Prime, Dominant, South East Shopping Centre Investment Investment Overview

PRIME, DOMINANT, SOUTH EAST SHOPPING CENTRE INVESTMENT INVESTMENT OVERVIEW

• Redhill is a highly affluent south-east commuter town in the borough of Reigate & Banstead and in the heart of Surrey, 21 miles due south of Central London.

• The town benefits from exceptional transport links with access to the M25 motorway within 2.5 miles and a train journey time of 30 minutes to Central London.

• Redhill is currently undergoing substantial regeneration, with over 450 residential units planned to be developed in the town centre and major improvements to the town’s transport infrastructure. Significant population growth is forecast over the next 5 years.

• Held freehold, The Belfry shopping centre dominates the town’s retail provision.

• Totalling 250,000 sq ft, the centre comprises 57 retail units over 2 trading levels, 2 office blocks, 4 residential flats and a 776 space car park.

• The asset is anchored by a 68,500 sq ft Marks & Spencer department store and a new 20,650 sq ft store is currently being developed for a major fashion multiple. Other key occupiers include WH Smith, Topshop/Topman, JD Sport and New Look.

• The centre includes 57 retail units producing total gross income of £3,797,918 per annum and a net income after landlord shortfalls and marketing expenditure of £3,593,247 per annum.

• Excellent income security: 66% of current income is secured against national retailers and the WAULT is 4.09 years to expiry (3.19 years to break).

• A number of readily achievable asset management initiatives.

• Offers are sought in excess of £43,500,000, reflecting 7.73% NIY, 7.29% EY and 7.58% RY assuming purchasers costs of 6.8%.

The Belfry shopping centre totals 250,000 sq ft and is anchored by Marks & Spencer, completely dominating the town’s retail provision

3 LOCATION AND COMMUNICATIONS Redhill is a highly affluent commuter town, located 21 miles south of Central London and 11 miles north of Crawley town centre. Neighbouring towns include Tunbridge Wells (25 miles) to the south-east, Guildford (20 miles) to the west and Reigate (2 miles) to the west.

Situated just 2.5 miles from Junction 8 each year. The main line railway station A second runway at Gatwick airport is of the M25 Motorway and 6.5 miles from provides frequent direct trains to both seen as a very deliverable option, and the M23 Motorway, Redhill benefits from London Victoria (30 mins) and London Redhill and the surrounding area would excellent transport links and offers direct Bridge (40 mins). There are also frequent benefit significantly as a result. access to Greater London, Brighton and services to Gatwick Airport, Reading, the rest of the South East. Tonbridge, Horsham and Bedford.

