PALACE HOUSE 3 CATHEDRAL STREET SOUTH BANK SE1. Prime long let freehold investment opportunity

Transcription

1 PALACE HOUSE 3 CATHEDRAL STREET SOUTH BANK SE1 Prime long let freehold investment opportunity

2 Contents INVESTMENT Summary 04 / 05 Location 06 / 13 Connectivity 14 / 15 Local Occupiers 16 / 19 Local DEVELOPMENT pipeline 20 / 21 Description 24 / 25 Specification 26 Accommodation 27 Floor Plans 28 / 29 Tenure and TENANCY 30 / 31 Covenant Information 32 Asset Management 33 SOUTH BANK MARKET 34 / 35 Contact & FURTHER INFORMATION 36 / 37

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4 INVESTMENT SUMMARY Freehold. Located in the thriving South Bank district adjacent to Borough Market. London Bridge station is within a five minute walk from the property. Currently under refurbishment by Kaplan, the property comprises 45,012 sq ft (4,182 sq m) of accommodation arranged over ground and five upper floors. The accommodation includes 43,083 sq ft (4,002 sq m) of office and ancillary accommodation and a retail unit at part-ground and part-first floor extending to 1,929 sq ft (179 sq m). The office space is single let to Kaplan Estates Limited guaranteed by Kaplan UK Limited, a 5A1 rated company, for a term of 15 years expiring 31 st August 2032, with a tenant option to determine on 31 st August The overall passing rent of the office accommodation is 2,453, per annum ( per sq ft). The retail unit is let to Nero Holdings Limited t/a Caffè Nero for a term of 15 years from 11 th June 2007 expiring 10 th June The rent payable is subject to a minimum base rent of 150,000 per annum and an additional turnover rent (if applicable). Title includes St Mary Overie s Dock and the surrounding walkways which are held leasehold from the Equitable Life Assurance Society (ELAS) for a term of years at a peppercorn rent. The total rent passing is 2,603, per annum ( per sq ft overall). The weighted average unexpired lease term is years to lease expiry and 9.36 to earliest break. Headline rents on the South Bank in excess of per sq ft with very limited supply of stock coming forward. Asset management opportunities to better utilise the undercroft parking as retail or leisure use taking advantage of the heavy footfall from nearby Borough Market and longer term redevelopment potential. Offers are sought in excess of 55,400,000, subject to contract and exclusive of VAT. A purchase price at this level reflects a net initial yield of 4.4% and a capital value of 1,231 per sq ft, assuming purchaser s costs of 6.78%. PALACE HOUSE 04 05

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6 IMAGES CLOCKWISE FROM BELOW: SOUTHBANK CENTRE CARAVAN (GREAT GUILDFORD ST) CITY HALL AND TOWER BRIDGE The South Bank is home to a number of London s most popular attractions including the London Eye, London Bridge and Borough Market as well as amenities along the river which attract SIGNIFICANT footfall. OVERVIEW Palace House is located on Cathedral Street in the thriving South Bank district of London adjacent to Borough Market and within a five minute walk of London Bridge which connects the South Bank to the City of London on the North Bank. Cathedral Street is an attractive cobbled pedestrianised street linking Montague Close and Clink Street. The property has a river frontage via St Mary Overie s Dock, home to the Golden Hinde. CONNECTIONS The property benefits from excellent transport links. London Bridge station is within a five minute walk from Cathedral Street which provides access via the London Underground to Canary Wharf within six minutes, Bond Street in the West End within eight minutes and King's Cross within 11 minutes. The City and the Bank of England are a short walk across London Bridge. REGENERATION There has been significant investment into regenerating the South Bank and the success of schemes such as Sea Containers House (pre-let to Oglivy and Mather), South Bank Central (pre-let to WeWork and DNV) and 240 Blackfriars Road (let to UBM and Boodle Hatfield amongst others) has helped cement the area as one of London s fastest growing districts and most culturally diverse. OCCUPIERS The area continues to attract a mix of occupiers, ranging from multinational corporations to occupiers from sectors including media & tech, professional services, the public sector, serviced offices and banking. Large future developments such as Bankside Quarter (Temasek, Native Land and Amcorp Properties), Elizabeth House (HB Reavis) and eventually the redevelopment of Colechurch House near London Bridge station will further enhance the locality and its surrounds. Strong occupational demand for South Bank has ensured it is one of London s fastest growing sub-markets. The lack of prime Grade A space and continued shortage of supply ensures the South Bank now receives unprecedented interest from developers and occupiers alike as a consequence, particularly properties which are close to the river. LOCATION PALACE HOUSE 08 09

