The Arcade, Old Christchurch Road, Bournemouth A PRIME RETAIL INVESTMENT OPPORTUNITY BOURNEMOUTH

The Arcade, Old Christchurch Road, Bournemouth A PRIME RETAIL INVESTMENT OPPORTUNITY BOURNEMOUTH

2 THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH A PRIME RETAIL INVESTMENT OPPORTUNITY Investment Considerations Iconic Victorian Retail Arcade The primary aspirational retailing destination in Bournemouth Freehold Prominent location fronting Old Christchurch Road Affluent catchment Excellent retail growth prospects Let to a number of national retailers on affordable rents Low service charge and rates liability Significant asset management initiatives Offers in excess of 12,510,000 reflecting an attractive net initial yield of 7.00%, a reversionary yield of 7.15% and an equivalent yield of 7.04%.

A UNIQUE RETAIL INVESTMENT OPPORTUNITY THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH Location The coastal town of Bournemouth is a major commercial and tourist destination located 100 miles south west of London, 22 miles west of Southampton and 6 miles to the east of Poole. Lying close to the M27. The town benefits from excellent transport links including the A31 and direct train services to London with a journey time of 1hr 45 minutes. Bournemouth International Airport is located circa 4 miles north of the city centre, offering a range of domestic and international flight options. In addition, the port of Poole offers scheduled passenger services to Cherbourg and the Channel Islands as well as freight services. A303 Winchester A34 M4 Basingstoke M3 A31 Heathrow A3 Guildford Gatwick LONDON M25 M23 Demographics Bournemouth has a total population of 403,000 within the primary catchment area and an estimated shopping population of 156,000 ranking the town 60th out of the PROMIS Centres. Bournemouth town centre faces below average competition from competing retail centres (PROMIS). Bournemouth is an affluent sub-regional centre with high levels of employment, car and home ownership. The population includes an above average representation of the more affluent A, B & C1 social groups. Representation of the least affluent DE Social group is significantly below average. The town s comparison retail expenditure is currently the 52nd largest of the PROMIS Centres and is forecast to grow an impressive 2.7% pa in real terms, over the period 2010-2015. In March 2011, tourism was reported to be worth an estimated 600 million to the town, providing circa 20,000 jobs across the wider Bournemouth and Poole area. The catchment is strong, as in March 2013 the local claimant count was 3.3% of the population aged 16-64, compared with the national claimant count of 3.8% (PROMIS). Office-based, private sector employment is also particularly significant with a plethora of multinational companies having operations based in the town. Significant employers include JP Morgan Chase, Liverpool Victoria, PruHealth, Lloyds TSB Insurance and Proctor & Gamble. A354 Ringwood A348 A35 POOLE A338 M27 A31 A338 A35 BOURNEMOUTH Southampton Portsmouth A27 Bournemouth also benefits from a substantial and growing student population with in excess of 17,000 students at the University.

4 THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH A UNIQUE RETAIL INVESTMENT OPPORTUNITY The Arcade is the primary high end fashion and jewellery quarter within Bournemouth town centre Retailing in Bournemouth The town centre retail floor space in Bournemouth is estimated at 1.1 million sq ft. Prime retailing in Bournemouth is divided into two sub-sections either side of The Square, namely Old Christchurch Road to the east and Commercial Road to the west. The prime stretch boasts a particularly strong number of leading national retailers including Topshop/Topman, Superdry, Monsoon, Marks & Spencer, H&M, Boots, Republic, Primark & House of Fraser. There are two other arcades within Bournemouth town centre, Richmond Gardens and Burlington Arcade which are both also located on Old Chirstchurch Road. These contain tenants targeted towards the lower end of the market whereas the subject property is viewed as the up market quarter in the town centre. Situation The Arcade is a busy pedestrianised thoroughfare linking the prime section of Old Christchurch Road to Gervis Place. The Arcade has entrances on both Old Christchurch Road and Gervis Place and is well positioned between House of Fraser and Beales Department Stores. The western section of Old Christchurch Road benefits from strong pedestrian flow with key retailers including House of Fraser, WHSmith, Dorothy Perkins, Oasis, Monsoon, McDonalds, River Island and Waterstones. A number of high quality retailers are situated on Gervis Place including Austin Reed, Russell & Bromley and Viyella. There are 3 managed shopping centres within Bournemouth but they only account for around 8% of the total retail floor space (PROMIS). Bournemouth is therefore dominated by the two main stretches of High Street. St Stephen s Road The section of the town where the subject property is situated has traditionally been more popular with the more aspirational type retailer. Commercial Road The Avenue Centre Avenue Road Bourne Avenue THE SQUARE Richmond Hill Yelverton Road Albert Road Old Christchurch Road Old Christchurch Road St Peters Road The Arcade Gervis Place Hinton Road Terrace Road Exeter Road HOUSE OF FRASER Westover Road

