Derby, Derby, DE1 2PL

JLL Non-Reliance Disclosure Disclaimer

Without prejudice to the right of any Addressee (as such term is defined on page [7] of the attached document) to rely on the attached valuation report prepared by Jones Lang LaSalle Limited ("JLL") dated 4 June 2019 (the "Property Valuation Report"), the copy of the Property Valuation Report attached hereto is provided for information only and, except as otherwise expressly agreed by JLL, you may not rely on it. It is for you to form your own view or take your own property and other professional advice independently of and without any reliance on, it.

Without prejudice to the confirmations given by JLL in relation to the Property Valuation Report, details of which are provided in the Offering Circular in relation to the notes issued by DECO 2019-RAM Designated Activity Company, dated [•] 2019 under the heading, "—Initial Valuation Disclaimer", neither JLL, DECO 2019-RAM Designated Activity Company nor Deutsche Bank AG, London Branch assumes any responsibility or liability to you in connection therewith or gives any undertaking to provide any additional information or correct any inaccuracies in it. JLL's work in preparing the Property Valuation Report was undertaken, and such Property Valuation Report was produced, sole in accordance with the terms of JLL's engagement agreed with Deutsche Bank AG, London Branch and constitutes a report to the Addressees alone. You may not rely on the contents of this document unless you have received and countersigned a reliance letter from JLL, or such letter has been received and countersigned on your behalf by a party having the legal authority to do so.

Jones Lang LaSalle Valuation Advisory Client: Deutsche Bank

Property: Intu Derby, Derby, DE1 2PL

June 2019

Property: Intu Derby, Derby, DE1 2PL June 2019

Intu Derby, Derby, DE1 2PL

Executive Summary

Key Property Facts Inspection Basis: Internal inspection Macro Location: Regional Micro Location: Prime Sector: Shopping Centre County: Derbyshire Total Property Area: 1,346,172 sq. ft. Tenure: Majority Freehold and part Leasehold (Riverside car park) Number of Tenants: circa. 200 (including Kiosks and car park).

Percentage Vacant: 8.34% vacant by Market Rent Total Rent Reserved: £27,590,080 per annum on a topped up basis Net Income: £24,204,728 per annum on a topped up basis Income Stream: Reversionary by 9.6% (including vacancy). Reversionary by 0.48% (excluding vacancy). Covenant Strength: Good AWUT: 6.17 years to break.

7.24 years to expiry.

Valuations as at: 4 June 2019 Market Rent of a 100% £30,244,855 per annum interest: Market Value of a 100% £351,000,000 (Three Hundred interest: and Fifty-One Million Pounds) IY: 6.51% EY: 7.23% RY: 7.65% Purchasers Costs: We have allowed for Stamp Duty Land Tax as follows: Market Value of up to £150,000, zero; next £100,000 (the portion from £150,001 to £250,000), 2.00%; remaining amount (the portion above £250,000), 5.00%.

Property: Intu Derby, Derby, DE1 2PL June 2019

We have also allowed for agents and legal fees plus VAT at lower than market rates, as is accepted in the market for properties within this price banding. These rates amount to 0.90% in total (0.5% agent’s fees and 0.25% legal fees plus VAT).

Location

■ The property is located in Derby, a busy and popular city in Derbyshire, and the third largest city in the East Midlands. The city has an extensive primary catchment estimated by PROMIS to be 387,000 at the end of 2018. ■ Derby is a major regional retailing destination located off the M5 and M6 motorways. Nearby competition comes from Nottingham which is circa 15 miles east and provides an Intu shopping centre and Leicester which is circa 30 miles to the south and provides The Haymarket and Highcross shopping centres. ■ The property is a regionally dominant scheme; it provides the majority of Derby’s retail provision and forms the prime pitch. ■ Retailing competition from within Derby comes from the Cathedral Quarter to the north, with the strongest pitches being on Iron Gate and the pedestrianised Corn Market which are both south of the historic cathedral and link with the subject property to the south. St Peter’s Quarter was the primary retail location of Derby prior to the development of the subject property, and is still home to Waterstones, Footlocker, Poundland, Tesco, Burton and Primark amongst others. ■ The subject property remains the dominant retail destination within Derby with other areas being secondary or tertiary in nature. The footfall created by the St Peter’s retail quarter in particular can serve to aid visitations to the retail offering within the Intu centre.

Description

■ Intu Derby, previously Westfield Derby, was completed in 2007 following a major redevelopment and extension of the Eagle Shopping Centre. ■ The property comprises over 200 stores, including a food court and a 12 screen Showcase Cinema de Lux which is arranged over two floors. There are four car parks which provide a total of 3,587 parking spaces. The Riverside car park is located to the north of the centre and provides 932 spaces over three levels, the Centre car park is in the core of the property and provides 1,941 spaces over three upper floor levels and the Basement car park provides 647 spaces over the basement level. There is a short stay car park to the south of the property off Bradshaw Way which provides 99 spaces over ground floor level. ■ The subject property is anchored by Marks & Spencer, Sainsbury’s, Showcase Cinema, Debenhams and a Market Hall and provides a mixed offering from convenience to upper fashion. Tenants include Next, H&M, Sports Direct, The Works, Poundland, Holland & Barrett, H Samuel and Boots. ■ The subject property produces a gross topped-up income of £27,590,080 per annum and a net topped-up income of £24,204,728 per annum. ■ The gross Market Rent is £30,244,855 per annum, reflecting a 9.62% reversion against the gross income. ■ When car park, mall, market and turnover income are removed, the centre benefits from a slightly above average WAULT to break of 6.17 years and WAULT to expiry of 7.24 years. ■ The below table outlines the income contribution of the top ten tenants, excluding the Car Park and Mall Income, which account for 16.35% and 5.5% of the income respectively.

Property: Intu Derby, Derby, DE1 2PL June 2019

Tenant Name Rent % AWULT Natl Amusements (Showcase Cinema De Lux) £1,230,290 5.6% 8.96 yrs Debenhams Properties Ltd (t/a Debenhams) £1,209,873 5.6% 13.36 yrs Marks and Spencer plc (t/a Marks and Spencer) £1,150,000 5.3% 22.66 yrs Next Group plc (t/a Next) £832,037 3.8% 2.81 yrs Boots Properties Ltd (t/a Boots) £585,000 2.7% 18.57 yrs Sainsbury's Supermarkets Ltd (t/a Sainsbury's) £499,000 2.3% 7.06 yrs H&M Hennes Ltd (t/a H&M) £482,205 2.2% 3.32 yrs Matalan Retail Ltd (t/a Matalan) £434,700 2.0% 6.37 yrs Top Shop Topman Properties Ltd (t/a Top Shop) £350,000 1.6% 3.06 yrs SportsDirect (DER113) - To Be Surrendered £350,000 1.6% 0.33 yrs

■ The lease to Debenhams falls within category A in the CVA, reflecting no reduction in passing rent. We also understand there is interest in the unit from Primark, leisure operators and serviced office providers in the event of a potential downsize. ■ The lease to Topshop falls within category B5 in the CVA, reflecting a 50% reduction in passing rent. Consequently, the tenant’s contribution to total income has fallen from circa. 2.5% to 1.6%. ■ Sports Direct are due to surrender their lease to unit SU113 (which is currently holding over and accounts for 1.6% of total income) and re-locate to 59-61 St Peters Street

Analysis

Strengths Weaknesses

■ The property is held freehold with the exception of the ■ The vacancy level is at 8.34% by Market Rent and 5.37% Riverside car park held on a long lease from the Council. by area which is slightly higher than is typical for a scheme of this size. It does highlight a slight ■ Intu Derby is ranked as 24th in the UK by CACI based on supply/demand imbalance which is of benefit to retailers total spend, putting it in the top 1% of centres in the UK. when negotiating on renewals or lettings. ■ The property is the dominant shopping destination in its ■ The Arcadia unit is categorised as a B5 within its CVA catchment and benefits from below average competition which results in a reduction in rent of 50% which has from within Derby itself and from centres outside. been reflected in our valuation. ■ The property was extensively redeveloped by Westfield in ■ A large volume of retailers are assessing their options for 2007, one of the most dominant and reputable shopping store rationalisation or property cost reduction. Some of centre asset managers in Europe. these options include CVA’s but others are relying on ■ Footfall levels have risen steadily over the past three strong negotiating tactics on lease renewals or new years from 20,605,968 to 22,307,912 in 2018. lettings. Tenants that have expressed nationally an interest to rationalise or reduce costs include Marks and ■ The car parking income accounts for 16.35% of income Spencer, Monsoon and Accessorize, Carphone and is the main parking provision in the city centre. Warehouse and Clarks. ■ The top 10 tenants by income account for 32.70% of the ■ There are a number of retailers rumoured to be entering gross income. JLL understands the majority trade well. CVA. Tenants at immediate risk include Boots, Smiggle The WAULT of these tenants equates to 8.65 years, above and Ann Summers. average for a regional centre. ■ The Debenhams store is categorised as a Category A within its recent CVA resulting in no reduction in rent.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Prime rents are £95 psf Zone A which is at an affordable level when compared to other similar centres. ■ The WAULT is 6.17 years to break and 7.24 years to lease expiry, which is about average for a prime shopping centre in the current market. ■ There are currently approximately £1.8m of arrears with rent arrears accounting for £960,000 of this. The rent arrears reflect approximately 3.5% of total gross rent (excluding Eagle Market) which we consider to be typical for a centre of this type. ■ Concerns surrounding structural changes in the retail occupational market have drastically impacted shopping centre volumes this year. However, there is a general market perception that regionally dominant (such as the subject property) and convenience led schemes will be less exposed to some degree from the occupational and investment challenges being experienced. ■ A recent study has shown the UK city where residents have the most disposable income to be Derby, with locals enjoying an average of £1,456 to spend per month after tax, bills and general (essential) outgoings such as travel and food. Derby residents earn around £200 a month above the national average and had the second lowest cost of living in the study.

Opportunities Threats

■ We understand that Primark have expressed interest in ■ With the backdrop of uncertainty in the wider economy moving to within the subject property from their current due to Brexit negotiations, political uncertainty, location in St Peters Quarter. This would strengthen Intu increased wages and import costs and the continually Derby’s positioning within Derby and cause a significant changing impact of the internet and how consumers deterioration in the St Peters Quarter. shop, retailers are reviewing the business models and property requirements. At present, we are broadly ■ There is a medium to long term opportunity to develop a seeing a decline in in-store sales and an increase in circa. 300- unit residential scheme above and adjoining online sales with a polarisation in retailer performance to Eagle Market, subject to planning permission. dependent on each operators’ business models ability to Although we understand this market is not chartered, move with this trend. As trends continue to change it is any development would have to give due consideration vital to ensure that the subject property remains on to the impact upon the immediate locality and track with these trends. infrastructure. ■ Market concerns persist regarding the future of ■ There is an opportunity to develop a stronger leisure department store as an occupier class. The property is evening led economy within the centre as no such anchored by Debenhams and Marks and Spencer both provision currently exists in Derby town centre. accounting for 8.55% (£2,359,873 per annum) of the ■ Intu provide an online sales platform from their website gross income. Although the Debenhams store falls within to a large number of stores within their centres. Although Category A there is continued risk surrounding the future the income from this is not directly reflected in the viability of department stores and the declining centres income it provides many additional benefits covenant strength. including a more seamless approach to shopping for

consumers, increased branding awareness for shoppers and greater likelihood of additional spend when collecting click and collect purchases.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Intu Derby have a programme of events that help to ■ Broadly speaking, there is currently a 13% national retail promote the centre and the experiential nature of vacancy rate and JLL’s research indicates that by 2026 shopping that consumers are leaning towards. This circa 25% of current retail space will be redundant. It is includes the promotion of start-ups and local operators, important to note that this is an average and will impact quiet hours for those more sensitive to noise, individual centres and high streets in varying degrees. It competitions and events geared towards seasonal is vital that all is done to ensure that Intu Derby remains holidays. resilient to increased vacancy levels. ■ There are turnover provision clauses in a large number of ■ The vacancy level is at 8.34% by Market Rent and 5.37% the leases at the property to enable them to monitor how by area which is higher than is typical for a scheme of the stores trade and facilitate management initiatives, this size. It does highlight a slight supply/demand including managing tenant mix and looking to offer imbalance which is of benefit to retailers when current brands that will drive footfall at the property. A negotiating on renewals or lettings. If this is to increase it percentage of turnover is also payable on a number of will continue to weaken the landlords negotiating power the leases, offering income potential. and potentially place downward pressure on rents. ■ As Market Rents begin to stabilise there may be an ■ Brexit negotiations combined with the UK’s political opportunity to grow future Market Rents, particularly uncertainty and wider structural changes in the retail considering the affordability of the centre compared to occupational market have drastically impacted competitors. shopping centre volumes this year and further volatility may be likely. ■ With vacancy in the centre standing at 8.34% by Market Rent, albeit only 5.37% by area, there is an opportunity ■ Disposals of UK commercial property by overseas to let vacant units and create tension within the centre to residents were previously exempt from Capital Gains Tax place upward pressure on Market Rents. (CGT). However, from April 2019 this exemption has been removed. Essentially it will equalise the tax treatment for ■ Opportunity to acquire parcels of the centre on the lower domestic and overseas buyers. Although all the details level that lie outside of the ownership to allow for greater surrounding this are in their infancy the UK is considered control over tenant mix. to be somewhat of an outlier in this regard and this change aligns the UK much more closely with countries such as the US, France and Germany. We understand that the charge applies to indirect disposals and overseas interest in REIT’s with overseas pension funds being exempt. Although at present there are other more pressing factors at play it may potentially have an impact on the liquidity of the subject property. At present the shopping centre investment market does rely on overseas money, especially as a source of capital for larger deals. However, the major incentives for investing in UK property remain.

Suitability for Loan Security

■ On the basis of the information provided and subject to the comments contained within this report, we consider that the subject property should form suitable security for a loan advance assuming it is maintained to a reasonable state of repair and managed appropriately for the duration of the loan. In accordance with normal commercial practice, however, we would anticipate any advance being for only a proposition of our opinion of Market Value.

Information Requiring Clarification and Key Assumptions

■ None

This Overview forms part of the Valuation Report dated June 2019 and should not be read in isolation.

30 Warwick Street London W1B 5NH tel +44 (0)20 7493 4933 fax (0)20 7087 5555

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Deutsche Bank AG 1 Appold Street London EC2A 2UT Our ref CR/479500/062019

Direct line 0207 8524775

[email protected] For the attention of David Morgans

26 June 2019

Dear Sir

Terms of Reference Addressee: Deutsche Bank AG, London Brach of Winchester House, 1 Great Winchester Street, London EC2N 2DB on its own behalf and in its capacity as Arranger and Original Lender, Situs Asset Management Limited on its own behalf and in its capacity as Agent for the Finance Parties and Situs Asset Management Limited on its own behalf and in its capacity as Security Agent for the Finance Parties, each as defined in a facility agreement dated on or about the date of this letter (as amended from time to time) between, amongst others, The Wilmslow No. 3 Limited Partnership as borrower and Deutsche Bank AG, London Branch (the ‘Facility Agreement’) and each Finance Part, as defined in the Facility Agreement, from time to time. (together the ‘Addressees’)

Property Address: Intu Derby, Derby, DE1 2PL

Reliance: 1. We confirm that this report dated June 2019 has been prepared in connection with the acquisition of INTU Derby and this report may be relied upon by the Addressees and is intended for their benefit. 2. The Report and this letter are confidential to the Addressees. However, copies of the Report and this letter may be disclosed for information only without liability for us to the following parties, provided, however, that the relevant Addressee shall be obligated to provide such parties only with the version of the Report with the JLL Non-Reliance Disclosure Disclaimer (contained within our letter of engagement) affixed to the front page: (a) the respective agents and advisers of the Addressees in connection with the Facility Agreement and/or the transaction described in paragraph 1 above; (b) the respective affiliates, employees, officers, directors and auditors of the Addressees; (c) any prospective purchaser, transferee or assignee of, or participant in, any loan made under the Facility Agreement and any other prospective Addressee; (d) any servicer of any loan under the Facility Agreement;

Jones Lang LaSalle Limited Registered in England & Wales Number 1188567 Registered Office 30 Warwick Street, London W1B 5NH

(e) any actual or prospective investor in any securities issued in connection with a securitisation of any loan under the Facility Agreement, and its advisers; (f) any rating agency actually or prospectively rating any such securities, and its advisers; (g) any trustee with respect to any securities issued in connection with a securitisation of the loan under the Facility Agreement; (h) any trustee (Treuhänder) of a Finance Party under and as defined in the Facility Agreement in connection with the use of all or any part of the loan made under the Facility Agreement (and security therefore) as a cover asset in the Pfandbrief cover register of any such Finance Party; and (i) any person to whom disclosure is required by law, court order, regulation, public authority, stock exchange or in connection with legal proceedings in connection with the Report or this letter. 3. In addition, the Report or a reference to and summary of it (and the methodologies and concepts on which it is based) may be included in any information memorandum, offering circular, registration statement or similar document as may be required to comply with any applicable laws, regulations or official guidelines relating to the issuance of or investment in any securitisation of the loan under the Facility Agreement Our liability cap is as follows: We shall under no circumstances whatsoever be liable, whether in contract, tort (including negligence), breach of statutory duty, or otherwise, for any loss of profit, loss of revenue or loss of anticipated savings, or for any indirect, special or consequential loss arising out of or in connection with this report; and Except for our liability for (i) fraud or fraudulent misrepresentation, (ii) death or personal injury caused by your negligence, and (iii) any other liability which may not lawfully be limited, our total aggregate liability (whether in contract, tort (including negligence, breach of statutory duty or otherwise) will be capped at £30m in aggregate for all parties and reliance on our Report will be extended to the Addressees as defined in Attachment C of the Letter of Instruction in Appendix 1 and to any party that receives and countersigns a reliance letter in substantially the form attached in Attachment D of the Letter of Instruction in Appendix 1, or on whose behalf such a letter is received and countersigned by a party legally authorised to do so. We can confirm that we have adequate and appropriate professional indemnity insurance in place for this instruction and that it complies with the RICS Rules of Conduct and RICS Minimum Terms.

Borrower: A JV between Cale Street and Intu Properties plc.

Tenure: Majority Freehold and part Leasehold

Valuation Date: 4 June 2019

Instruction Date: 24 May 2019

Instruction and Purpose of In accordance with your letter dated 24 May 2019 (attached to Appendix 1) we are Valuation: instructed to provide you with a report and valuation for loan security purposes.

Proposed Loan Details: We are not aware of the proposed loan details.

Basis of Valuation: Global Standards 2017, incorporating the IVS, and the RICS Valuation – Global Standards 2017 – UK national supplement published by the RICS (the RICS Red Book) on the basis of Market Value as defined in Appendix 2. Market Value: The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. The report is subject to, and should be read in conjunction with, the attached General Terms and Conditions of Business and the General Principles Adopted in the Preparation of Valuations and Reports which are attached in Appendix 2. Our valuation has been prepared in accordance with your instruction letter (attached in Appendix 1). If there is any inconsistency between the Terms and Conditions of Business and the instruction letter (including the Appendices), then the requirements contained in the instruction letter will take precedence and prevail. No allowance has been made for any expenses of realisation, or for taxation (including VAT) that might arise in the event of a disposal and the property has been considered free and clear of all mortgages or other charges that may be secured thereon.

Inspection: The property was inspected specifically for this valuation. All significant parts of the property were inspected. The property was inspected on 4 June 2019 by Yannick Fourie, Matthew Allen, Ben Smith and Cara Reynoldson. We understand that we saw representative parts of the property and we have assumed that any physical differences in parts we did not inspect will not have a material impact on value.

Personnel: The valuation has been prepared by Yannick Fourie MRICS, Matthew Allen MRICS and Emma Woolven (nee Horner) MRICS under the direction of Ben Smith MRICS, Director and Cara Reynoldson MRICS, Director. We confirm that the personnel responsible for this valuation are qualified for the purpose of the valuation in accordance with the RICS Valuation – Professional Standards and are RICS Registered Valuers.

Status: In preparing this valuation we have acted as External Valuers, subject to any disclosures made to you.

Disclosure: As we have advised to you our shopping centre letting agents currently act for Intu as letting agents on Intu Derby. We do not deem this to be a conflict. We will not benefit from this instruction other than by way of the valuation fee.

Market Value and Assumptions: As agreed the instruction has been split into 3 separate phases:

1- Occupational Assessment. A short report and schedule which gives an understanding of the specific performance and turnover for the top 30/40 operators within the scheme based on income. Providing the above would enable a reasonable assumption of affordability moving forward to be made. 2- Indicative Assessment of Value 3- RICS Red Book Valuation As instructed we have undertaken valuations on the following bases: ■ Market Value ■ Market Rent ■ Market Value of the Retail Park in isolation ■ Market Value excluding the Retail Park ■ Indicative Reinstatement Cost (no reliance) We have made no Special Assumptions

Floor Areas As instructed, we have relied upon the floor areas provided by the borrower, which have been provided within an Argus CVL file.

Software The valuations have been undertaken using ARGUS Valuation Capitalisation Version 2.50.079.

Sources of Information: We have inspected the premises and carried out all the necessary enquiries with regard to rental and investment value, Rateable Value, planning issues and investment considerations. We have not carried out a building survey or environmental risk assessment. We have not measured the premises and have relied on the floor areas provided. We have been provided with the following reports, which we have relied upon: ■ Draft Certificate of Title provided by Macfarlanes on 25 June 2019 ■ Draft Red Flag Report ■ Draft Construction Report provided by Macfarlanes on 20 June 2019 ■ Schedule of Debtors, rent review schedule, schedule of rent deposits, tenancy schedule and arrears report provided by Allen & Overy on 25 June 2019 ■ Draft Certificate of Title provided by DAC Beachcroft on 24 June 2019 ■ Answers to multiple queries on email and phone by Intu throughout the valuation process ■ Independent Review of Service Charge Expenditure for year ended 31 December 2018 provided by Intu ■ Aries- Javelin Rent Sustainability Analysis dated 7 February 2019 provided by Intu ■ Footfall cameral locations along with supporting commentary provided by Intu ■ CBRE Building Survey Report dated January 2019 provided by Intu

■ CBRE Phase 1 Environmental Assessment and Flood Risk Review dated January 2019 provided by Intu ■ CVL file dated December 2018 provided by Intu ■ Car Park gross-net income- 2019 budget and historic actuals provided by Intu ■ March 2019 Turnover Rent Forecast provided by Intu ■ March 2019 Reforecast Turnover rent provided by Intu ■ Tenancy Schedule provided by Intu ■ EPC Information provided by Intu ■ Collated turnover schedule provided by Intu ■ Footfall summary 2016-2018 provided by Intu ■ Showcase Cinemas- paid admissions summary provided by Intu ■ Intu experiences gross-net income- 2019 budget and historic actuals provided by Intu ■ Operational Board Report dated May 2019 provided by Intu ■ Arrears schedule as at 9 April 2019 provided by Intu ■ Leasing Minutes dated 23 May 2019 provided by Intu ■ Summary of Sales Data provided by Intu ■ Service charge budget and apportionment schedules provided by Intu

Market Value: £351,000,000 (THREE HUNDRED AND FIFTY ONE MILLION POUNDS)

Purchaser’s Costs: We have allowed for Stamp Duty Land Tax as follows: Market Value of up to £150,000, zero; next £100,000 (the portion from £150,001 to £250,000), 2.00%; remaining amount (the portion above £250,000), 5.00%. We have also allowed for agents and legal fees plus VAT at lower than market rates, as is accepted in the market for properties within this price banding. These rates amount to 0.90% in total (0.5% agent’s fees and 0.25% legal fees plus VAT).

Confirmation To the best of the knowledge and belief of JLL (having taken all reasonable care to ensure that such is the case), the information contained in this Report is in accordance with the facts and does not omit anything likely to affect the import of such information and JLL consent to the inclusion of such confirmation in any offering circular or prospectus issued in connection with any securitisation of the Facility (as defined in the Facility Agreement).

Confidentiality and Publication: Finally, and in accordance with our normal practice we confirm that the Report is to be relied on by the Addressees for the specific purpose to which it refers. No responsibility whatsoever is accepted to any third party and neither the whole of the Report, nor any part, nor references thereto, may be published in any document, statement or circular, nor in any communication with third parties without our prior written approval of the form and context in which it will appear – save as otherwise agreed.

