INVESTMENT PROMINENT HIGH STREET RETAIL PARADE GRAINGER STREET & BIGG MARKET, NEWCASTLE UPON TYNE NE1 5JQ

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INVESTMENT PROMINENT HIGH STREET RETAIL PARADE 68-82

1 INVESTMENT PROMINENT HIGH STREET RETAIL PARADE GRAINGER STREET & BIGG MARKET, NEWCASTLE UPON TYNE NE1 5JQ

INVESTMENT HIGHLIGHTS SITUATION DESCRIPTION

RETAIL MARKET Multi let retail parade of 5

Station) Weighted average unexpired lease

25 years A unique opportunity to acquire a

management angles including letting vacant

2 INVESTMENT HIGHLIGHTS SITUATION DESCRIPTION NEWCASTLE TENURE COVENANT RETAIL COMMENTARY RETAIL MARKET Multi let retail parade of 5 units including 1 vacant (formerly Game Station) Weighted average unexpired lease term of 7.25 years A unique opportunity to acquire a City Centre parade with genuine asset management angles including letting vacant unit and lease re-gears Improving retail location with new retailers and future development planned Tenants include KFC, Regis and City Gent Ability to achieve an un-geared IRR of over 10%

Newcastle is approximately 451km (280 miles) north of London, 160 km (100 miles) north of Leeds and 175km (109 miles) south of Edinburgh. The A1 (M) and A19 are the principal North/South routes.

3 LOCATION New extension to Eldon Square The City of Newcastle is the regional and commercial capital of the North East. The population of the city is approximately 259,000, whilst the wider primary catchment area is 1,462,000 rating the city fourth of the PROMIS centres. Newcastle is approximately 451km (280 miles) north of London, 160 km (100 miles) north of Leeds and 175km (109 miles) south of Edinburgh. The A1 (M) and A19 are the principal North/South routes. The A69 extends west towards Hexham and Carlisle, while the A1 is the main route to the north and Scotland. As well as being the focal point of a network of local rail services, Newcastle Central Station is a major staging point on the East Coast Main Line and Cross Country Network. The shortest journey time to London is 2 hours 37 minutes, and to Edinburgh 1 hour 30 minutes. The city is served by Newcastle International Airport situated approximately 11 km (7 miles) north of the city centre. The Airport is the tenth busiest of the UK s 59 airports, providing daily flights to the main domestic destinations and major European centres. More recently daily flights to Dubai have been added opening up the region to the Far East. BAR CITY GENT HAIRDRESSING GAMESTATION COMP GAME SUPERCUTS HAIRDRESSING Edinburgh Berwick-upon-Tweed KFC F/FD REST Newcastle upon Tyne Sunderland Middlesbrough Darlington Proposed redevelopment of existing scheme by McAleer & Rushe Harrogate Leeds York

DESCRIPTION The property comprises a Grade II* listed Georgian end of terrace property dating back to circa 1840. The accommodation is arranged over basement ground and four upper floors.

The building provides ground floor retail units with an ornamental sandstone façade to the upper levels.

Four of the units comprise traditional lockup shops and are occupied by Regis (Hairdresser), City Gent (Hairdresser), KFC and one vacant unit.