7 Borough Market With the earliest known records dating back to 1276, Borough Market is London s Oldest Food Market. It has been trading on the current site since 1756 and this extraordinary heritage makes it one of the most exciting attractions south of the river. Borough Market is a source of British and International produce, and is London s most renowned food and drink market. The market s stalls, shops and restaurants reflect London s status as a global city, with traditional British produce sitting alongside regional specialties from around the world. It attracts significant numbers of locals and tourists, especially on weekends and remains one of London s most visited attractions. LOCATION PALACE HOUSE 10-11

8 St Mary Overie Dock and the Golden Hinde Borough YARDS St Mary Overie Dock is home to The Golden Hinde an English galleon best known for her circumnavigation of the globe between 1577 and 1580, captained by Sir Francis Drake. This is the one full size replica still in existence in London, located within the tenure of Palace House. The Golden Hinde replica dates from 1973 and since then she has travelled more than 140,000 miles (225,000 km). She has been in St Mary Overie Dock since 1996 where she is open to the public hosting a range of educational programmes. Over 100,000 sq ft of new retail on Clink Street to include 35 retail units and 10 restaurants Designed by the award-winning practice SPPARC Architecture, the 190,200 sq ft Borough Yards scheme is scheduled to open in early In addition to office accommodation, Borough Yards will provide more than 115,600 sq ft (10,740 sq m) of retail and leisure space. The Office Group will occupy Thames House and an adjacent building, taking a total of 68,500 sq ft (6,364 sq m), while the new building will incorporate a 6,100 sq ft (567 sq m) Everyman cinema. The project involves the redevelopment of former wine-tasting venue Vinopolis and neighbouring sites, which front onto the pedestrian path linking the Tate Modern to the west with Borough Market, London Bridge Station and The Shard, close by to its east. As part of the redevelopment, a new pedestrian lane (Dirty Lane) will create access from Park Street to Bank End. Borough Yards will re-introduce some of the area s original Elizabethan street names, such as Clink Yard and Soap Yard, celebrating the site s heritage. Winchester Palace Winchester Palace was one of the largest and most important buildings in medieval London. Founded in the 12 th century by Bishop Henry de Blois, brother of King Stephen, it was built to house the bishops in comfort when they visited London. The remaining ruins which form part of the old Great Hall, some of which are incorporated into the fabric of the building of Palace House, were revealed in the 1980s and are protected by English Heritage. LOCATION PALACE HOUSE 12 13

9 CONNECTIVITY Palace House benefits from the following excellent transport connectivity; KING S CROSS ST PANCRAS 19 minutes BANK 15 minutes CITY AIRPORT 24 minutes CANNON STREET 10 minutes MONUMENT 7 minutes BOND STREET 16 minutes P CANARY WHARF 12 minutes Infrastructure Improvements London Bridge reopened in January 2018 marking the completion of the 1bn redevelopment after more than five years of work. SOUTHWARK 9 minutes LONDON BRIDGE 3 minutes Since work began in 2013, London Bridge has been transformed by Network Rail as part of the government-sponsored Thameslink Programme, while remaining open for the 50 million passengers that use London s oldest station each year. The vast new concourse, larger than the pitch at Wembley, unites all fifteen platforms for the first time and modern facilities make the landmark station fully accessible for all with step free access to every platform. There are two new entrances on Tooley Street, which will connect the north and south sides of the station, while the completion of the five new platforms will allow Cannon Street services to once again stop at London Bridge. KEY Walk times Journey times Source: TfL WATERLOO 10 minutes BOROUGH 8 minutes GATWICK AIRPORT 41 minutes The tracks through and around the station have been entirely remodelled to modernise the infrastructure and to allow more trains to travel through London, reducing delays and bringing more reliable journeys to more destinations than ever before. Throughout 2018 new shops, cafés and leisure facilities will open, fuelling the reinvigoration of the area. Within 10 minutes of the property is London Waterloo Station. It is one of the busiest railway stations in Europe, providing more than half a million passenger journeys a day and 230 million a year. The station is currently being upgraded to enhance passenger capacity by 30%. This is to be done by rebuilding the former Waterloo International terminal, reconfiguring platforms and extending various platforms to house longer trains with more cars. Various supporting shops, restaurants and other facilities will be incorporated into the upgrade works which are scheduled to complete in December CONNECTIVITY PALACE HOUSE 14 15