Yours faithfully Yours faithfully

Yannick Fourie MRICS Matthew Allen MRICS Surveyor Surveyor For and on behalf of Jones Lang LaSalle Limited For and on behalf of Jones Lang LaSalle Limited

Yours faithfully Yours faithfully

Emma Woolven (nee Horner) MRICS Ben Smith MRICS Associate Director Director For and on behalf of Jones Lang LaSalle Limited For and on behalf of Jones Lang LaSalle Limited

Yours faithfully

Cara Reynoldson MRICS Director For and on behalf of Jones Lang LaSalle Limited

Property: Intu Derby, Derby, DE1 2PL June 2019

The Property

Location

Road Plan Street Plan

Macro & micro Location Overview – Derby and access ■ Intu Derby is located in the heart of Derby in the southern part of Derbyshire. Derbyshire is home to just over 1 million people, making it one of the smaller Midlands retail markets. Intu Derby is the largest shopping centre in Derbyshire by far, followed by The Pavements shopping centre in Chesterfield, some 25 miles north of INTU Derby. Other competing centres outside of Derbyshire are Intu Victoria Centre and Intu Broadmarsh in Nottingham which is circa 15 miles east and The Haymarket and Highcross shopping centres, which are located in Leicester circa 30 miles to the south. ■ Intu Derby holds a prominent location in terms of local and regional dominance, offering the primary retail and leisure destination in Derby and Derbyshire. It is therefore the focal point of the city and benefits from easy access by foot, public transport and car due to its central location. ■ The property is located a ten-minute walk from Derby Midland railway station, and is adjacent to the A601, which forms part of the IDR (Inner Distribution Road) and feeds off the A52, which in turn links to the M1 seven miles to the east. Derby Overview ■ As one of the UK’s major industrial hubs during the industrial revolution, Derby has benefitted from strong rail links throughout its modern history. Today, the city is served by direct routes from London, the North-East and the South- West. Derby is also easily accessible by road with the nearby M1 providing access to the broader motorway network. Derby’s central location within England, coupled with good road links has made the city an attractive location for logistics companies in recent years. Ted Baker has recently opened a national distribution centre in Derby, joining the likes of Heineken and Keuhne & Nahel who already have sizeable distribution centres in Derby. Demographics ■ Pertinent to the value of the subject property is the size and affluence of the Derby catchment shopping population. PROMIS ranks the total population of 387,000 within Derby’s primary catchment as on par with the Regional Centre average (24 out of the PROMIS Centres). Reflecting the demographic profile and spending habits of the primary retail market area, PROMIS ranks the per capital total retail spending levels as average.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ The town has a shopping population (an estimate of the number of people who regard the town as their main shopping destination) of circa 281,000 in the total catchment, which includes core, primary, secondary and tertiary catchment areas. We would expect Derby to capture a large share of the spending in its primary catchment area and, further still, to draw shoppers from further afield; catchments such as Burton on Trent and Loughborough. PROMIS identifies the Derby catchment population as less affluent than the regional centre national average, ranking it 120 of the PROMIS centres on the PMA Affluence Indicator. Despite this CACI data shows the annual expenditure is broadly average across most goods classes, with spending on leisure, durable and personal goods being ranked above the national average, although total expenditure is slightly below the average (100) being ranked at 98. Derby is also ranked 24th in the UK by CACI based on total spend, putting it in the top 1% of centres in the UK.

Acorn Group Profile ■ According to Acorn, the core catchment for Derby comprises a shopper population of 214,432. The graph below demonstrates that the population affluence categories are broadly in line with the average over Great Britain. The key differences are there being an above average number of ‘successful suburbs’ and ‘steady neighbourhoods’ coupled with below average ‘career climbers’ and ‘city sophisticates’.

Property: Intu Derby, Derby, DE1 2PL June 2019

University of Derby ■ Derby is also home to the University of Derby. Together the campuses located on Kedleston Road, Markeaton Street, Britannia Mill and Friar Gate Square, the university caters for approximately 18,500 students. Three of the campuses are within walking distance of the subject property whereas the other is a short distance (less than 20 minutes) via public transport. Competition – Retail Footprint Leakage ■ Intu Derby is a well-known destination in Derby, which strengthened its positioning within the region. PROMIS data shows the property faces below average competition from shopping centres both in its direct locality and across the catchment more widely. The greatest competition for large destination shopping comes from Nottingham and Leicester. Nottingham is located within half an hour’s drive and provides two large shopping centres in Intu Victoria and Intu Broadmarsh. Leicester is a little further afield and provides the Haymarket and Highcross shopping Centres. Areas such as such as Loughborough and Burton-on-Trent do not provide comprehensive competition to rival the retail offering at Intu Derby, however, these locations will provide a degree of competition for local shopping trips due to their proximity. ■ We set out below the most recent Retail Footprint Leakage Report from CACI Ltd. Spend Spend From Market Market From Core Total Retail Footprint Retail Footprint Distance Share Share Catchment Catchment Centre Class RF Score* (Miles) (Core) (Total) (£m) (£m) Nottingham Principal Centres 2,671 13.8 3.9% 17.2% £35.2 £949.8 Derby Quality Regional 1,461 0.0 52.9% 11.4% £479.2 £628.8 Centres Burton-on-Trent Major Centres 987 10.5 3.6% 4.4% £32.2 £242.3 Leicester Principal Centres 2116 24.3 0.5% 4.0% £4.3 £218.2

Property: Intu Derby, Derby, DE1 2PL June 2019

Spend Spend From Market Market From Core Total Retail Footprint Retail Footprint Distance Share Share Catchment Catchment Centre Class RF Score* (Miles) (Core) (Total) (£m) (£m) Mansfield Lower Average 744 19.3 0.1% 3.3% £0.5 £182.5 Major Centres East Midlands Quality Major 366 14.6 1.3% 3.0% £11.3 £163.4 McArthurGlen Outlet Centres Designer Outlet Centre Nottingham – Shopping Parks 325 9.8 1.4% 2.9% £12.3 £160.2 Giltbrook with Major Anchor Loughborough Value Major 722 15.2 0.4% 2.4% £3.6 £133.0 Centres Tamworth - Ventura Major Shopping 660 22.4 0.2% 2.2% £1.5 £123.1 Retail Park Parks with Major Anchor Leicester - Fosse Major Shopping 532 25.5 0.3% 1.8% £2.5 £97.8 Park Parks with Major Anchor Derby - Kingsway Medium Retail 275 1.3 9.5% 1.7% £86.2 £92.7 Retail Park Parks Nottingham - Castle Shopping Parks 234 13.2 0.2% 1.6% £2.0 £87.5 Marina Retail Park Chesterfield Value Major 724 21.9 No Core 1.6% No Core £86.3 Centres Long Eaton Small 423 8.7 0.9% 1.5% £8.5 £82.6 Metropolitan Towns Sutton-in-Ashfield Local Centres 455 16.7 0.1% 1.5% £0.6 £80.2 *RF Score denotes the quality and quantity of retail offer within a retail centre. ■ The table above highlights that there is a reasonable amount of leakage between key shopping destinations around the Derby catchment area. Of note is Nottingham which holds the dominant position in the catchment with 17.2% of market share compared Derby’s 11.14%. Whilst Derby holds the second spot there is also competition from Burton-on- Trent and Leicester, which together hold 8.4% of the market share with £460.5 million spent from total catchment compared to Derby’s £628.8 million. This shows that, whilst Derby holds its own as a retail destination, it by no means holds a monopoly over the catchment area and is considered alongside other nearby destinations as an additional option for shoppers. ■ We comment below on schemes in the micro location and wider catchment that we consider to be the strongest competition. Competition in the Micro Location ■ Historically, the pedestrianised thoroughfare St Peters Street constituted the main shopping area in Derby, however, the construction of Westfield Derby (later INTU Derby) in 2007 provided a new retail focus for retailers and shoppers alike and strengthened Derby’s positioning within the region. St Peters Street continues to draw footfall to the city centre with a broad retail offering with key retailers including Waterstones, Footlocker, Poundland, Tesco, Burton and Primark amongst others within close proximity to the subject property.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ To the north-west of the subject property The Strand and Wardwick, within the St Peter’s Quarter, have become a focus for leisure and entertainment with a growing number of themed bars and clubs. ■ The pedestrianised Iron Gate, within the historic Cathedral Quarter of the city and to the north of the subject property, provides an array of leisure and restaurant facilities with occupiers including Pizza Express, Slug & Lettuce, Nando’s and ASK amongst a number of local restaurants and pubs. ■ Despite the existence of local competition, the subject property remains the dominant retail destination within Derby with other areas being secondary or tertiary in nature. The footfall created by the St Peter’s retail quarter in particular can serve to aid visitations to the retail offering within the Intu, Derby. Competition in the Macro Location: Nottingham ■ The historic city of Nottingham is ranked 6th highest retail destination in the UK. The city has two universities which attracts over 60,000 students, giving it the 4th largest student population in the UK. The city centre boasts two major shopping centres in Intu Broadmarsh, on the southern end of the city centre, and Intu Victoria on the northern end. To the east of these two shopping centres is the creative quarter which hosts a range of independent shops, bars and restaurants. Intu Broadmarsh, Nottingham: ■ The Broadmarsh shopping centre has historically been the retail hub of Nottingham since it was constructed at the beginning of the 1970s. Since then the local authority has sought to keep it as the primary retail destination, going as far as offering £50million towards its redevelopment when the Victoria Centre development was proposed in 2013. Currently the centre provides approximately 55 stores over two floors with anchor tenants including Boots and Dorothy Perkins. ■ In January 2019 it was announced that planning was permitted for an £86million redevelopment of Intu Broadmarsh in conjunction with a greater investment in adjoining areas of Nottingham city centre totalling approximately £150million. Sir Robert McAlpine was appointed to deliver the transformation of Intu Broadmarsh and works commenced on the centre in February 2019. ■ Intu Broadmarsh is a 30-minute drive from the subject property and a little over half an hour away via public transport. Given the substantial investment in expanding and improving the shopping centre, along with the city core surrounding it, it should not be overlooked as providing a significant element of competition to trade, particularly once the redevelopment is complete and given consideration to the fact that Nottingham already holds the dominant position for consumer spending in the Derby catchment area. Intu Victoria, Nottingham ■ Intu Victoria was originally built on the site of Nottingham Victoria Railway Station just north of the core of the city centre. Development of the centre was completed in 1972 and comprised the core shopping centre as well as over 450 flats and 36,000 sq. ft of office accommodation. The centre has since been refurbished in 1997 and once again in 2015. Currently the centre provides approximately 120 stores over two floors and parking for circa 2,700 vehicles with anchor tenants including John Lewis, House of Fraser, Next, Boots and JD Sports. ■ Intu Victoria is a 35-minute drive from the subject property and approximately 45 minutes away via public transport. We are of the opinion that Intu Victoria, coupled with the redevelopment of Intu Broadmarsh and the surrounding Nottingham city centre core provide a substantial source of competition, specifically for those consumers within the eastern area of the Derby catchment area. Haymarket and Highcross Shopping Centres, Leicester ■ The of Haymarket Shopping Centre has historically been at the core of the retail offering in Leicester since it was constructed in 1973. It is in the core of Leicester city centre to the east of the more modern Highcross Shopping Centre. The property comprises 65 stores over three floors, a theatre and parking for approximately 500 vehicles. Anchor tenants include Primark, Sports Direct, T.K Maxx and H&M. The centre is well connected via local transport as it is adjacent to a major bus terminal.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ The Highcross Shopping Centre is larger and more modern than its Haymarket counterpart. It was constructed in 1991 and was subject to an extension in 2008. The centre now provides approximately 140 stores over four floors as well as a Showcase Cinema de Lux with 12 screens. The centre provides parking for approximately 3,000 vehicles. Anchor tenants include John Lewis and Debenhams. ■ It is our opinion that the facilities at the Haymarket and Highcross Shopping Centres do not present significant competition to the subject property. This is partially due to the distance between the two city centres, we consider there is a marginal catchment that will be drawn to either one of the two locations. Additionally, we believe the facilities offered by the subject property are superior and would therefore be of greater appeal to shoppers. ■ Set out below is a competition map showing where key competing centres are located: This includes the Intu centres in Nottingham and the Haymarket and Highcross centre in Leicester as well as the retailing provisions within Derby and nearby towns such as Burton-on-Trent and Mansfield.

Conclusions ■ The subject property benefits from a central and easily accessible location in Derby with a far-reaching catchment. Derby is a key destination for shoppers, particularly since the development of Intu Derby in 2007. However, there is a considerable amount of competition from neighbouring towns and cities which have been longer established and provide similar or superior retail and leisure options. This is demonstrated by Nottingham holding the primary market share in the Derby catchment. With the recent announcement of a significant investment in the core retailing locations within Nottingham city centre we believe competition is set to get tougher and Derby may struggle to retain or grow its market share.

Property: Intu Derby, Derby, DE1 2PL June 2019

Situation

Street Plan OS Map

■ The town centre retail floorspace in Derby is estimated at 1.86 million sq ft, of which Intu Derby accounts for approximately 1.3 million sq ft (70%). The retail provision is centred on and around Intu Derby, which has entrances/exits to London Road and St Peters Street to the west and East Street to the north. These are pedestrianised streets that provide a substantial retail offering in the heart of Derby city centre. ■ Prior to the construction of Intu Derby the traditional prime pitch in the catchment was considered to be St Peters Street, however, agents now consider the prime pitch to include Intu Derby as well as St Peters Street and East Street. ■ As well as having entrances/exits to pedestrianised retail pitches Intu Derby also fronts Traffic Street (A601) on its southern perimeter which is the central ring road in Derby and provides convenient access for vehicles with entrances to all four of the car parks coming off this road. ■ The landscaping and public areas within the scheme, in conjunction with the 12-screen Showcase Cinema de Lux, are such that the subject property constitutes more than merely a shopping destination, differentiating it from the adjacent competing St Peters Street and East Street. Intu Derby also competes with the restaurant/leisure facilities offered on Corn Market and Iron Gate by providing restaurants on the upper floor as well as a Hollywood Bowl, miniature golf and access to Derby theatre. ■ The Derby City Local Plan was adopted in January 2017 and sets out the planning framework for the city up to 2028. The plan sets out aspirations and key targets for the development and modernisation of the city and discloses its plans for investment into the retailing core. The plan states “The City Centre will remain predominantly within its existing boundaries with the focus of development being on regeneration and consolidation to it rather than expansion”. The plan goes on to state “New investment will have taken place within the City Centre to compliment Intu Derby and Riverlights, including the provision of new and improved leisure and cultural facilities. This will have helped boost the centres’ vitality and visibility through increased visitor numbers”. ■ In terms of accessibility, the main shopping thoroughfare, including the subject property, is located a 10-minute walk from Derby Midland Railway station.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Intu Derby benefits from four main car parks which provide a total of 3,587 parking spaces. The Riverside car park is located to the north of the centre and provides 959 spaces over three levels, the Centre car park is located in the core of the property and provides 1,888 spaces over three upper floor levels and the Basement car park provides 641 spaces over the basement level. There is a short stay car park to the south of the property off Bradshaw Way which provides 99 spaces over ground floor level. ■ Access to Derby town centre is detailed according to transport type below: Road ■ Derby benefits from being on the western end of the M1 corridor, being just 8 miles (13 minutes) west of junction 25 of the M1. The M1 provides access to the wider motorway network and nearby cities such as Nottingham to the north-east and Leicester to the south-east. By road the property has two key entrances, both of which are located off Traffic Street (A601) which acts as the primary ring-road in Derby city centre. Rail ■ Derby Midland Station is the primary transport link in the city centre and is served by Cross Country, East Midland and Northern Railway services. ■ The station acts as an interchange point for Midland Main Line services between London St Pancras and Leeds as well as Cross-Country routes between Aberdeen and Birmingham. Conclusions ■ Intu Derby is the prime pitch in a well-established Midland location with reasonable transport links to the rail and motorway network, connecting it to nearby regional towns and cities as well as key cities such as London and Aberdeen. ■ Derby has a substantial catchment area for a Midland city. However, due to competition from nearby neighbouring towns and cities there is also a reasonable amount on leakage from around the catchment towards other retail and leisure destinations.

Description and Accommodation

Second retail floor Entrance on St Peters Street

■ Intu Derby, formerly Westfield Derby, opened in 2007 following a two-year construction period where the existing Eagle Centre was demolished, rebuilt and extended. Overall the property provides approximately 1.3m sq ft of space and is the largest shopping centre in the East Midlands. ■ The property comprises over 200 stores, including a food court and a 12 screen Showcase Cinema de Lux. The upper floors integrate the leisure element of the scheme including the food court, miniature golf, Hollywood Bowl and access to Derby Theatre.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ The property comprises over 200 stores, including a food court and a 12 screen Showcase Cinema de Lux which is arranged over two floors. There are four car parks which provide a total of 3,587 parking spaces. The Riverside car park is located to the north of the centre and provides 932 spaces over three levels, the Centre car park is in the core of the property and provides 1,941 spaces over three upper floor levels and the Basement car park provides 647 spaces over the basement level. There is a short stay car park to the south of the property off Bradshaw Way which provides 99 spaces over ground floor level. ■ The subject property provides a mid to upper market retail offering with a few mass retailers. Tenants range from Debenhams, H&M, JD Sports, M&S, Next, and Top Shop amongst many others. ■ Footfall figures show that the centre generates circa 22.3 million visitors annually. Intu Derby has 20 entrances around its perimeter with the main ones coming off Traffic Street, London Road, St Peters Street and East Street. Of these total visitors, circa 39% of them enter the centre via either Albion Street or Crown walk, which are both off East Street to the north, or Burrows Walk which is off St Peters Street to the west. The other entrances to the centre see an even spread of use, with no single entrance seeing more than 10% of the total footfall.

Age: 2007

Number of storeys: There are two main storeys of retail with further third and fourth levels which incorporate restaurants, Hollywood Bowl, miniature golf and the Showcase Cinema de Lux. There is a food court on the north-western corner of the first floor which comprises a large open plan seating area for fast food suppliers as well as two larger units with internal seating for restaurant operators. The Showcase cinema de lux is set over the third and fourth floors The car parking facilities are arranged over several storeys. The Centre car park provides parking at basement level as well as three upper floors, including the roof. The Riverside car park is a separate structure to the main Intu building and provides parking on ground and three upper floors. The site also includes Bradshaw Way Retail Park and Victoria Chambers to the south and the Eagle Market and Playhouse Theatre to the north.

Construction: Steel and glass elevations

Floors: Marble floor

Roof: Steel and glass

Heating/ Air-conditioning: Typical H Vac system, with nine air handling units and six chillers at roof level for the main centre.

Lighting: Variety of lighting types – majority recessed with some suspended

Ancillary Accommodation: Remote Storage units

Internal Fit-out: Communal areas are branded in accordance with UNTU standard delivery and the retail and leisure units were branded in accordance with the individual operators’ standard delivery.

Yard: Concrete service yard.

External Areas: Despite a footbridge connecting the Riverside car park to the main Intu centre there are no external areas to the property that are accessible/useable by the public.

Property: Intu Derby, Derby, DE1 2PL June 2019

Services: The property is connected to mains gas, electricity, water, soil and surface water drainage.

■ We have been provided with floor areas by Intu within the tenancy schedule and have assumed that these are net internal areas (or gross where applicable) in accordance with the RICS’ Code of Measuring Practice. As agreed we have relied upon these floor areas for the purposes of this valuation exercise. We have reconciled the overall areas within the tenancy schedule and the Argus ValCap file provided. While we have been unable to reconcile the ITZA areas, we are comfortable relying upon those provided within the Argus ValCap file as we are confident that due to the NIA correlation it is reasonable to assume the ITZA’s are correct.

Basis: GIA/NIA

Description Sq m Sq ft

Main Shopping Centre 104,484.82 1,112,702

Bradshaw Way Retail Park 5,211.13 56,094

Victoria Chambers (Retail) 5,046.70 54,324

Victoria Chambers (Level 3 & 4) 744.69 8,016

63-69 St Peters Street 499.52 5,377

Market/Theatre Walk 9,072.52 97,659

Total Area 125,059.38 1,346,172

Condition and Maintenance

■ We were not instructed to undertake any structural surveys, tests for services, or arrange for any investigations to be carried out to determine whether any deleterious materials have been used in the construction of the subject property or subsequent additions. ■ Our valuation has been undertaken on the basis that the property is in good structural repair and condition and contains no deleterious materials and that the services function satisfactorily. From our inspection for valuation purposes we would comment that this was the case. Building Survey Report ■ We have been provided with a copy of the Building Survey Inspection report carried out by CBRE in January 2019. We summarise and comment where relevant below: – The report finds that the shopping centre is in a fair condition and whilst there are no significant structural concerns, there are a number of maintenance issues which need to be addressed as part of a proactive maintenance routine. – In terms of backlog maintenance, there are a number of water ingress issues to the centre noted; these relate to leaks to the cinema and glazed roofs. The roof to the Cinema and the Adventure Golf complex is understood to be under a valid warranty and the installing contractor has undertaken repair works to address these leaks. Internally the centre is noted as remaining in good condition. – Bradshaw Way Retail Park, Eagle Market and Victoria Chambers are noted as receiving a fair level of reactive and planned maintenance although there are areas of backlog maintenance noted for each. The basement car park and basement service yard are noted as in a fair condition. – The multi storey Riverside Car Park is in a poor condition with a lack of cyclical maintenance and decoration however we understand the car park has been marked for a major refurbishment program. We have included capex of £3,091,000 in our valuation to reflect these works.

Property: Intu Derby, Derby, DE1 2PL June 2019

– The Mechanical and Electrical plant serving the main centre is generally considered to be in a good condition and is receiving a good level of maintenance. The Mechanical & Electrical plant serving the markets area and parts of the original centre are considered to be in a fair to poor condition and will require replacement in the short to medium term as they have exceeded their recommended life expectancy, however the schedule prepared indicates this is likely to be recoverable through the service charge. – An overall asbestos management plan for the site was not provided; however, five asbestos reinspection surveys have been provided for the scheme dated July 2017 and additional reinspection surveys for the Theatre, Centre Management suite, back of house, Basement, Service Yard/External, The Mall, The Eagle Centre Market dated June 2018. Asbestos Containing Materials (ACM’s) have been identified on site and it was recommended to manage these in situ and generally inspect annually however the panels to the perimeter of the ramp should be monitored every 6 to 12 months. However, these have all been identified as very low risk in terms of the action plan and minor risk of fibre release. An asbestos survey for Victoria Chambers prepared by ABC asbestos division dated 9th December 2013. No ACM were identified in the samples taken. – Composite panels are evident in various locations throughout the shopping centre. An assessment of the cladding was undertaken by High Access in August 2017 with sampling taken where necessary. The cladding to Debenhams soffit was shown to have no flame-retardant properties. Given its location and non-residential use, it was not considered necessary to replace this cladding. – A summary of the budgeted cost liabilities was as follows; Short term (Year 1-2) £2,157,700, Medium Term (Year 3-5) £9,111,750, Long Term (Year 6-10) £6,025,500 for a total of £17,294,950. The total Landlord Capex Works was budgeted to be £6,615,500 with the balance recoverable through the service charge. – Short term works identified (to be carried out within year 1-2) breaks down as £60,000 expenditure on Health & Safety, Essential Repairs/ Defect Rectification requiring immediate attention and £973,000 on programmable repairs and maintenance, which do not necessarily need to be carried out in the short term and £1,124,000 on major capital expenditure. – A sample of the leases showed the leases are generally held on an internal repairing basis which includes the doors and shop fronts with a service charge contribution towards the repairs and maintenance of the main structure, external parts and common parts including mechanical & electrical installations. ■ We have included the following Capex in our valuation to reflect the information provided in the Building Survey Report and further information provided by the borrower as set out in the table below: Year 1 – 2 Capex -£1,094,000 Car Park – Riverside Refurbishment -£2,483,547 Landlord Works -£302,585 Total -£3,880,132

■ The car park capital expenditure allows for £3,000,000 of costs (as outlined in the building survey) commencing in 2022. The £2,483,547 therefore reflects the present value. ■ Further capital expenditure costs have been reflected in relation to void units and new lettings. We discuss capital costs in detail in the Valuation Methodology and Approach section of this report. Service Charge at the Subject Property ■ A service charge is operation at the subject property. We have been provided with the Service Charge Budgets for 2019 which shows and discusses the changes to the 2018 service charge budget. ■ In general, the service charge budget at the subject property covers; management fees, utilities, soft services (such as security, cleaning and marketing), hard services, insurance and major works, including works to the main structure and fabric of the shopping centre. ■ The 2019 budget shows that the total service charge for the property has increased 3.8% from 2018 and is now £8,894,936 pa, which equates to £6.84 per sq ft (weighted). This included £1,212,874 for major works. In contrast, the 2018 budget allowed for £873,052 of major works.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ We have been provided with a tenancy schedule which shows the current service charge budget as £9,013,092 pa and shows a current shortfall of £1,866,105, which has been reflected in our valuation as a revenue deduction. ■ Where units are occupied there appears to be several reasons for there being a service charge shortfall. The shortfall from occupied units amounts to £951,706 with the largest individual shortfalls coming from the cinema, Boots, Poundland and Debenhams (totalling a shortfall in excess of £600,000 between them). The shortfall resulting from vacant units is £914,399. ■ More than half of the service charge shortfall is therefore coming from occupied units, and approximately one third of the total service charge shortfall is attributable to just four of the tenants. ■ We consider the service charge appropriate for the asset type. However, the amount of shortfall is concerning as retailers consider their total occupational costs (TOC) when negotiating rents.