Redhill benefits from a well-connected Gatwick Airport, the UK’s second largest Excellent transport and public transport infrastructure, which and busiest airport, is located within 7 communication links, is currently undergoing a significant miles south of the town and is accessed improvement funded by the local via the A23 or the M23. Gatwick Airport with a fastest journey REDHILL authority. Redhill station is among the top has been shortlisted for expansion as part time in to Central 100 busiest stations in the UK, with over of London’s commitment to satisfy the 3.5 million passengers passing through it increasing demand for airport capacity. London of 30 minutes Redhill sits in the metropolitan borough of Reigate & Banstead, which is the largest borough 2 29 A127 in the county of Surrey. With a total population of 110,000 people, and significant population 1 A40 A41 growth expected over the next 5 years, the town makes a vital contribution to the county’s 1 economy, and that of the South East. A406 M25 Maidenhead Uxbridge CITY Slough A13 A13 Redhill is widely recognised for its over 45,000 businesses and £20.7 billion debate surrounding the expansion of a GDP, is one of the strongest regional London airport (including the addition 7 LONDON 30 outstanding natural environment, being 6 Woolwich located in the Surrey Hills Area of economies in the UK. of a 2nd runway at Gatwick) still to be 4 3 2 1 31 Tilbury Outstanding Natural Beauty, attracting a settled. Up to 32,600 new jobs could be Richmond A4 wealthy commuter catchment population. Redhill’s proximity to Central London created in the Gatwick areas as a result Windsor 14 HEATHROW A205 Dartford and major transport infrastructure has of the airport expansion, as well as the 13 A20 A2 2 Gravesend Furthermore, its strategic location allowed it to become a popular location improvement to the local infrastructure A2 between Central London and Gatwick for business space occupiers. The borough Staines 1 Kingston needed to serve the airport. Regardless Bracknell upon Thames Swanley Airport makes it an important location for is home to almost 5,700 businesses of the expansion decision, the airport will Croydon business, and the town thrives as a result. and the area has attracted a host of continue to serve as a global hub, and a multi-national companies which include: 11 Sutton A232 M20 crucial part of Redhill’s local economy. Located at the heart of Reigate & Toyota, Pfizer, Canon, Towers Watson, 4 3 Banstead, Redhill is a key priority town AXA, Fidelity Investments and Balfour Epsom for the Borough Council, highlighted in Beatty. The service sector is the dominant M25 M25 2 10 A22 4 its strategic vision for 2020. As such, the Redhill’s thriving 4 Woking 9 REDHILL M26 3 industry in the town, accounting for 83% A23 town is undergoing a major regeneration. 9 A24 5 of total employment, whilst 36% of total 7 The town centre has been allocated business environment Leatherhead A228 employment is within the financial and Sevenoaks resources to transform its image, boosting A3 M25 business services sector which is above is well-positioned for 6 8 A21 the road network, local amenities and the UK average. public realm, which will all be improved. Dorking Oxted A26 future growth Redhill also benefits from its location The potential for future growth in the Guildford Reigate within the Gatwick Diamond, which with region is enormous, with the continuing A31 A22 Tonbridge A24 M23 Godalming 5 GATWICK 9 East Grinstead A264 Crawley 10 Tunbridge Wells A21

A264 11 A26 Horsham CATCHMENT AND DEMOGRAPHICS £ Top 3 REDHILL WILL OUTPERFORM THE UK AVERAGE IN GDP GROWTH, ACORN GROUPS EXTREMELY CONSUMER SPENDING, EMPLOYMENT, REPRESENTED IN REDHILL: MOBILE POPULATION: WORKFORCE GROWTH, DISPOSABLE AFFLUENT ACHIEVERS (31%) 85% HAVE 1 OR MORE CARS INCOME AND TOTAL POPULATION RISING PROSPERITY (26% (UK AVERAGE OF 74%) GROWTH (2015-2020) COMFORTABLE COMMUNITIES (21%) (CACI) (OXFORD ECONOMICS) (CACI) 68% OF REDHILL’S POPULATION IS CLASSED WITHIN THE ABC1 EXTENSIVE TOTAL CATCHMENT TOTAL COMPARISON ACORN PROFILE POPULATION OF GOODS EXPENDITURE: (UK AVERAGE OF 53% ABC1) £317 MILLION (CACI) 447,200 (PMA) (CACI)

Redhill has an extensive STAINES UPON KINGSTON UPON THAMES BROMLEY Redhill is forecast to outperform both the UK and the Surrey region in all of the catchment with a total Ascot THAMES population of 447,200 people. CROYDON economic indicators, as highlighted in the graph below. The catchment extends SUTTON beyond the M25 motorway REDHILL GROWTH (FORECAST 2015 - 2020) to Purley in the north and the EPSOM metropolitan centre of Crawley 6.00% in the south. The catchment 5.20% UK Surrey Redhill also extends towards WOKING 5.00% Sevenoaks in the east, and to Bookham Oxted Westerham Guildford in the west. 4.00% Godstone 4.00% GUILDFORD 3.60% Dorking REDHILL 3.00% Edenbridge 2.40% 2.60% Retail Footprint - Catchments Bramley 2.00% 2.00% 1.70% 1.80% Primary Lingfield 2.00% 1.60% 1.50% 1.50% Copthorne Secondary 0.90% Cranleigh 1.00% 0.70% Tertiary CRAWLEY Average Annual Year on Year Growth (2015 - 2020) (2015 Growth on Year Annual Year Average Quaternary Broadfield Forest Row 0.00% Haslemere Horsham Retail Footprint - Centres

Primary Centres Cuckfield Retail Spending Workforce Growth Major Centres Billingshurst Consumer Spending Gross Domestic Product ILO Unemployment Rate Total Population Growth Metropolitan Centres Uckfield Burgees Hill Household Disposible Incomes Source: Oxford Economics 7 Source: CACI RETAILING IN REDHILL Redhill is the premier shopping destination for a large catchment population that stretches north of the M25 towards Central London, as far east as the Surrey Hills, and west to the M23.