4 DESCRIPTION The property comprises a Grade II* listed Georgian end of terrace property dating back to circa The accommodation is arranged over basement ground and four upper floors. The upper parts are in separate ownership with the top three floors providing luxury apartments, whilst the first floor is currently vacant. The building provides ground floor retail units with an ornamental sandstone façade to the upper levels. The ground floor has been substantially altered to provide good quality retail units, with a basement bar. The subject property consists of five retail units and a basement bar. Four of the units comprise traditional lockup shops and are occupied by Regis (Hairdresser), City Gent (Hairdresser), KFC and one vacant unit. The KFC unit also comprises basement accommodation and a return frontage on to Bigg Market. The fifth unit is occupied by bar operator Quilted Camel Ltd t/a Mushroom Bar and comprises a small entrance lobby with a large open feature staircase leading to the bar below. The bar itself is rectangular and regular in shape with a bar running the majority of the length of the premises providing a standing area and seating to the rear. Adjacent to the main entrance is a further doorway leading to the pub s cellar by means of direct staircase from the street level. SITUATION The subject property is situated on Grainger Street at its junction with the Bigg Market and Newgate Street and forms one of the main thoroughfares from Newcastle Central Station to Greys Monument, the main focal point for the retailing core which in turn leads to the prime pitches of Eldon Square and Northumberland Street. The area is populated with Grade II listed buildings with ornamental sandstone facades to the upper levels with ground floor façades having been substantially altered to provide conventional retail display windows. Grainger Street is restricted in terms of vehicular access and forms part of the city centre s main bus route/network. Both Monument and Central Station Metro (Underground Rail) interchange serve Grainger Street providing further access by public transport. Nearby retailers include TJ Hughes, Wilkinsons, Debenhams, Boots, Tesco, McDonalds, Ann Summers and Pizza Hut.

NEWCASTLE RETAIL MARKET Traditionally the Newcastle retail market was centred around the Grainger Town core which included streets such as Grainger Street, Grey Street and their side streets.

However as the city developed emphasis shifted towards Northumberland Street and Eldon Square shopping centre which was built during the 1970 s.

Similar rental levels had been established within parts of Eldon Square.

This has been due largely to the lack of available large, well configured retail units required by the modern day fashion retailer.

The scheme has been successful in attracting retailers such as Apple, Superdry, Guess, Republic and Hollister which has been excellent for the city as a whole.

Other department stores include Fenwick, Marks & Spencer, John Lewis, BHS, Primark and TJ Hughes. In 1997 the Grainger Town Project was established in partnership with Newcastle City Council.

The success of Northumberland Street and Eldon Square had led to the decline of this area and the Grainger Town Project which has now been completed has seen the area return to its former glory and

5 NEWCASTLE RETAIL MARKET Traditionally the Newcastle retail market was centred around the Grainger Town core which included streets such as Grainger Street, Grey Street and their side streets. Northumberland Street was originally residential and formed part of the A1 London to Edinburgh Road. The city has a primary catchment area of 1,462,000 ranking it fourth of the PROMIS centres. However as the city developed emphasis shifted towards Northumberland Street and Eldon Square shopping centre which was built during the 1970 s. Northumberland Street has become known as one of the country s leading high streets, with rental values reaching 3,552 per sq m ( 330 per sq ft) in terms of Zone A before the credit crunch took hold. Similar rental levels had been established within parts of Eldon Square. Whilst Newcastle offers the broad variety of retailing one would expect for a centre of its size, it is considered underweight in fashion retailing. This has been due largely to the lack of available large, well configured retail units required by the modern day fashion retailer. The extension to Eldon Square shopping centre, which opened in spring 2010, has gone someway to providing a number of these units. The scheme has been successful in attracting retailers such as Apple, Superdry, Guess, Republic and Hollister which has been excellent for the city as a whole. To add to this, the 39,483 sq m (425,000 sq ft) extension has been anchored by a new 16,722 sq m (180,000sq ft) Debenhams strengthening the city s department store offer. Other department stores include Fenwick, Marks & Spencer, John Lewis, BHS, Primark and TJ Hughes. In 1997 the Grainger Town Project was established in partnership with Newcastle City Council. This was a 120m refurbishment plan to be centred around the historic city core designed and built by John Dobson and Richard Grainger during the 1830 s and 40 s. The success of Northumberland Street and Eldon Square had led to the decline of this area and the Grainger Town Project which has now been completed has seen the area return to its former glory and has had an enormous impact on the retailing in the locality. With the pedestrianistion of many streets and buildings redeveloped behind the facades the area has been successful in attracting a number of high street names and up-market fashion retailers. Grainger Street and the area around the Monument now houses retailers such as H&M, All Saints, French Connection, Reiss, LK Bennett, TM Lewin, Vivien Westwood, Fat Face, Pretty Green, Jaeger and Urban Outfitters. Closer to the subject property Tesco have opened on nearby Clayton Street. Other retailers include TJ Hughes, Boots, McDonalds, Pizza Hut, Greggs, Ann Summers and Wilkinsons. We expect the location to improve considerably following the redevelopment of the Newgate Centre by McAleer & Rushe, which will include 3 hotels, 4,830 sq m (52,000 sq ft) of offices and 7,060 sq m (76,000 sq ft) of retail & leisure space.