Environmental and Sustainability Issues

■ No indications of past or present contaminative land uses were noted during the inspection. Our inspection was only of a limited visual nature and we cannot give any assurances that previous uses on the site or in the surrounding areas have not contaminated subsoil or ground water. In the event of contamination being discovered, further specialist advice should be obtained. The Environmental Agency classifies that the majority of the subject property as lying within a Flood Risk Zone with a low chance of Flooding meaning between a 0.1% and 1.00% chance of flooding. ■ We have been provided with the Phase 1 Environmental Assessment & Flood Risk Review, prepared by CBRE and dated January 2019. We outline salient points below: – A potential for contamination has been identified associated with the former industrial uses of the site, including various mills, works, factories, garages, wharves, a foundry and a dairy with the potential for bulk fuel storage, as well as infilled land/refuse tip. However, a number of previous intrusive investigations have been undertaken across parts of the site, which whilst limited to a degree in terms of scope, have not identified any evidence of significant, site-wide contamination. – Furthermore, the redevelopment of the site to its current configuration is also anticipated to have involved a degree of ground excavation, thereby reducing the potential for contamination to remain; with planning conditions relating to contaminated land satisfactorily discharged by Derby City Council (DCC), where applied. – In the context of the on-going commercial use of the site and surrounds (with its own potential for contamination), it was considered that there is a low to medium risk of the site attracting the attention of the regulatory authorities or representing a significant risk to human health and/or controlled waters. No further works were considered to be necessary in the context of an on-going commercial use. ■ As a result of the Energy Efficiency Regulations 2015, the Minimum Energy Efficiency Standards (MEES) come into effect on 1st April 2018 for new leases and lease renewals/extensions and from 1st April 2023 for all existing leases. The standards make it unlawful for properties with F or G Energy Performance Certificates (EPC) to be let, without implementing cost-effective energy efficiency improvements or fulfilling an exemption criterion. ■ We have been provided with an EPC schedule by the Borrower and note that 15 units are F/G rated and a further 114 units do not have an EPC. ■ Units with an EPC of F/G total 20,962 sq ft and represent a passing rent of £814,250 pa and a Market Rent of £917,200 p.a., which respectively is 2.95% of the current income of the property and 3.03% of the potential income of the property. ■ Units without an EPC total 912,535 sq ft and represent a passing rent of £14,967,766 p.a. and a Market Rent of £15,624,050 pa, which respectively is 54.25% of the current income of the property and 51.66% of the potential income of the property. The two largest components of this are Marks & Spencers and Debenhams which account for 4.17% and 4.39% of passing rent and 3.74% and 3.70% of Market Rent respectively. ■ Combined this amount to £15,782,026 in current income and £16,541,250 in Market Rent, which constitutes 57.20% of the current income of the property and 54.69% of the Market Rent of the property.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ We recommend that you ensure that the borrower puts in place a clear strategy to ensure that all relevant parts of the property comply with the EPC requirements as non-compliance will result in a fine and compliance may involve capital expenditure from the Landlord in order to improve the fabric of the building and plant/machinery to achieve an EPC rating of E or above. ■ The borrower has not provided the capital expenditure forecasts but has advised that, as is typical with shopping centre landlords, they are actively working on improving EPC’s that are F&G and obtaining EPCs where necessary as leases come up for renewal or become vacant. ■ Therefore, we anticipate minimal capital expenditure will be required in this regard.

Rating Assessment

■ Business rates are a form of property tax, usually paid by the occupier of property, and related to property rental value (known as Rateable Value). The level of rates paid is generally revised annually to reflect inflationary increases. The Rateable Value may be revised every five years to reflect changes in the value of the premises. ■ Rates are payable on any vacant units. After an initial three-month exemption period for commercial properties such as shops and offices, and a six-month exemption period for some industrial properties such as factories, warehouses, workshops and stores, business rates will have to be paid in full, for which the landlord will be liable. ■ Certain premises are exempt from paying business rates. This will apply to vacant buildings owned or used by charities or community amateur sports clubs, where the property is listed or held by a company in administration, for empty buildings with a rateable value below £2,900 and for buildings that are in a poor condition and cannot be economically repaired, or where occupation is prohibited by law. ■ The standard national non-domestic rates multiplier for 2019/2020 is 50.4p. We have received information on the rates payable for each unit, which totals £9,481,672 per annum. ■ The current Rates shortfall relating to vacant units is £951,761 which is high (10% of total rates payable) due to the 37 vacancies within the scheme. This will be discussed further in our Valuation Methodology and Approach.

Planning

■ The Derby City Local Plan was adopted in January 2017 and sets out the planning framework for the city up to 2028. The plan sets out aspirations and key targets for the development and modernisation of the city and discloses its plans for investment into the retailing core. ■ The Core Strategy details several overarching aims of the local authority for the development and use of the city until 2028. It states, “The City Centre will remain predominantly within its existing boundaries with the focus of development being on regeneration and consolidation to it rather than expansion”. “New investment will have taken place within the City Centre to compliment Intu Derby and Riverlights, including the provision of new and improved leisure and cultural facilities. This will have helped boost the centres’ vitality and visibility through increased visitor numbers”. ■ The plan acknowledges that prime retailing has moved to the south-east of the city centre with the introduction of Intu Derby and the secondary areas are now considered to be the historic Cathedral Quarter to the north and the St Peters Quarter to the north-west. The plan states “To the east of the City Centre, between the Intu Centre and the Railway station, is an area known as Castleward. This is a mixed area of mainly low-quality industrial units with some housing and community uses. The Council has been working to bring forward proposals for the redevelopment of this area as a new sustainable urban village”. ■ This will help to revitalise the area immediately to the south of Intu Derby, which is the thoroughfare between Derby Midland Railway station and Intu Derby. Compendium Living, Derby City Council and Homes England are currently undertaking a £100 million regeneration plan for this area as an integral part of the city’s development plan. Phase 2 of the project is currently underway consisting of 54 new homes near to Intu Derby. The project will take a total of 15-20 years, with 800 new homes and 35,000 sq ft of commercial retail space. The scheme also comprises of a new primary school, new public open space and a new pedestrian link to Bass’s recreation ground.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ In addition to the Compendium Living’s development, there are further development opportunities in the Castleward area, with the Siddals Road car park mooted for a mixed-use development by owners Newcore. The Car Park is currently let, however, the leasehold interest is subject to a landlord break option in order to facilitate the potential development. The council previously approved a 500,000 square foot development for the site which would have included office, a hotel and retail but we understand that has now lapsed. ■ St James Securities are working with Derby City Council to bring forward comprehensive development proposals for the regeneration of Becketwell. The development proposals envisage a new urban quarter and will feature apartments and a range of office spaces catering for different types of business from small start-ups to large corporates. A new public square on Victoria Street will be the focal point of the development and the buildings around the square will feature a range of cafes and restaurants at ground floor. ■ The local authority plan to introduce a minimum of 11,000 new homes throughout the city, including in and around the city centre by 2028. The main sites earmarked for this development is the Osmaston Triangle (1 mile south-east of Intu Derby) and Boulton Moor (3 miles south-east of Intu Derby). ■ The Local Authority also intend to bring new office developments forward within the city centre, partially provided by the council’s Regeneration Fund. This is coupled with a real focus on regeneration in a number of specific areas, that include the City Centre and its Eastern fringes. ■ We are not aware of any enforcement actions, outstanding applications which affect the property. ■ The property is not Listed or in a Conservation area.

Tenure

■ We have been provided with and reviewed a draft Certificate of Title prepared by Intu’s solicitors, Macfarlanes LLP and DAC Beachcroft LLP, undated. ■ We have also been provided with and reviewed a draft Red Flag Report Overview Report, prepared by your solicitors Allen & Overy LLP, undated. ■ We have commented on the salient points contained within these reports below but would recommend that you review these documents for a full understanding of the legal tenure. ■ Allen & Overy LLP comment within their report that the Certificate of Title confirms that a) the Legal Owners and the Beneficial Owner of the Property are as set out below; and b) that in the opinion of the Certifying Lawyers, the Legal Owner and the Beneficial Owners are together solely legally and beneficially entitled to the Property and have good and marketable title to them (subject only to the disclosures and limitations set out in the Certificates of Title). ■ We can confirm that there is nothing contained within these documents that materially alter our opinion of Market Value as set out in this report.

Property: Intu Derby, Derby, DE1 2PL June 2019

Tenure The site plan below details the total site boundary:

■ We have calculated that the property lies within in a total site area of 9.58 ha (23.66 acres). This reflects 8.14 ha (20.10 acres) for the main centre and 1.44 hectares (3.56 acres) for Bradshaw Way Retail Park. ■ The property is comprised of 6 parcels of land consisting of five freehold titles and one leasehold title: 1. Site 1- INTU, Derby ■ The majority of the property. ■ Tenure: Freehold. ■ Registered title number: DY11149. ■ Quality of Title: Absolute ■ Beneficial Owner: Wilmslow (No.3) Limited Partnership, incorporated in Jersey (registered number LP007037). ■ Outlined in light blue in Appendix 3 and above. 2. Site 2- part of the Bradshaw Way Retail Park ■ Tenure: Freehold. ■ Registered title number: DY128464. ■ Quality of Title: Absolute ■ Beneficial Owner: Wilmslow (No.3) Limited Partnership, incorporated in Jersey (registered number LP007037). ■ Outlined in dark blue in Appendix 3 and above.

Property: Intu Derby, Derby, DE1 2PL June 2019

3. Site 2- part of the Bradshaw Way Retail Park ■ Tenure: Freehold. ■ Registered title number: DY21980. ■ Quality of Title: Absolute ■ Beneficial Owner: Wilmslow (No.3) Limited Partnership, incorporated in Jersey (registered number LP007037). ■ Bordered by dark blue, green and purple in Appendix 3 and above. 4. Site 2- part of the Bradshaw Way Retail Park ■ Tenure: Freehold. ■ Registered title number: DY21979. ■ Quality of Title: Absolute ■ Beneficial Owner: Wilmslow (No.3) Limited Partnership, incorporated in Jersey (registered number LP007037). ■ Outlined in green in Appendix 3 and above. 5. Site 2- part of the Bradshaw Way Retail Park ■ Tenure: Freehold. ■ Registered title number: DY372900. ■ Quality of Title: Absolute ■ Beneficial Owner: Wilmslow (No.3) Limited Partnership, incorporated in Jersey (registered number LP007037). ■ Outlined in purple in Appendix 3 and above. 6. Site 3- Riverside car park ■ Tenure: Leasehold. ■ Registered title number: DY326991. ■ Quality of Title: Absolute ■ Beneficial Owner: Wilmslow (No.3) Limited Partnership, incorporated in Jersey (registered number LP007037). ■ Outlined in green in Appendix 3 and above. Head Lease Review relating to 6. Site 3- car park Demised Premises: The site edged green with Registered title number: DY326991 Lessor: Derby City Council Tenant: Wilmslow (No.3) Limited Partnership, incorporated in Jersey (registered number LP007037). Surety: None Lease Term: 99 years from 29 September 1998 to 28 September 2097 Rent: The principal rent payable is calculated as being the greater of: a) The Minimum Yearly Rent of £900 per annum exclusive of VAT and b) The ‘Landlord’s Share’ of the aggregate net receipts (being all income received from the premises (subject to standard exclusions) less aggregate expenditure incurred in relation to the Premises) received by the tenant during the relevant annual period.

Property: Intu Derby, Derby, DE1 2PL June 2019

If in any annual period the net receipts are less than the Tenant’s Minimum Return (being the sum determined by increasing the sum of £853,700 annually in line with RPI. It has been confirmed that the Tenant’s Minimum Return for the year ending 28 September 2016 was £1,372,982 and for the year ending 28 September 2017 was £1,428,545 and for the year ending 28 September 2018 was £853,700) then the Landlord’s Share is nil. In any annual period where the net receipts exceed the Tenant's Minimum Return: (i) if the Overage (being the amount by which the net receipts exceed the Tenant's Minimum Return in any year) does not exceed the Indexed Sum (being £66,500 as increased annually by RPI. The Company confirms that the Indexed Sum until the year ending 28 September 2016 was £106,950 and for the year ending 28 September 2017 was £111,278 and for the year ending 28 September 2018 was £114,919), then the Landlord's Share is all of that Overage; or (ii) if the Overage exceeds the Indexed Sum, the Landlord's Share is the aggregate of the Indexed Sum and 50% of the amount by which the Overage exceeds the Indexed Sum. The Company confirms that the annual rent payable for the last five years is £900 per annum (plus VAT) and has been paid up to 29 September 2019. There were arrears for the period 2011 to 2018 but these were discharged in May 2018. The Company confirms that no Overage has fallen due to the Landlord in 2017 and 2018 and none is anticipated by the Company in 2019. Rent Review: The rent is reviewed annually as detailed above. Use: The Property may only be used as a car park or such other uses as the landlord may approve at its discretion. Service Charge: None. Alienation: The tenant may not assign part of the Premises, however the tenant may assign the whole of the Premises subject to the landlord's prior written consent (not to be unreasonably withheld or delayed). The Lease states that the "Developer" (which is an undefined term) may assign the Premises without the landlord's consent if the proposed assignee is the owner of the freehold or a valuable long leasehold interest in at least 75 per cent of the gross internal area of the adjoining Eagle Centre. The Certifying Lawyers consider that the reference to “Developer” is a typo and should be a reference to the “Tenant”. Subletting the Premises in whole or in part, granting licences and charging are permitted without landlord's consent provided that, in the case of subleases, the sublease is granted at open market value (whether at a premium or reserving a rack rent).

Red Flag Report ■ We have been provided with and reviewed the draft Red Flag Report, prepared by Allen & Overy LLP. Only two items are flagged as red which are commented on below along with any other salient points. ■ Red- The Property is currently charged pursuant to a charge dated 13 November 2014 in favour of HSBC which is to be discharged on completion as a condition precedent to the Transaction. ■ Red- Pursuant to an agreement to surrender dated 10 March 2017 of parts of the Property formerly owned by Derby City Council the Company is obliged to pay Derby City Council a one off payment of £1,100,000 plus VAT which is triggered by the Transaction. The Company has confirmed that it will pay the additional payment on or before completion of the Transaction. The obligation is protected by a restriction on title.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Yellow- Claims and Disputes- The company is in discussion with various tenants (Debenhams, Boots, M&S and Poundland) following disposals at the Property which have necessitated a re-apportionment of the service charge. The potential shortfall in the service charge amount being recharged if tenants refuse to pay the uplift (due to the provisions in their leases) is a total of £35,000 per annum based on the 2019 service charge budget. We have not reflected this within our valuation. ■ Yellow- There are various water leaks at the Property. The Company confirms that no tenant has made any claim in respect of the leaks and that there are budgeted amounts within the service charge budgets for the next 10 years to rectify damage and ensure a resolution to the issue. ■ Indemnity Insurance- Your solicitors have recommended indemnity insurance be secured relating to standard matters such as chancel repair liability, missing documents and plans, unknow easements and restrictive covenants affecting the title and a mines and minerals exception affecting a small part of the Site 3 car park. They state that there is currently no title indemnity insurance whatsoever in place. The borrower’s solicitors responded to say that: “Intu will not be putting in place any title indemnity insurance at this Property. This is because the property is a mature development, it has been refinanced under Intu’s ownership twice with institutional lenders who did not require title insurance and Cale Street were prepared to take an overall view that title insurance is not required.”. We would recommend that you take your solicitors advice relating to these matters but would consider none of these to be detrimental to our opinion of value. ■ We have cross checked all the occupational leases that have been reviewed within the Red Flag Report and the information contained within corresponds with the information we have been provided with by Intu and adopted within our valuation. ■ We are of the opinion that all legal documents provided would be considered intuitionally acceptable in the current investment market and we do not consider there to be any onerous clauses that would negatively impact the value.

Tenancy Summary Number of tenants: 234 retail and leisure units Vacancy: 8.34% by Market Rent Average weighted To Break: 6.17 years To Expiry: 7.24 years unexpired Term: Current Gross Income: £27,590,080 pa (this allows for rental top-ups of £577,750 pa). Leases currently under rent free are Carluccios, Washington Green, Typo, Thai Express, GDK, Sketchers. Current Net Income: £24,204,728 pa (this allows for rental top-ups of £577,750 pa). General Lease terms: The leases throughout the scheme are generally let on 5 and 10-year leases on FRI terms. There are, however, several temporary lettings at the property which are typically let on 1 to 2-year leases and cover rates, service charge and insurance costs. Markets perception of The majority of the tenancies at the subject property are derived from covenants that would be covenant strength: classified as being national multiple occupiers. However, we would comment that national multiples are not immune to the current occupational market as evidenced by recent CVAs and administrations involving some of the best known High Street brands. A more detailed overview is set out in the Covenant section. Arrears: There are currently approximately £1.8m of arrears with rent arrears accounting for £960,000 of this. The rent arrears reflect approximately 3.5% of total gross rent (excluding Eagle Market), which we consider to be typical for a centre of this type. Cost Recovery: There are current non-recoverable costs amounting to £3,384,452 per annum. This includes occupational costs on void units for service charge, rates and insurance as well as for caps for service charge, rates and insurance / inclusive leases. This figure also incorporates the landlord’s contribution to marketing of £461,657 per annum, which we have reflected each year into perpetuity as a revenue deduction.

Property: Intu Derby, Derby, DE1 2PL June 2019

Covenant Review

■ Detailed financial investigations of the tenants are outside the scope of this report. However, below we review the market perception of covenants that are integral to the property.

Unexpired Tenant Name Rent % Term Covenant Perception Natl Amusements £1,230,290 5.7% 8.96 yrs Good. (Showcase Cinema De Showcase and Showcase Cinema de Lux are owned and Lux) operated by National Amusements, Inc, a world leader in the cinema industry operating more than 940 screens in the US, UK, Argentina and Brazil. Debenhams Properties £1,209,873 5.6% 13.36 yrs Weak due to recent CVA however this store is category Ltd (t/a Debenhams) one. The department store has launched a CVA procedure that will close 22 underperforming stores as early as next year. The CVA is part of the company's restructuring and turnaround plan. Furthermore, the department store posted a 5.4% drop in UK revenue for the 26 weeks to 2 March. EBITDA before exceptional plummeted 36.3% over the period. Marks and Spencer plc £1,150,000 5.3% 22.66 yrs Weakening due to recent closures. (t/a Marks and Spencer) Recently the retailer has confirmed it plans to close 72 of its big high street stores, on top of the 48 it has already shut. The company is battling the transfer of clothing sales online and it had previously told the City to expect about 100 closures. Next Group plc (t/a Next) £832,037 3.8% 2.81 yrs Good. Next’s Easter sales grew by 4.5% for the 13 weeks to 27 April, however, retail store sales dipped 3.6% over the period. Boots Properties Ltd (t/a £585,000 2.7% 18.57 yrs Weakening due to recent profit warnings. Boots) The chemist posted a 0.8% drop in sales to £6.7bn for its FY to 31 August 2018, with revenue down 2.3%. Operating profit plummeted by 22.3% to £391m, and pre-tax profit dropped 20%. The chemist revealed it is embarking on a review of its stores-estate and wider business model. Although, there is no formal procedure being proposed, it is important to note that a CVA is currently not being explored.

Property: Intu Derby, Derby, DE1 2PL June 2019

Unexpired Tenant Name Rent % Term Covenant Perception Sainsbury's £499,000 2.3% 7.06 yrs Good. Supermarkets Ltd (t/a FY pre-tax profits fell 46.1% to £239m, after the failed Sainsbury's) Asda merger, but on an underlying basis, pre-tax profits were up 7.8% to £635m. However, LFLs fell 0.9% in Q4, and 0.2% for the FY. Group sales edged up 2.1%, and total retail sales up 0.4% over the FY period. The concept dubbed "SmartShop", will open in London's Holborn circus with no checkouts or tills. Using an app, customers can scan products which will then automatically transact the payment for the goods. H&M Hennes Ltd (t/a £482,205 2.2% 3.32 yrs Good. H&M) H&M Home new concept store from the Swedish fast- fashion brand has opened on Regent Street. The 7,534sq-ft store will span two floors and have an in- store café. (Retail Gazette). Renowned for being an aggressive lease negotiator. Matalan Retail Ltd (t/a £434,700 2.0% 6.37 yrs Good. Matalan) The fast-fashion retailer posted a 50% pre-tax profit increase to £30.1m, with total sales up 3.8% to £1.1bn for the 12 months to 23 February. Top Shop Topman £350,000 1.6% 3.06 yrs Weak due to recent CVA. This store is category B5. Properties Ltd (t/a Top After revising their proposal, asking for rent reductions Shop) between 25-50% rather than the previously proposed 30-70%, Arcadia has pushed their proposal over the line. This was despite Intu reportedly voting against the deal. At least 75% of creditors voted in favour of the proposal, under which 23 sites will close immediately with rents reduced across 194 of the original 566 stores. SportsDirect -To Be £350,000 1.6% 0.33 yrs n/a – current lease to be surrendered as the tenant is Surrendered relocating to the former BHS unit at 59-61 St Peters Street. The retailer has offered £52m, or 30p a share, for the video game seller - a 27.4% premium on the share price a day earlier. Total £7,123,105 32.8%

CVAs and Closures ■ There have been a number of CVAs / administrations to UK retailers over the course of 2018 and 2019. A large volume of retailers are assessing their options for store rationalisation or property cost reduction. Some of these options include CVA’s but others are relying on strong negotiating tactics on lease renewals or new lettings. ■ With regard to security of income at the subject property, we highlight the following: – The lease to Debenhams falls within category A in the CVA, reflecting no reduction in passing rent; – The lease to Topshop falls within category B5 in the CVA, reflecting a 50% reduction in passing rent; – The lease to Monsoon falls within category 7 reflecting a passing rent of £0.

Property: Intu Derby, Derby, DE1 2PL June 2019

– The lease to Accessorize falls within category 5 reflecting 55% rent reduction. – Tenants that have expressed nationally an interest to rationalise or reduce costs include Marks and Spencer, Carphone Warehouse and Clarks; ■ In addition, there are a number of retailers rumoured to be entering CVA. Tenants at immediate risk include Monsoon, Boots, Smiggle and Ann Summers.

Income Analysis

Current Rent Dynamics ■ The current gross and net un-topped-up income are £27,012,330 per annum and £23,626,978 per annum respectively. ■ As is market practice, we have topped up the gross income to reflect any tenancies currently in their rent-free period. This results in a gross topped up income from the subject property of £27,590,080 per annum and net topped up income of £24,204,728 per annum. We have reflected the cost of topping up this income as a capital expenditure within the valuation. ■ The WAULT (Weighted Average Unexpired Lease Term) to Earliest Termination and to Expiry is 6.17 years and 7.24 years respectively. Top Ups ■ We have reflected top ups within seven tenancies in the valuation that currently benefit from rent frees. These have been calculated as at the valuation date (04/06/2019). In total, the passing rent has been topped up by £577,750 p.a. resulting in a gross topped up income of £27,590,080 per annum. The topped-up rents account for 2.09% of the current gross income. Our analysis is outlined in the table below. Start of Rent End of rent Topped Up Unit Tenant Free free Rent Free Rent p.a. Values DER823 Carluccios 29/08/2018 24/09/2019 12 £70,000 £21,465 DER249 Washington Green 01/11/2018 01/08/2019 9 £70,000 £11,116 DER217 Typo 08/10/2018 08/07/2019 9 £65,000 £6,051 DER301 Thai Express 02/07/2018 02/10/2019 15 £60,000 £19,713 DER299 GDK 01/04/2019 01/04/2020 12 £65,000 £53,744 DER137 Sketchers 30/07/2019* 04/08/2020 14 £150,000 £175,359 DER125 Trespass 24/03/2019 23/09/2019 6 £97,750 £20,706 Total £577,750 £317,153 *Sketchers are topped up from Valuation date (04/06/19), however the Rent Free starts from 30/07/19.

■ We discuss this matter further in the Valuation Approach section.

