The Equinox, 19 Cadogan Street

Glasgow G2 6QQ

Overview

  • The Equinox provides an outstanding opportunity to acquire a prime, single let office investment in the heart of Glasgow's Central Business District and International Financial Services District (IFSD).
  • The Equinox, completed in 2002, is an eight storey office building providing 67,851 sq ft of office accommodation with 28 secure car spaces providing a ratio of 1:2,423 sq ft.
  • Adjacent to M&G's 277,426 sq ft planned office scheme 'The Grid' and Fore Partnership's speculative 94,000 sq ft office development 'Cadworks'.
  • Single let on full repairing and insuring terms to esure, with over 1,000 staff based at the building. esure pre-let The Equinox prior to the completion of the development.
  • Secured to the undoubted covenants of esure Property Limited (Tenant) and esure Holdings Limited (Guarantor D&B rating of 5A1), the investment has a remaining term certain of 12.33 years with an expiry in October 2030.
  • Total passing rent of £1,860,000 per annum, subject to upwards only open market rent reviews at 4th October 2020 and 2025.
  • Heritable interest (Scottish equivalent of English Freehold).
  • Offers are invited in excess of £33,300,000 (Thirty-Three Million, Three Hundred Thousand Pounds), subject to contract and exclusive of VAT, for our client's Heritable interest in the property. This represents an attractive net initial yield of 5.49% and a capital value of £491 per sq ft, assuming acquisition costs of 1.80% through the purchase of the Luxembourg SARL.

Location

Glasgow is the largest city in Scotland and the third largest in the UK with a population of approximately 608,500. The Greater Glasgow conurbation (2011 census) had a population of 2.3 million accounting for more than 40% of Scotland's entire population.

From a traditionally industrial employment base, the city has successfully promoted itself to become an established of office location, attracting inward investment on a national and international basis. Glasgow is now Scotland's largest centre of employment with 84% of employment being in the service sector, including financial, public administration and business services.

Glasgow has a highly educated workforce, with 40% of the working age population educated to degree level or higher. There are over 130,000 students in the city attending the five higher education institutions and the three super colleges, providing a skilled local labour pool and making Glasgow an attractive destination for business. Glasgow Caledonian University is a Chartered Institute for Securities & Investment Centre of Excellence, the first specialising in financial services operations and risk, joining an exclusive group of just three universities outside London. Both the University of Strathclyde and the University of Glasgow Business schools are triple accredited. Only 1% of business schools worldwide hold this distinction.

Further information is available in the marketing particulars.

Situation

The Equinox has a prominent corner position at the junction of Cadogan Street and West Campbell Street, in the heart of Glasgow's CBD and the International Financial Services District (IFSD). Through a public and private partnership, the IFSD has created a highly attractive environment for local and overseas firms in financial services and related sectors.

As a pre-equipped business area, the IFSD is designed to allow fast track occupancy by financial firms seeking a new UK location for their operations. Over £1 billion investment has been secured to date, over 90% from the private sector.

Since the launch of IFSD in 2001, over 15,000 net new jobs have moved to the district through new investment, expansion or diversified development. This includes companies such as esure, JP Morgan and Morgan Stanley that have moved into the IFSD, and existing employers such as Barclays and BNP Paribas that have expanded their operations substantially. Other employers who have moved into the IFSD from other locations in Glasgow include The Weir Group, British Steel Pension Fund and ACCA.

The Equinox is ideally positioned for access to public transport links, with Glasgow Central Station a 3 minute walk to the east, and Glasgow Queen Street Station an 8 minute walk away. Numerous bus services run through the city centre linking to the wider city area and local towns. The M8 motorway is just half a mile to the west of the property.

The surrounding buildings are predominantly large office developments, with key occupiers in the immediate area including Direct Line, JP Morgan, NFU Mutual, NHS, Clydesdale Bank and SSE. There are numerous retail and leisure facilities in the surrounding area, particularly on nearby Bothwell Street and towards Central Station, including Marks & Spencer, Sainsbury's, Costa, Caffè Nero, Operatta, Gusto and Tesco Metro.

Description

The Equinox comprises a landmark of office building, completed in 2002.The building provides a total of of 67,851 sq ft of Grade A accommodation arranged over ground and seven upper levels, with 28 secure car parking spaces demised.