A UNIQUE RETAIL INVESTMENT OPPORTUNITY 5 Description The subject property is a Grade II listed Victorian Arcade of approximately 37,000 sq ft (3,437 sq m), constructed in 1866 by Henry Joy originally as two rows of shops. The glazed domed arcade roof was added in 1872 and includes coloured glass end panels and an original 19th century clock at the eastern end. The Arcade contains a glazed Victorian tiled floor with a number of coloured glass panels at either end of The Arcade. Additionally, the property contains an original 19th century clock at the eastern end. The property was built as 19 retail units including two on Gervis Place and is currently arranged as 13 units. Units 12 & 13 and House of Fraser complete the retail frontage within The Arcade and are in separate ownerships. The property provides a good range of well-proportioned units which are ideally suited to the high end jewellery and fashion retailers. The ancillary areas include basement and sub-basement levels as well as on first and second floors, some of which may suit a change of use subject to the usual consents. There is one residential flat let on a assured short hold tenancy which is situated above the Space NK unit and accessed via Gervis Place. UNDER OFFER The property has prime frontages to both pedestrianised Old Christchurch Road and Gervis Place with servicing to the rear of several of the units. The Arcade has recently undergone an extensive refurbishment and redecoration plan. Tenure Freehold N

6 THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH A UNIQUE RETAIL INVESTMENT OPPORTUNITY Unit Tenant Trading As Lease Start Lease Expiry Next Rent Review Break Floor Areas (Sq m) (Sq ft) Current Rent per annum (Zone A) ERV per annum (Zone A) Current Landlord Non-Recoverables 1 Space NK Limited Space NK 29/10/2007 28/10/2022 29/10/2017 Ground Floor 68.4 736 85,000.00 80,600.00 - Lease is within the 1954 Act security of tenure provisions. ITZA 64.6 695 ( 116) ( 110) First Floor Anc. 63.9 688 132.3 1424 2 Vacant Vacant Ground Floor 57.0 614 58,700.00 58,700.00 2308.18 569.20 2,877.38 - Vendor to provide a 2 year top up on vacant unit from completion. ITZA 41.4 446 ( 110) ( 110) First Floor Anc. 50.9 548 Second Floor Anc. 38.3 412 Basement Anc. 51.1 550 Sub-basement Anc. 47.8 515 245.2 2639 3-4 K Retail Propco Limited Karen Millen 14/09/2005 28/09/2015 Ground Floor 84.0 904 102,000.00 99,600.00 - Lease is within the 1954 Act security of tenure provisions. ITZA 68.4 736 ( 113) ( 110) Basement Sales 86.5 931 First Floor Anc. 87.2 939 Second Floor Anc. 76.1 819 Basement Anc. 13.4 144 347.2 3737 Service Charge Insurance Comments - Rent agreement in place for monthly rent payment (ceases on 02/09/2015). 5-6 Cath Kidston Limited Cath Kidston 13/03/2012 12/03/2022 13/03/2017 Ground Floor 86.8 934 85,000.00 87,400.00 - Lease is within the 1954 Act security of tenure provisions. 7 Gembox Jewellers Limited Gembox Jewellers Limited 29/09/2009 28/09/2019 25/12/2014 Ground Floor ITZA 62.2 669 ( 106) ( 110) First Floor Sales 76.2 820 Ground Floor Anc. 8.7 94 First Floor Anc. 1.5 16 Second Floor Anc. 58.7 632 Basement Anc. 97.3 1047 320.4 3449 ITZA First Floor Anc. Second Floor Anc. Basement Anc. Sub-basement Anc. 41.9 30.6 32.1 34.1 16.9 32.9 157.9 451 329 346 367 182 354 1700 55,000.00 40,400.00 - Lease is within the 1954 Act security of tenure provisions. ( 154) ( 110) 14-16 Waterstones Booksellers Ltd Waterstones 21/05/2014 20/05/2024 21/05/2019 20/05/2019 Ground Floor ITZA First Floor Sales 184.7 120.3 156.6 1988 1295 1686 150,000.00 ( 87) 187,300.00 ( 110) - We have made an allowance of -10% on the whole to reflect quantum. Part of Waterstones unit to the rear is not included within the sale. Agreed floor areas in accordance with lease renewal. Basement Sales Second Floor Anc. 154.4 164.5 1662 1771 - Lease is within the 1954 Act security of tenure provisions. Basement Anc. 70.0 754 Sub-basement Anc. 119.9 1291 850.2 9152 Accommodation & Tenancy