Redhill is estimated to have approximately is currently undergoing redevelopment to 480,000 sq ft of town centre retail include an enlargement of the Sainsbury’s floorspace. to three times its current size, a 70 bed Travelodge hotel & The Gym Group gym, At 250,000 sq ft, the Belfry shopping and increased parking provision plus a centre completely dominates the retail new facia and entrance to the Harlequin provision in the town and is considered Theatre. to be the prime retail pitch. This extends out of the scheme’s main entrance onto The Harlequin Theatre is located directly Redhill High Street where Wilko, Argos adjacent to the Warwick Quadrant and Poundland are located. shopping centre. The Harlequin is a popular theatre and cinema with Historically, the pre-recessionary prime capacity for 768 people, hosting live rent in the town stood at £85 per sq ft shows, muscials and comedy. The theatre ITZA. Prime rents in the town are now ensures that Redhill has a lively night time closer to £70 per sq ft ITZA, and the trade and benefits the local restaurants prime pitch is within the Belfry on the surrounding it. The proposed cinema lower level, accessed via the High Street. which forms part of the Marketfield Way development will further enhance Redhill’s Surrounding the Belfry are a number of night-time economy. complementary retail pitches, including Station Road, High Street and Warwick There are currently three retail-led Quadrant. Station Road has a strong development projects either in planning or tenant line-up and houses a number underway to improve the retail provision of banks, cafés and pharmacies let to in Redhill, which include: Marketfield Way, Natwest, Greggs and Boots. The High where a cinema- Street pitch includes the fashion retailer led development Bonmarché, and Argos amongst other will include retail, national occupiers. restaurant and café units; proposals The secondary scheme in the town, for Redhill Station Warwick Quadrant (The Harlequin including a Waitrose Centre), is anchored by a Sainsbury’s supermarket and superstore. The parade includes a number the aforementioned of complementary service-led operators Warwick Quadrant. and continues down High Street to where Poundland and McDonalds are located. It

9 INVESTMENT IN AND AROUND THE BELFRY

REDHILL SUSTAINABLE REDHILL BALANCED WARWICK QUADRANT TRANSPORT PACKAGE NETWORK SCHEME

W • Sainsburys / Aviva Investors A • PedestrianR and cycle • Regional connectivity • Enlargement of existing W I accessC improvements improvements food store to 80,000 sq ft K • £4.9 million R • £4 million superstore. 70 bed Travelodge O • Completed A 2014. • Completed 2015. Hotel and “The Gym Group” gym. D T GLO TREE UCES ORTH S TER • Completion 2017 N ROAD

D OA R P KE R O IN R C E B S D S A W L A CLAREN Y DO N RO AD D

B N A T W O

T A D S R N H W IL F O U L L I

R C Z

K EH E N IL R A L REDHILL O L A D 5 D 2 BUS STATION L A E I DOM F E WAY K AY SW Y N N T I EE A U N L Q A W

OXF O DR RD S E L R A L OAD S IV I U HARLEQUIN E R H Q

S C D T K T I A N ’S B C THEATRE I E W R N R P N

A A W T

S ST ATION D ROAD STATION ROA

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M VE A RI KE D T NO T H A2 5 E 5 2 W A L ’ T IN S E REDHILL STATION K E F R IE R L T E D T D NU S R S E FA AVE T I AX E R E RF H • Kier/Network Rail D G

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• ResidentialT and

D food store development

A E E

O Y U H

R A • £50mI “Platform 0”

S L ROAD

E H Redhill will be D W L DIS

N C OM EN R WE V LL RD for LondonAV bound trains

A D C L A H L C B SE T A X LO E • Commencement 2017-18 A XT C I transformed with the H E A D R N F F AV F LA E CHA E HOL T N RMA NU R N R I C G OAD E E R A A K enormous scale of A T F R O 2 E S A 5 S S