Property: Intu Derby, Derby, DE1 2PL June 2019

Non-Recoverable Costs ■ In arriving at our net income inclusive of top ups we have deducted Landlord holding costs of service charge, rates and insurance shortfalls for any vacant units or units with caps, as well as Landlord contribution to marketing. The table below outlines landlord total non-recoverable costs. Total Non-Recoverable Costs £ per annum Total Gross Income (Including Top Ups) £27,590,080 Service Charge Shortfall/Caps -£951,706 Insurance Shortfall/Caps -£7,851 Rates Shortfall/Caps -£65,570 Void Service Charge -£914,399 Void Insurance -£28,298 Void (Empty) Rates -£954,971 LL Contribution to Marketing -£461,657 Site 3 – Car Park Ground Rent -£900 Net Income (including top up) £24,204,728

■ The above tables demonstrate that the service charge (including caps and void costs) constitutes the primary non- recoverable cost to the Landlord, just over 55%. This is followed by empty rates which account for over 28% of the holding costs. We have relied on information provided by the Borrower for all other non-recoverable costs. Top Ten Tenants by Rent ■ The below table and chart outline the income contribution of the top ten tenants, excluding the Car Park and Mall Income, which account for 16.4% and 5.5% of the income respectively. Tenant Name Rent % AWULT Natl Amusements (Showcase Cinema De Lux) £1,230,290 5.6% 8.96 yrs Debenhams Properties Ltd (t/a Debenhams) £1,209,873 5.6% 13.36 yrs Marks and Spencer plc (t/a Marks and Spencer) £1,150,000 5.3% 22.66 yrs Next Group plc (t/a Next) £832,037 3.8% 2.81 yrs Boots Properties Ltd (t/a Boots) £585,000 2.7% 18.57 yrs Sainsbury's Supermarkets Ltd (t/a Sainsbury's) £499,000 2.3% 7.06 yrs H&M Hennes Ltd (t/a H&M) £482,205 2.2% 3.32 yrs Matalan Retail Ltd (t/a Matalan) £434,700 2.0% 6.37 yrs Top Shop Topman Properties Ltd (t/a Top Shop) £350,000 1.6% 3.06 yrs SportsDirect (DER113) - To Be Surrendered £350,000 1.6% 0.33 yrs £7,123,105 32.7%

Property: Intu Derby, Derby, DE1 2PL June 2019

Top Ten Tenants by Rent

£1,400,000 £1,200,000 £1,000,000 £800,000 £600,000 £400,000 £200,000

■ The data show a relatively even income contribution between the top ten tenants, albeit a few of them are currently under Company Voluntary Agreements (CVA). ■ The lease to Debenhams falls within category A in the CVA, reflecting no reduction in passing rent. We also understand there is interest in the unit from Primark, leisure operators and serviced office providers in the event of a potential downsize. ■ The lease to Topshop falls within category B5 in the CVA, reflecting a 50% reduction in passing rent. Consequently, the tenant’s contribution to total income has fallen from circa. 2.5% to 1.6%. ■ Sports Direct are due to surrender their lease to unit SU113 (which is currently holding over and accounts for 1.6% of total income) and relocating to 59-61 St Peters Street of which they are acquiring the virtual freehold. Income Profile ■ The below table outlines the income at the subject property by tenant use. Retail shops provide the majority of income at the subject property, followed by the Car Park (including the centre car park and Bradshaw Way) accounting for 16.4% of all income. Food & Beverage, Cinema and Leisure account for 12.8% of the income. Supermarkets are also represented, however these account for under 3% of the income. Tenant Use Rent % AWULT Retail Shops £16,019,780 58.1% 5.31 yrs Car Park £4,511,490 16.4% 0.58 yrs Food & Beverage £2,138,240 7.8% 6.13 yrs Mall income £1,523,684 5.5% 0.58 yrs Cinema £1,230,290 4.5% 8.96 yrs Department Store £1,209,873 4.4% 13.36 yrs Supermarket £629,200 2.3% 5.87 yrs Leisure £168,387 0.6% 18.10 yrs

Property: Intu Derby, Derby, DE1 2PL June 2019

Tenant Use Rent % AWULT Eagle Market £60,000 0.2% 7.58 yrs Storage £53,285 0.2% 1.01 yrs Turnover £45,851 0.2% 4.83 yrs

Total £27,590,080 100.0%

Vacancy Analysis As at the valuation date, 91.66% of the property (by Market Rent) is let and income producing, with the vacant units accounting for 8.34%. Vacancy by area is slightly lower and accounts for 5.37%. Expiry Analysis ■ The WAULT (Weighted Average Unexpired Lease Term) to Earliest Term is 6.17 years and the WAULT to Expiry is 7.24 years. This is slightly above average for a prime shopping centre. ■ The table and graph below illustrate the time period in which the income from the centre expires to the earliest termination, excluding Car Park, Mall Income and turnover provisions. Expiry Profile Rent % 0 - 0.5 years £1,337,514 6.2% 0.5 - 1 years £621,745 2.9% 1 - 2 years £2,314,036 10.8% 2 - 5 years £8,403,915 39.1% 5 - 10 years £5,042,431 23.4% Over 10 years £3,789,414 17.6%

£21,509,055* 100.0% *Total Gross rent excluding Car Park, Mall Income and turnover provisions.

Property: Intu Derby, Derby, DE1 2PL June 2019

Expiry Profile - Earliest Termination £9,000,000

£8,000,000

£7,000,000

£6,000,000

£5,000,000

£4,000,000

£3,000,000

£2,000,000

£1,000,000

£0

■ As shown in the table and graph above, 82.50% of the current income expires within the next 10 years. The short-term expiry (within 1 year) is relatively low at 9.5%, while the majority of leases are due to expire in 5 years or after, which is to be expected given the norm for leases in the centre is a 5 to 10-year term. Income Run-Off ■ The income run off graph below demonstrates the worst case scenario and potential fall in income should all the tenants with break clauses, that we consider will be activated, and eventual lease expiries leave the scheme between the valuation date and 2024. It should be noted that this graph does not reflect any lease renewals or incoming tenants who may replace those who leave. ■ The data is skewed by the Car Park and Mall income, which has not been projected into the future for the purposes of this graph. In reality it is reasonable to assume that the car park and mall income will continue to be received in the medium term at levels similar to those for 2019.

Property: Intu Derby, Derby, DE1 2PL June 2019

Income Run off £30,000,000

£25,000,000

£20,000,000

£15,000,000

£10,000,000

£5,000,000

£0

Occupancy Cost Ratio ■ We have been provided with a schedule by the JLL leasing team outlining the performance of the largest retailers in Intu, Derby. The schedule sets out retailers’ performance (turnover against total occupancy costs (TOC), that is Occupancy Cost Ratio) in a traffic light system. The general banding used is as follows: Green Less than 20% Yellow 20-25% Orange 25-30% Red Greater than 30%

■ It is worth noting that target Occupancy Cost Ratio will differ dependant on brand and type of retailer. Retailers with a higher gross profit will accept higher percentages such as a card shop (25-30%) while department stores are at the other end of the spectrum and would target between 7.5-15%. ■ After analysing the retailers in Intu, Derby, we have noted the following: Banding % of largest retailers in Intu, Derby Green 68% Yellow 19% Orange 7% Red 6%

■ As can be seen from the table above just under 70% of the largest retailers fall under the green banding, demonstrating lower levels of OCR, and a total of 87% (including green and yellow) would be considered acceptable levels. Only 6% of the largest retailers have greater than 30% OCR. Based on this we consider current rental levels and our opinion of Market Rent to be appropriate for sustained occupation and demand at the centre.

Property: Intu Derby, Derby, DE1 2PL June 2019

The Market and Valuation

Shopping Centre Occupational Market Commentary

Retail Market Overview ■ May 2019’s BRC-KPMG Retail Sales Monitor revealed total retail sales for the month dropped by 2.7%, compared to a 4.1% rise in May 2018, the biggest monthly decline since the monitor’s conception in 1995. LFL sales also performed badly, falling by 3% year-on-year, compared to a 2.8% rise for the same period in 2018. However, on a three-month rolling-average basis, total sales were up 0.2% - this is a better indicator of overall market performance, as it smooths out distortions that can occur in the monthly data. One note of minor optimism was a marginal uptick in consumer confidence in May, which improved by 3 points from April, according to the GfK measure. ■ According to new research from BRC-Springboard, footfall dropped by 3.5% in May 2019 across all regions, its worst figure in six years, with declines in every region. Furthermore, according to a survey of 200 British retailers carried out by Censuswide, half of retail decision-makers have no Brexit plans in place, with 1/3 of retailers having experienced a fall in sales since the referendum. ■ The ONS data was released on the 20th June, which makes for an interesting comparison, as these updates are generally more positive than the BRC numbers. According to the ONS, the quantity bought in retail sales increased by 1.6% compared to the previous three months, with growth across all stores except department stores and household goods. Department stores suffered the eight consecutive month of negative growth. The quantity bought in May 2019 decreased by 0.5% when compared with the previous month, with a strong decline of 4.5% in clothing sales. In May 2019, online retailing accounted for 19.3% of total retailing, with an overall growth of 8.2% when compared with the same month a year earlier. ■ Whilst customers’ demands and expectations are increasing regarding product availability and delivery, retail and logistics have become inextricably linked. Optimum store and warehouse networks are required to deliver profitable retail. Data analytics and technology provide an insight into customers and their shopping preferences, as well as becoming essential enablers to improve stock selection, inventory management and logistics. The role of the physical retail store within the supply chain is continuing to evolve. Evidence suggests that future retail stores will combine technology with human interaction, and act as a key channel in driving overall (and online) brand sales, as well as a crucial cog in the increasingly complex retail supply chain. Retailers that are failing are the ones who are not adapting their offering to the changing needs of customers, creating a polarisation in retailer performance. Retailer Performance Positive ■ Poundland set to continue expansion. The discount-variety store reported a 3.1% rise in revenue for its Q2, offsetting muted growth of 0.6% in Q1. Poundland is set to continue expanding into H2 as it pushes into new markets. ■ Card Factory posts sales increase. The card company revealed that total sales for the quarter ending 30 April increased 6.4%, with LFLs up 2.3% over the period. ■ Matalan profits rise. The fast-fashion retailer posted a 50% pre-tax profit increase to £30.1m, with total sales up 3.8% to £1.1bn for the 12 months to 23 February. ■ Hunter revenue grows. The boots maker revealed that revenue grew by 9% to £113.8m in the year to 29 December, with gross profit margin increasing 2.3% to 54.2%. EBITDA also grew by 54% to £10.6m. ■ Tesco's moderate sales. For the 13 weeks to 25 May, the grocer recorded a 0.4% increase in UK LFLs, with UK total sales dipping 0.4%. The supermarket group's sales rose 11.5% to £56.9bn, with LFLs up 2.9% for its FY. Pre-tax profits grew 28.8% Y-o-Y to £1.7bn. ■ Inditex profits rise. The parent company of Zara has posted at Q1 net sales increase of 5% to £5.2bn, with net profit up 10% to £653m. ■ Boohoo sales jump. The online fast-fashion retailer reported a 38.5% jump in sales to £254.3m in the three months to 31 May, with UK revenue up 27%.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Lululemon profits bloom. The athleisure brand announced a 22% rise in gross profits to £249.31m for Q1 to 5 May, with revenue up 20% to £462.51m. ■ Superdrug revenue grows. The health and beauty retailer posted a 3.3% rise in total revenue to £1.3bn for the 52 weeks to 29 December, with pre-tax profits dropping by 5% to £88.3m. LFLs rose by 1.4%. ■ Discounting at Quiz takes toll. The fast-fashion retailer revealed that group revenue grew by 12.4% for the 52 weeks to 31 March, with UK stores and concessions’ revenue up 3.6%. However, pre-tax profits fell 97% after heavy discounting take its toll. ■ Iceland mixed results. The frozen food specialist revealed that sales grew by 2.2% to £3.08bn, with total revenue up 4.5% in the 52 weeks to 29 March, however, adjusted EBITDA dropped 8.7% to £140.1m ■ Majestic Wine margin squeezed. The wine merchant’s group sales grew 6.3% to £506.1m, however, the business swung to a £8.5m loss for the FY to 1 April, with adjusted EBIT squeezed by 33.8%. ■ Joules revenue rises. The fashion retailer’s revenue rose 17.2% to £218m in the year to 26 May, with retail sales increasing 22.7% to £159.1m over the period. ■ Ikea mixed results. The flat-pack furniture specialist reported that for the FY to 31 August 2018, sales increased by 5.6%, with turnover up to £1.96bn from £1.86bn. However, pre-tax loss came to £4.1m due to increased admin expenses and expansion costs. ■ Mountain Warehouse posts peak profits. The outdoor-gear retailer posted its 22nd consecutive year of sales growth, with sales up 13% to £255m for the FY to 24 February. LFLs also grew by 5.3% over the period, with pre-tax profits up 14% to £23.7m. Negative ■ Ted Baker posts profit warning. The fashion retailer posted a 1.1% fall in group revenue on a reported basis, for the 19 weeks to 8 June, with retail revenue down 0.3%. ■ Boots misses a step. The chemist posted a 0.8% drop in sales to £6.7bn for its FY to 31 August 2018, with revenue down 2.3%. Operating profit plummeted by 22.3% to £391m, and pre-tax profit dropped 20%. The chemist revealed it is embarking on a review of its stores-estate and wider business model. Although, there is no formal procedure being proposed, it is important to note that a CVA is not being explored. ■ Wilko turnaround continues. The variety store’s total sales remained negative at 3.9% with LFLs also down by 3.9% however, full-year pre-tax profit came to £34.8m for the 52 weeks to 2 February, up from a loss of £65m the previous year. ■ GBK losses widen. The burger chain’s operating losses widened to £4.6m for the FY to 28 February, with its CVA procedure yet to move the restaurant chain back to black. ■ Laura Ashley issues second warning. The fashion retailer has issued a second profit warning this year after suffering a pre-tax loss of £1.5m over the 26 weeks to 31 December. LFLs fell 4.2% with total sales dropping 8.7% to £122.9m over the period. ■ Debenhams reveals stores for closure. The department store has launched a CVA procedure that will close 22 underperforming stores as early as next year. The CVA is part of the company's restructuring and turnaround plan. Furthermore, the department store posted a 5.4% drop in UK revenue for the 26 weeks to 2 March. EBITDA before exceptional plummeted 36.3% over the period. ■ Sainsbury’s sales slide. FY pre-tax profits fell 46.1% to £239m, after the failed Asda merger, but on an underlying basis, pre-tax profits were up 7.8% to £635m. However, LFLs fell 0.9% in Q4, and 0.2% for the FY. Group sales edged up 2.1%, and total retail sales up 0.4% over the FY period. ■ Cotswold Outdoor launches CVA. Its parent company, Outdoor & Cycle Concepts, has had the proposed CVA approved by more than 97% of unsecured creditors. In the restructure, 4 stores will close over the next 3 months. ■ Pizza Express sales slip. For its FY 2018 the pizza group posted a 1% fall in LFLs, turnover increased 1.6%, reaching £543m. EBITDA fell 15.3% to £80.2m over the year.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Homebase turnaround continues. As the DIY retailer reported that operating losses dropped from £187.3m to £39.1m for its half-year to 30 December. Sales over the period still declined by 3.5% Y-o-Y to £497.8m. ■ Monsoon and Accessorize potential CVA. The companies will each launch a CVA as part of these wider plans to reconfigure and reduce their cost bases. The CVAs call for rent reductions at 135 of Monsoon and Accessorize’s 258 leased stores. The full proposals will be distributed, and the companies will seek creditor approval on the proposals in July. ■ Paperchase CVA confirmed. The stationery retailer has announced that at least five stores will close after undertaking a CVA procedure. The brand expects to keep the majority of its 145 outlets open. ■ Mothercare losses increase. The retailer recorded a loss before tax of £87.3m for the 53 weeks to 30 March, total UK sales dropped 11.8%, while UK LFLs fell by 8.9% over the period. ■ House of Fraser to shut more stores. House of Frasers in Cirencester, Hull, Edinburgh, Nottingham, Norwich, Gateshead, Lakeside and Chichester are also closing down after Sports Direct failed to reach an agreement with their respective landlords. ■ New Look revenue falls. New look’s CVA addressed its ‘over -rented’ UK stores estate and secured £40m cost saving in the hope of gaining financial and operational stability in 2019. CVA further identified 60 out of 593 potential store closures in UK and 6 sites that were sublet to the third parties. Deloitte handled the CVA. ■ Majestic Wines prepares for sale. The wine merchant is furthering its restructuring plans, prioritising its Naked Wines subscription business, which will see it close, sell or rebrand its 200 stores. ■ Arcadia one step closer to CVA. Arcadia’s proposed CVA has cleared a major hurdle after pledging an additional £25m cash injection for the pension scheme, with total contributions now worth £385m. However, Deloitte, the group's advisor, has drawn up papers to put the group into administration should the proposal not gain creditor agreement. Expanding ■ Waterstones owner buy Barnes & Noble. The book retailer’s parent company, Elliott Advisors, has acquired the US Barnes & Noble for £538m. The PE firm has also made a bid for all 200 stores of Majestic Wine’s £100m estate. (Retail Gazette) ■ Iceland plots expansion drive. The food shop plans to open 50 stores over the remained of this financial year, 34 of which will be under its Food Warehouse brand. (The Times) ■ Lidl London expansion. The discount grocer will invest £500m to expand its presence across Central London, with its first ever central London shop opening on Tottenham Court Road. 40 additional stores will open over the next five years across the capital. (The Telegraph) ■ Aldi Aberystwyth plan approved. The discounter has been granted approval from the council for a new store on Park Avenue, Aberystwyth. (The BBC) ■ Primark enters new market. The fast-fashion retailer has opened a new store in Ljubljana, Slovenia, bringing its international presence to 12 different market. (Retail Gazette) ■ Carpetright partners with Furniture Village. The carpet specialist has opened its first concession in the furniture retailer’s 3,000sq-ft Guildford store. (Retail Gazette) ■ John Lewis to invest £21m for refurbishment. The department store is investing £21m in its Peterborough store in the Queensgate shopping centre, with the aim to overhaul the entire 93,000sq-ft shop to make a more destinational store. ■ Microsoft flagship store confirmed. The tech giant’s 22,000sq-ft store on Oxford Street is set to open on 11 July. Restructuring ■ Topshop to sell on ASOS. As part of the retailer’s turnaround push, for the first time, Topshop will be sold on the online retailer’s platform. ■ Moss Bros stake acquired. Gatemore Capital has acquired a 9.57% stake in the suite specialist. ■ Karen Millen parent mulls sale. The Icelandic bank Kaupthing has reportedly drafted in Deloitte to review its options after receiving a string of takeover bids.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Rococo enters administration. The luxury chocolatier has fallen into administration after appointing insolvency specialist BDO, which is searching for a buyer for the retailer’s five London stores. ■ Sports Direct bids for Game Digital. The retailer has offered £52m, or 30p a share, for the video game seller - a 27.4% premium on the share price a day earlier.

Rental Market Overview

Local Market Review ■ Derby city centre retail floorspace is estimated at 1.86 million sq ft which is above the regional centre average. The retail provision is dominated by Intu Derby, which is ranked 16th in the 2019 Trevor Wood Shopping Centre rankings for all shopping centres in the UK. In comparison, the remainder of the city centre is considered secondary or even tertiary in character. There are very few retailers which trade outside Intu itself. The key multiple comparison retailers include Primark on Corn Market, Waterstones on St Peters Street, Burton on Victoria Street and White Stuff and Joules on Sadler Gate. However, we are aware that Primark are currently in negations as they would like to enter the shopping centre. ■ Derby, according to PROMIS, has below average range of fashion multiples for a Regional Centre. Whilst the city has several quality independent fashion retailers, multiple fashion retailers are largely mass market. In saying that, the city is still ranked favourably compared to Nottingham. ■ Department stores have a low presence in Derby, with Debenhams being the only major store left. Historically TJ Hughes and Bhs used to have variety stores however the collapse of the retailers in 2011 and 2016 respectively resulted in the closure of both stores. Convenience provisions are reasonable with Sainsbury, Marks & Spencer and Iceland stores located within Intu Derby. ■ Intu Derby offers shoppers a small dining area on the upper floor, where the likes of Carluccio's, Byron Burger, TGI Friday's, Wagamama, Zizzi and more recently Five Guys are located. Branded catering outside the shopping centre is limited. ■ The prime pitch in Derby is located within Intu Derby and comprises the upper floor of the main North and South Malls. The offer here is fashion focused including retailers such as Topshop/Topman, Next, All Saints, New Look, Superdry, Oasis, Warehouse, H&M and Zara. Historically, the prime pitch in Derby ran from Copecastle Square within Intu Derby, along Albion Street, to its junction with East Street. While Albion Street is still a busy entrance for Intu Derby, it has become increasingly run down in recent years. ■ Overall vacancy rate in Derby town centre stands at 12.2%, below the Retail PROMIS average and a slight fall on the level recorded in December 2016. The level of take-up between the December 2016 and June 2018 audit was 3.4% of units, below the PROMIS average. This compares with a vacancy rate of 8.34% within Intu, Derby itself. ■ Prime A rents in Derby have generally been well below the average recorded for Regional Centres over the period of record. Between 2008-2017, prime rents in the city have continued to decline, peaking at £175 psf Zone A in 2008 before falling sharply to £135 psf Zone A the following year in the aftermath of the credit crunch and onset of economic recession. At the 2018 agent sources estimated prime rents in Derby at £110 psf Zone A however since then we believe the Zone A has fallen again as is currently at £95 psf Zone A.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ In arriving at our opinion of rental value we have had regard to the following transactions within the subject property;

Leasing Comparables – Upper North Mall & Upper South Mall

Area No. Date Address / Location (Sq ft) Tenant(s) Rent Comment

1 10/18 SU217, Intu Derby, 2,005 Typo £65,000 p.a. New letting. 9 months’ rent free, 5- Upper North mall year term, no break option. 8% (£71.50 ZA) TOR.

2 9/18 SU264 & SU317, Intu 8,160 Footasylum £220,000 p.a New letting, 10-year term with a Derby, Upper South rent review and position to break (£107.95 ZA) Mall at 5 years.

3 7/18 SU220/221, Intu Derby, 3,213 All Saints £135,200 p.a Lease renewal, 5 year term, option Upper North mall to break at 3 years (£77.74 ZA)

4 6/18 SU226, Intu Derby, 1,797 Hotel £65,000 p.a New letting, 10-year term with a Upper North mall Chocolat rent review and position to break (£76.47 ZA) at 5 years.

5 3/18 SU245, 246 & part 247, 3,382 Foot Locker £177,000 p.a. New letting. 12 months’ rent free, Intu Derby, Upper 5-year term, no break option. No (£120 ZA) South Mall turnover provisions.

Leasing Comparables – Lower North Mall & Lower South Mall

Area No. Date Address / Location (Sq ft) Tenant(s) Rent Comment

6 7/19 SU1137/138, Intu 3,150 Sketchers £150,000 New letting, 10-year term with a Derby, Lower south rent review and position to break (£87.57 ZA) Mall at 5 years. 12 months’ rent free.

7 3/19 SU123, Intu Derby, 890 Tiger £92,000 New letting, 10-year term with a Lower north Mall rent review and position to break (£103.37 ZA) at 5 years. 1 month rent free. No turnover provisions.

8 6/18 SU1125, Intu Derby, 928 Trespass £88,200 New letting. 5 year term. Lower north Mall (£95 ZA)

9 2/18 SU1107, Intu Derby, 1,389 Vodafone £140,000 New letting, 10-year term with a Lower north Mall rent review and position to break (£100.79 ZA) at 5 years. 8 months’ rent free.

10 6/17 SU1101, Intu Derby, 1,216 F Hinds £80,000 Rent review. Nil uplift. Lower north Mall Limited (£93.05 ZA)

Property: Intu Derby, Derby, DE1 2PL June 2019

Leasing Comparables – F&B

Area No. Date Address / Location (Sq ft) Tenant(s) Rent Comment

11 4/19 Food Court Unit 9, Intu 497 GDK £65,000 New letting. 15-year term rent Derby review cycle 5 year, 12 months’ (£131 psf) rent free

12 7/18 Food Court Unit 11, 507 Thai Express £60,000 New letting. 10 year term with a Intu Derby rent review and position to break (£118 psf) at 5 years. 12 months’ rent free.

13 6/18 Food Court Unit 3, Intu 828 The Wok £85,950 New letting. 10 year term with a Derby rent review and position to break (£103.80 psf) at 5 years.

14 5/18 Food Court Unit 5, Intu 668 Hey Potato £65,000 New letting. 5-year term, 6 Derby months’ rent free. (£97.31 psf)

15 5/18 Food Court Unit 6, Intu 499 Tasty Place £52,500 New letting. 10 year term with a Derby rent review and position to break (£105.21 psf) at 5 years. 12 months’ rent free.

Leasing Comparables – Cinema

Area No. Date Address / Location (Sq ft) Tenant(s) Rent Comment

16 07/16 Cineworld, Newport 13 Screen Cineworld £512,500 p.a. Lease Re-gear of reversionary Leisure Park, Newport Cinema (£10 psf) lease of 15 years with 5 yearly rent reviews to 1.5% p.a. compounded. Rent Reduced to £512,500 p.a. Anchor of a near prime Leisure Park.

17 02/16 Vue Cinema, Feethams 9 screen Vue £390,000 p.a. New Letting. 20 year term. Leisure Scheme, cinema Cinemas (£15.25 psf) New development in Darlington Darlington which opened in 2016.

18 09/13 Cineworld, Ashton 14 screen Cineworld £806,500 p.a. Rent Review. Minimal increase in Leisure Park, Fold Way, cinema (£16.13 psf) passing rent. Ashton

Property: Intu Derby, Derby, DE1 2PL June 2019

Leasing Comparables – Crown Walk, Copecastle Square, Albion Walk and St Peters Street

Area No. Date Address / Location (Sq ft) Tenant(s) Rent Comment

19 3/19 67 St Peters Street, Intu 1,946 Oxfam £30,000 New letting. 10 year term with a Derby letting rent review and position to break (£53.50 psf) at 5 years. 9 months’ rent free.

20 2/19 18 Crown Walk, Intu 1,197 Charlie £50,000 New letting. 5 year term with Derby browns position to break at 3 years. (£41.77 psf)

Leasing Comparables – East Lower Mall

Area No. Date Address / Location (Sq ft) Tenant(s) Rent Comment

21 1/19 SU157A, Intu Derby 455 Mobile Lab £30,500 New letting. 10 year term with a rent review and position to break (£70.56 ZA) at 5 years. 4 months’ rent free.

