British Airways UK Maintenance and R&D Facility Investment

Ely Meadow, Talbot Green, Llantrisant CF72 8XL

Overview

  • British Airways UK maintenance and research & development facility
  • Strategically located adjacent to Junction 34 of the M4 Motorway and within the Cardiff Capital Region, one of the UK's fastest growing commercial locations
  • Modern office campus providing three, two-storey buildings including VAV air-conditioning, raised floors, passenger lifts, suspended ceilings and atria
  • 111,087 sq ft facility on a site area of 20.67 acres
  • Let to British Airways Avionic Engineering Ltd (D&B 3A1), who have been in occupation for 25 years and have recently signed new reversionary leases
  • Three simultaneous fully repairing & insuring leases expiring on 24th March 2024 (c.5.5 years unexpired)
  • Initial rental is £987,000 per annum, which reduces to £805,011 per annum on 25th March 2019, reflecting a low rent of £7.25 per sq ft
  • The landlord can request the benefit of the tenant's extensive fit out at lease expiry
  • Major occupiers in the vicinity include The Royal Mint, Welsh Blood Service, Renishaw, Finning CAT, Leekes, and The Royal Glamorgan Hospital
  • Aerospace and defence are a cornerstone of the Welsh economy, with world class training, innovation and expertise attracting some of the world's leading aviation and defence companies to locate within Wales
We are instructed to seek offers in excess of £8,300,000 (Eight Million, Three Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level would equate to a reversionary yield of 9.00% and a net initial yield of 11.05% until March 2019, subject to purchaser's costs of 7.54% and reflects a low capital value of £74 per sq ft (subject to contract and exclusive of VAT).

Location

The British Airways facility is located within the Cardiff Capital Region, one of the UK's fastest growing commercial locations, centred on Cardiff, the capital city of Wales. The Cardiff Capital Region is a highly compact area, with a 1.6m population within a 45 minute commute to Cardiff city centre which is the focal business, commercial, economic, government and administrative centre for Wales.

Key drivers of the region's success include:

  • Quality of Life - Cardiff is ranked the UK's number 1 city for quality of life. It is the closest European capital city to London and the work/life balance offered across the region is exceptional. The region has a very low cost of living being some 20% less than the UK national average while comparable salary costs are approximately 40% lower than in the city of London.
  • Fast Growing - Cardiff's population is projected to grow by 20% over the next 20 years, faster than any other UK city including London. Growth has already been 12% over the last 10 years.
  • Low Occupational Costs - Occupancy costs in the Cardiff Capital Region are up to 60% lower than prime sites in central London, offering potentially huge annual savings on occupancy costs.
  • Transport Infrastructure - Fast developing transport networks enhance Cardiff's position as the closest European capital city to London.
  • World Class Retail and Leisure - The region has outstanding retail, leisure and sporting facilities together with striking landscapes and coastline, much of which has National Park status. These elements combine to offer exceptional life style and leisure opportunities across the region.
  • Highly Skilled Workforce - The Cardiff Capital Region contains extensive Higher Education facilities with more than 70,000 students studying at Cardiff University (ranked in the top 5 universities in the UK in terms of the quality and impact of its research), The University of South Wales and Cardiff Metropolitan University. Significant numbers of students choose to remain in the region after graduating, providing an ever increasing skilled and highly qualified work force.
  • Inward Investment - The Cardiff Capital Region City Deal will see a £1.2 billion investment fund established, with the target of delivering 25,000 new jobs and leveraging £4 billion of private sector investment. This investment is set to fund a number of major projects, including a new light rail Metro system for the region.

Connectivity

The Cardiff Capital Region has outstanding road, rail and air communications. British Airways UK maintenance and research & development facility is situated on juction 34 of the M4 motorway, and lies approximately 236 km (147 miles) from London in the east. South Wales links via the M50 and M5 motorways to the Midlands and south west of England. Almost 80% of the UK population lives within a 4-hour drive of the Cardiff Capital Region.

High speed rail services give rapid access to all major cities across the UK. The extensive Valley Line Network serves the inland towns of south east Wales, from where a significant proportion of the city's work force is drawn. The delivery of an integrated Metro system has been allocated up to £730m from the Cardiff Capital Region Deal. The project may include the introduction of a light rail system to Cardiff, alongside delivery of a major upgrade to the existing rail network around Cardiff. A contract was awarded to an Keolis Amey in 2018.

Electrification of the railway between London Paddington and Cardiff Central is set to be completed in Q4 2018 reducing best travel times to 1 hour 45 minutes. The Cardiff Capital Region has its own international airport located 19.2 km (12 miles) from the city at Rhoose. The airport serves many national and European destinations. London's Heathrow airport is less than a two hour drive or rail journey.

Situation

Llantrisant is a key commuter town to Cardiff and is one of the growth locations within the Cardiff Capital Region. It is located 12 miles from Cardiff city centre and 159 miles west of London.

Cardiff Airport is located approximately 28 km (17 miles) to the south and Bristol Airport circa 92 km (57 miles) east, providing daily flights to both domestic and international destinations.

The facility is well located on the A4119 dual carriageway, neighbouring Llantrisant Business Park and having the benefit of proximity to Junction 34 of the M4 motorway and direct access to the city of Cardiff.

The Welsh Blood Service and Royal Glamorgan Hospital are directly adjacent to the site and other adjacent occupiers include Premier Inn (which is being extended) and a Brewers Fayre, plus a new Costa Coffee Drive-Thru which is under construction. Renishaw Plc occupies a major facility of around 460,000 sq ft which is located at Junction 34 of the M4 and a number of other occupiers have established a presence in this location, including Fillcare and Leekes HQ.