10 World class neighbours Local Occupiers 1. PwC 2. Time Inc 3. ITV 4. Totaljobs 5. Mozilla 6. News UK 7. TfL 8. Telstra 9. Omnicom 10. Ogilvy & Mather 11. HSBC 12. IBM 13. TP Bennett 14. WeWork 15. Boodle Hatfield 16. reform Architects 17. UBM 18. Tiffany & Co. Kraft Heinz Duff & Phelps Bars & Restaurants 1. London Grind 2. Padella 3. Roast 4. Fish! 5. The Breakfast Club 6. Honest Burger 7. Aqua Shard 8. Oblix 9. Brindisa 10. Elliot s 11. Bedale s 12. Wright s 13. Hutong 14. Caravan 15. Whiskey Ginger 16. Lobos Meat & Tapas 17. Hawksmoor 18. Hixter Hotels 1. Shangri-La hotel 2. Mondrian London 3. CitizenM 4. London Bridge Hotel 5. Novotel 6. Ibis 7. Hilton 8. Holiday Inn 9. Hoxton Hotel (Q2 2018) 10. Travelodge Fitness 1. Fitness First 2. Soho Gym 3. Nuffield Health 4. Third Space 5. No.1 Fitness 6. Gymbox VICTORIA EMBANKMENT BELVERDERE ROAD WATERLOO BRIDGE 14 YORK ROAD ARUNDEL STREET TEMPLE UPPER GROUND FLEET 12 WATERLOO 3 LOWER MARSH MIDDLE TEMPLE LANE WATERLOO ROAD COIN STREET STAMFORD STREET CORNWALL ROAD ROUPELL STREET WINDMILL WALK TEMPLE AVENUE RS STREET HATFIELDS UFFORD STREET TUDOR STREET BLACKFRIARS LANE BURRELL STREET UNION STREET BEAR LANE GREAT SUFFOLK STREET CARTER LANE VICTORIA EMBANKMENT UPPER THAMES STREET THE CUT 2 10 UPPER GROUND SOUTHWARK WEBBER STREET BLACKFRIARS ROAD BLACKFRIARS ROAD BLACKFRIARS BRIDGE BLACKFRIARS BLACKFRIARS SURREY ROW 8 HOLLAND STREET 7 GREAT SUFFOLK STREET QUEEN VICTORIA STREET 2 4 GREAT SUFFOLK STREET MILLENNIUM BRIDGE TATE MODERN SUMNER STREET 8 11 SOUTHWARK STREET LAVINGTON STREET EWER STREET UNION STREET COPPERFIELD STREET 9 3 SOUTHWARK BRIDGE ROAD GREAT GUILDFORD STREET NEW SUMNER STREET SOUTHWARK BRIDGE ROAD BREAD CANNON STREET CANNON STREET MANSION HOUSE REDCROSS WAY SOUTHWARK BRIDGE PARK STREET FLAT IRON SQUARE 16 MARSHALSEA ROAD BOROUGH PARK STREET QUEEN STREET UNION STREET BOROUGH YARDS QUEEN VICTORIA STREET UPPER THAMES STREET WINCHESTER WALK STONEY STREET SOUTHWARK STREET BOROUGH HIGH STREET 2 CLINK STREET CANNON STREET BOROUGH MARKET BOROUGH HIGH STREET NEWCOMEN STREET BANK ST THOMAS STREET CROSBY ROW 1 KING WILLIAM STREET 4 LONDON BRIDGE 1 GREAT MAZE POND 6 6 SNOWSFIELDS LOMBARD STREET MONUMENT WESTON STREET WESTON STREET GRACECHURCH STREET EASTCHEAP LOWER THAMES STREET 1 ST THOMAS STREET SNOWSFIELDS LIME STREET BREMONDSEY STREET MINCING LANE GREAT TOWER STREET TOOLEY STREET TOOLEY STREET LONDON BRIDGE MARK LANE BARNHAM STREET TREET FENCHURCH STREET DRUID STREET MARK LANE FENCHURCH STREET CRUTCHED FRIARS 5 TOWER HILL COOPER S ROW TOWER BRIDGE ROAD 3 5 MINORIESS TOWER HILL TOWER BRIDGE LAFONE STREET 10 LOCAL OCCUPIERS PALACE HOUSE 16 17