Market Rent Analysis

Analysis Methodology ■ All Market Rents are based on a headline basis. We have explicitly reflected rent free periods within our cashflow and would direct you to our Valuation Methodology section for further detail. ■ We have used a variety of methods to arrive at our opinion of Market Rent. Historically, rents were largely analysed on a psf Zone A basis but this method is becoming less used as rents become more aligned to affordability on a unit by unit or operator by operator basis. Rents are today more often considered by operators on a global rent basis or on a Total Occupancy Cost (TOC) basis and we have taken this into account when adopting our Market Rents. ■ We have also relied upon the Occupational Assessment of the Top 30 Operators Schedule undertaken by our retail agents This schedule provides us with an indication of performance of the key retailers and we have considered this when forming our opinion of Market Rent. ■ We would comment that where appropriate we have adopted tones for similar sized units or for units in a similar location and the rents achievable for these units may be above or below our tone. Upper North Mall & Upper South Mall ■ In terms of demand and recent rental evidence the Upper North and Upper South malls are considered the prime retail pitches by retailers. ■ The most recent lettings along to Upper North Mall were to Typo located in unit SU217 achieving a Zone A of £71.50 psf, All Saints (SU220/221) which occurred in July 2018 achieving a Zone A of £77.74 psf and slightly earlier in June 2018 Hotel Chocolate (SU226) which achieved a Zone A of £76.47 psf. These three lettings, although the most recent, were also strategic to improve the tenant mix along this pitch. These deals were therefore considered soft and below where the prime pitch would be. Hugo Boss has shown interest in occupying unit SU225 offering a Zone A of £104 psf. ■ In the Upper South Mall pitch the two most recent lettings where to Footasylum (SU264 & SU317) which occurred in September 2018 achieving a Zone A of £107.95 psf and Foot Locker in March 2018 achieving a Zone A of £120 psf. ■ Although firm evidence points to there being a differential between the North and South of the mall, after speaking to our leasing colleagues we believe retailers would view them both as equal. Analysis of the recent lettings, as well as the Hugo Boss offer yields an average Zone A rate for the pitch in question at £93 psf.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ It is also worth highlighting the recent Monsoon CVA which has affected unit 204, assigned category 7 and unit 223, assigned category 5 both located in said pitch. On a positive note Whistles has shown interest in occupying Unit 225 offering £80k reflecting a Zone A of £90 psf. ■ On balance of the above we have adopted £95 psf ZA for this pitch. Lower North Mall & Lower South Mall ■ The Lower North and South Mall has the advantage of being close to Sainsburys (anchor tenant) and the main entrance to the scheme. ■ In 2019 there have been two lettings to note in the Lower North and South Mall. Sketchers (SU1137/138) letting (July 2019) achieved Zone A of £87.57 psf. After speaking with the letting agent we understand this was again a soft deal as the site was let to avoid a potential vacancy due to Tiger relocating, and to improve the tenant mix along this pitch. Tiger’s (SU123) relocation was the second most recent letting which occurred in March 2019 achieving a Zone A rate of £103.37 psf. Tiger was prepared to pay slightly above other occupiers due to the location of the unit. ■ In 2019 Trespass leased unit SU1125 at a Zone A rate of £95 psf, Vodafone leased unit SU1107 at a Zone A rate of £100 psf and F Hinds Limited leased unit SU1101 at a Zone A rate of £93 psf. We believe these are all reflective of the rental tone for this pitch and we have therefore adopted £95 psf ZA for this pitch F&B ■ To arrive at our opinion of the F&B units we have reviewed on an overall basis rather than zoning, reflecting the market norm. Based on the most recent lettings, size and location we have further categorised the F&B units into three Market Rent categories, A3 large, A3 medium and A3 small. A3 Large ■ There have been no recent lettings for A3 large and we have therefore relied upon Nandos (SU322) rent review which was agreed in 2017 achieving £36 psf. Wagamamas (Restaurant 4) 2018 rent review is currently outstanding but it’s believed to be just below £30 psf. ■ Based on the most recent evidence, along with our knowledge of the Market Rents that can be expected for these units in the current occupational market, we have adopted £35 psf for these units. A3 Medium ■ In May and June 2018 there were two new lettings to Hey Potato (unit 6), which achieved £97 psf and The Wok (unit 3) achieving £103 psf. These were both extremely strong lettings and indicates a rent of around £100 psf we have made a discount based on today’s market, believing occupiers would be closer to £75 psf for these units. A3 Small ■ The most recent letting was to GDK (Unit 9) in April 2019 which was let for £65,000 pa equating to £130 psf. Slightly earlier in July 2018 Thai Express let Unit 11 for £60,000 pa (£118 psf) and in May Tasty place let Unit 6 for £52,500 £105 psf). In arriving at our opinion of Market Rent we have considered both a global rent as well as psf. We believe for these units a retailer would offer between £55-65,000 as a global rent and have therefore adopted £110 psf for these units.

Property: Intu Derby, Derby, DE1 2PL June 2019

Cinema ■ We have outlined below typical cinema Market Rents in the current occupational market based on a typical ‘warm shell’ specification: Location Average Rate (psf) Central London/Regional Malls £22 - £35 Regional Malls/ Major Cities/ Prime £17 - £20 Major Towns & Smaller Markets £15 - £18 (on leases up to £500,000 p.a. but no Landlord capital contribution is increasingly common) Prime Towns (excluding SE) £12.50 - £15 (plus £750k incentives) Secondary Towns/ Infill Opportunities £11 - £13 (plus £1 - £2m incentives) London arthouse/ boutique £12 - £20 (location, inventive and spec/ completion dependent)

■ Incentives will vary, with turnover deals more common for larger schemes. ■ The data shows that cinema occupiers tend to pay between £15 psf and £18 psf in Major Towns and Smaller Markets – Derby would fall into this category. While our rental comparables for cinema occupiers are not directly comparable to the Showcase Cinema at the subject property, the evidence, along with our knowledge of the overall Market Rents that can be expected in the current occupational market, suggest using a rack-rent. ■ We have therefore adopted a rate of £16 psf. Hollywood Bowl ■ Based on the evidence, along with our knowledge of the overall Market Rents that can be expected in the current occupational market, suggest that the bowling alley is revisionary. ■ We have therefore adopted a rate of £7.50 psf. Crown Walk, Copecastle Square, Albion Walk and St Peters Street ■ When looking at the above we have considered evidence based on the likely tenants to occupy these units. Using the nature of the tenants as a guide for overall psf, we then crossed checked against the global rents. ■ The most recent lettings were that to Oxfam (67 St Peters Street) which let the unit in St Peters Street in March 2019 for £30,000 pa equating to £53.50 psf. In February 2019 Charlie Browns let 18 Crown Walk for £50,000 and a psf of £41.77. Further to these Mobile Tech has shown interest in 17 Crown Walk at £51 psf and Birds Expresso has shown interest to upsize into 8 Crown Walk at £65,000 which equates to £82.56 psf. ■ We have adopted a range between £45 to £75 psf depending on location, size and occupier, as well as always having regard to the global rent. East Lower Mall ■ The most recent letting occurred in January 2019 to Mobile Lab which occupied unit SU157A. The unit was let at £30,500 equating to a Zone A rate of £70.56 psf. We believe this is a true reflection of the tone for these units and have therefore adopted Zone A rate of £70 psf. Anchor Stores ■ We have been provided with the OCR levels for the top 30 tenants within the scheme by JLL leasing agents. They have set out retailer’s performance on a traffic light system based on the following banding: – < 20% – 20-25% – 25-30% – > 30%

Property: Intu Derby, Derby, DE1 2PL June 2019

■ These bandings have not taken into consideration the brand or type of retailer which also needs to be considered. Total occupancy costs (TOC) will differ depending on the retailer’s brand strength as retailers with a higher gross profit will accept a higher percentage, such as card shops (25-30%) while a department store is at the other end of the spectrum and would target between 5-15%. We have therefore used the information provided, but also made use of our own opinion when reviewing the OCR information. ■ This evidence has however helped us form our opinion of Market Rent, particularly for the anchor stores. We have looked both at a £ psf rate as per the industry norm, as well as having regard to their individual OCR levels. Debenhams and Marks & Spencer ■ Following Debenhams CVA this unit fell under category 1 confirming the strong performance of this unit. The current estimated turnover is £17.2m, and current sales to TOC equates to c.13%. Based on this and the green banding assigned to this unit it would appear to be rack-rented, however we believe this TOC is slightly towards the high end for a department store and have therefore made a slight discount to the Market Rent. ■ Marks & Spencer’s is a strong performing store with the current estimate turnover figures of c.£27.5m and the TOC equating to 8%. This gives us comfort around Marks & Spencer’s current rent. ■ On balance we have adopted £9 psf. River Island, H&M and Topshop ■ River Island recently re-geared their rent from £330,000pa to £167,500 (£12 psf). The turnover is c.£2.2m with current sales to TOC equating to c.16% putting it into the green category. This recent regear has given us comfort around the affordability of the unit, as based on the previous rent the TOC would have equated to c.23%. ■ H&M generate total sales of c.£4m a year from their “adult and kids” formats. Although this has been flagged as amber, H&M covenant strength moves this unit as low risk. We feel a similar Market Rent to River Island and Topshop should be adopted due to its location. ■ Topshop’s recent CVA has put this unit as category B5 which means 50% of its current rent. Topshop rent has been rebased to £350,000 per annum (£14.45 psf). The estimated turnover figures are c. £3.4m, based on the previous rent of £700,000 the current sales to TOC equated to c.31% which flags the unit as risky, however after the current CVA this has moved the unit in the green category. ■ On balance we have adopted £15 psf. Zara, Superdry and Next £21 ■ Zara trades extremely well from this unit and ranks Derby in terms of performance above Basingstoke and Canterbury. Zara recently renewed for an additional 3 years and is currently reflecting a cost to sales ratio of >15%. ■ Superdry’s current sales are c.£2.2m pa producing a costs to sales ratio of c.16% which is in-line with New Look, and where we would expect this retailer to be. Superdry had a rent review in 2018 which showed a slight uplift. ■ Next is performing extremely well and wishes to upsize. Their current estimated turnover is c.£10m equating to a current sales to TOC to be c.15%. ■ On balance we have adopted £21 psf. Sainsbury and Sports Direct £15 ■ Sainsbury’s current estimated turnover is £10.3m translating into a current sale to TOC of 8.7%. This lower TOC gives us comfort around the units current rent and we believe this unit to be broadly rack-rented. ■ Sports Direct performs strongly in this location however they have purchased the virtual freehold of the former BHS unit (59-61 St Peters Street) from Intu and will be vacating their current unit, regardless of their good TOC percentage. ■ On balance we have adopted £15 psf.

Property: Intu Derby, Derby, DE1 2PL June 2019

Retail Park ■ The retail park includes Matalan, Home Bargains, Poundstretcher and Cycle Republic. To arrive at our opinion Market Rent for these units we have reviewed on an overall basis rather than zoning, reflecting the market norm. ■ There is limited evidence within the scheme, with no recent transactions at these units. We have had regard to the occupational cost ratio (OCR) of each tenant, as well as speaking with our leasing agents. The OCR levels shows the tenants are in the yellow / low green banding. Based on this we believe an occupier today would slightly discount the current passing rent. We have therefore adopted £12 psf for Matalan, Home Bargains and Cycle Republic. Poundstretcher’s corner unit location would be perceived as superior and we have therefore adopted a premium rent of £14 psf. ■ Based on our knowledge of the overall Market Rents that can be expected in the current occupational market we believe the retail park is 9% over-rented. Car Parking Income We have assumed the Car Park Net Income is rack rented at £4,278,480 per annum for the main car park, and £233,010 per annum for Bradshaw Way car park. We have reviewed the last three years of car parking income to reach our opinion. We address the car parking income and capital expenditure in full in our Valuation Methodology section. Market Rent Summary Table ■ Our opinion of the market rent for the centre, categorised according to the distinct pitches we have identified is summarised below. Market Rent Market Rent Pitch (psf ITZA) (psf Overall) Upper North Mall & Upper south Mall £95.00 Lower North Mall & Lower South Mall £95.00 A3 Large £35.00 A3 Medium £75.00 A3 Small £110.00 Cinema £16.00 Hollywood Bowl £7.50 Crown Walk, Copecastle Square, Albion Walk and St Peters Street £45-£75.00 East Lower Mall £70.00 Debenhams and Marks & Spencer £9.00 River Island, H&M and Topshop £15.00 Zara, Superdry and Next £21.00 Sainsbury and Sports Direct £15.00

Property: Intu Derby, Derby, DE1 2PL June 2019

Reversionary Analysis: Prime Zone As comparable centres ■ It can be seen from the market rent summary table above that the prime rent adopted is £95 psf ZA. Turnover information has also been made available to us allowing us to gain further comfort around the rental tone adopted, and whether these levels are achievable for the retailers and operators. We have detailed below the prime rents in some comparable UK shopping centres. ■ The table below outlines prime Zone As in some comparable shopping centres in the UK (ranked by ZA). As highlighted below, the rents in Intu Derby are substantially lower than the surrounding schemes. This emphasises the affordability of Intu which gives us comfort in this current occupational market that these rents can be maintained. Intu Derby is a relatively new scheme that created a lot of additional space in the area. Once opened a great number of the retailers moved from the high street and surrounding more secondary locations into the scheme itself. This high level of supply caused a lower achieved rental tone within the scheme, however as the vacancy rate stabilises (currently 8.34% by Market Rent) we anticipate rents should see some further growth. ■ The 9.62% reversion from gross current rent to gross Market Rent at the subject property is appropriate and we believe retailers will continue to seek representation at the centre at this level. TOWN STREET Zone A 2018 London Westfield London 532.5 Stratford Westfield 500.0 Birmingham Bullring 330.0 Manchester Arndale - New Cannon Street (Prime) 280.0 Nottingham Victoria Centre 275.0 Nottingham Intu Broadmarsh 275.0 Cardiff St David's Centre 250.0 Kingston-upon-Thames Bentall Centre 250.0 Liverpool L1 250.0 Reading The Oracle 250.0 Milton Keynes The centre MK: Midsummer Arcade 245.0 Leicester Highcross 205.0 Solihull Touchwood 190.0 Braehead Braehead Centre 170.0 Derby Intu Derby 95.0

Market Rent ■ This is defined by the RICS Valuation – Professional Standards 2014 as: “The estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.” ■ Market Rent is interpreted as the headline rent on the basis of the assumed lease terms set out below. It is generally not suitable for assessing the rent likely at a rent review. ■ We are of the opinion that the Market Rent, as at the valuation date, is £30,244,855 per annum. We have this market rent in our valuation. ■ As a result, we consider the property reversionary by 9.62% based on market rent.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Our market rent assumption is based on a standard 10 year lease, with a 5 year tenant’s break option, drawn on institutionally acceptable, full repairing and insuring terms, subject to five yearly upwards only rent reviews, and with the benefit of a rent free period between 6 – 12 months.

Shopping Centre Investment Market Commentary

■ The UK Economic and Property Market Commentary is provided in Appendix 6. ■ Shopping centre investment volumes are at historic lows with Q1 2019, currently at £340 million which is on parity with the same time last year. However, if the Intu Derby acquisition is removed from the statistics only £178 million was transacted. To give some background, in 2018, the total shopping centre investment volume was £958.3m against £2.127bn in 2017. The reduced liquidity in the market is primarily being driven by investor concerns surrounding the structural changes and occupational volatility being experienced in the retail market. Broadly speaking, this is affecting the whole retail sector irrespective of the occupational performance of individual schemes. ■ Councils continue to remain active in the market as they were last year, primarily thanks to their ability to borrow at 1% or 2%. The most recent local authority deal is the acquisition of the Pentagon Centre by Medway Council from Bridges Castle in Chatham for £30 million reflecting 8% net initial yield. This accounts for the third council deal this year and another three deals are currently under offer to councils which makes it one part of the sector that is holding up against the odds. Councils are generally focussed on smaller lot size, convenience led schemes which require council input to improve their positioning. ■ There are several shopping centres on the market. Motherwell, Orpington, Clydebank and Horsham are key examples. Under offer, there is currently Petersfield with the council, Newbury and Crawley are in a £130 million package, however due to lending restrictions, there is still a long road for the deal ahead. ■ In 2018, the total shopping centre investment volume was £958.3m against £2.127bn in 2017 with the four deals of Tunbridge Wells, Clapham, Leicester and Canterbury accounting for almost 50% of that. Only 9 of the 22 transactions were priced over £25m. Local authorities accounted for 7 of the 22 transactions. This is the lowest volume of UK shopping centre sales since JLL started collecting records in 1996 and one of only four years where investment volumes have dipped below £2 billion. At the start of the year, we forecasted circa £3 billion to transact in 2018, as we were expecting the Hammerson and Intu merger to release stock. However, as this has not come to pass the total volumes were significantly below our forecast levels. ■ Overall, JLL believes that as valuations continue to move outwards, it will release more secondary stock to the market in the coming months and that will increase the demand for convenience led local shopping centres as when you compare that with what’s happening across other geographies and sectors, as long as they are resilient enough, it will start to look like good value. However, there is still investor demand for shopping centres, but only accompanied by residential, leisure or any additional alternative use and as a result, firm pricing persists for locations that match what retailers want. Further, the uncertainty surrounding Brexit has impacted investor decision making, with particular nervousness from overseas investors who are adopting a ‘wait and see’ approach. This has been exacerbated by the challenged occupational market and recent changes in Capital Gains Tax legislation, which has already resulted in a backdrop of subdued activity in previous years. ■ We anticipate there to continue to be an outward pressure on yields across the spectrum, which is rebalancing investor and vendor pricing expectations. However, despite retailer consolidation, new space was still being built commensurate to retailers’ requirements. New schemes that have opened in 2018 include O2 Designer Outlet, Coal Drops yard in Kings Cross, and Westfield Stratford extension. Looking beyond, 2019 is likely to see completions well below the long-term average, however forecast GLA for 2020 will rise once again.

Shopping Centre Prime Yields

Property: Intu Derby, Derby, DE1 2PL June 2019

JLL’s In house “Best in Class” Yields as at June 2019 are as follows: Category Current Yield 1 month ago 3 months ago 12 months ago Trending Super Prime 5.00% 5.00% 4.75% 4.00% *Stable

Prime 5.50% 5.50% 5.50% 5.25% Weaker

Town Centre Dominant 7.00% 7.00% 7.00% 6.25% Weaker Secondary Centres 9.50% 9.50% 9.00% 9.00% Weaker

Tertiary Centres 13.00% 13.00% 13.00% 13.00% Weaker

*Best in Class Yields relate to rack rented investments let with lease lengths considered by the market as most appropriate for the asset class. Within London, the yields may be keener; * Denotes change from last month; Trending denotes investor sentiment towards the sector. ■ The current yield for super prime shopping centre has remained at 5.00% as a starting point, this is based on the discussions JLL has been having off market. The yield gap between super prime and secondary schemes has remained at 450 basis points. We continue to see growing global investor appetite in the convenience/community shopping centre sector with new entrants to the market considering that this sub-sector is displaying value compared to other asset classes both in the UK and on the continent. Councils have been actively acquiring assets taking advantage of the cheap funding available through the Public Works Loan Board, particularly in the purchases of secondary town centre schemes. 1.2.2 Debt Market ■ As of May 2019, the Bank of England has maintained interest rates at 0.75% and the next interest rate hike is forecasted to be around Q4 2019. In the UK lending market, with the exception of retail, lenders are generally keen to underwrite and start looking at large transactions but adopting in general a ‘wait and see’ approach. Most of the large transactions have been focused around refinancing, as loan facilities secured in 2014 and 2015 have become due for repayment with both lenders and borrowers opting to roll these facilities over instead of trading out of these positions. It is also partly driven by parties looking to take advantage of the low interest rate environment. ■ In the retail sector, we are seeing limited demand to fund assets and any available debt is on conservative terms with senior debt providers offering LTVs of 40-50% and margins reportedly upwards of 400 bps. This is having a further negative impact on liquidity as borrowers seek additional mezzanine funding to bridge the funding gap that would otherwise not have been needed 6 months ago. 1.2.3 Future Outlook ■ The UK shopping centre market is starting to see the gap close between vendor and purchaser pricing aspirations with vendors of more occupationally challenged assets getting more comfortable with purchasers pricing expectations. Until this gap closes we anticipate that the volume of transactions will continue to be low. We anticipate that as vendors and purchasers align we will see an increase in volumes particularly from private equity investors interested in convenience centres or centres with strong alternative uses and strong fundamentals. We expect to see growing global investor appetite once yields have softened and the UK, as a mature market, is perceived to be adapting to online retail spend ahead of other nations. However, this demand will be extremely polarised based on the occupational story behind each individual centre. Local authority investment is likely to continue, albeit only for shopping centres within their jurisdictions. Overall, we anticipate a slight uptick in turnover and volumes in 2019, dependent on the outcome of Brexit, the UK’s current political uncertainty and any further occupational market shocks.

Property: Intu Derby, Derby, DE1 2PL June 2019

Marketing Background

■ The subject property was put to the market in Q3 2018 by INTU at a quoting price of £458m (100% interest) which reflected a NIY of 6.0%. ■ We have spoken with CBRE, the vendors agents, and our shopping centre investment team to understand the detail surrounding potential purchaser interest. ■ We understand that there were a number of potential parties interested in the centre and undertaking the appropriate due diligence to place a bid for various interests from 100% to 50%. ■ We understand that in Q3/Q4 2018 Cale Street expressed their interest in the centre at in excess of £400m (£200m for a 50% interest) and there were two private equity parties expressing interest at £370m - £375m. We understand that these offers reflected circa. £375m (£262.5m for a 70% stake). ■ It was general market perception that the subject property had been placed on the market to raise capital after the failed takeover by Hammerson earlier in the year. Hammerson had cited ‘a weak consumer market in the UK’ and ‘heightened level of risk associated with the UK retail property sector’ as their reasons for walking away. A few months after the subject property had been placed on the market it became common knowledge that INTU were in talks with a consortium of investors comprising Brookfield, Olayan Group and Peel Group (together owning circa 30% of INTU’s shares and the latter chaired by INTU deputy chairman John Whittaker). At the end of 2018 it was announced that they would not make a formal offer ‘given the uncertainty around the current macroeconomic conditions and the potential near-term volatility across markets’. ■ Due to the potential company acquisitions, the subject property’s marketing and negotiations were placed on hold and in 2019 the centre was, to some degree, remarketed. Cale Street continued to show the strongest level of interest in the asset but the volume and levels of interest were reduced. We believe that other parties remained interested but with Cale Street providing the highest initial bid talks progressed with them. ■ We understand that in 2019 a 50% interest was placed under offer by Cale Street at the December 2018 book value. INTU recently published their 2018 annual accounts, outlining a valuation of £372.5 million for the centre as at 31st December 2018, reflecting a NIY of 6.60% and a 19% decline on 2017. The reduction in the pricing was perceived as being reflective of income decline and occupational concerns in the retail sector and the subject property. ■ It is also reported that the purchase involves a corporate transaction which gives a preferential income treatment to Cale Street’s stake. Market perception of this is that it is not solely a property transaction and therefore implying that if that asset were to be sold on a property transaction basis only it would not achieve the same level. We are not aware of the exact structure of the deal as it is confidential. ■ We believe that the reasons behind the price deduction from the initial interest to placing it under offer and the structure of the transaction is due to a variety of reasons. It is difficult to separate the reasons but they include a heightened awareness of INTU’s cash requirement, nervousness surrounding the wider retail occupation market, nervousness surrounding the wider economic and political volatility and reassessment of the income and future cashflow of the asset. ■ We understand that the structure of the deal is also to INTU’s benefit as it enables them to receive a cash injection whilst maintaining a stake and securing the opportunity to buy-back the interest when Cale Street exit. For this reason, we believe that the pricing of the transaction gives us a ceiling to the property value but there is not a significant discount as the deal is structured to benefit both parties. ■ We would comment that the above information has been provided to us on a verbal basis by investment agents and although we cannot clarify this information and do not rely on it solely it does help to paint a picture regarding interest levels. ■ As commented on in our shopping centre market commentary shopping centre investment volumes are at historic lows and there is limited comparable investment evidence to draw upon. For this reason, we have paid particular attention to the details surrounding the subject property transaction, investment evidence we consider most relevant, current investor requirements and returns required for an asset of this type and the underlying occupational position to arrive at our opinion of yield.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ We have had reference to the initial yields achieved in our investment comparables but are reliant upon assessing the equivalent yields and potential IRR returns in order to arrive at our opinion of yield and value. ■ We set out below the comparable investment evidence we consider relevant to the subject property.

Investment Comparables

No. Date Address / Location Area sq ft Price Yield Comment

1 April Intu, Derby 1,300,000 £186m NIY 6.6% ■ Key tenants include: M&S, 2019 Next, Boots, Sainsbury’s, Zara,

Debenhams, Hollywood Bowl, 50% Cinema de Lux. Stake ■ City Centre scheme with 3,700 sold parking spaces. ■ Freehold title. Built in 2007. Circa 200 units. ■ On the market from 2018 with quoting price of £458,000,000 for 100% interest. ■ Benefits from strong F&B offering. ■ We note that Intu recently published their 2018 annual accounts, which outlines a valuation of £372.5m for the centre as of 31st Dec 2018, reflecting a NIY of 6.60% and a 19% decline against 2017. ■ Bought by Cale Street Partners at the reported book value of £186m. However, we understand the sale involves a complex corporate transaction which gives preferential income treatment to Cale Street’s stake. 2 Oct Highcross Shopping 1,140,000 £236m NIY 5.50% ■ 50% stake was purchased by 2018 Centre, Leicester Norinchukin Bank in an off-

market transaction. 50% ■ Footfall of 18 million per year. stake ■ Redeveloped in 2008, 140 unit sold scheme with 3,000 parking spaces. ■ Key tenants include: John Lewis, Zara, H&M, Next, Apple and Topshop. ■ Hammerson to retain a 50% asset management stake in the property.

