The war in Ukraine has shone a spotlight on the UK's arms production capabilities.
BAE Systems, Europe's largest defence contractor, is performing well after signing a £280 million deal with the Ministry of Defence, which is set to create more than 100 new jobs in the North East. The arms producer is the tenant in a warehouse bought by local government pension scheme Teesside Pension Fund for £50.15 million, reflecting a net initial yield of 6.8%, earning it a CoStar Impact award.
The 346,485 square foot property was built in 2010 and is located at Radial 64 on a 16.5-acre site. The investment is a virtual freehold, being held on a 999-year ground lease from 2010, at a peppercorn annual rent. BAE Systems has a 25-year lease from 2011, with 13 years remaining. The current passing rent is £3.685 million a year and is subject to annual uplifts of 3%.
About the Project: The plant at Washington, Tyne and Wear, carries out forging, machining and treatment of large calibre mortar, artillery and tank ammunition.
What the Judges Said: "It was a significant disposal of premises occupied by a defence-led company whose order book is expanding as a result of the war in Ukraine and a need to rebuild reserves," said Gavin Black, partner, Naylors Gavin Black.
They Made It Happen: Jamie Sim, associate, capital markets and Simon Beanland, principal, capital markets, at Avison Young advised the seller.