11 THE CITY AT YOUR FEET BANK LIVERPOOL STREET CANNON STREET THE LEADENHALL 30 MONUMENT 20 FENCHURCH BOROUGH LONDON TOWER HILL BOROUGH SOUTHWARK HMS THE NEWS LONDON BRIDGE LONDON BRIDGE TOWER BUILDING ST MARY AXE STREET YARDS BRIDGE MARKET CATHEDRAL BELFAST BUILDING BRIDGE THE SHARD LOCAL OCCUPIERS PALACE HOUSE 18 19

12 Local Development pipeline The South Bank is one of London s fastest growing sub-markets, fuelled by strong occupational demand has been subject to unprecedented development activity in recent years, with a pipeline to suggest this will continue. WATERLOO BRIDGE BELVERDERE ROAD YORK ROAD UPPER GROUND WATERLOO WATERLOO ROAD LOWER MARSH COIN STREET STAMFORD STREET WATERLOO EAST CORNWALL ROAD WINDMILL WALK ROUPELL STREET HATFIELDS UFFORD STREET UPPER GROUND SOUTHWARK THE CUT WEBBER STREET BLACKFRIARS ROAD BLACKFRIARS ROAD 6 BURRELL STREET BLACKFRIARS UNION STREET SURREY ROW BEAR LANE HOLLAND STREET SOUTHWARK STREET GREAT SUFFOLK STREET GREAT SUFFOLK STREET 1 GREAT SUFFOLK STREET SUMNER STREET LAVINGTON STREET EWER STREET UNION STREET COPPERFIELD STREET 2 SOUTHWARK BRIDGE ROAD 10 GREAT GUILDFIORM STREET SUMNER STREET SOUTHWARK BRIDGE ROAD REDCROSS WAY PARK STREET FLAT IRON SQUARE MARSHALSEA ROAD BOROUGH PARK STREET UNION STREET 4 WINCHESTER WALK STONEY STREET CLINK STREET SOUTHWARK STREET BOROUGH HIGH STREET BOROUGH MARKET NEWCOMEN STREET CROSBY ROW LONDON BRIDGE ST THOMAS STREET LONDON BRIDGE GREAT MAZE POND 13 SNOWSFIELDS LOWER THAMES STREET WESTON STREET WESTON STREET TOOLEY STREET LONDON BRIDGE ST THOMAS STREET SNOWSFIELDS BREMONDSEY STREET WESTMINSTER BRIDGE ROAD LONG LANE 53 GREAT SUFFOLK STREET, SE1 100 UNION STREET, SE1 251 SOUTHWARK BRIDGE ROAD, SE1 LAMBETH NORTH BOROUGH ROAD Morgan Capital Partners Scheme: 30,097 sq ft of office accommodation. Let to George P Johnson & F B Ellmers Completion: Q Lake Estates Scheme: Completion: Q ,419 sq ft of office and retail accommodation Oakmayne and LonE Star Real Estate Scheme: 33,368 sq ft of office and retail accommodation Completion: Q WESTMINSTER BRIDGE ROAD LONDON ROAD 3 BOROUGH HIGH STREET GREAT DOVERSTREET BOROUGH YARDS (DIRTY LANE), SE1 COOPER & SOUTHWARK, SE1 BANKSIDE QUARTER, SE1 PARKSIDE, 185 PARK STREET, SE1 THE SHELL CENTRE, SE1 ELIZABETH HOUSE, SE1 Meyer Bergman & Sherwood Thames Venture Scheme: 68,500 sq ft of office accommodation and 115,600 sq ft of retail and cinema Completion: Q HB Reavis Scheme: Completion: Q ,000 sq ft of office accommodation, whole building pre-let to CBRE Temasek/Native Land/Amcorp Properties Scheme: 5.3 acre (mixed use) Completion: Stage 1 delivery scheduled for 2019 Delancey Scheme: Completion: residential units with 22,500 sq ft of retail Almancantar Scheme: Completion: residential units, 800,000 sq ft of office (pre-let to WeWork) and 80,000 sq ft of retail HB Reavis Scheme: 1.25 million sq ft mixed use scheme Completion: ONE BLACKFRIARS, SE1 20 BLACKFRIARS ROAD, SE1 WEDGE HOUSE, 40 BLACKFRIARS ROAD, SE1 SHARD PLACE, SE1 BEAR GARDENS APART-HOTEL, SE1 105 SUMNER ROAD & 133 PARK STREET, SE1 Berkeley Group Scheme: 274 residential units and 121,000 sq ft hotel Completion: 2018 Black Pearl Scheme: Completion: residential units and 277,000 sq ft office scheme Ennismore Scheme: Completion: Q ,000 sq ft office and hotel scheme to be operated by Hoxton Hotel Sellar Property Group Scheme: 148 residential units and 19,500 sq ft of retail accommodation Completion: Q Macro Investments Limited Scheme: 75 bedroom hotel Completion: Q Land Sec Scheme: Completion: ,500 sq ft office scheme LOCAL DEVELOPMENT PIPELINE PALACE HOUSE 20 21