A UNIQUE RETAIL INVESTMENT OPPORTUNITY THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH 7 Unit Tenant Trading As Lease Start Lease Expiry Next Rent Review 17 Ms Clare Andrew Essential Jewellers 04/08/2014 04/08/2024 04/08/2019 04/08/2019 Ground Floor Break Floor Areas (Sq m) (Sq ft) Current Rent per annum (Zone A) ITZA First Floor Anc. Second Floor Anc. Basement Anc. 56.8 35.4 44.2 40.1 52.9 194.0 611 381 476 432 569 2088 54,000.00 ( 128) ERV per annum (Zone A) 54,000.00 ( 128) Current Landlord Non-Recoverables Service Charge Insurance Comments - Terms of Agreement for Lease agreed with Essential and engrossment in circulation for signing. Landlord required to complet te works prior r to the 3 month rent free period. The landlord will top up to the contractual rent commencement date. 18-19 White Stuff Limited White Stuff 08/10/2010 07/10/2020 08/10/2015 08/10/2016 Ground Floor 121.7 1,310 120,000.00 123,200.00 684.03 684.03 - Insurance for sub-basement not included within service charge schedule ITZA 75.9 817 ( 106) ( 110) and sub-basement unit is excluded from the demise. 20 Roberta Ltd Roberta 25/03/2011 24/03/2016 25/03/2014 Ground Floor 21-22a 23 Charles Fox (Jewellers) Ltd Holland & Barrett Ltd Charles Fox (Jewellers) Ltd Holland & Barrett 21/08/1969 20/08/2068 21/08/2025 First Floor Sales 65.7 707 Basement Sales 202.3 2,178 Second Floor Anc. 75.5 813 465.2 5,008 ITZA First Floor Sales First Floor Anc. Second Floor Anc. Ground Floor ITZA First Floor Sales Basement Sales First Floor Anc. Second Floor Anc. Basement Anc. Sub-basement Anc. Kiosk to Gervis Place 28/06/2006 27/06/2016 24/06/2016 Ground Floor ITZA First Floor Anc. Second Floor Anc. Floor Area 43.5 27.2 36.5 4.1 38.4 122.4 118.0 78.1 85.1 75.5 2.4 49.9 30.3 43.0 10.6 404.2 35.6 31.7 42.6 42.4 120.6 468 293 393 44 413 1318 1270 841 916 813 26 537 326 463 114 4351 383 341 459 456 1298 - Lease is within the 1954 Act security of tenure provisions. - Tenant's service charge obligations are capped ( 5,500 p.a. subject to RPI increases). 46,250.00 38,600.00 - Lease is within the 1954 Act security of tenure provisions. ( 136) ( 110) 111,106.00 116,000.00 ( 105) ( 110) 41,000.00 ( 114) 39,800.00 ( 110) - The Unit is on two seperate co-terminous leases. Unit 21 is paying 51,421.20 p.a. and Unit 22-22a is paying 59,684.80 p.a. - We have made an allowance of +5% to reflect the 14 year rent review pattern and a reduction of 13.95% to reflect the assumed term (being the unexpired residue of the lease). The tenant occupies the unit under two leases. - Lease is within the 1954 Act security of tenure provisions. - Imelda s Wardrobe Shoes are in occupation of the rear premises (being unit 22a) on a sub-lease at a rent of 13,000 p.a. - 5% deduction for shape - Lease is within the 1954 Act security of tenure provisions. 23a Westover Jewellers Westover Jewel 10/04/2006 09/04/2021 10/04/2016 Ground Floor 15.1 163 13,500.00 13,500.00 - Lease is within the 1954 Act security of tenure provisions. Storage Units A (basement unit), B and C (both sub-basement units) (under separate leases) Part-Basement and Sub-Basement Electricity Substation, Unit 1 House of Fraser (Stores) Ltd The Prudential Assurance Co Ltd Southern Electric Power Distribution Plc ITZA 15.1 163 ( 76) ( 76) Basement Anc. 33.4 360 48.6 523 House of Fraser 28/01/2005 24/03/2040 - - - Peppercorn rent. - No service charge obligations (save for insurance contribution). - Leases are within the 1954 Act security of tenure provisions. Prudential 01/12/2005 30/11/3004 - - - Not included within service charge schedule. 01/02/1964 01/02/2060 0.05 0.05 - Peppercorn rent. 1a Mr Tom Hampson & Miss Lola Rowe - Residential AST 16/07/2013 15/07/2014 7,200.00 7,200.00 1271.51 136.02 1,407.53 - Two bedroom flat 3,408.22 36,687 928,756.05 946,300.05 4,968.94-800 deposit held under TDS.

