAT.
A sub-station owned and operated by Western Power Distribution (East Midlands) Plc is located on the site within the structure of the existing building.
Tenure
Freehold.
Tenancy
The property is let to Morgan Sindall Construction & Infrastructure Limited (previously known as Morgan Sindall Plc) on a full repairing and insuring lease for a term of 15 years from 6th February 2014, expiring on 5th February 2029. It is noted that the lease places a full repairing obligation on the tenant (which includes the exterior and structure), being responsible for any accumulated items at the date of the lease. This is a strong repairing obligation since it ensures the tenant is liable for any inherent defects should they exist.
The lease is guaranteed by Morgan Sindall Group plc.
The current rent is £375,378 per annum with rent reviews linked to increases in the Retail Price Index (compounded annually), subject to a cap at 21.6652% (4% per annum) and collar at 10.4080% (2% per annum).
In calculating the increase, reference is made to the Retail Price Index figure in the month preceding the review, namely January. Given RPI in January 2019 was 283 and in September 2022 347.6, the increase of 22.8269% has already exceeded the cap of 21.6652%.
Therefore, the vendor will top-up the income to the guaranteed maximum increase in February 2024 of 21.6652%, meaning the purchaser will benefit from an income of £456,704 per annum.
Covenant
Morgan Sindall Construction & Infrastructure Limited (Co. No. 04273754) has reported the following figures:
| Year Ending | 31st December 2021 | 31st December 2020 |
|---|---|---|
| Revenue | £1,416,470,000 | £1,533,146,000 |
| Pre-Tax Profits | £49,652,000 | £28,246,000 |
| Net Assets | £301,811,000 | £280,279,000 |
Morgan Sindall Construction & Infrastructure Limited is a UK construction and infrastructure business with a network of local offices. The Company works for private and public sector companies on projects and frameworks from £50,000 to over £1 billion. Activities range from small works and repair and maintenance to the design and delivery of complex construction and engineering projects. The Company also operates across the commercial, defence, education, emergency and custodial, energy, healthcare, industrial, leisure and community, nuclear, retail, science and technology, transport and water sectors.
The Company is part of the Morgan Sindall Group plc (Co. No. 00521970) which has reported the following figures:
| Year Ending | 31st December 2021 | 31st December 2020 |
|---|---|---|
| Revenue | £3,212.8 million | £3,034.0 million |
| Pre-Tax Profits | £126.2 million | £60.8 million |
| Net Assets | £474.2 million | £420.1 million |
Morgan Sindall is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. It is a group of specialist businesses, delivering construction and regeneration across the UK for the public, commercial and regulated sectors. The group employs approximately 6,900 people and operates through five divisions; Construction & Infrastructure, Fit Out, Property Services, Partnership Housing and Urban Regeneration.
2021 was a record year for Morgan Sindall, delivering a record set of results 42% above the Group’s last peak in 2019. The Group continued to win work throughout 2021; secured workload at the year end was £8,614m, up 4% on the prior year. Over 46% of this workload is secured for 2024 onwards. Adjusted operating profit increased by 92% to £131.2m (2020: £68.5m)
For further information visit www.morgansindall.com.
VAT
The property has been elected by the vendor for VAT. It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).
Proposal
We are instructed to seek a figure of £5,040,000 (Five Million and Forty Thousand Pounds), subject to contract, reflecting a net initial yield of 8.50% assuming standard purchaser’s costs of 6.59%.
Please note that a purchaser will be re-charged the costs of the measured survey (£1,750 + VAT), environmental survey (£2,500 + VAT) and searches (£1,409.86 + VAT ) which are provided in the data room.
Investment Considerations
An opportunity to acquire a regional headquarters office investment;
A purchase at the asking price reflects an attractive net initial yield.
The property provides highly secure income, being let to Morgan Sindall Construction & Infrastructure Limited (Pre-Tax Profits £50m, Net Assets £302m);
The lease is guaranteed by Morgan Sindall Group Plc, a FTSE 250 listed company;
Let until February 2029, without breaks;
The property occupies a prominent position in Rugby town centre fronting the A426;
Freehold;