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14 Palace House was completed in 1986 and provides office and retail accommodation totalling approximately 45,012 sq ft (4,182 sq m) arranged over ground and five upper floors. Currently under refurbishment by Kaplan, the property comprises 45,012 sq ft (4,182 sq m) of accommodation arranged over ground and five upper floors. The office accommodation comprises 43,083 sq ft (4,002 sq m) to include the reception area arranged over ground and five upper floors. There is also a retail unit at part-ground and part-first floor totalling 1,929 sq ft (179 sq m). The majority of the property provides well-specified part-open plan and part-cellular air-conditioned office accommodation. The second, fourth and fifth floors will be refurbished by Kaplan in line with the agreed Scope of Works. The property benefits from a double-height entrance hall accessed from Cathedral Street, and extensive roof terrace accessed via the stairwell from the fourth floor. Part of the roof is utilised by the Tenant as a terrace and benefits from views over the City to the north. The property also benefits from surface and undercover car-parking for approximately 13 vehicles. There is a public right of way that runs under the building, linking Cathedral Street to Clink Street. DESCRIPTION PALACE HOUSE 24 25

15 SCHEDULE OF AREAS The property has been independently measured by Plan London in accordance with the RICS Code of Measuring Practice 6 th Edition and the International Measuring Standards IPMS. The survey is assignable to a purchaser and a Duty of Care letter can be provided. Floor Accommodation NIA sq ft NIA Sq m 5 th Office 1, th Office 9, rd Office 11,480 1,067 2 nd Office 11,293 1,049 1 st East Office 3, st West Office 2, Ground Office 2, Ground & First Retail 1, Ground Reception TOTAL 45,012 4,182 SPECIFICATION CURRENT Specification The current specification of the office space can be summarised as follows: Substantial double height entrance hall. Slab to slab of 4.2 metres at ground floor level and over 3.5 metres at first floor and above. Male and female WCs. VAV Air conditioning. Suspended Ceilings. Raised Floors. Two 10 person lift providing access to the office space. One Goods lift refurbished in Access to terrace on the fifth floor with views over City of London and St Paul s. The Landlord has agreed to provide a capital contribution to the Tenant of 3,625,620 exclusive of VAT, in respect of the works to be carried out. SPECIFICATION & ACCOMMODATION PALACE HOUSE 26 27

16 Floor Plans PICKFORDS LANE Ground floor Office 2,590 sq ft / 241 sq m Retail 1,386 sq ft / 129 sq m Reception 613 sq ft / 57 sq m STONEY STREET Third floor 11,480 sq ft / 1,067 sq m WINCHESTER WALK Cathedral STreet First floor East 3,696 sq ft / 343 sq m West 2,423 sq ft / 225 sq m Retail (mezzanine) 543 sq ft / 50 sq m Fifth floor 1,283 sq ft / 119 sq m Office Retail Core Building Footprint For indicative purposes only. Not to scale. N FLOOR PLANS PALACE HOUSE 28 29

