H&M - 181/185 WESTERN ROAD, BRIGHTON

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1 181/185 WESTERN ROAD, BRIGHTON PRIME RETAIL STORE INVESTMENT FOR SALE WITH FIXED UPLIFTS 1

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INVESTMENT SUMMARY Brighton is one of the largest, most affluent commercial centres in the South East of England with a resident catchment population of 744,000.

3 INVESTMENT SUMMARY Brighton is one of the largest, most affluent commercial centres in the South East of England with a resident catchment population of 744,000. Prime flagship store of circa 49,000 sq ft, providing one of the best configured large stores in Brighton which are in short supply. Situated on the northern side of Western Road in Brighton s prime retailing pitch. Brighton ranks 1st of the 200 Promis Centres on the basis of rental performance between and this is set to continue. Let to the undoubted 5A1 covenant of H&M with just under 10 years 11 months unexpired. Advantageous landlord s rent review provisions to the higher of open market rental value or part open market rental value with part fixed increases. Total gross passing rent of 787,157 pax, which increases to a fixed uplift of 870,753 pax, effective from 25th December 2015 rent review which is currently outstanding and in negotiation. After deduction of the head rent, the net current rent passing is 754,907 per annum exclusive, increasing to a minimum fixed uplift of 838,503 pax, effective December Our clients are seeking a base price in excess of 16,950,000 (Sixteen Million Nine Hundred and Fifty Thousand Pounds) subject to contract and exclusive of VAT. A purchase at this base price on the minimum fixed uplift reflects a net initial yield of 4.68% and an equivalent yield of 5.39%, after allowing for purchasers costs of 5.80% and the head rent. YEAR RENTAL INCREASES WITH FIXED ELEMENT (PAX) ,753 * 4.68% ,336 * 5.20% ,072,345 * 5.80% NET RUNNING YIELD * Yield is net of head rent and based on fixed increases and keeping today s rental value on the standard retail unit constant. Freehold and part long leasehold with a head rent pay away of only 32,250 per annum. 3

INVESTMENT SUMMARY LOCATION DEMOGRAPHICS 10 DESCRIPTION RETAILING IN BRIGHTON ACCOMMODATION TENURE GOAD TENANCY 3 RENTAL 4 VALUE TENNANT COVENANT INVESTMENT MARKET VAT EPC PROPOSAL FURTHER

A29 Arundel A27 Littlehampton A25 Pulborough A29 A264 A24 Worthing A283 A24 A281 GATWICK Crawley A264 Horsham Shoreham A272 11 A23 Hove 9 10 A273 A27 A22 Haywards Heath Hurstpierpoint BRIGHTON A264

A265 A259 LOCATION Brighton is one of the largest commercial centres in the south east of England, located 56 miles (90km) south of London, 25 miles (40km) west of Eastbourne and 62 miles (100km)

4 INVESTMENT SUMMARY LOCATION DEMOGRAPHICS 10 DESCRIPTION RETAILING IN BRIGHTON ACCOMMODATION TENURE GOAD TENANCY 3 RENTAL 4 VALUE TENNANT COVENANT INVESTMENT MARKET VAT EPC PROPOSAL FURTHER INFORMATION 9 Woking Caterham Leatherhead Sevenoaks 8 6 Dorking Redhill Oxted Reigate Guildford Tonbridge A286 A331 A31 A29 A323 Haslemere A272 Bognor Regis A283 A3 Godalming Billingshurst A29 Arundel A27 Littlehampton A25 Pulborough A29 A264 A24 Worthing A283 A24 A281 GATWICK Crawley A264 Horsham Shoreham A A23 Hove 9 10 A273 A27 A22 Haywards Heath Hurstpierpoint BRIGHTON A264 Lewes A259 East Grinstead A275 A275 A22 Uckfield A264 A26 Newhaven Seaford A25 A27 A26 A21 A272 A22 A267 A227 Tunbridge Wells Crowborough A259 A22 A26 Heathfield A21 A271 Hailsham A228 Eastbourne A265 A259 LOCATION Brighton is one of the largest commercial centres in the south east of England, located 56 miles (90km) south of London, 25 miles (40km) west of Eastbourne and 62 miles (100km) east of Southampton. The City benefits from good road communications with the A23 dual carriage way linking north and joining the M23 motorway and in turn, the M25 motorway at Junction 7. The A27 dual carriage way acts as a ring road around the City and links Brighton with Eastbourne in the east and Southampton to the west. Rail links are excellent, with regular train services to London Bridge and London Victoria, with a fastest journey time of approximately 50 minutes. London Gatwick Airport is located only 22 miles (35 kilometres) north of Brighton, via the A23 dual carriage way and the M23 motorway. 4

CATCHMENT AND DEMOGRAPHICS Brighton dominates its primary catchment area and the total population within the Brighton catchment area is in excess of 511,000, ranking the City 36 out of the PROMIS