The building has a striking tower at the corner of Cadogan Street and West Campbell Street, with the main entrance at Cadogan Street leading into an impressive full double height reception area. From reception are two scenic and one standard passenger lifts, plus a stairway serving all levels. The building has the benefit of roof gardens at first, second and third floor levels, plus a smoking area at ground floor.

The building is of steel frame construction with the office accommodation arranged in a horseshoe shape behind a central core. The main core contains lifts and stairway plus WCs, and two further cores situated at opposite ends of the floor plates provide further male and female WCs, two fire fighting lifts and escape staircases.

Specification

The building benefits from the following specification:
  • Column free floorplates with good level natural light
  • Floor to ceiling height of 2.7m
  • 185mm full raised access floors
  • Floor loading of 4kN per sq m
  • 600 x 600mm steel suspended ceiling system throughout
  • Four pipe fan-coil air-conditioning system serving all areas
  • Three passenger lifts plus two fire fighting lifts
  • Male, female and disabled WC on each floor
  • 28 car parking spaces, providing a ratio of 1:2,423 sq ft
  • 10 cycle spaces provided within car park
At ground floor level the occupational tenant has fitted out an office wing as a staff canteen. A post room and security room are also located at the ground floor.

To the rear at ground floor level is a secure car park with vehicular access gained from Holm Street. The tenant has 28 car spaces demised, however has constructed ancillary space over 8 of these, leaving 20 remaining spaces.


Tenure

Heritable (Scottish equivalent of English freehold).

Tenancy

The property is let in its entirety to esure Property Limited on a single full repairing and insuring lease (guaranteed by esure Holdings Ltd) for a term of 20 years until 3 October 2030, without break.

The total annual rent passing is £1,860,000 per annum, reflecting £27.11 per sq ft on the office space assuming £10 per sq ft on storage areas, £2,500 per car parking space and half rate on the ground floor reception. The rent is subject to upward only open market rent reviews at 4 October 2020 and 2025.

Covenant Information

esure is an internet focused insurance company and a household name in the UK, founded by Sir Peter Wood.

Originally a car insurance and home insurance business, esure have gradually expanded to also provide travel and pet insurance, and both Sheila's Wheels and Gocompare.com brands are part of the group. HBOS, by then Lloyds Bank, were bought out of their 70% share by Esure Group Holdings in 2010 for a reported £185m. Esure Group plc then began trading on the London Stock Exchange on 27 March 2013 as esureGroup plc.

esure now employs over 1,500 staff in the UK, with The Equinox being their largest office having a total staff of approximately 1,000 people.

For the financial year to 31 December 2016, the tenant esure Property Limited had a turnover of £5,442,000 and a tangible net worth of £30,593,000, with a Dun & Bradstreet rating of 4A1, representing a minimum risk of business failure. The guarantor esure Holdings Limited has a D&B rating of 5A1.


VAT

The asset is elected for VAT which will therefore be payable on this transaction, however it is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

DEBT OPPORTUNITY

This asset is an attractive opportunity for traditional lenders. Indicative lender interest has already been expressed, drawn by the propertys prime location, long-term secure income and good quality office accommodation. The headline financial terms in the link below should be achievable for an asset of this profile:

Our Cushman & Wakefield Debt & Structured Finance team are available to assist with debt terms and sourcing of capital. Please contact:
James Spencer-Jones
James.Spencer-Jones@cushwake.com
+44 (0)20 7152 5524

CAPITAL ALLOWANCES

It is anticipated that any capital allowances may be available to qualifying parties. Further details of these, if applicable, are available in the online data room.

VAT

The asset is elected for VAT which will therefore be payable on this transaction, however it is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

EPC

Copies of the EPC are available upon request.

DATAROOM

Further information is available in the data room. Access details are available upon request.

GLASGOW

Further information on Glasgow's office letting and investment markets and major development schemes is available in the marketing particulars.

Proposal

Offers are invited in excess of £33,300,000 (Thirty-Three Million, Three Hundred Thousand Pounds), subject to contract and exclusive of VAT, for our client's Heritable interest in the property.

This represents an attractive net initial yield of 5.49% and a capital value of £491 per sq ft, assuming acquisition costs of 1.80% through the purchase of the Luxembourg SARL.

The Equinox is part of the Amundi Collection of eight UK properties located in London, Glasgow and Cardiff. These assets are available individually or as a portfolio.

Full details can be found at

www.amundicollection.com

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NET INITIAL YIELD:
5.49%
PRICE:
£33,330,000
REGISTER INTEREST
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