Property: Intu Derby, Derby, DE1 2PL June 2019

No. Date Address / Location Area sq ft Price Yield Comment

3 Sold Itis, Helsinki Retail: €516m NIY 5.25% ■ Constructed in 1981, Shopping Oct Centre and Office asset. 81,000 Sq 2018 ■ Has benefited from a rolling m refurbishment cycle: 1992, (875,000 sq 2001 and 2011 respectively. ft) ■ Comprises of 150 retail units and 3,000 parking spaces. Office: Located in East Helsinki. 22,457 Sq ■ Attracts 17 million visitors a m year. (240,000 sq ■ Key tenants include: Flagship ft) Zara and H&M stores, Lidl, S- Market and Stockmann department store. ■ Previously on the market for €500m but failed to sell and received no offers. ■ Sold by Wereldhave to Morgan Stanley at a NIY of 5.25% and a Gross Yield of 5.35%. This rises to 5.85% when the capital expenditure is accounted for, reflecting €450m 4 Sold Jumbo, Helsinki 86,100 Sq €248.6m NIY 5.00% ■ Part 1 was constructed in 1999, Feb m (34% stake) followed by Part 2 (extension) 2019 in 2005. (925,000 sq ■ Situated 17km from the ft) Helsinki CBD and 3km from Helsinki International Airport. ■ Comprises of 177 retail units

and 4,600 parking spaces. ■ 34% Stake sold by Unibail- Rodamco-Westfield to Elo Mutual Pension Insurance in off market transaction. Elo Mutual Pension Insurance now own 100%. ■ Attracts 11.8 million visitors a year. ■ Benefits from a low vacancy level of 1.5% of Market rent. ■ Key tenants include: Stockmann, Zara, Stadium, H&M, Hanlonen and Carlson, New Yorker, Intersport.

Property: Intu Derby, Derby, DE1 2PL June 2019

No. Date Address / Location Area sq ft Price Yield Comment

5 Sold Edmonton Green 607,000 £72m NIY c. 6.7% ■ Rent Passing: £4,891,899 pa Nov Shopping Centre, ■ Constructed in the 1960s.

2018 London ■ A WAULT of 4.6 years to break and 9.4 years to expiry. ■ Planning permission for 77 PRS units plus a further 657 residential units could be built on site. ■ Current rent of c. £16,425,000 pa ■ Key Tenants include: Asda, Poundland, Sports Direct, The Gym, Travelodge, Costa, Argos, Boots, Wilko. 6 With- Liberty Shopping 432,000 Q £215m NIY 5.25% ■ Freehold, built in 1968, drawn Centre, Romford refurbished in 2004.

from ■ Footfall of 19 million per year. market ■ Current rent of c. £11,790,000 Jan pa. WAULT of 5.12 yrs (4.15 to 2019 break) ■ Key tenants include: H&M, Boots, Next, SportsDirect, New

Look, Waterstone, Topshop, WH Smith ■ Was previously under offer at £190 m to Western Ridge in Aug 2018 to Western Ridge with Investec Argo. Sale fell through due to lack of debt available. 7 Under County Mall, 480,000/ c. £140m NIY ■ Constructed in 1992/ 2011 Offer Crawley/Parkway 300,000 (Combined) respectively. c. 9.00% & Centre, Newbury ■ County Mall, Crawley c. £80m/ c. 8-8.50% incorporates 70 retail units, a £60m kids soft-play area, restaurants and attracts 8 million footfall per year. ■ Crawley has recently

benefitted from a town centre regeneration programme, with public realms work to Queen Square and has further works in the pipeline as a result of the multi-million pound Crawley Growth Programme announced autumn 2017. ■ Parkway, Newbury has over 40 retail units, 184 residential units and attracts 4.8 million footfall per year.

Property: Intu Derby, Derby, DE1 2PL June 2019

No. Date Address / Location Area sq ft Price Yield Comment

■ Key Tenants include: Primark, Debenhams, Next and JD Sports/ John Lewis at home, Debenhams, Jack Wills and H&M. 8 Nov-17 Intu Chapelfield, 530,000 £148m NIY 5.00% ■ 50% interest. Norwich ■ Freehold, built in 2005. EY c. 5.25% Enclosed shopping centre comprising 90 stores and 1,000 car parking spaces. ■ Footfall 12 million per year. ■ Current rent of c. £16,425,000 pa ■ Key Tenants include: House of Fraser, Disney, Apple, Hollister, Hugo Boss, Levi, River Island. 9 Remov Bluewater Shopping 1,800,000 Q £871.25m NIY 4.50% ■ 42.5% interest. GIC selling ed from Centre, Dartford, Kent 17.50% and Lendlease selling (Considered market 25.00% Rack ■ Freehold, built in 1999. 4th rented) largest shopping centre in the UK comprising 300 stores and 13,000 car parking spaces. ■ Footfall of 27 million per year. ■ Current rent of c. £89,000,000 pa. ■ Key tenants include: John Lewis, M&S, House of Fraser, Apple, Next, Boots, Zara, H&M, All Saints, Topshop. ■ John Lewis and M&S on 99 year leases with John Lewis paying a base rent with turnover. 10 Sep-17 Bluewater Shopping 1,800,000 £155m NIY 4.20% ■ 7.5% interest. Centre, Dartford, Kent ■ Freehold, built in 1999. 4th EY c. 4.25% largest shopping centre in the UK comprising 300 stores and 13,000 car parking spaces. ■ Footfall of 27 million per year. ■ Current rent of c. £89,000,000 pa.

■ Key tenants include: John Lewis, M&S, House of Fraser, Apple, Next, Boots, Zara, H&M, All Saints, Topshop. ■ John Lewis and M&S on 99 year leases with John Lewis paying a base rent with turnover.

Property: Intu Derby, Derby, DE1 2PL June 2019

Comparable Analysis

■ The subject property is a large lot size and a regional centre that serves an extensive catchment with limited competition. Shopping centres that fall into this ‘regional’ status do not transact frequently. This is in part due to the limited number of regionally dominant centres and in part due to the investment drivers of owners and investors being more long term. Generally speaking, regional centres tend to benefit from less fluctuation in pricing than more secondary shopping centres due to their lower risk characteristics. ■ As previously commented on, over the last 12-24 months there has been a large reduction in transaction volumes in the shopping centre investment market. The above evidence highlights the outward movement in yields being seen in the market for regional centres over the last 12-24 months. For the purposes of comparing transactional evidence we have relied upon the initial yield to draw comparisons. Although the equivalent and reversionary yields are relevant to investors in the current client they are subjective and less reliable from a comparison point of view. We would comment that when comparing similar schemes it would be reasonable to deduce that they have similar characteristics and cashflows with the initial yield therefore being reflective of these. However, we are aware that this is not an ideal comparison method and hence why we have relied upon information regarding the marketing background for the subject property, comparable investment evidence and calculating an IRR in order to arrive at our opinion of Market Value. ■ With the exception of the subject property itself, which we have commented on in detail in the marketing background section, the most recent comparable transaction is the sale of a 50% interest in Highcross, Leicester by Hammerson to Norinchukin Bank in an off-market transaction in October 2018, reflecting a NIY of 5.5%. We would consider this asset to be very comparable to the subject property. In the Trevor Woods Shopping Centre list it is ranked 19th compared to the INTU Derby at 16. We would consider INTU Derby to be perceived in the investment market as similar to Highcross. The subject property benefits from minimal competition whereas Highcross does suffer from leakage, due to Fosse Park being only 4 miles away. However, Highcross does have the benefit of being anchored by John Lewis in addition to the Debenhams store (Category A) and the subject property is anchored by Debenhams (Category A) and Marks and Spencer. Taking the above into account we would consider the two assets to transact at a similar level. Highcross transacted in October 2018 at 5.5%, however, the investment market has moved significantly since the deal was agreed and we suspect outward initial yield movement could be in the region of 100 bps. ■ We have provided transactional evidence from mainland Europe to highlight the achievable yields for dominant shopping centres with a large lot size. Itis, Helsinki in October 2018 and Jumbo, Helsinki in February 2019 both transacted at yields of 5.25% and 5% respectively. Broadly speaking, shopping centres in Europe tend to transact at keener yields than in the UK and have not seen the same level of outward movement in yields to date. We are of the opinion that although these assets aren’t comparable they do provide evidence of international money continuing to consider retail. ■ Edmonton Shopping Centre in London highlights the demand for convenience led centres with development opportunities. We do not consider this to be a direct comparable as it is convenience based with a limited number of national retailers and a more mixed income profile and is located in London adjacent to a transport hub. It also benefits from planning for PRS and a substantial residential development opportunity. This transacted in November 2018 at 6.7% IY and, although not a direct comparable, we would consider INTU Derby to achieve a yield keener than Edmonton. ■ The Liberty Shopping Centre in Romford originally came to the market in June 2017 however there was limited interest at the asking price of £215m (with an additional £35m to reflect the residential opportunity), which reflected a NIY of 5.25% (on a corporate acquisition), and bidding was thin. ■ Throughout an 18 month period of the scheme being on the market there were several offers made by various parties in the region of £175m - £195m (5.75% - 6.00%). In November 2017 Sun Cheung Group approached with an offer of £220m, but eventually withdraw their offer. Morgan Stanley also submitted an offer of £180m. In August 2018 Western Ridge, with Investec Argo, delivered an offer at £200m, which reflected a NIY of 5.50%. Their offer was revised to £190m in October 2018 and then the sale fell through. We understand that this was due to a lack of debt available. As a result, the shopping centre was withdrawn from the market. This failed transaction provides an indication of where potential buyers were pricing their offers and highlights the common issue of material gaps between buyers and seller’s expectations. When this was placed in the market there was a general view that the vendors pricing expectation was unrealistic and if they had been more open to discussions a sale may have been achievable.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Although the Liberty Centre is not a direct comparable we are of the opinion that if it were to be placed in the market today the yield achievable would be higher than the last offer at 5.50%. Due to its location in London and the residential opportunities we are of the opinion it would achieve a yield keener than INTU Derby. ■ County Mall in Crawley and Parkway Centre in Newbury are currently under offer to Fund Manager Alteris Partners and Standard Life Pooled Property Pension Fund (Aberdeen Standard selling) at a combined price of £140m reflecting NIY’s of 9.00% and 8-8.50% respectively. These two centres were originally placed on the market last year at a quoting price in the region of 7.5%. last year and has recently been confirmed as under offer at circa 9%, albeit finance has yet to be secured and they are having difficulty. ■ County Mall, Crawley incorporates 70 retail units, a kids soft-play area, restaurants and attracts 8 million footfall per year. County Mall, Crawley has recently benefitted from a town centre regeneration programme, with public realms work to Queens Square and has further works in the pipeline as a result of the multi-million pound Crawley Growth Programme announced in autumn 2017. Parkway, Newbury has over 40 retail units, 184 residential units and attracts 4.8 million footfall per year. ■ These centres are perfect examples of town centre dominant schemes (rather than regional or prime centres) that are being most affected by the retail occupational challenges and in turn a lack of investor demand at historic pricing levels. We are of the opinion that INTU Derby would achieve a yield keener than County Mall and Parkway Centre. ■ Intu’s 50% interest in Intu Chapelfield in Norwich was sold in November 2017 to LaSalle Investment Management for £148 million at a NIY of 5.00%. We consider this to be a strong comparable due to its regionally dominant status and similar tenant line up, however, it is a dated comparable and the investment market has moved significantly since the deal was agreed and we suspect outward initial yield movement could be in the region of 150 bps. ■ Although dated we consider it appropriate to comment on the sale and marketing of various interests in Bluewater. In September 2017, Royal London purchased Hermes REIM’s 7.50% interest in Bluewater Shopping Centre for £155 million reflecting a net initial yield of 4.20%. It was originally placed on the market for £166 million at the beginning of 2017. It is also important to note that in addition to the above 7.5% share, two separate interests in Bluewater Shopping Centre were placed on the market at 4.50%. They were initially marketed separately with Lendlease selling their 25% share in June 2017 and GIC selling their 17.5% share in July 2017. The pricing required was not achieved and these interests have been quietly removed from the market. ■ Bluewater is a regionally dominant centre with a more prevalent international brand than the subject property. It also benefits from significantly greater footfall and draws on a wider shopping population than the subject property. If this were to be placed on the market today we are of the opinion that the yield achievable would be in the region of 5.0% - 5.5%, highlighting the movement in pricing being seen in the current investment market.

Yield Conclusions

■ In order to arrive at our opinion of yield we consider the subject property and Highcross Leicester to be the strongest comparable transactions. ■ It is our understanding that the purchase of a 50% interest in INTU Derby involves a corporate transaction which gives preferential income treatment to Cale Street’s stake. Market perception of this is that it is not solely a property transaction and therefore implying that if the asset were to be sold on a property transaction basis only it would not achieve the same pricing. Although we are not aware of the exact structure of the deal we understand that it enables INTU to receive a cash injection whilst maintaining a stake and securing the opportunity to buy-back the interest when Cale Street exit. For this reason we believe that the pricing of the transaction gives us a ceiling to the property value but we would not consider the discount to be significant. ■ We are aware that offers received from two private equity parties in the region of £370-£375m at the same point in time when Cale Street offered £400m (£200m for a 50% stake). We understand that this was in 2018 and we are of the opinion that the market has moved since then. Cale Street’s purchase involving a structural transaction is at the December 2018 book value reflecting a NIY of 6.6%, however, this yield is reflective of the income at that date. We have undertaken our valuation as at 4 June 2019 and reflected the income position as at this date. Therefore the value we adopt has a ceiling of £372.5m albeit the NIY may be lower due to immediate income changes that have occurred since this date.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ A 50% stake in Highcross Leicester transacted in October 2018 reflecting a NIY of 5.5% and we consider this scheme to be very comparable to the subject property. As previously mentioned, in the Trevor Woods Shopping Centre list it is ranked 19th compared to the INTU Derby at 16. The subject property benefits from minimal competition whereas Highcross does suffer from leakage, due to Fosse Park being only 4 miles away. However, Highcross does have the benefit of being anchored by John Lewis in addition to the Debenhams store (Category A) and the subject property is anchored by Debenhams (Category A) and Marks and Spencer. Footfall levels are also of a similar level at 18m per annum in Highcross and 22m in INTU Derby. ■ It is our opinion that since the date of this transaction yields for centres such as these have moved outwards since the end of 2018 and therefore we consider the net initial yield currently achievable would be in the region of 5.5% - 6.6%. In order to arrive at a more specific yield we have taken into account where the equivalent and reversionary yields are and also the potential IRR. ■ As previously mentioned, we are of the opinion that the NIY may have moved outwards circa 100 bps since the Highcross Leicester transaction. If we were to adopt a 6.5% NIY our cashflow, based on the assumptions contained within this report, reflects an EY of 7.20% and a RY of 7.65%. Based on our conversations with our investment colleagues these would be considered appropriate yields for private equity and international funds currently in the market. The running yield on the subject property does fall to 6.18% in February 2020 due to a number of assumed expiries, voids and rent frees but then climbs back to in excess of 6.5% in July 2020 and in 5 years in June 2024 it is 7.15%. This is taking into account reasonable cashflow assumptions including a structural void, all of which are detailed in our valuation approach. ■ We have calculated an IRR, as commented on in the Valuation Methodology section of this report in more detail, which produces an ungeared return of 7.88% and 8.35% respectively on a 5 and 10-year cash flow basis. Our investment colleagues have advised us that returns expected from investors currently in the market would be in the region of 7-8%. ■ Taking the above into account and adopting a 6.5% NIY this produces a value of £351,000,000 which is below the ceiling of book value at £372,500,000.

Valuation Methodology and Approach

■ We have valued the property adopting the traditional direct capitalisation approach as this investment essentially provides income and an income growth opportunity to the purchaser. This method involves the capitalisation of current income or forecast income at appropriate capitalisation rates to arrive at a yield calculated with reference to investment transactions within the market. ■ We have approached the valuation on a topped-up net initial yield basis, whereby we have targeted a topped-up NIY of circa. 6.50%. In order to target the topped-up NIY we have applied nominal equivalent yield capitalisation rates to reflect the perceived strength of specific pitches within the subject property. However, an investor would primarily have regard to the blended NIY. ■ We have assumed that the main centre and Bradshaw Way Retail Park would be purchased together with investors unlikely to willingly create adjacent competition to the asset. Although the majority of assumptions below (including revenue, Market Rent and capital expenditure) therefore encompass both assets, we have had regard to the differential between the shopping centre and retail park investment and occupational markets. Notably, we have applied a specific capitalisation rate and Market Rent to the Retail Park element of the scheme. Tenure Assumptions ■ The subject property comprises of six parcels of land, consisting of five freehold titles and one leasehold title. ■ Parcel 1, which comprises the majority of the property, is held freehold. Four parcels of land relate to Bradshaw Way Retail Park, which we have valued separate to the main shopping centre component. Each parcel is held freehold. The leasehold title relates to Site 3 – the car park (DY326991). The report on title confirms the historic ground rent payable in 2017 and 2018 to be £900 per annum, with no increase forecasted for 2019. We have therefore adopted a ground rent of £900 per annum as a day one revenue cost in our valuation, which we assume remains constant throughout the cash flow. ■ Income Assumptions

Property: Intu Derby, Derby, DE1 2PL June 2019

■ The current gross and net un-topped-up income are £27,012,330 per annum and £23,626,978 per annum respectively ■ The gross topped-up and net topped-up passing rent is £27,590,080 per annum and £24,204,728 per annum respectively. ■ Topped up income - We have reflected top ups within seven tenancies in the valuation that currently benefit from rent frees. These have been calculated as at the valuation date (04/06/2019). This is market practice to ensure that all contracted income, such as any completed future leases and tenancies currently in their rent-free period, is reflected. Future contracted income is therefore assumed to be received upon the valuation date and the residual rent free is deducted as capital expenditure (as outlined in the table below and capital costs section below). This reflects the approach an investor would take to maximise sales proceeds and consequently is a market facing approach that is widely accepted by prospective purchasers. ■ Including top-ups results in a gross topped up income from the subject property of £27,590,080 per annum and net topped up income of £24,204,728 per annum. We have reflected the cost of topping up this income as a capital expenditure within the valuation. ■ In total, the passing rent has been topped up by £577,750 p.a. The topped-up rents account for 2.1% of the current gross income. Our analysis is outlined in the table below.

Start of Rent End of rent Unit Tenant Free free Rent Free Rent p.a. Topped Up Values DER125 Jacobs and Turner Ltd 18/06/2018 17/06/2023 6 £97,750 £29,706 (t/a Trespass) DER823 Carluccios 29/08/2018 24/09/2019 12 £70,000 £21,465 DER249 Washington Green 01/11/2018 01/08/2019 9 £70,000 £11,116 DER217 Typo 08/10/2018 08/07/2019 9 £65,000 £6,051 DER301 Thai Express 02/07/2018 02/10/2019 15 £60,000 £19,713 DER299 GDK 01/04/2019 01/04/2020 12 £65,000 £53,744 DER137 Sketchers 30/07/2019* 04/08/2020 14 £150,000 £175,359 Total £577,750 £317,154 *Sketchers are topped up from Valuation date (04/06/19), however the Rent Free starts from 30/07/19.

■ The lease to Sketchers commences 30/07/2019. However, as the lease has completed, we consider that a prospective purchaser would reflect the topped-up income. The capital deduction therefore accounts for the void period between the valuation date on 04/06/2019 and the lease commencement date. ■ Turnover Income – Where tenants have turnover rents payable we have reflected these turnover rents until expiry, or break, of each respective lease with turnover provision within our valuation. Only a small number of tenants pay a turnover rent despite it being written into the vast majority of lease agreements. We have reflected turnover rent of £45,851 per annum (0.2% of gross passing rent). This is substantially low as a proportion of total gross rent, which can be interpreted as both a positive and negative reflection upon the subject property. While turnover rent may be indicative of the strength of tenant trade, we understand anecdotally that the majority of tenants trade well. The low percentage of turnover rent may therefore present an opportunity to grow future income whilst simultaneously the current passing rent is protected from substantial fluctuation (with a substantial proportion of income being derived primarily from base rents). Conversely, the limited turnover rent perceived does suggest that current passing rental levels are at the upper end of the range of affordability. This is reflected in the low level of reversion by our opinion of Market Rent of 0.48% when vacant units are excluded. The WAULT to expiry of turnover income is 4.83 years. We have assumed that current turnover rent falls away upon expiry of each respective lease as our opinion of Market Rent is subject to base rent only.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Mall Income – We have adopted a net mall income of £1,523,684, which we have set as rack-rented, based upon a budgeted gross mall income of £1,749,291 per annum and budgeted expenditure of £225,608 per annum. The table below outlines actual historic mall income, which shows a steady increase since 2017. Although there is a reasonably sharp decrease between 2016 and 2017, this is due to significantly lower expenditure in 2016 rather than decreased gross income in 2017. Gross Income (per Expenditure (per Net Income (per Year annum) annum) annum) 2018 £1,640,191 £208,939 £1,431,252 2017 £1,575,944 £214,837 £1,361,107 2016 £1,572,305 £56,743 £1,515,562

■ Car Park Income –We have assumed that the current income from parking is rack rented. There is income from the main centre and Bradshaw Way car parks respectively. As these could be separated in the event the main centre and Bradshaw Way retail Park were to be sold separately, we have applied different capitalisation rates to this income. Below we set out current 2019 forecasts and the historic actual receipts: 2019 Forecasts Gross Income (per Expenditure (per Net Income (per Car Park annum) annum) annum) Main Centre £6,566,483 £2,288,002 £4,278,480 Bradshaw Way £400,000 £166,990 £233,010 Total £6,966,483 £2,454,992 £4,511,490

2018 Actual Gross Income (per Expenditure (per Net Income (per Car Park annum) annum) annum) Main Centre £6,382,009 £2,076,295 £4,305,714 Bradshaw Way £399,319 £112,757 £286,562 Total £6,781,328 £2,076,295 £4,592,276

2017 Actual Gross Income (per Expenditure (per Net Income (per Car Park annum) annum) annum) Main Centre £6,523,276 £2,101,691 £4,421,585 Bradshaw Way £386,290 £86,514 £299,777 Total £6,909,566 £2,188,205 £4,421,362

2016 Actual Gross Income (per Expenditure (per Net Income (per Car Park annum) annum) annum) Main Centre £6,471,949 £1,884,104 £4,587,845 Bradshaw Way £447,899 £131,591 £316,308 Total £6,919,848 £2,015,695 £4,904,153

Property: Intu Derby, Derby, DE1 2PL June 2019

■ As outlined in the above tables, we have been provided with forecasted and actual historic gross car park income, operational costs and the resultant net income. We have adopted the net income directly in our valuation. The total net car park operating income provided to us of £4,511,490 per annum reflects 16.35% of the total gross income received at the subject property of £27,590,080 per annum. The forecasted 2019 net car parking income represents 64.76% of gross car parking income, which would be considered to fall within the upper quartile of a typical gross to net ratio for a multi storey car park. This income has been capitalised into perpetuity. As evidenced in the tables above, net car park income has decreased marginally over the past three years. However, we have reflected significant capital expenditure of £3.0m, which is due to be spent on the car park over the next 5 years. Consequently, we consider that adopting a rack-rented Market Rent for this income is appropriate. ■ Tenants in Company Voluntary Arrangements (CVA) – As discussed in the Covenant Strength section of this report, there are seven tenants currently in CVA at the subject property: Debenhams, Topshop, New Look, Monsoon/Accessorize, Paperchase, Regis and Carluccio’s. We have not topped-up any lost income as we do not consider that an investor would reflect it when acquiring the asset. We have applied a higher capitalisation rate to this income to reflect the increased risk of insolvency. ■ At Risk Tenants – In addition to tenants currently in CVA, there are a number of tenants at the subject property considered to be at risk of entering into a CVA or administration, including Boots, Smiggle, Ann Summers, M&S and HMV. For these tenants we have also adopted a higher capitalisation rate to the income to reflect the increased risk of insolvency. ■ Below we summarise the current gross rent: Tenant Use Rent % AWULT Retail Shops £16,019,780 58.1% 5.31 yrs Car Park £4,511,490 16.4% 0.58 yrs Food & Beverage £2,138,240 7.8% 6.13 yrs Mall income £1,523,684 5.5% 0.58 yrs Cinema £1,230,290 4.5% 8.96 yrs Department Store £1,209,873 4.4% 13.36 yrs Supermarket £629,200 2.3% 5.87 yrs Leisure £168,387 0.6% 18.10 yrs Eagle Market £60,000 0.2% 7.58 yrs Storage £53,285 0.2% 1.01 yrs Turnover £45,851 0.2% 4.83 yrs Total £27,590,080 100.0%

Non-Recoverable Cost Assumptions ■ We have deducted a number of non-recoverable revenue costs on a unit by unit basis as set out below: Inclusive Service Charge -£21,650 per annum 0.64% Inclusive Business Rates -£35,989 per annum 1.06% Service Charge Cap Shortfall -£930,056 per annum 27.47% Business Rates Cap Shortfall -£29,581 per annum 0.87% Insurance Cap Shortfall -£7,851 per annum 0.23% Void Service Charge -£914,399 per annum 27.01% Void Business Rates -£954,971 per annum 28.21% Void Insurance -£28,298 per annum 0.84%

Property: Intu Derby, Derby, DE1 2PL June 2019

Landlord Contribution to Marketing -£461,657 per annum 13.64% Carpark Leasehold Site 3 -900 per annum 0.03% Total Irrecoverable Costs -£3,385,352 per annum 100.0%