6 TENURE TENANCY SCHEDULE & ACCOMMODATION We understand the property is held by way of a 999 year lease with effect from 21st January 2005 at a peppercorn. Unit Tenant Rent p.a. lease term (expiry) NIA (m2) NIA (sq ft) ITZA (sq ft) RENTAL COMMENTARY Grainger Street has seen a number of new lettings recently. To the northern end of the street occupiers such as Jaeger, Urban Outfitters, Pretty Green and Calvin Klein have taken space. Whilst rents have not fully returned to the previous level of 200 Zone A they are recovering. At the mid section of Grainger Street rents were previously between Zone A. The KFC rent review has been agreed at 75 Zone A. We therefore believe a similar level can realistically be achieved on the letting of unit 3 and we have based our ERV off a realistic level of Zone A. PROPERTY PERFORMANCE AND ASSET MANAGEMENT We believe there are a number of opportunities to significantly enhance the property and achieve excellent performance whether IRR driven or not including: 1. Re-letting Unit 3. There is an immediate opportunity to significantly increase the running yield by letting the vacant unit previously occupied by Game Station. We have assumed an ERV of 56,500 per annum based on a very achievable Zone A. 2. Acquisition of first floor space (currently vacant) to provide additional retail space to be combined with unit 3 or other units. 3. KFC Re-gear. This is their only city centre store within Newcastle and they recently demon strated their commitment to this location by considering taking additional upper floor space in the building and therefore providing an opportunity to re-gear their lease. 68/72 Grainger Street (Unit 1) 76 Grainger Street (Unit 2) 78 Grainger Street (Unit 3) 80 Grainger Street (Unit 4) 82 Grainger Street (Unit 5) Totals COVENANT Company Kentucky Fried Chicken (Great Britain) Ltd Regis UK Ltd t/a Supercuts Vacant Kentucky Fried Chicken (Great Britain) Ltd City Gent Franchising Ltd Quilted Camel Ltd Year Ending 28/11/2011 Turnover 63,500 48,000 50, , ,215, years from 09/02/04 (08/02/2014) 15 years from 01/12/03 (30/11/2018) 10 years from 23/03/2011 (22/03/2021) 20 years from 14/10/2002 (13/10/2022) Pre-Tax Profit (Loss) 38,389, ,706 Shareholders Funds 75,417, CreditSafe Score 90/100 In our opinion, it is possible to achieve an un-geared IRR of over 10%. In arriving at this we have assumed the following assumptions: Regis UK Ltd 26/06/ ,154,000 ( 602,000) 14,159,000 90/ Letting of the vacant unit at 6,500 per annum which reflects Zone A months void and incentive package. 3. Re-basing the other units down to Zone A. 4. An exit yield in 5 years at 7.50%. City Gent Franchising Ltd Quilted Camel Ltd 31/05/ /01/2011 1,551, ,371 28,028 1,977,863 88/100 81/100 PROPOSAL We are instructed to seek offers in excess of 3,300,000, which reflects a Net Initial Yield of 7.14% after purchaser s costs of 5.80%, rising to 8.76% on letting unit 3 at 56,500 per annum. VAT The property is elected for VAT and it is anticipated that the sale will be treated as a TOGC. CONTACT James Metcalf e: James@mhpi.co.uk or Simon Harland e: simon@mhpi.co.uk t: MHPI Limited, 1st Floor West Wing, City Quadrant, Waterloo Square, Newcastle upon Tyne NE1 4DP Misrepresentation Act: These particulars shall not form part of any offer or contract and no guarantee is given as to the condition of the property or the accuracy of its description. An intending purchaser or tenant is not to rely on any representation made in these particulars and must satisfy himself as to their accuracy by his own investigation before entering into any contract. April 2012 Designed & produced by LemonPie -

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