8 THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH A UNIQUE RETAIL INVESTMENT OPPORTUNITY Accommodation & Tenancy The Arcade is predominantly let to national multiple retailers, approximately 68% by income in accordance with the tenancy schedule. The principle tenants within The Arcade include Cath Kidston, White Stuff, Karen Millen, Space NK, Holland & Barrett, Charles Fox and Waterstones. Charles Fox was established in 1876 and has been in occupation for over 130 years. The tenancies are on institutional leases and are either on full repairing and insuring basis or full service charge recovery, apart from a small service charge and insurance shortfall on the residential unit. 32% 68% % Income Against Covenant Status National retailers Local Retailer The weighted average unexpired lease term by income is approximately 10.1 years. The current net rental (inclusive of the 2 year top up guarantee on the vacant unit 2 from completion) is 926,664.49 per annum. 6% % Occupied Floor Space Occupied area Vacant Area 94%

A UNIQUE RETAIL INVESTMENT OPPORTUNITY THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH 9 Service Charge Goadsby and Harding currently manage The Arcade. The service charge runs on a calendar year basis and is demanded quarterly on account based on a service charge budget. The service charge for the year ending December 2013 was 52,704 which reflects circa 1.40 per sq ft and the principle costs are administration, cleaning, fire alarm maintenance, general repairs, security and insurance. The service charge and rates liability continue to remain very affordable. Arcade Owners There are currently three property owners within The Arcade with units 12 and 13 in separate ownerships. In addition to this the House of Fraser has an entrance on to The Arcade which is in a separate ownership. A deed of covenant dated 1922 sets out a number of provisions in respect of the The Arcade (more information available in the data room). Estimated Rental Value We have analysed the passing rents devaluing to Zone A rates of between 87 psf and 154 psf. Prime rents in Bournemouth have historically been recorded on Old Christchurch Road. These rents reached a peak of circa 190 per sq ft Zone A in 2006 and they are currently in the region of 160 per sq ft. The rents peaked in The Arcade at a rent of 154 psf Zone A with the Gem Box Jewellers letting in 2009. The Arcade has largely maintained its rental tone throughout the downturn and has continued to attract considerable interest from retailers. The most recent open market letting was to Cath Kidston at 106 psf in March 2012. We believe there is further rental growth to come through in the near future as a result of continued strong interest from the high end jewellery and fashion retailers. Some of which include Jack Wills, Sole Trader, L Occitane, Gerry Weber and Jojo Maman Bebe.

10 THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH A UNIQUE RETAIL INVESTMENT OPPORTUNITY Asset Management Initiatives There are a number of initiatives that could be explored to further increase value in the future: Continue to build on the only high end fashion pitch within Bournemouth town centre An opportunity to purchase other ownerships within The Arcade Residential conversion of the upper parts Sustainable rents with excellent prospects for future rental growth Improve the signage within The Arcade Regear a number of the existing leases Let the vacant unit Opportunities to amalgamate shop units to create further anchor stores Surveys An environmental audit together with a measured and building survey have recently been carried out and may be assignable to a purchaser. Energy Performance Certificates are available.

A UNIQUE RETAIL INVESTMENT OPPORTUNITY THE ARCADE OLD CHRISTCHURCH ROAD BOURNEMOUTH 11 VAT The property is opted for tax but the seller expects the sale to be treated as a Transfer of a Going Concern. Data Room Proposal We are seeking offers for our client s freehold interest in excess of 12,510,000 (twelve million five hundred and ten thousand pounds) reflecting an initial yield of 7.00%, a reversionary yield of 7.15% and an equivalent yield of 7.04% subject to contract after allowing purchaser s costs and exclusive of VAT. There is a data room for the property with key tenancy information, EPC s and legal documentation. Access can be arranged upon request.

Contacts Mark Bennett 020 7317 3711 mbennett@klmproperty.co.uk Simon Harvey 020 7317 3719 sharvey@klmproperty.co.uk MISREPRESENTATION CLAUSE Kitchen Le Frenais Morgan gives notice that these particulars are set out as a general outline only for the guidance of 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 Party 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 Kitchen Le Frenais Morgan has any authority to make any representation or warranty whatsoever in relation to this property. June 2014. Designed & Produced by CORMACK 020 7620 1205 www.cormackadvertising.com