M L R development taking T A D E T N

E S D

T R H

place in the town S O G I A D

H D L

E 3 I 2 F A FENGATE K CH S N APEL I RO RD AD L KDENE OAKDE OA RD NE RD QUEENSGATE PUBLIC REALM MARKETFIELD WAY PHOENIX PLAZA Over 450 residential IMPROVEMENTS • Lodge Crest • Reigate & Banstead Borough • Rainier Developments units are being built in • Office to • Completed 2014. Council/CoPlan Estates • Residential and convenience residential • £40 Million store development Redhill town centre conversion and • 153 Residential Units, redevelopment 6 Screen Cinema, 11 Retail / of ground Restaurant Units floor retail units • Planning 2016 • Completion 2017 11 AD PHOTOLABS

WILKO HOUSEHOLD GOODS

AVAILABLE BY SEPARATE NEGOTIATION

TO BE A MAJOR FASHION MULTIPLE

TOP GIFTS

U/O

BREAK

MUFFIN CARD FACTORY

ROBERT DYAS

U/O BARNES & FADDEN

THE BELFRY SHOPPING CENTRE GROUND FLOOR THE EAGLES NEST The Belfry is located at the heart of Redhill, benefitting from an unrivalled location in the town and accessed via both the busy pedestrianised High Street and Station Road. First opened in 1991, the scheme dominates the retail offer in the town and has benefitted from a comprehensive refurbishment in 2007.

The Belfry is highly accessible fashion multiple on a 15 year term; The prime pitch in the scheme with an imposing and highly opening is due Q1 2017. This will is on the main mall at the lower Completely visible entrance to the centre reinforce the scheme’s position as level, where a rental tone of dominant from the pedestrianised high the catchment’s principal fashion approximately £65 Zone A street, which has recently been offer. is established. Footfall is at and let to upgraded through public realm its highest here, with 40% of

a host of VACANT The strong tenant line-up drives improvements and new street shoppers entering the scheme fashion and footfall of approximately 5.1 million PITCH furniture. through the entrance from High BLUE VACANT people per annum. Year to date Street serving this level. The upper convenience The centre comprises figures for 2016 show that the level offers a discount where approximately 250,000 sq ft of Belfry experienced an increase in the rental tone is £45 Zone A. retailers covered retail accommodation footfall of 1% year-on-year, bucking Direct access to this level is from arranged over 2 trading levels. The the national trend in this measure. Station Hill where rents are further TOY BARNHOUSE 24-26 scheme is anchored by a 68,500 discounted to approximately The scheme also benefits sq ft M&S which is let on a long £27.50 Zone A. TO BE from a second frontage on to A MAJOR lease at a peppercorn rent. FASHION Station Road in a landscaped The scheme’s 776 space, landlord MULTIPLE The lower level of the scheme street environment. This parade operated car park attracts over comprises Redhill’s fashion offer, sits opposite a large, modern The Belfry

527,500 users per annum and is FRAMED let to retailers including JD Sports, residential development and is the town’s main and largest car VACANT will be Burton/Dorothy Perkins and occupied by national multiples park. Acting as a key anchor and transformed Clarks. This is complemented by including Barclays Bank and HSBC. footfall generator, access is via two other major national occupiers entrances, on Cromwell Road and by the Also within the ownership are such as Boots, WH Smith and St Matthew Road. The car park two office blocks, Priory House creation Waterstones. has recently undergone a minor and Tower House. These sit refurbishment with new barriers of a new, The upper level of the scheme is above the scheme (accessed and a “pay on foot” system also extremely well let, to national via Station Road and Cromwell dual level installed. occupiers including New Look, Road respectively) and provide anchor unit Topshop/Topman, Pep & Co and approximately 16,125 sq ft of office Servicing to the scheme is via BENSONS FOR BEDS The Body Shop. accommodation over two levels. an underground basement level The ownership also includes four accessed via St Matthews Road. The scheme will be transformed by residential dwellings, which are FIRST FLOOR the creation of a new 20,650 sq ft located on Station Road. dual level MSU, to be let to a major 13 INCOME PROFILE/ANALYSIS 1% The centre offers a WAULT of 4.09 years to expiry and 3.19 years to first break options. 66% of the asset’s total income 14% is secured against national covenants. 3% National