5 CATCHMENT AND DEMOGRAPHICS Brighton dominates its primary catchment area and the total population within the Brighton catchment area is in excess of 511,000, ranking the City 36 out of the PROMIS centres. The catchment extends east to Hastings, north to Crawley and west to Chichester and encompasses many of the popular and affluent commuter towns and villages that include Haywards Heath, Horsham, Hove, East Grinstead, Uckfield and Midhurst. The estimated shopping population of Brighton is 329,000, ranking the City 29 of the PROMIS centres. Spending in Brighton is boosted by leisure and business tourism. Brighton and Hove City Council estimated that tourist expenditure in 2012 amounted to 780m; an estimated 14,600 jobs are tourism related. Brighton also boasts a very popular student destination, attracting students from throughout the UK and worldwide. The age profile of Brighton s primary catchment population includes a high proportion of adults aged and Brighton s population is set to grow 2.6% by 2016, with a further 4.9% by In 2011 the service sector accounted for 82% of total employment in Brighton. Within this sector, financial and business services account for 27% of total employment. Major employers include Lloyds, Legal & General and American Express, which has its European headquarters in the City. Other major employers include Domestic and General, Bupa, University of Brighton, University of Sussex, Hospitals NHS Trust, Sussex Police and the City Council. (PROMIS Retail Report January 2016). CHURCHILL SQUARE SHOPPING CENTRE Aerial for illustrative purposes only 5

DESCRIPTION The property comprises an attractive art deco flagship store, providing approximately 48,927 sq ft (4,545 sq m) arranged on part basement, ground and 2 upper floors.

6 DESCRIPTION The property comprises an attractive art deco flagship store, providing approximately 48,927 sq ft (4,545 sq m) arranged on part basement, ground and 2 upper floors. The property is constructed with load bearing masonry and a steel frame encased in concrete. The front elevation has been rendered and the remaining elevations are either rendered masonry or facing brick. Hennes took an assignment of the lease from Woolworth s in 2009 and paid a premium of 720,000 plus VAT for the existing Woolworth s interest, with competitive bidding illustrating the strength of demand for a store of this size in Brighton City Centre. When Hennes acquired the lease, part of the property, 185 Western Road, (Standard shop unit) had been sublet to Clinton Cards at ground and first floor, Hennes have subsequently taken over this accommodation. The main property has dedicated vehicular servicing from the rear at first floor level, accessed by a ramp off Marlborough Street. 6

7 H AMPT ON P L ST MON TPELIER SUBJECT PROPERTY U P PER NORT H ST REET DY K E R O A D WE ST ERN R OA D Churchill Square Shopping Centre A 2010 W ES T ST REET Q UEE N S R OA D NO CH U R N O L RETAILING IN BRIGHTON Brighton s retail City Centre floor space is estimated at 1.58m sq ft and is comparable with the regional centre average, ranking the city 27 of the PROMIS centres on this measure. Brighton s retail core is predominantly linear in nature, stretching along Western Road and North Street, which together with Churchill Square Shopping Centre are the main focus of national multiple retailing in the City. The Lanes to the east of the core retail area provides a mix of more independent/local and specialist retailers. Brighton ranks 10 on the basis of its PMA retail score and 8 on the PMA fashion score. Brighton s retail offer is very extensive for a city of its size. Its fashion offer is well above the average for regional centres. The City faces below average competition from competing retail centres and has limited out of town competition. As a result, demand for the City and especially larger stores is particularly strong with outstanding requirements including Boots, Zara, Anthropology and Ikea. John Lewis have long term plans to redevelop the existing Boots store and adjacent units on North Street to create a potential 130,000 sq ft department store. The site was acquired in March 2015, although it is understood that work cannot begin on the scheme until the existing leases expire in Brighton ranks 1st of the Promis Centres on the basis of rental performance between and it will undoubtedly continue to be a strong performer, especially with the future proposed arrival of JLP. 7

ACCOMMODATION The property has been measured in accordance with the RICS code of measuring practice and we set out our floor areas below:- Accommodation H&M Hennes

02 sq m *Remote Store 2,677 sq ft 2,48.7 sq m Total GIA 43,491 sq ft 4,040.29 sq m Standard Retail Unit (NIA) Ground Floor Retail 2,834 sq ft 263.