Below we comment on each of these deductions further: ■ Non-Recoverable Shortfalls - In relation to inclusive leases and caps, insurance, service charge and business rates shortfalls amount to -£7,851 per annum, -£951,706 per annum and -£65,570 per annum respectively. Combined this equates to -£-1,025,127 per annum (30.29% of total non-recoverable costs). ■ Void Shortfalls - Typical holding costs, namely service charge, rates and insurance shortfalls on void units total - £1,897,668 per annum (56.07% of total non-recoverable costs). ■ Landlord Contribution to Marketing - The current marketing budget is £1,154,152.50 per annum and the landlord is responsible for a 40% share of this amount, which is typical in the shopping centre market. We have deducted £461,657 per annum (13.64% of total current non-recoverable costs) as the landlord contribution to marketing. This has been reflected into perpetuity as a revenue deduction. ■ Mall Income - operating expenditure provided to us in relation to mall income is £208,939 per annum. As a proportion of mall income (£1,749,291 per annum) this reflects 11.9% which is relatively low and indicates operational efficiency. We have not adopted this cost explicitly but have instead adopted the net income figure of £1,523,684 per annum. ■ Carpark Leasehold Site 3 – held leasehold on a term of 99 years from 29 September to 28 September 2097. The rent payable is £900 per annum to Derby City Council. ■ Based on the income and cost assumptions set out above the net income is summarised below: Total Gross Income £27,590,080 Total Non-recoverable Revenue Costs -£3,385,352 Total Net Income per annum £24,204,728

Market Rent Assumptions ■ We have used a variety of methods to arrive at our opinion of Market Rent. ■ As discussed in our rental value commentary above we have applied different rental tones to shops depending on their location. ■ We have valued the larger units on an overall basis, in line with normal market practice. ■ We have assumed that car parking and mall income is rack rented. ■ We have valued the anchor tenants on a global rent and Total Occupancy Cost (TOC) basis. ■ Our opinion of Market Rent for the subject property is £30,244,855 per annum, which implies a potential reversion of £2,654,775 per annum (9.62%) and £133,375 per annum (0.48%) when currently vacant units are excluded. ■ Our opinion of Market Rent is on a headline basis. ■ We have made no adjustment to account for incentives for upcoming rent reviews, as typically rent free packages of 3 months are being agreed. Once 3 months are deducted for assumed fit out there is no differential between the Headline Rent and the Net Effective Rent.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Below we contrast the current gross income and Market Rent by tenant use: Current rent Market Rent pa Use pa (£) Total (%) (£) Total (%) Reversion (£) Reversion (%) Retail Shops £16,019,780 58.1% £18,552,201 61.3% £2,532,421 15.81% Food & Beverage £2,138,240 7.8% £2,203,900 7.3% £65,660 -3.07% Storage £53,285 0.2% £53,285 0.2% £0 0.00% Leisure £168,387 0.6% £336,505 1.1% £168,118 99.84% Supermarket £629,200 2.3% £641,500 2.1% £12,300 1.95% Other income £0 0.0% £0 0.0% £0 1.95% Cinema £1,230,290 4.5% £1,230,290 4.1% £0 0.00% Mall income £1,523,684 5.5% £1,523,684 5.0% £0 0.00% Department Store £1,209,873 4.4% £1,132,000 3.7% -£77,873 -6.44% Car Park £4,511,490 16.4% £4,511,490 14.9% £0 0.00% Eagle Market £60,000 0.2% £60,000 0.2% £0 0.00% Turnover £45,851 0.2% - - - N/A Total £27,590,080 100.0% £30,244,855 100.0% £2,654,775 9.62%

■ The table shows that, in line with current gross rent, the majority of Market Rent is derived from the retail shops, with an increase from 58.1% of total current gross rent to 61.3% of gross Market Rent, reflecting a 15.8% reversion. Market Rent for restaurant income also sees a 3.1% reversion. The total reversion amounts to £2,654,775 p.a, reflecting 9.62% of current gross rent. Void Assumptions ■ Current Voids – There are 37 units currently vacant at the subject property. Our opinion of the Market Rent for these units equates to £2,521,400 per annum, reflecting a vacancy rate of 8.34% by Market Rent. We have been provided with incomplete and partially audited turnover figures, alongside anecdotal information that suggests there has been good demand for the centre in the context of significant challenges to the occupational market, which has helped to inform our opinion of the appropriate void periods to adopt. We have also had regard to tenant incentives granted as part of recent lettings and lease renewals at the subject property. We have therefore applied void and rent-free periods respectively ranging between 3 and 12 months dependent on unit size and pitch. ■ Expiry Voids - We have generally adopted 3, 6, 9- or 12-month void periods upon expiry of lease expiry/break within the five years of the valuation date. After each expiry void period reflected, we have applied a rent free on renewal of 6, 9 or 12 months. Our void period is determined primarily by the size and pitch of the unit. ■ These are blanket assumptions that represent an average which may vary in reality depending on the terms agreed. ■ Break Options - We have assumed that any tenant break options are exercised. As discussed above, If these are within the next three years, we have applied expiry voids and rent-free periods. If these are within the next three to five years we have applied rent-free periods only. There is a total of 23 break options within the next 3 years with a gross passing rent of £1,740,250 per annum (6.2% of total gross rent). ■ Structural Void – We have adopted a structural void of 4% of income, deferred by three years from the valuation date. This is market practice to reflect the unlikelihood of a scheme achieving full occupancy levels at any given time in the context of continued weakening sentiment in the occupational market. The structural void assumes an increase in occupancy levels over the upcoming three years, with a fall in vacancy by Market Rent from current levels of 8.34%. As discussed in the Market Rent section of this report, we have therefore adopted Headline Market Rent levels and explicit void and rent-free assumptions for all tenants with lease breaks or expiries up to three years from the valuation date, with rent-free periods for a further two years thereafter. This avoids any overlap between the structural void and an explicit void to a particular tenant within the cash flow.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Capital Cost Assumptions ■ Letting Fees - We have applied letting fees on the seven vacant retail units and vacant office space on the initial lease start at 15.00% of Market Rent, deducted as a capital cost. We have reflected total letting fees payable of £378,210. We have not applied letting fees to units where leases expire or are assumed to have broken within 5 years, only to currently void units. ■ Top Ups - We have assumed the full contracted rent as at the valuation date and deducted the residual rent-free amount as a capital deduction (“Topped Up”). As previously stated, this amounts to a total day one deduction of £317,154. ■ Capital Costs - We have reflected total capital expenditure of £4,344,675, which is a combination of planned works by the landlord and assumed capital costs such as letting fees. This has been informed by the Building Survey provided as set out below: CBRE Building Survey: Year 1 – 2 Capex -£1,094,000 Car Park – Riverside Refurbishment -£2,483,547 Landlord Works -£302,585 Capital Contributions -£120,000 Namco & Sketchers Capital Contribution -£101,000 Break Penalties £448,416 Letting Fees -£374,805 Top-Ups -£317,154 Total CapEx -£4,344,675

■ Purchasers’ costs - We have allowed for Stamp Duty Land Tax as follows: Market Value of up to £150,000, zero; next £100,000 (the portion from £150,001 to £250,000), 2.00%; remaining amount (the portion above £250,000), 5.00%. ■ We have also allowed for agents and legal fees plus VAT at lower than market rates, as is accepted in the market for properties within this price banding. These rates amount to 0.90% in total (0.5% agent’s fees and 0.25% legal fees plus VAT). Yield Assumption ■ We have arrived primarily at our value using an overall blended yield approach and reviewing the property as a whole. We would refer you to our comparable analysis and yield conclusions section. ■ We have also had consideration of the equivalent yield given the reversionary potential at the subject property and the spread between initial and equivalent yield. ■ We have targeted a blended topped-up net initial yield of 6.50%, which produces a rounded capital value of £351,000,000, which reflects an equivalent yield of 7.23% and a reversionary yield of 7.65%, based on a reversion to Market Rent £30,244,855 per annum. ■ We have also adopted varying capitalisation rates on different income streams as a check of these assumptions. We have detailed in the table below the different capitalisation rates adopted in order to arrive at our overall blended initial yield approach: Category Group Method Category Yield Cinema Hardcore 6.50% Main income Hardcore 7.00% Victoria Chambers Hardcore 7.50% St Peters Street Hardcore 7.85% Market Hardcore 7.85% Bradshaw Way Retail Park Hardcore 8.00%

Property: Intu Derby, Derby, DE1 2PL June 2019

Category Group Method Category Yield Tenant at Risk Hardcore 8.10% Vacant Hardcore 8.25%

■ A Valuation Summary Print-Out is provided in Appendix 5. Assumed Marketing Period ■ We are of the opinion that the property would take approximately 9-12 months to sell in the current market. Discounted Cash flow 5 and 10 year Analysis ■ To provide us with a sense check we have undertaken a Discounted Cash Flow (DCF) analysis over a 5 and 10 year investment horizon to derive a return profile based on the Market Value derived from the traditional rent and yield approach. The 10-year cash flow IRR has a higher IRR than the 5-year cash flow primarily because we have adopted explicit rent-free assumptions up to year 5 of our cash flow, the exit year net income is therefore not stabilised, impacting upon the net terminal value. ■ We stress that the estimating of future rentals and exit values is a very problematic exercise which at best should be regarded as an indicative assessment of possibilities rather than absolute certainties. The process of making forward projections of key elements include assumptions regarding a considerable number of variables which are acutely sensitive to changing conditions, variation in any of which may significantly affect value. However, we consider that the assumptions adopted are market facing assumptions likely to be adopted by investors. DCF Assumption Summary ■ We summarise below the DCF assumptions and outputs as follows: Assumption 5 Year 10 Year Terminal Yield/Exit Yield* 6.50% 6.50% Market Rent Growth Rate -0.75% -0.75% IRR/Discount Rate (100% Equity) 7.88% 8.35% Net Terminal Value (No discounting) £382,321,684 £408,865,789 Terminal Rent £25,991,614 £27,798,785 Total PV (Market Value) £351,000,000 £351,000,000 *Based on a topped up Net Initial Yield. ■ We have been provided with a -1.6% growth per annum forecast by our in house research team with information sourced primarily from Oxford Economics. However, we consider that the Market Rents at the subject property have been rebased over the past few years. Although there may be a further fall in Market Rent, we do not consider that it will fall as significantly as the average UK forecasts. Consequently, we have adopted -0.75% growth over five years for the purposes of the DCF. Conclusions We consider the IRR profile on the shopping centre to be adequate to attract reasonable levels of investor interest in the current market at an IRR of approximately 8.35% on a 10-year basis and a 7.88% on a 5-year basis. This is in line with IRRs produced for other prime shopping centres valued on DCF methodology and provides an adequate return over bonds.

Property: Intu Derby, Derby, DE1 2PL June 2019

Sensitivity Analysis

We have set out below a sensitivity analysis showing the impact on our opinion of Market Value of movements in rents and yields. The range based on a 100-bps variance on yield and an 8% variance on Market Rents is £337,000,000 to £367,000,000.

Rental Growth

-2.00% -1.00% 0.00% 1.00% 2.00%

-50bps £366,665,961 £373,177,751 £379,721,245 £386,395,130 £393,185,428

-25bps £352,260,110 £358,485,572 £364,742,334 £371,126,671 £377,624,475 Yield Movement 0bps £338,855,817 £344,815,766 £350,806,618 £356,922,309 £363,148,624

25bps £326,352,572 £332,065,706 £337,809,351 £343,675,180 £349,648,882

50bps £314,662,867 £320,146,041 £325,659,342 £331,292,245 £337,030,365

Bradshaw Way Retail Park Valuation Methodology and Approach

■ Within our valuation we have recognised the different characteristics (particularly from an occupational perspective) between the main shopping centre and Bradshaw Way Retail Park by adopting separate Market and capitalisation rate assumptions. However, we consider that a purchaser would most likely acquire the assets together as although they sit under separate titles, both fall within the same ownership. Equally, we would expect most investors to prefer to avoid creating competition by separating the assets, albeit the tenant offer between them differs. ■ Bradshaw Way Retail Park is fully let. We have assumed void and rent-free periods of between 6 and 12 months depending on the unit for leases with breaks and expiries within the next three years and rent-free periods between 6 and 12 months for leases that expire between three and five years from the valuation date. ■ As outlined in the Market Rent section of this report, we consider the units at Bradshaw Way Retail Park to be 9% over- rented. As there is limited evidence within the scheme, with no recent transactions at these units we have had regard to the occupational cost ratio (OCR) of each tenant, as well as speaking with our leasing agents. The OCR levels shows the tenants are in the yellow / low green banding. Nevertheless, we believe an occupier today would slightly discount the current passing rent due to the limited occupational demand in the current market for units of this size. We have therefore adopted £12 psf for Matalan, Home Bargains and Cycle Republic. Poundstretcher’s corner unit location would be perceived as superior and we have therefore adopted a premium rent of £14 psf. ■ We have adopted a higher capitalisation rate to the income from Bradshaw Way of 8.00% (as opposed to the main income within the shopping centre of 7.00%) to reflect the limited occupational demand. While there is limited transactional evidence, our Out of Town Investment team has confirmed that investor demand would likely sit at this level. ■ We have therefore targeted an equivalent yield of 8.00% which produces a rounded capital value of £11,000,000, reflecting an initial yield of 8.71% and a reversionary yield of 7.96%. ■ We consider that if the park were to be sold in isolation to the main centre it may achieve a higher yield due to the substantial competition from the centre. In addition, in this scenario, standard purchaser’s costs would be assumed due to the lot size, resulting in a lower net value.

Suitability for Loan Security

Location ■ The property is located in Derby, the third largest city in the East Midlands after Nottingham and Leicester with a population of around 250,000 and an extensive primary catchment of 387,000, ranking the City 24 out of the 200 PROMIS Centres. ■ Derby is a popular regional retailing destination and the principal commercial and administrative centre in Derbyshire.

Property: Intu Derby, Derby, DE1 2PL June 2019

■ The Derby primary catchment is not particularly affluent, ranking 120 of the PROMIS centres on the PMA Affluence Indicator. ■ Competing cities include Sheffield 36 miles to the north, Nottingham 15 miles to the east, Leicester 30 miles to the south east and Birmingham 41 miles to the south west. The main competing regional shopping centres include Meadow Hall in Sheffield, Intu Victoria in Nottingham, High Cross in Leicester and The Bull Ring in Birmingham. ■ The property is a town centre dominant scheme and provides around 70% of Derby’s retail provision which totals ca. 1.86m sq.ft. according to PROMIS. The property forms the prime pitch in the city centre. ■ The shopping centre has entrances from London Road, St Peters Street, East Street and Albion Street which provide ancillary high street retail. The Corn Market provides further high street retail provision in Derby anchored by Primark. ■ Footfall levels have risen steadily over the past three years from 20,605,968 to 22,307,912 in 2018 and this compares very favourably to the UK shopping centre change in footfall which is circa -5% over the same period. ■ The scheme also includes retail warehouse provision in the form of Bradshaw Way Retail Park, consisting of four units let to Homebargains, Poundstretcher, Matalan and Cycle Republic located to the south west of the main scheme accessible from Bradshaw Way. ■ Given the property’s location, extensive primary catchment and dominant retailing position within Derby and the surrounding catchment, we would expect any retailer requirements from national multiples seeking representation in Derby to focus on the subject property. ■ Out of Town retail accommodation is reasonably high in Derby with over 1.13m sq.ft. according to PROMIS, ranking the City 33 out of the 200 PROMIS Centres. ■ The main retail warehouse in Derby is Kingsway Retail Park, located to the north of the City Centre over 200,000 sq.ft. The scheme, which benefits from a part Open A1 and Part Bulky Goods planning consent, provides 12 retail units and three pods let to Argos, Boots, Costa, Greggs, Halfords, Harveys, Hobbycraft, Marks & Spencer, Next, Pets at Home, Poundland, ScS, Smyths Toys, Subway and TK Maxx. A standalone store let to Currys/PC World, a Sainsbury’s food store and a Homebase DIY store complete the retail warehouse “cluster” in the locality, adjacent to the main retail park. ■ The Meteor Centre is a retail park over 188,600 sq.ft. located to the north of the City Centre. The Bulky Goods consented scheme is anchored by Aldi, B&M, DFS, Dreams and Wren. The park provides more of a value/convenience offer with no fashion. ■ Overall, the subject property dominates the retail provision in Derby and the surrounding catchment and the existing retail warehouse accommodation doesn’t offer much direct competition for consumer spend. Physical ■ The scheme is relatively new, having been extensively redeveloped in 2007 by Westfield, the shopping centre developer. ■ The centre presents well with many newly refurbished units throughout the scheme providing modern well configured retail units with generous glazing and or open, easily accessible shop frontages and wide, well-lit retail malls. ■ Accommodation in the northern section of the centre generally offers smaller units with lower ceiling heights and narrower malls as this part is the refurbished Eagle Shopping Centre. ■ The subject property benefits from extensive car parking over four car parks which provide a total of 3,587 parking spaces. The car parking provision is owned and operated by the landlord. Income Analysis ■ The gross passing rent as at the valuation date is £27,590,080 per annum on a “topped up” basis. ■ The net income is £24,204,728 per annum on a “topped up” basis. ■ The prime rents within the centre is around £95 Zone A and this compares favourably to other prime centres and implies that rents are relatively affordable. To provide some context, excluding the two Westfield shopping centres in London the average Zone A rent for the top 10 UK shopping centres is around £300 Zone A. ■ We are of the opinion that the Market Rent is £30,231,605 per annum, implying that the property benefits from a potential reversion of £2,654,4775 per annum (9.62%).

Property: Intu Derby, Derby, DE1 2PL June 2019

■ Our opinion of Market Rent for occupied units excluding current voids is £27,723,455 per annum, implying a reversion of 0.48%, demonstrating that almost the entirety of the reversionary potential is from the opportunity to let vacant space. ■ The ongoing uncertainty around Brexit and the wider structural challenges in the retail and leisure occupational markets is causing downward pressure on rents and upward pressure in void rates with very few centres exempt from this trend. Whilst we anticipate some volatility in income returns in the short term we are of the opinion that regionally dominant schemes are likely to remain resilient and become more dominant within their respective catchments in the medium to long term once the occupational markets stabilise. ■ There are currently seven tenants in rent free: Sketchers, Carluccio's, Castle Galleries, Cotton On UK, GDK, Thai Express and Tiger with contracted headline rent of £577,750 per annum. ■ Of the top ten retailers by gross income Next, H&M, Sports Direct and TopShop have lease expiries or breaks within the next five years comprising gross rent of £2,126,837 per annum, reflecting 7.71% of gross topped-up income (32.70% of the income derived from the top ten tenants). We would comment that this represents reasonable income security. ■ Importantly Debenhams, who anchor the southern end of the scheme at a rent of £1,209,873 per annum, recently announced a CVA and the store was classified as a Category 1 Lease which means the store is performing well, the rent is broadly affordable, the store is in a strong retailing location/catchment and is modern and well configured and consequently rent reductions were not considered to be necessary, only a switch to monthly rents to assist cash flow. This would give a prospective investor comfort as to the underlying trade of one of the centre’s major anchor tenants. ■ Other recently announced CVAs have revealed more mixed trading performance. TopShop (Category B5), Monsoon (Category 7) and Accessorise (Category 5) have either secured or are seeking to secure rent reductions of up to 65%. As a general comment the centre appears to be fairing reasonably well relative to other prime centres. ■ The WAULT to break of 6.17 years and lease expiry of 7.24 years are commensurate with the income profile of a prime shopping centre such as the subject property, particularly given the current retail climate where leases are generally shortening and CVAs are impacting lease lengths. ■ The current vacancy rate is 8.34% vacant by Market Rent and this is reasonably high for a centre of this nature as we would expect a void rate closer to 5%, as was the void rate for the centre at year end 2018 (demonstrating the turbulence in the retail occupational market in 2019). ■ The Borrower will need to continue to actively manage upcoming renewals to minimise any expiry voids/holding costs and maintain the current net income. Given the track record of the Borrower we do not have any major concerns around the prospect of maintaining and improving the occupancy rate. ■ The subject property benefits from significant parking receipts of £4,511,490 per annum after the deduction of operating costs. Derby has several smaller car parks, but the subject property’s is the main car park servicing the city centre with direct access from the ring road. ■ We have assumed that the current income from parking is rack rented. ■ Based on our assumptions at lease expiry/break the running yield increases to ca. 6.7% within 12 months and 7.09% within 24 months, which is attractive from an interest cover perspective and demonstrates the strength of the underlying cashflow. In June 2022 the running yield drops to 6.35% in line with activated breaks for Clinton Cards, Ernst Jones and CEX. ■ We have adopted a conservative approach to breaks and lease expiries, assuming an expiry void and rent free on renewal in 100% of cases when in fact we know that this is likely to be much lower in reality as break options are negotiated out and tenants renew. ■ Our leasing team have reported to you separately on the occupational tenant audit. Of the 31 tenants assessed we were able to obtain trading information from 24 tenants. While the TOC at the subject property fluctuates, the average for the 24 tenants assessed as a proportion of rent was 12.8% which compares favourably to the average annual TOC for large shopping centres of 22.7%. Therefore, we consider rental levels to be affordable.

Property: Intu Derby, Derby, DE1 2PL June 2019

Lettability ■ Generally, the inherent lettability of the centre is good as a regionally dominant centre with an extensive catchment. ■ We would envisage a marketing period of circa 6 months for vacant retail units within the scheme which minimises income shortfalls. In our opinion, tenant incentives between 6-9 months’ rent free would be required to successfully market the property to a variety of National Multiples. ■ For the largest units over 2,500 sq. ft. we have applied an average rent free period of 12 months. ■ Generally, the covenant and income profile of occupational tenants is secure and we are not aware of any retailers experiencing difficulties within the centre other than the most recent CVAs mentioned above and those tenants categorised as “riskier” within the choice of our capitalisation rates mentioned under valuation methodology. ■ We are of the opinion that occupier demand is likely to be largely from national operators of good covenant status seeking representation in Derby. ■ There are a number of opportunities to increase the rental income through letting current voids and competing lease renewals where tenants are currently holding over. ■ In the current market, National Multiples typically take a 5-year FRI lease, although for larger units retailers are more likely to take a 10-year FRI lease, normally with an option to break at the end of the 5th year. ■ Retailers have generally been able to drive their rental outgoings down by utilising the oversupply in the retail sector to their advantage as evidenced by Next who are securing an average of 30% rent reduction on renewals at present. The centre is a large shopping centre with circa 200 units and a vacancy rate of 8.34% by Market Rent. We are of the opinion that there is probably an element of oversupply at the subject property, but this is not uncommon in the current market. Given the volatility in the occupational markets there is every possibility that the vacancy rate will increase in the short term. Given the property’s dominant position in Derby and relative to the rental base of £95 Zone A we are confident of the Borrower’s ability to maintain income broadly at the current levels, particularly given the anchor tenants trade well. Liquidity ■ There was a sharp reduction in transactional volumes in the shopping centre market in 2018 and this trend has continued into 2019 with only a handful of transactions having completed. In 2018 the total shopping centre investment volumes was £958m circa 55% down on 2017. ■ Annual volumes have only been below £2 billion in six years since JLL started collecting records being 1996, 2001, 2008, 2009, 2017 and 2018. ■ The 10-year average for UK shopping centre investment volumes is around £3.4 billion (having been around £4bn prior to 2017). ■ The centres that have traded in 2019 have been redevelopment opportunities underpinned by alternative uses as in the case of the Nicholsons Centre in Maidenhead, the Galleries in Bristol and Milburngate in Durham. ■ We consider the lot size of the subject property to have an adverse impact on pricing as evidenced by the lack of deals over £100m in 2018/19. ■ You should be aware that if the property was offered for sale it may take longer to sell in the current market than would otherwise be the case, say compared to 18 months ago as investors are more risk adverse than they were given how quickly the occupational markets are changing. ■ Prime yields in the current investment market for regionally dominant schemes are in the region of 5.50% but this would probably be for shopping centres located in the South East of England. ■ Pursuant to the factors mentioned above and the commentary on the marketing background below we are of the opinion that a sale of the subject property would be expected to take approximately 6-9 months in the current investment market, including full due diligence and financing. ■ Overall, we are of the opinion that due to the lack of prime stock in the current market there would be interest in the subject property if it were actively marketed again. However, the buyer pool would be restricted due to the current negative sentiment towards the retail sector and this is evidenced by the limited number of parties who bid on the property in 2018/19.

Property: Intu Derby, Derby, DE1 2PL June 2019

Marketing Background ■ We have previously discussed the marketing background in detail as part of our yield consideration but summarise the commentary below. ■ The subject property was put on the market in Q3 2018 at a quoting price of £458m (100% interest) which reflected a NIY of 6.0%. In Q4 2018 Cale Street expressed their interest in the centre at a level £200m for a 50% interest and there were two private equity parties expressing an interest at £370m - £375m. ■ Due to the highly publicised abortive acquisition of Intu by Brookfield, the property’s marketing was placed on hold and the centre was relaunched in 2019. We understand that in 2019 a 50% interest was placed under offer by Cale Street at the December 2018 book value of £372.5 million. The reduction in the pricing was perceived as being reflective of income decline and occupational concerns in the retail sector and the subject property. ■ It is also reported that the purchase involves a corporate transaction which gives a guaranteed income return to Cale Street. Market perception of this is that it is not solely a property transaction and therefore implying that if that asset were to be sold on a property transaction basis only it would not achieve the same level. We are not aware of the exact structure of the deal as it is confidential. ■ We understand that the structure of the deal is also to Intu’s benefit as it enables them to receive a cash injection whilst maintaining a stake and securing the opportunity to buy-back the interest when Cale Street exit. For this reason, we believe that the pricing of the transaction gives us a ceiling to the property value but there is not a significant discount as the deal is structured to benefit both parties. Finance ■ Generally speaking, prime shopping centre investments make good security for senior debt. They have a variety of different income streams and covenant profiles and can often respond well to active management. In this respect, the subject property is no different. It has many advantages including a mix of uses, a dedicated leisure offer, a large food court and a profitable town centre car park. ■ However, currently there is negative sentiment towards the UK retail sector and this is affecting both investment demand but also the availability of debt to finance transactions. ■ We believe that finance for this type of asset would be available but only from a selection of the senior lenders currently in the market and we believe this is reflective of how the financing of the transaction has played out having initially being offered to the debt markets in February 2019. ■ Furthermore, lenders are only likely to offer conservative terms against a backdrop on continued uncertainty in the retail market. We understand that loan to value ratio ratios are currently around 50-55% and this compares to 60-65% say 12 – 18 months ago. ■ This means that purchasers are often having to source mezzanine debt to compliment any available senior debt which is having a knock-on effect increasing the cost of debt. In turn this is impacting pricing and liquidity in the current market. ■ Fundamentally, the subject property offers relatively robust cash flow and so the property provides for ample interest repayment cover. Future Value Prospects ■ Intu are one of the most recognised and well respected asset managers of shopping centres in the UK. The subject property, like other regionally dominant shopping centres, requires a knowledgeable asset manager and this is fundamental to protect the centre’s future value. ■ There are a number of value accretive asset management initiatives at the subject property as set out under the SWOT Analysis in the Executive Summary of this report. ■ As a general comment the property benefits from a wide range of opportunities to enhance value. The proposed residential scheme above the market hall is probably the most exciting and if planning were to be secured for a feasible scheme this would enhance saleability/liquidity.