Total Income5% by Covenant Type Regional 1% Offices Commercialisation 11%

14% Car Park Residential 3% National 66%

5% Regional Offices Commercialisation 11% Car Park Residential

66%

Retail and Office Income Expiry Profile (Excluding Breaks)

0 - 2 Years 36% 20% 2 - 5 Years 5 - 10 Years 10 - 15 Years 9%

0 - 2 Years 36% 20% 2 - 5 Years 35% 5 - 10 Years 10 - 15 Years

29% of the asset’s contracted income is secured for in excess of 5 years and 35% for between 2-5 years. The asset also boasts a

vacancy rate of just35% 2.3% by ERV.

Top 10 Tenants by Income (Excluding Residential, Car Park and Commercialisation)

Tenant Name Expiry (Break) Current Rent (pa) Income % TENURE To be a Major Fashion Multiple 2032 (Year 7, 2024) £195,000* 6.3% Boots UK Ltd 21/11/2016 £178,500 5.8% The asset is held freehold. New Look Retailers Ltd 10/07/2020 £159,500 5.2% Waterstones Booksellers Ltd 23/06/2018 £135,000 4.4% TENANCIES Superdrug Stores Plc 28/09/2016 £125,000 4.0% WH Smith Retail Holdings Ltd 24/06/2022 £100,000 3.2% The property is let on let on 67 leases to 56 retail, Burton/Dorothy Perkins 28/09/2016 £91,000 2.9% 7 office and 4 residential tenants as detailed in the C & J Clark International Ltd 23/06/2019 £86,250 2.8% tenancy schedule. Linens Direct Ltd 28/09/2018 £86,000 2.8% Including income from commercialisation activities, Robert Dyas Holdings Limited 22/06/2026 £80,000 2.6% the asset is currently producing a gross income of £3,797,918 per annum. After the deduction of landlord’s *Turnover rent of 5% of gross turnover. shortfalls and the landlord’s contribution to marketing, 40% of the total income, excluding residential, car park and commercialisation, is secured against these top 10 tenants the net income is £3,593,247 per annum. by passing rent. 43% of the income from the top 10 tenants is secured in advance of three years and against national covenants such as New Look, WH Smith and Robert Dyas. 15 TITLE PLAN ASSET MANAGEMENT INITIATIVES

57 to 65 9 67 1 6 51 to 53 49 39 25

Office accommodation fronting

a 8 Improve A3 offer on Upper Level

N ROAD 3 Station Road – this parade has two

STATIO Station Road mall accessed via Station Road –

0 5

0 4

8 3

6 82.9m LB 0 storeys of office accommodation

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3 footflow through this area will be 2

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area has been greatly improved as a 2

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y 1 R r 42 a OA B 27 The Wilko unit (3-7 High Street) is M

1 PRP Source: 9 41 42A 3 29 30 1 1 Service yard between Boots and D being sold as part of a separate sale, The Belfry Wilko, High Street – there is the

1 being run simultaneous to the sale of 8 potential to create out of hours

3 15

1 the Belfry. The incoming purchaser

0 0

0 access to the car park through a b Multistorey has the opportunity to acquire the Car Park ( 7 over) 9

1 this yard, given the cinema and

4 asset and benefit from an unexpired

2 3

6 3 restaurant development on

2 lease term of 8 years to a national 2 Marketfield Way, to increase the

6 covenant, improving the income revenue generated from the car park. El Sub Sta PC profile of the shopping centre asset.

m 3

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. 8

7 5

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3 6

3 Ram 1to3 PH p 4 Ramp 0

9 Car Park (over) 3

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D 78.3m CRO LB MWELL ROAD Benefit from the significant