8 ACCOMMODATION The property has been measured in accordance with the RICS code of measuring practice and we set out our floor areas below:- Accommodation H&M Hennes (GIA) Ground Floor Retail 19,143 sq ft 1, sq m First Floor Retail 14,380 sq ft 1, sq m Second Floor Retail 9,968 sq ft sq m *Remote Store 2,677 sq ft 2,48.7 sq m Total GIA 43,491 sq ft 4, sq m Standard Retail Unit (NIA) Ground Floor Retail 2,834 sq ft sq m First Floor Retail 2,602 sq ft sq m ITZA 1,020 units 1,020 units *Remote Store - Flying Leasehold over 187 Western Road. Not included in Total GIA. ** Basement area not included (basement void and not used). 8

TENURE The property is held freehold and partly leasehold as detailed below:- 31/32 Marlborough Street & 23 Regent Hill Freehold (coloured dark blue on the OS plan) 181/185 Western Road Long

9 TENURE The property is held freehold and partly leasehold as detailed below:- 31/32 Marlborough Street & 23 Regent Hill Freehold (coloured dark blue on the OS plan) 181/185 Western Road Long leasehold (coloured light blue on the OS plan). The property is held on a 150 year leasehold interest from Brighton Borough Council for a term expiring 11th November The current head rent is 31,500 pax and is reviewed at 5 yearly intervals. The next head rent review is due on 12th November 2017 and is to the higher of the passing rent or 6.5% of the open market rental value of the demise. The floor area of this part of the demise totals approximately 26,660 sq ft (ground 9,510 sq ft, first floor 9,088 sq ft and second floor 8,062 sq ft). The 2010 head rent review was settled at a nil increase and we would expect a nil increase at the 2017 review. A = Standard retail unit Freehold 23 Regent Hill to the rear of 187 Western Road (1st Floor only) Short leasehold (coloured green on the OS plan). Long Leasehold Short leasehold, first floor only 63 year leasehold interest from Espirit GB Limited, expiring 24th December The current head rent is 750 per annum without further review. This element of the demise comprises a first floor remote storage room, which falls within the occupational lease to Hennes and is currently unused. A The total head rent payable is 32,250 pax. For illustrative purposes only 9

10 10

TENANCY The entire property is let to H&M Hennes and Mauritz UK Limited from 25th March 2001 until 23rd December 2026 at a current passing rent of 787,157 pax, effective from 25th December 2010 rent

11 TENANCY The entire property is let to H&M Hennes and Mauritz UK Limited from 25th March 2001 until 23rd December 2026 at a current passing rent of 787,157 pax, effective from 25th December 2010 rent review. The lease is subject to 5 yearly upward only rent reviews, with 25th December 2015 rent review currently outstanding. Rent reviews are upward only to the higher of the following two options:- Option 1 The open market rent for the main premises (H&M occupied element ignoring the standard retail unit demise) plus the open market rent for the sublet premises (standard retail unit). Option 2 The open market rent for the standard retail unit plus 719,753 pa in 2015, 814,356 pa in 2020 and 921,345 pa in A worked example of Option 2* can be highlighted as follows:- Date Fixed Increase (H&M Part) (PAX) Standard Retail Unit (PAX) 12/ , , ,157 Total Anticipated Gross Income (PAX) 12/ , , ,753 12/ , , ,336 12/ , ,000 1,072,345 * This worked example is based on the assumption that the rental value of the standard unit remains at 151,000pax. After deduction of head rent the net rent passing is currently 754,907 pax, but this will increase to a net figure of 838,503 pax in December The vendor will require the successful purchaser to pay a top up on completion of the outstanding rent review on any rent agreed in excess of the minimum fixed net rental increase of 838,503 pa. 11

RENTAL VALUE We are of the opinion that the estimated rental value of the property as of today s date would conservatively lie in the region of 999,000 pax.

In our opinion therefore, the Option 1 valuation of the open market rental value of the former H&M main demise and the standard unit shop 2015 estimated rental value of 999,000 pax would be

The 33,400 sq ft store was let at a rent of 921,402 pax, which reflected a headline rent of 27.60 per sq ft. 2. MSU3 Churchill Square (Bershka / Zara) Open market letting March 2013.

12 RENTAL VALUE We are of the opinion that the estimated rental value of the property as of today s date would conservatively lie in the region of 999,000 pax. This is based on a rent of 848,000 pax ( per sq ft) on the H&M Hennes demise and a rent of 151,000 pax ( 135 ZA) on the standard unit. In our opinion therefore, the Option 1 valuation of the open market rental value of the former H&M main demise and the standard unit shop 2015 estimated rental value of 999,000 pax would be applicable The principle evidence can be set out as follows:- Store Evidence 1. MSU& Churchill Square (Topshop / Topman) Open market letting May The 33,400 sq ft store was let at a rent of 921,402 pax, which reflected a headline rent of per sq ft. 2. MSU3 Churchill Square (Bershka / Zara) Open market letting March The 14,931 sq ft store was let on a 10 year lease at a rent of 465,000 pax, which reflected a net overall rate of per sq ft. 3. Unit 2/3 Churchill Square (WH Smith) Lease renewal June ,563 sq ft store, agreed at a rent of 713,800 pax, which reflected a headline rate of per sq ft and a net of per sq ft after deduction of rent free. The current service charge in Churchill Square is c 7 per sq ft. Western Road Evidence North Street (Metrobank) Open market letting March 2015 at a stepped rental averaging 345,000 pax reflecting a net Zone A rate of 134 per sq ft. The unit has a ground floor area of 3,540 sq ft Western Road (Cotswold Outdoor) Rent review April 2015 fixed uplift to 170,000 pax which reflected a Zone A rate of 135 per sq ft. The unit has a ground floor area of 2,462 sq ft. 3. Unit 6 Church Square (Calzedonia) Open market letting of scheme unit fronting Western Road in September 2014 at a rent of 150,000 pax which reflected a net Zone A rate of 201 per sq ft. The unit has a ground floor area of 1,290 sq ft. 12