17 Tenancy Tenure & Site The office space will be single let to Kaplan, guaranteed by Kaplan UK Limited and Kaplan Inc for a term of 15 years, expiring 31 st August 2032 with a tenant only break option on 31 st August Kaplan Estates Limited will occupy the whole of the office accommodation in Palace House on a floor by floor basis, guaranteed by Kaplan UK Limited, a 5A1 rated company with a parent guarantee from Kaplan Inc. The office accommodation is to be occupied on the ground, first and third floors on a new 15 year term from 4 th June 2017, with a 10 th year tenant option to determine. The total rent agreed over these three floors is 1,160, per annum, equating to psf. Kaplan Estates Limited have agreed to a lease over the second, fourth and fifth floors. The tenant will begin works on-site from March 2018, and will have 6 month s to undertake a refurbishment of the accommodation in line with the agreed Scope of Works. The lease start date for these floors will be 1 st September 2018 and will be co-terminus with the other Kaplan leases, with a tenant s option to determine on 31 st August PALACE HOUSE IS held FREEHOLD. Little Winchester Wharf Horseshoe Wharf Old Thameside Inn (PH) Pickfords Wharf The total rent passing for these floors will be 1,292,298 per annum, equating to psf. The tenant will be granted an 18 month rent free period from Lease Commencement. Clink Street The retail unit is let to Nero Holdings Limited t/a Caffè Nero for a term of 15 years from 11 th June 2007 expiring 10 th June The rent payable is subject to a minimum base rent of 150,000 per annum and, by way of additional rent, the Turnover Rent. Winchester Palace (Rems of) St Mary Overie Dock The Turnover Rent is the sum equal to the amount, if any, by which the Turnover Percentage (12%) of the Gross Turnover exceeds the Base Rent of 150,000. Tenant Floor Use Area Lease Lease Next Tenant Rent Start Expiry Review Option Sq Ft Sq M PAX PSF Comments Winchester Square PALACE HOUSE Kaplan Estates Limited 5 th Office 1, , Rent commencement 1 st March Outside the security provisions of the L&T 1954 Act. Kaplan Estates Limited Kaplan Estates Limited 4 th Office 9, rd Office 11,480 1, , , Rent commencement 1 st March Outside the security provisions of the L&T 1954 Act. Rent commencement 4 th September Outside the security provisions of the L&T 1954 Act. Winchester Stables New Hibernia House Winchester Walk Cathedral Street Kaplan Estates Limited Kaplan Estates Limited Kaplan Estates Limited 2 nd Office 11,293 1, st East Office 3, st West Office 2, Ground Office 2, , , , Rent commencement 1 st March Outside the security provisions of the L&T 1954 Act. Rent commencement 4 th September Outside the security provisions of the L&T 1954 Act. Rent commencement 4 th September Outside the security provisions of the L&T 1954 Act. The Freehold boundary is shown edged red. The Long Leasehold is edged blue. For identification only, on the Ordnance Survey plan. St Mary Overie s Dock and the surrounding walkways are held leasehold from the Equitable Life Assurance Society (ELAS) on a lease expiring 9 th June 2109 at a fixed rent of a peppercorn. ELAS in turn hold their lease from the Port of London Authority, the Freeholder. Caffè Nero Part Ground & Part First Retail 1, , The rent payable is subject to a minimum base rent and a turnover rent (if applicable). TOTAL 44,399 4,125 2,603, Notes: Kaplan Estates Limited benefits from 18 months rent free from 1 st September The vendor will top up any outstanding rent free period upon completion. TENANCY & TENURE PALACE HOUSE 30 31