To the south of the site towards the M4 is a significant retail offering, including a Tesco Extra superstore and retail park that is occupied by national retailers, such as M&S, Argos, Next, Boots, TK Maxx and Pizza Hut.

Description

The facility comprises a complex of three buildings with associated car parking and additional land suitable for future expansion. The buildings were constructed in 1993 and are of steel frame construction with insulated, coated steel cladding and double glazed curtain walling. Each building is constructed in two wings over two storeys, linked by a central core area and has its own services making it capable of independent and multi occupation.

The specification of the buildings includes:

  • Fully accessible raised carpeted floors
  • Suspended ceilings incorporating Cat II anti glare lighting
  • Air conditioning
  • Modern WC facilities
  • Double height reception/atria
  • One lift within each building
  • Restaurant facility in Building C
The buildings were constructed to shell & core specification with all services connected and with the benefit of lifts, WC accommodation and boilers. The tenant subsequently undertook fit out works at a cost of approximately £5 million. Importantly, at the expiry of the leases, the landlord can request which fit out works they wish for the tenant to leave in situ and those they wish them to remove.

These works include the installation of:
  • Raised floors
  • Suspended ceilings
  • Water storage heaters and pipe work
  • Air-conditioning and chillers
  • Ventilation system
  • Compressed air facility
  • Fire and security alarm instillation
  • Construction of single storey glazed link walkways between buildings
  • Security gatehouse and barrier controls
The site is bounded entirely by a 3.6 m (12 ft) high wire mesh fence and there is security gate access.

Parking

The property includes an extensive 299 space car park which provides a ratio of 1:372 sq ft.

Site

The property extends to approximately 8.36 hectares (20.67 acres) as edged in red on the Situation Plan.

Accommodation

A full schedule of accommodation is available via the link below:


Tenure

The property is held on a long leasehold basis for a term of 999 years from 30th July 2004 at a ground rent of £100 per annum without review.

Tenancy

The property is held on four co-terminus leases expiring on 24th March 2024 at a current rent of £987,000 per annum. The tenant has signed reversionary leases effective from 25th March 2019, at which point the rent will reduce to £805,011 per annum. There is a nine month rent free period upon the commencement of the reversionary leases, which will be topped up by the vendor.

The leases are currently held under the name of British Airways Avionic Engineering Ltd by way of an assignment from British Airways Plc in 1996.

British Airways uses the facility to provide its UK one-stop solution for the repair and maintenance of a broad range of electrical, electronic and electro-mechanical aircraft components, employing some 250 people.

British Airways also undertakes repairs and maintenance for other airline operators from this facility including Airbus, Thales, Euro Air Transport, Thomson Airways, Air Europa, Air France, Aero Flot and Honeywell.

Claw Back Provision

If the site or part of it is used or occupied for residential uses, then the owner of the site is required to pay 50% of the Development Value to a previous owner of the site more particularly detailed on the title. The Development Value is defined as the difference in value between the Industrial Market Value and the Residential Market Value based upon the actual Residential Use of the Conveyed Land. Residential Use means use or occupation for residential purposes (other than residential uses which are ancillary or incidental to the industrial or main use) or use for all or any of the uses specified in Classes A1, A2, A3, C1, C3, D1 and D2 of the Town and Country Planning (Use Classes) Order 1987.

Further details on this clawback arrangement, together with all other title matters, are detailed on the title to the Property which is available on request.

Covenant Information

British Airways Avionic Engineering provides highly skilled and specialised aircraft electrical, electronic and mechanical component maintenance services to both British Airways and other airlines. Their South Wales maintenance facility at Llantrisant provides avionic solutions to electronical, electronic and mechanical components through the use of new diagnostics and reliable technologies for a range of Boeing and Airbus aircraft for multiple airline carriers including British Airways. Examples of the type of services provided include in-flight technology, radio and radar and lighting. The services provided at the facility support the continuous improvement and product development to enhance future aircraft capabilities.

British Airways Engineering is the aircraft maintenance subsidiary of British Airways which provides support services to British Airways and other airlines. It is responsible for the entire BA Boeing 747-400 fleet maintenance, cabin interior conversions and general ramp maintenance work for both their own fleet and other airlines.

British Airways Engineering's UK bases have a strong Welsh focus, and are as follows:

  • British Airways Engineering Headquarters - London Heathrow Airport
  • British Airways Maintenance - London Gatwick Airport
  • British Airways Maintenance - Cardiff International Airport, South Wales
  • British Airways Maintenance - Glasgow Airport, Scotland
  • British Airways Avionics Engineering - Llantrisant, South Wales
  • British Airways Interiors Engineering - Blackwood, South Wales
  • British Airways Distribution Centre - London Heathrow Airport
In order to facilitate its substantial presence in South Wales, British Airways has a unique partnership with the University of South Wales. This provides graduates on the University's Aircraft Maintenance Engineering, Aeronautical Engineering and Mechanical Engineering degrees access to real BA aircraft to improve their career prospects, and gives British Airways staff the opportunity to develop their skills at the University. 2015 saw the opening of the Aerospace Centre at the University by the partnership, demonstrating British Airways' commitment to its engineering facilities in South Wales.


VAT

We understand that the property is elected for VAT and therefore VAT will be payable on the purchase price.

EPC

The property has been assessed with a D95 rating. Further information is available upon request.

AEROSPACE INDUSTRY IN WALES AND MARKET COMMENTARY

Please see the marketing brochure for further information.

Proposal

We are instructed to seek offers in excess of £8,300,000 (Eight Million, Three Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level would equate to a reversionary yield of 9.00% and a net initial yield of 11.05% until March 2019, subject to purchaser's costs of 7.54% and reflects a low capital value of £74 per sq ft.

(Subject to contract and exclusive of VAT).

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NET INITIAL YIELD:
11.05%
PRICE:
£8,300,000
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