77.1m

8 3

t regeneration of Redhill - the town 4

3 MA 6 4 0 R

1 KET 2 F

3 IELD The scheme has recently been 8 2 o t 4 2

6 1 ROA centre will see an influx of new

5 rebased with a number of leasing 4 8 6 3 1 Knowles House 2 residents as well as complementary deals concluded at our prime 0m 25m 50m 75m retail developments to boost the rental tone of £65 Zone A. There is W

a profile of Redhill. An expansion HUNTINGDON ROAD the opportunity for the incoming ASSET MANAGEMENT INITIATIVES 3-7 HIGH STREET of Redhill station is proposed to purchaser to benefit from rental cope with the increased volume of growth from this low base. Following the opening of the major fashion multiple within the scheme the following The Wilko unit is being sold as part of a passengers passing through the will all be valid target tenants: Hotter Shoes, Superdry, Smiggle, Schuh, Jones Bootmaker, separate sale. This offers the chance to further station each day. Paperchase, Tiger, Oliver Bonas, Footlocker. Each of these tenants would boost the profile increase the income profile of the asset. of the scheme.

Continue to let up void units – it is expected that there will be increased leasing pressure on the remaining vacant units as a result Upper decks of multi storey car park of a major fashion multiple entering – there is an opportunity to grow the scheme, and the boost to the income from the upper decks which local economy provided by the are currently under-utilised. ongoing regeneration. There is also the opportunity to proactively re-gear existing leases to enhance the income profile of the asset. Recreate PMS(from pdf)

17 ADDITIONAL INFORMATION

CAR PARKING FOOTFALL

The Belfry benefits from a popular landlord operated 776 space The year to date total footfall from January 2016 to August multi-storey car park, accessed from St Matthew’s Road. It is 2016 is 3.26 million, a 1% increase from the same period in 2015. located to the rear of the centre with pedestrian access points at The projected annual total is in excess of 5.1 million people. A each level of the asset. significant increase in footfall is anticipated in 2017 once the new fashion anchor opens for trade. The Belfry offers the cheapest car park in the town centre and is open from 7am–8pm Monday to Friday, 7am-7pm on Saturdays, and 8.30am to 5.30pm on Sundays and Bank Holidays. VAT Car Parking Tariff Price It is anticipated that the sale will be treated as a Transfer of 0-1 hour £1.00 Going Concern (TOGC). However, should this not be the case, the 1-2 hours £1.70 properties have all been elected for VAT and therefore VAT will 2-3 hours £2.20 be payable on the purchase price. 3-4 hours £2.80 4-5 hours £5.00 EPCS All Day (5+ hours) £7.50 An EPC for the whole asset has been commissioned and will be available upon request. A selection of individual unit EPCs is SERVICE CHARGE available on the sales website.

The service charge budget runs from the 1st October until the 30th September annually. The budget for the year ending 30th PROPOSALS September 2016 is £1,320,930 which represents £5.36 per sq ft on an overall basis. We are instructed to seek offers in excess of £43,500,000, subject to contract. Assuming purchasers costs of 6.8% this reflects the following yield profile: MARKETING BUDGET Net Initial Yield 7.73% The marketing budget for 2016 is £132,000 per annum, Nominal Equivalent Yield 7.29% unchanged from the previous year. In line with good Reversionary Yield 7.58% management practice, the landlord currently funds 50% of the marketing budget which equates to £66,000 per annum. WEBSITE

Further information is held in a data room at: www.the-belfry-redhill.co.uk

FURTHER INFORMATION

For further information please contact:

JAMES STRATTON CHRIS WHITE T: 020 7152 5668 T: 020 7152 5735 E: [email protected] E: [email protected]

PAUL MORTLOCK T: 020 7152 5051 E: [email protected]

MISREPRESENTATION ACT: Cushman & Wakefield gives notice that: These particulars are set out as a general outline only for the guidance of intending purchasers or TENANCY SCHEDULE 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 Cushman & Wakefield as any authority to make any representation or warranty whatever in relation to this property. Purchase prices, rents or other prices quoted are correct at the date of publication and, unless otherwise stated, exclusive of VAT. Intending purchasers and lessees must satisfy themselves independently as to the incidence of VAT in respect of any transaction relating to this property. September 2016. Designed and Produced by Creativeworld Tel 01282 858200.