18 Covenant Information Asset Management Kaplan is one of the world s largest and most diverse education providers. Throughout their 75-year history, Kaplan has been a beacon for expanding educational access and a leader in instructional innovation. Kaplan has over 1 million students worldwide in over 30 countries, employing over 19,000 people and partners with over 2,600 business clients and 1,000+ educational partners. Kaplan Estates Limited is guaranteed by Kaplan UK Limited who have a D&B rating of 5A1, the highest financial strength rating available. In addition, the lease is also guaranteed by Kaplan Inc. The Dun & Bradstreet ratings for Kaplan Estates Limited and its first guarantor are as follows: Company Kaplan Estates Limited Kaplan UK Limited D&B Rating O 2 - O indicates a financial strength which is undisclosed and 2 indicates a lower than average risk of business failure. 5A1 based on a tangible net worth of 78,033,000 and a minimum risk of business failure. Kaplan is owned by the Graham Holdings Company, a publicly listed American conglomerate listed on the New York Stock Exchange. Graham Holdings Company also owns the online magazine Slate, Graham Media Group, (formerly Post-Newsweek Stations), a group of five large-market television stations and the now closed Trove (formerly WaPo Labs) the developers of a news reader app. Graham Holdings Company also owned cable television and internet service provider Cable One until it was spun off in Moody s rates the company Ba1 as at May More information can be found at Nero Holdings Limited t/a CafFè Nero Nero Holdings Limited was founded in 1997 and now operates more than 800 coffee houses across Europe. Nero Holdings Limited have a D&B rating of 5A1. Company Nero Holdings Limited t/a Caffè Nero D&B Rating 5A1 based on a tangible net worth of 191,791,000 and a minimum risk of business failure. Palace House offers immediate opportunities to add value as well as longer term potential to increase the massing to almost double the existing net area. In the short term additional value can be created by converting the undercroft parking at ground floor level into retail or leisure use. SODA architects have produced a scheme which illustrates that between 1,356 sq ft (126 sq m) and 2,077 sq ft (193 sq m) of additional retail space could be created. The total amount of additional area created will depend on the repositioning of the sub-station. SODA have also explored a number of longer term options to add massing through the rationalisation and extension of the 5th floor. An indicative CGI has been produced by Silver Shadow Studio to illustrate these options. Consideration has also been given to a comprehensive redevelopment of the site creating a new building comprising approximately 80,834 sq ft (7,509 sq m) of net internal area as set out below: Floor NIA sq ft NIA sq m 5 th 4, th 11,002 1,022 3 rd 13,090 1,216 2 nd 13,090 1,216 1 st 6, Ground 6, Basement 13,090 1,216 Lower Basement 13,090 1,216 Total 80,833 7,509 The feasibility study for the new build scheme can be accessed on the data room. COVENANT INFORMATION & ASSET MANAGEMENT PALACE HOUSE 32 33