13 TENANT S COVENANT H&M Hennes & Mauritz UK Limited was incorporated in 1979 and operates as a fashion retailer with 6 different brands. H&M has expanded substantially and today has around 3,900 stores worldwide. Germany accounts for the biggest market, followed by the UK and the US, and the company s target is to increase the number of stores by 10-15% per year. We understand that the tenant trades well from the property and indeed extended into the former Clinton Cards sublet demise when the company entered into administration in 2012, despite their being several offers on assignment for the lease. 30/01/2013 GBP /01/2014 GBP /01/2015 GBP 000 Sales Turnover 957, , ,579 Pre Tax Profit 61,014 N/A 17,748 Tangible Net Worth 109, , ,136 H&M Hennes & Mauritz UK Limited has an Equifax Score of A Excellent, based on a tangible net worth of 109.5m. 13

INVESTMENT MARKET COMPARABLE EVIDENCE The most salient comparable sale transactions can be set out as follows:- Date Property Price Net Initial Yield Purchaser June 2015 March 2015 June 2015 North

14 INVESTMENT MARKET COMPARABLE EVIDENCE The most salient comparable sale transactions can be set out as follows:- Date Property Price Net Initial Yield Purchaser June 2015 March 2015 June 2015 North Street, Brighton, Hanningtons Estate 129/133 North Street, Brighton, Boots 134/138 North Street, Brighton, Sainsbury s Sports Direct Poundland 56.7m 3.65% Redevco 21.8m 4.4% JLP 15.15m 4.21% Merseyside Pension Fund VAT The property is elected for VAT and it is proposed that the sale will be treated as a Transfer Of a Going Concern (TOGC). EPC The property has an EPC rating of C68. A copy of the EPC rating and assessment report is available from this office. 14

PROPOSAL We are seeking offers for the property in excess of 16,950,000, (sixteen million nine hundred and fifty thousand pounds) subject to contract and exclusive of VAT, A purchase at this price

On the basis of the minimum fixed uplifts and assuming the rental value of the standard retail unit remains constant at 151,000 pax the gross passing rent would rise as follows RENTAL INCREASE WITH

15 PROPOSAL We are seeking offers for the property in excess of 16,950,000, (sixteen million nine hundred and fifty thousand pounds) subject to contract and exclusive of VAT, A purchase at this price reflects a net initial yield of 4.68% and an equivalent yield of 5.39% after allowing for purchasers costs of 5.80%. On the basis of the minimum fixed uplifts and assuming the rental value of the standard retail unit remains constant at 151,000 pax the gross passing rent would rise as follows RENTAL INCREASE WITH FIXED ELEMENT (PAX) NET RENTAL YIELD % Year , % Year , % Year ,072, % *The yield assumes the head rent and standard unit rent remains constant. The vendor will require the proposed purchaser to pay a top up on completion of the outstanding rent review at the agreed initial yield on any rent obtained in excess of the fixed rental increase. 15

For further information or to arrange an inspection, please contact the following: Phillip Hay Jackson Criss 020 7637 7100 phay@jacksoncriss.co.uk Matthew Coates Jackson Criss 020 3716 0501 matthewc@jacksoncriss.

16 For further information or to arrange an inspection, please contact the following: Phillip Hay Jackson Criss Matthew Coates Jackson Criss Brook Wannop Jackson Criss Designed by TCC Messrs. Jackson Criss for themselves and for the vendors or lessors of this property whose agents they are to give notice that: (i) the particulars are set out as a general outline only for the guidance of intending purchasers or lessees, and do not constitute, nor constitute part of, an offer or contract; (ii) all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them as statements or representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them; (iii) no person in the employment of Messrs. Jackson Criss has any authority to make or give any representation or warranty whatever in relation to this property. JC0079. February

136/140 High Street GUILDFORD

136/140 High Street GUILDFORD PRIME FREEHOLD HIGH STREET INVESTMENT FOR SALE INVESTMENT SUMMARY The highly affluent south east town of Guildford is one of the UK s premier retail destinations outside of