19 South Bank Market OCCUPATIONAL The South Bank office market remains one of Central London s strongest performing sub-markets. Take-up in 2017 surpassed the long term average with approximately 1.3m sq ft leased across the year. Availability is amongst the lowest across any sub-market in Central London with only 725,000 sq ft of stock available and a vacancy rate of c.2.8%. The professional sectors remain the dominant type of occupier however the South Bank has also seen a growth in the TMT sector particularly in the areas around Union Street and Great Suffolk Street. With schemes like Borough Yards expected to enhance the retail and amenity offering closer to the River we also expect rents in this immediate location to increase. Excluding the Shard which has achieved lettings in excess of psf, prime office rents south of the river are now consistently in excess of 70.00psf, as exemplified by recent lettings within the Blue Fin Building, 240 Blackfriars and the breakdown in rents for the upper floors at HB Reavis' Cooper & Southwark Building. The following tables shows occupational comparables for both retail and office lettings on the South Bank; INVESTMENT According to Union Street Partners total investment volumes on the South Bank totaled around 2.2bn in 2017, approximately 350% up on Institutional investor interest has been driven by a strengthening occupational market and lack of good quality supply. As the sub-market matures and the impact of the improvement to infrastructure to London Bridge and Waterloo stations starts to be felt by local occupiers, it is anticipated that demand will increase throughout 2018, particularly from overseas buyers. In-fact overseas investors accounted for c.63% of investments into the South Bank in Q4 2017, a total of 266m (up c.20% from the previous three years), reinforcing the increasing attractiveness of the location as a core London sub-market. The table below sets out investment transactions across Central London with a similar leasing profile to the subject property; PRIME RENTS IN EXCESS OF PER SQ FT VACANCY RATE OF c.2.8% 2017 INVESTMENT VOLUMES UP 350% ON BN OF INVESTMENT INTO THE SOUTH BANK IN 2017 Retail Occupational Comparables Investment Comparables Property Tenant Floor Size Rent Psf 81 Southwark Street Black Sheep Coffee G+LG 1,229 75, Unit 15, Bankside Joe & The Juice G , Winchester Walk Hawksmoor G+LG 4, , Office Occupational Comparables Property Tenant Floor Size Psf Term Break Incentives Comments Date 61 Southwark Street CBRE Whole 75, years 12 th year 26 months rent free on top floor Jan Blackfriars Road Peninsular Business Services 17 th 11, Undisclosed Sublease Dec Blackfriars Road SAP 8 th 11, Undisclosed Sublease Dec-17 The Blue Fin Building Undisclosed Part 9 th 11, years - 16 months rent free - Dec Union Street Kimble G 3, years - Undisclosed - Dec-17 Clink Street The Clearing Consultancy Limited Union House Ren Ltd 5 th and Mezz 5 th 2, years - 3 months rent free Private roof terrace Nov-17 6, years 5 th year Undisclosed - Nov Winchester Walk Howden M&A 1 st 3, years 5 th year 6 months - Aug-17 Address Tenure Area (sq ft) 38 Chancery - Cursitor, WC2 Porters Wharf, 8-14 Crinan Street, N1 99 Gresham Street, EC2 Tenant Wault to Lease Expiry (Breaks) Rent / sq ft Price Capital Value / sq ft Iy Purchaser Completion Date FH 73,793 70% to WeWork (16.90) ,000,000 1, % Sinar Mas Land Under offer FH 44,107 Single let to Macmillan Publishers Limited (16.25) ,000,000 1, % KIRKBI Exchanged FH 95,717 Multi-let 7.00 (6.30) ,200,000 1, % Million Cities Dec Blackfriars, SE1 FH 226,271 Multi-let ,500,000 1, % Al Gurg Family Dec-17 Cspace, City Road, EC1 FH 63,536 Multi-let to 2 tenants 75% of the space let to creative agency, MullenLowe and 25% to NeuLion 8 Bouverie Street, EC4 FH 47,183 Single let to Tipall Ltd with a surety from Euromoney Institutional Investor Plc 9-13 St Andrew Street, EC (9.00) ,000,000 1, % Meadow Partners Nov ,003,000 1, % Harbor Group International FH 16,772 Single let to Rosenblatt ,780,000 1, % Get Nice London (Hong Kong Investor) Aug-17 Aug Union Street Planning-INC 2 nd 3, years - 9 months rent free - Jul-17 The Blue Fin Building The Crown Agency Part 7 th 14, years - 15 months - May-17 The Blue Fin Building Savio Limited 12 th 6, years 5 th year Undisclosed - May Union Street Sonnedix 3 rd /4 th 4, years 5 th year 8 months rent free up front. Further RF post break Private roof terrace Apr Lombard Street, EC3 Rose Court, Southwark Bridge Road, SE1 FH 93,640 Multi-let to 6 tenants and over 50% let by income to Arthur J. Gallagher ,300,000 1, % Ho Bee Land Jun-17 FH 157,144 Single let to WPP ,000,000 1, % M&G Real Estate Feb-17 SOUTH BANK MARKET PALACE HOUSE 34 35

20 Contacts Planning The property is located in The London Borough of Southwark. It is not listed, but is situated within the Borough High Street conservation area. Capital Allowances For further information, access to the data room or to arrange a viewing please contact: Capital Allowances can be made available to the purchaser. James Abrahams VAT james.abrahams@allsop.co.uk Chris Room The property is elected for VAT. It is anticipated that the transaction will be treated as a Transfer of a Going Concern christopher.room@allsop.co.uk EPC Marsha Rabinovich marsha.rabinovich@allsop.co.uk The property has an EPC rating of C. A copy of the certificate is available upon request. Proposal Offers are sought in excess of 55,400,000, subject to contract and exclusive of VAT. A purchase price at this level reflects a net initial yield of 4.4% and a capital value of 1,231 per sq ft, assuming purchaser s costs of 6.78%. Data Room Further information can be found on the online data room. Please contact the vendor s agents to request access. DISCLAIMER: Allsop LLP on its behalf and for the Vendors or Lessors of this property, whose Agents they are, give notice that: These particulars are set out as a general outline only for guidance to intending Purchasers or Lessees, and do not constitute any part of an offer or contract. Details are given without any responsibility and any intending Purchasers, Lessees or Third Parties should not rely on them as statements or representations of fact, but must satisfy themselves by inspection or otherwise as to the correctness of each of them. No person in the employment of Allsop LLP has any authority to make any representation or warranty whatsoever in relation to this property. Unless otherwise stated, all prices and rents are quoted exclusive of VAT. March Designed & Produced by Cre8te cre8te.london CONTACT & FURTHER INFORMATION PALACE HOUSE 36 37

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