Property: Intu Derby, Derby, DE1 2PL June 2019

Suitability for Loan Security ■ On the basis of the information provided and subject to the comments contained within this report, we consider that the property should form suitable security for a mortgage advance assuming it is maintained to a reasonable state of repair for the duration of the loan. In accordance with normal commercial practice, however, we would anticipate any advance being for only a proportion of our opinion of Market Value reflecting detailed in our report.

Valuation as at 4 June 2019

Market Value: £351,000,000 THREE HUNDRED AND FIFTY-ONE MILLION POUNDS

Initial Yield (Topped-up): Equivalent Yield: Reversionary Yield:

6.51% 7.23% 7.65%

Market Rent: £30,244,855 per annum

Market Value of the retail £11,000,000 per annum ELEVEN MILLION POUNDS park:

Initial Yield: Equivalent Yield: Reversionary Yield:

8.71% 7.94% 7.96%

Market Value excluding the £340,000,000 THREE HUNDRED AND retail park: FORTY MILLION POUNDS

Initial Yield: Equivalent Yield: Reversionary Yield:

6.44% 7.21% 7.64%

Purchasers Costs: We have allowed for Stamp Duty Land Tax as follows: Market Value of up to £150,000, zero; next £100,000 (the portion from £150,001 to £250,000), 2.00%; remaining amount (the portion above £250,000), 5.00%. We have also allowed for agents and legal fees plus VAT at lower than market rates, as is accepted in the market for properties within this price banding. These rates amount to 0.90% in total (0.5% agent’s fees and 0.25% legal fees plus VAT).

Property: Intu Derby, Derby, DE1 2PL June 2019 Appendices

Appendix 1 ...... Letter of Instruction Appendix 2 ...... General Terms and Conditions Appendix 2 ...... General Principles Appendix 2 ...... Definitions of Market Value & Market Rent Appendix 3 ...... Location Plans and Maps Appendix 4 ...... Photographs Appendix 5 ...... Valuation Print-Outs Appendix 6 ...... UK Economic and Property Market Commentary

Appendices

Appendix 1 Letter of Instruction

Appendices

Appendix 2 General Terms and Conditions General Principles Definition of Market Value Definition of Market Rent

1. AGREEMENT “Insolvent” means in relation to:

1.1. These Terms together with any Engagement set out the (a) a company (including any body corporate), that it: terms on which JLL will provide the Services to the Client. Each of the provisions provided in the Agreement are severable and (i) is unable to pay its debts as they fall due; distinct from the others. (ii) becomes or is deemed insolvent; 1.2. The Engagement shall prevail to the extent of any (iii) has a notice of intention to appoint an administrator conflict between the Terms, and the Engagement. The Agreement filed at Court in respect of it, has an administrator supersedes any previous arrangement concerning its subject appointed over, or has an administration order in matter. Unless the Parties agree otherwise, these Terms shall relation to it, or has appointed a receiver or an apply to any future instructions from the Client, although such administrative receiver over, or an encumbrancer takes instructions may be subject to a separate Engagement. possession of or sells the whole or part of its 2. INTERPRETATION undertaking, assets, rights or revenue;

The following definitions and rules of interpretation apply in (iv) passes a resolution for its winding up or a court of these Terms: competent jurisdiction makes an order for it to be wound up or dissolved or it is otherwise dissolved (other 2.1. Definitions than a voluntary winding up solely for the purpose of a solvent amalgamation or reconstruction); or “Affiliates” includes in relation to either Party each and any subsidiary or holding company of that Party and each and any (v) enters into an arrangement, compromise or subsidiary of a holding company of that Party and any business composition in satisfaction of its debts with its creditors entity from time to time controlling, controlled by, or under or any class of them or takes steps to obtain a common control with, that Party, and “holding company” means moratorium or making an application to a court of a holding company as defined in section 1159 of the Companies competent jurisdiction for protection of its creditors; Act 2006 or a parent undertaking as defined in section 1162 and schedule 7 of the Companies Act 2006, and “subsidiary” means a (b) a partnership, that it is dissolved by reason of the subsidiary as defined in section 1159 of the Companies Act 2006 bankruptcy of one or more of its partners; or a subsidiary undertaking as defined in section 1162 and (c) an individual, that they are bankrupt; and schedule 7 of the Companies Act 2006; (d) a Party based outside England and Wales, that it is “Agreement” means any Engagement and these Terms together; considered insolvent by the laws applicable to that “Client” means the Party who enters into the Agreement with Party; JLL; “JLL” means Jones Lang LaSalle Limited of 30 Warwick Street “Data Protection Legislation” shall mean GDPR and any national London W1B 5NH registered in England and Wales with company implementing laws, regulations and secondary legislation in force number 01188567 and/or any Affiliate of JLL that provides the in the United Kingdom from time to time; Services to the Client;

“Engagement” means the agreement, letter of engagement or “Materials” means all materials, equipment, documents and engagement agreement or email and any schedules/appendices other property of JLL made available to the Client by JLL in sent to the Client by JLL (or agreed in writing) which sets out carrying out the Services; details of the Services to be provided to the Client pursuant to the “Party” means either the Client or JLL (as the context requires) Agreement; and “Parties” shall mean both of them; “GDPR” means the General Data Protection Regulation ((EU) “Services” means the Services set out in the Engagement or as 2016/679) and in this Agreement: “controller”, “processor”, “data otherwise agreed in writing between the Parties; subject”, “personal data”, “personal data breach”, “supervisory authority”, and “processing” shall have the meaning set out in the “Terms” means these terms and conditions. GDPR, and references to “personal data” shall in addition mean personal data related to the Agreement.

1 L&C UK - General Terms and Conditions of Business – Version 1.8 June 2019 COPYRIGHT © JONES LANG LASALLE IP, INC. 2019. All Rights Reserved 2.2. Unless the context otherwise requires, words in the 3.5. JLL shall have the right to make any changes to the singular shall include the plural and, in the plural, shall include Services which are necessary to comply with any applicable law, the singular. regulation, safety requirement, or which do not materially affect the nature or quality of the Services and JLL shall notify the Client 2.3. A reference to a statute or statutory provision is a in any such event. reference to it as it is in force as at the date of the Agreement and shall include all subordinate legislation made as at the date of the 3.6. Without prejudice to clause 9.2(b), JLL will take all Agreement under that statute or statutory provision. appropriate steps to identify, prevent or manage a conflict of interest that may arise in the course of business. In the event that 2.4. A reference to writing or written unless otherwise an actual or potential conflict of interest is identified, JLL will specified herein includes email. recommend a course of action.

2.5. Any words following the terms including, include, in 4. CLIENT OBLIGATIONS particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding 4.1. The Client shall: those terms. a) notify JLL promptly if it considers that any details or 2.6. Headings are for convenience only and do not affect the requirements set out in the Engagement are incomplete interpretation of this Agreement. or inaccurate;

3. SERVICES b) co-operate with JLL in all matters relating to the Services; 3.1. JLL shall provide the Services using reasonable care and skill. c) provide JLL, its employees, agents, consultants and subcontractors, with access to the relevant property as 3.2. JLL has no obligation to provide any services other than reasonably required by JLL to provide the Services; and the Services and has no obligation to provide nor any liability for: d) obtain and maintain all necessary licences, permissions a) an opinion on the price of a property (unless specifically and consents which may be required by the Client agreed in writing); before the date on which the Services are to start. b) any advice regarding the condition of a property (unless 4.2 The Client shall promptly provide JLL with such specifically agreed in writing); information and materials as it may reasonably require in order to supply the Services and warrants that: c) the security or management of a property unless specifically instructed to arrange it; a) such information is complete and accurate and was obtained and drafted in accordance with all applicable d) the safety of any third party entering any premises; or laws; e) the management or payment of any third party b) it shall ensure that where the information and material suppliers. include representations or descriptions of a property, 3.3. Where the Parties have agreed that JLL shall carry out that such information and material contain no estate agency business, JLL shall (i) report in writing all offers it misrepresentation or false impression; receives regarding the relevant property; and (ii) comply with its c) where the Client will advertise a property under JLL’s obligations under the Estate Agents Act 1979 and regulations logo, that such advertisement (including its content and made under that Act together with any other similar laws and context in which it will appear) is approved in writing by regulations. JLL prior to its publication; and 3.4. Where agreed in writing JLL shall use reasonable d) it shall immediately notify JLL on becoming aware of endeavours to meet any performance dates. JLL shall not be any changes or issues that may render inaccurate any responsible for any failure to meet performance dates due to information or material provided to JLL. causes outside its reasonable control and time shall not be of the essence for the performance of the Services.

4.3. In the event of any act or omission by the Client in judgment. The Client shall pay the interest together with the breach of the Agreement or failure by the Client to perform any overdue amount. relevant obligation (Client Default): 5.5. If termination of the Agreement takes place prior to the a) JLL shall without limiting its other rights or remedies Services being completed, JLL shall, without limitation to its other have the right to suspend performance of the Services rights and remedies under this Agreement or at law, be entitled to until the Client remedies the Client Default, and to rely receive from the Client a reasonable fee proportionate to the part on the Client to relieve JLL from the performance of any of the Services performed to the date of termination. of its obligations to the extent the Client Default prevents or delays JLL’s performance of any of its 6. INTELLECTUAL PROPERTY RIGHTS obligations; and 6.1. All intellectual property rights in or arising out of or in b) JLL shall not be liable for any costs or losses sustained connection with the Services including the intellectual property or incurred by the Client arising directly or indirectly rights in Materials shall be owned by JLL unless otherwise from the Client Default. expressly agreed in writing. For this purpose “intellectual property rights” means patents, utility models, rights to 4.4. The Client is responsible for effecting and maintaining inventions, copyright and related rights, trademarks and service adequate property and public liability insurance in relation to its marks, trade names and domain names, trade secrets, rights in activities and any relevant properties owned or occupied by it and get-up, goodwill and the right to sue for passing off or unfair shall be responsible for the safety of any person entering the competition, rights in designs, rights in computer software, relevant properties. database rights, rights to preserve the confidentiality of information (including know-how and trade secrets) and any 4.5 Where the Client constitutes more than one legal other intellectual property rights, including all applications for person, the liability of such persons shall be joint and several. (and rights to apply for and be granted), renewals or extensions of, and rights to claim priority from, such rights and all similar or 5. PAYMENTS equivalent rights or forms of protection which subsist or will 5.1. Whenever possible, the fees and expenses (if known) for subsist, now or in the future, in any part of the world. the Services shall be as set out in the Engagement. Where fees 6.2. The Client shall have an irrevocable, royalty-free, non- and expenses for the Services are not specified in writing, JLL shall exclusive licence to use the Materials for the purposes for which be entitled to the fee specified by the Royal Institution of they are prepared by JLL, subject to JLL having received full Chartered Surveyors (RICS) or if there is none specified, by any payment for the Services in accordance with the Agreement. Such other applicable professional body chosen by JLL (acting licence shall be capable of sub-licence by the Client to its reasonably) or, if none is specified, a fair and reasonable fee by employees, agents and subcontractors and shall survive reference to time spent delivering the Services; and termination. No third party has any right to use any such Materials reimbursement of any expenses properly incurred by JLL on the without JLL’s specific consent. JLL shall not be liable for the use Client’s behalf. of any Material for any purpose other than that for which JLL 5.2. All amounts payable by the Client under the Agreement provided it to the Client. are exclusive of value added tax (VAT) or similar taxes which the 6.3 Nothing in this clause 6 shall affect the Client’s Client shall pay at the applicable rate. intellectual property rights that pre-exist the Services. The Client 5.3. In consideration of the provision of the Services, the shall grant to JLL an irrevocable, royalty-free, non-exclusive, sub- Client shall pay each invoice submitted by JLL in accordance with licensable licence to use such pre-existing intellectual property the Agreement within 28 days from the date of invoice. rights for the purpose of carrying out the Services.

5.4. If the Client fails to make any payment due to JLL under 7. CONFIDENTIALITY the Agreement by the due date for payment, then JLL reserves the 7.1 A Party (receiving party) shall keep in strict confidence right to charge late payment interest after the due date on the all technical or commercial know-how, processes or initiatives overdue amount at the rate of 4% per cent per annum above the which are of a confidential nature and have been disclosed to the Bank of England's official bank rate from time to time. Such receiving party by the other Party (disclosing party), their interest shall accrue on a daily basis from the due date until actual Affiliates and their employees, agents or subcontractors, and any payment of the overdue amount, whether before or after other confidential information concerning the disclosing party's

L&C UK - General Terms and Conditions of Business – Version 1.8 June 2019 COPYRIGHT © JONES LANG LASALLE IP, INC. 2019. All Rights Reserved 3 business, its products and services which the receiving party may that all other parties pay the share of loss attributable obtain. The receiving party shall ensure that such Affiliates, to them (whether or not they do); or employees, agents and subcontractors comply with the obligations set out in this clause as though they were a party to c) due to any failure by the Client or any representative or the Agreement. The receiving party may disclose such of the agent of the Client to follow JLL’s advice or disclosing party's confidential information as is required to be recommendations. disclosed by law, any governmental or regulatory authority or by 8.3. JLL owes no duty of care and has no liability to anyone a court of competent jurisdiction, or with the consent of the but the Client unless specifically agreed in writing by JLL. disclosing party. JLL may remove, or arrange for the removal of, names and any other identifiers from confidential information 9. TERMINATION and then use such anonymised information for lawful purposes chosen at its discretion. 9.1. Without limiting its other rights or remedies, either Party may terminate the Agreement by giving the other Party 28 7.2 Where JLL delivers services to or is approached to days’ written notice. deliver services to another party JLL shall not be required to use or disclose to the Client any information known to JLL, which is 9.2. Without limiting its other rights or remedies, either confidential to another party. Party may terminate the Agreement with immediate effect by giving written notice to the other Party if: 8. LIABILITY a) the other Party commits a material breach of the 8.1. a) JLL shall under no circumstances whatsoever Agreement and (if such a breach is remediable) fails to be liable, whether in contract, tort (including remedy that breach within 14 days of that Party being negligence), breach of statutory duty, or otherwise, for notified in writing to do so; any loss of profit, loss of revenue or loss of anticipated savings, or for any indirect, special or consequential loss b) a conflict of interest arises which prevents JLL arising out of or in connection with the Agreement continuing to act for the Client; or and/or the Services; c) the other Party becomes Insolvent. b) JLL’s total liability in respect of all losses arising out of or in connection with the Agreement and/or the 9.3. Without limiting its other rights or remedies, JLL may Services, whether in contract, tort (including suspend provision of the Services under the Agreement or any negligence), breach of statutory duty, or otherwise, other contract between the Client and JLL if the Client becomes shall not exceed £5 million; and Insolvent, or JLL reasonably believes that the Client is about to become Insolvent, or if the Client fails to pay any amount due c) nothing in the Agreement limits any liability which under the Agreement on the due date for payment. cannot legally be limited, including but not limited to, liability for: death or personal injury caused by 9.4. On termination of the Agreement for any reason: negligence; or fraud or fraudulent misrepresentation. a) the Client shall immediately pay to JLL all of JLL's 8.2. JLL shall have no liability for the consequences, outstanding unpaid invoices and interest and, in respect including delay in or failure to provide the Services: of Services supplied but for which no invoice has been submitted and associated expenses, JLL shall submit an a) due to any failure by the Client or any representative or invoice, which shall be payable by the Client agent of the Client to provide information or other immediately on receipt; material that JLL reasonably requires promptly, or where that information or material provided is b) the Client shall return any Materials which have not inaccurate or incomplete; been fully paid for; b) to the extent that the Client or someone on the Client’s c) JLL may, to comply with legal, regulatory or behalf for whom JLL is not responsible is responsible, professional requirements, keep one copy of all Material and where JLL is one of the parties liable in conjunction which is what was supplied by or on behalf of the Client with others, JLL’s liability shall be limited to the share of in relation to the Services; loss reasonably attributable to JLL on the assumption

L&C UK - General Terms and Conditions of Business – Version 1.8 June 2019 COPYRIGHT © JONES LANG LASALLE IP, INC. 2019. All Rights Reserved 4 d) the accrued rights, remedies, obligations and liabilities shall provide to the Client a general description of the security of the Parties as at expiry or termination shall be measures it has adopted. unaffected, including the right to claim damages in respect of any breach of the Agreement which existed at 10.5 JLL shall take reasonable steps to ensure any person or before the date of termination or expiry; and that has access to personal data is made aware of their responsibilities, and subject to enforceable duties of e) clauses which expressly or by implication survive confidentiality. termination shall continue in full force and effect. 10.6 JLL shall notify the Client without undue delay if it: 9.5. JLL may destroy any hard copy and electronic files it has in its possession after six years from the earlier of completion of 10.6.1 receives a request for access from an individual, or a the Services or termination of the Agreement. request relating to any of the other individuals’ rights available under the Data Protection Legislation, in respect of personal data; 10. DATA PROTECTION 10.6.2 receives any enquiry or complaint from a data subject, 10.1. JLL (including third parties as described in our Privacy supervisory authority or third party regarding the processing of Statement available at www.jll.co.uk) may process in hard copy the personal data; and and/or in electronic form, personal data regarding the Client, its officers and any other individuals connected with the Client 10.6.3 becomes aware of a personal data breach affecting (‘Client Contacts’). It may also verify the identity of Client personal data, unless the breach is unlikely to result in a risk to Contacts including carrying out checks with third parties such as the rights and freedoms of data subjects. financial probity, anti-money laundering or sanctions-checking 10.7 JLL shall assist and provide all information reasonably agencies. To facilitate compliance with money laundering requested in writing by the Client in relation to data protection regulations and avoid duplication of due diligence, the Client impact assessments or ‘prior consultation’ with supervisory acknowledges that JLL may share Client contacts’ personal data authorities or matters under clause 10.6. with such third party agencies and JLL Affiliates. 10.8 JLL shall maintain all the records and information 10.2 Unless the Agreement and factual arrangements dictate necessary to demonstrate its compliance with the requirements otherwise, as between the Parties for the purposes of the set out in this clause 10. Agreement, the Client is deemed to be the controller and JLL is deemed to be the processor. The Client will ensure that any 10.9 JLL shall allow the Client (or its appointed auditor) to transfer of personal data to JLL (and any sub-processors under audit JLL’s compliance with this clause 10. The Client agrees to clause 10.11) complies with the Data Protection Legislation. In give reasonable notice of any audit, to undertake any audit during providing the Services, JLL in its role as processor shall comply normal business hours, to take steps to minimise disruption to with the Data Protection Legislation as it relates to data JLL’s business, and not exercise this right of audit more than once processors. Nothing within the Agreement relieves either Party of every year unless instructed otherwise by a supervisory authority. its own direct responsibilities and liabilities under the Data Protection Legislation. 10.10 JLL shall, upon receipt of a written request, from the Client delete or return all personal data at the end of the provision 10.3 JLL shall not process personal data other than in of the Services. JLL may retain copies of the personal data in relation to the documented instructions of the Client, unless it is accordance with any legal or regulatory requirements, or any required to process the personal data by any law to which it is guidance that has been issued in relation to deletion or retention subject. In such a case JLL shall inform the Client of that legal by a supervisory authority. requirement before complying with it, unless that law prohibits JLL from doing so. 10.11 JLL shall only engage a sub-processor where:

10.4 JLL shall ensure that it and any third party with access 10.11.1 the Client has agreed in writing to the engagement of to the personal data has appropriate technical and organisational the sub-processor; or security measures in place, to guard against the unauthorised or unlawful processing of personal data and against the accidental 10.11.2 the sub-processor is an Affiliate of JLL or a service or unlawful destruction, loss, alteration, unauthorised disclosure provider engaged by JLL to support the infrastructure and of, or access to, the personal data. Upon a written request, JLL administration of its business (with details maintained at http://www.jll.co.uk/sub-processors).

10.12 JLL shall ensure that any arrangements between JLL 12.2. Notices. a) Any notice or other communication, and a sub-processor are governed by a written contract including including the service of any proceedings or other terms which offer at least the same level of protection for documents in any legal action given to a Party under or personal data as those set out in this clause. Where JLL intends to in connection with the Agreement shall be in writing, engage a new sub-processor under 10.11.2 and the Client objects, addressed to that Party at its registered office (if it is a then the Client may choose to terminate the Services in company) or its principal place of business (in any other accordance with clause 9. case) or such other address as that Party may have specified to the other Party in writing in accordance 10.13 In accordance with clause 12.1, JLL shall remain liable with this clause, and shall be delivered personally or for the acts and omissions of its sub-processors. sent by pre-paid first class post or commercial courier. Any notice or other communication sent to a Party 10.14 JLL shall only transfer personal data outside the located in a different country to the sending Party must European Economic Area where it has ensured the transfer be sent by commercial courier; complies with the Data Protection Legislation. b) A notice or other communication shall be deemed to 11. FORCE MAJEURE have been received: if delivered personally, when left at 11.1. Neither Party shall be liable to the other Party as a result the address referred to in clause 12.2.a); if sent by pre- of any delay or failure to perform its obligations under the paid first class post at 9.00 am on the second business Agreement as a result of any event beyond the reasonable control day after posting; or if sent by commercial courier, on of either Party including strikes, lock-outs or other industrial the date and at the time that the courier's delivery disputes (whether involving the workforce of JLL or any other receipt is signed. For this purpose, a business day means party), failure of a utility service or transport network, act of God, a day (other than a Saturday or Sunday) on which banks war, riot, civil commotion, malicious damage, compliance with are open for business in London. any law or governmental order, rule, regulation or direction, 12.3. Severance. a) If any provision or part-provision of accident, breakdown of plant or machinery, fire, flood, storm or the Agreement is or becomes invalid, illegal or default of suppliers or subcontractors. unenforceable, it shall be deemed modified to the 11.2. If such an event prevents either Party from providing minimum extent necessary to make it valid, legal and any of the Services for more than four weeks, the affected Party enforceable. If such modification is not possible, the shall, without limiting their other rights or remedies, have the relevant provision or part-provision shall be deemed right to terminate the Agreement immediately by giving written deleted. Any modification to or deletion of a provision notice to the Party. or part-provision under this clause shall not affect the validity and enforceability of the rest of the Agreement; 11.3. This clause does not apply to the payment of fees due to JLL by the Client. b) If any provision or part-provision of the Agreement is invalid, illegal or unenforceable, the Parties shall 12. GENERAL negotiate in good faith to amend such provision so that, as amended, it is legal, valid and enforceable, and, to 12.1. Subcontracting. JLL may subcontract or deal in any the greatest extent possible, achieves the intended other manner with all or any of its rights or obligations under the commercial result of the original provision. Agreement to any third party or agent provided that: 12.4. Waiver. A waiver of any right under the Agreement or (i) where JLL subcontracts or delegates its obligations at law is only effective if it is in writing and shall not be deemed to be the specific request of the Client, JLL shall have no a waiver of any subsequent breach or default. No failure or delay liability for the acts or omissions of the third party or by a Party in exercising any right or remedy provided under the agent; and Agreement or by law shall constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict its further exercise (ii) otherwise, JLL shall remain liable for the acts or of that or any other right or remedy. No single or partial exercise omissions of the third party or agent, unless the Client of such right or remedy shall prevent or restrict the further agrees to rely only on the third party or agent, such exercise of that or any other right or remedy. agreement not to be unreasonably withheld.

12.5. No Partnership or Agency. Nothing in the Agreement is terrorist financing. JLL may be unable to inform the Client of any intended to, or shall be deemed to, establish any partnership or disclosure and may have to stop the Services for a period of time joint venture between the Parties, nor constitute either Party the without explanation. agent of the other for any purpose. Neither Party shall have authority to act as agent for, or to bind, the other Party in any way. 12.13. Regulated Activity. JLL is not permitted to carry out any activity regulated by the Financial Services and Markets Act 2000 12.6. Third parties. Subject to clause 12.8, a person who is not including the insurance of property, except through an authorised a Party to the Agreement shall not have any rights to enforce its person and in accordance with a separate agreement. Unless JLL Terms unless specifically agreed in writing. specifically agrees otherwise in writing, no communication by JLL is intended to be, or should be construed as an invitation or 12.7. Variation. Except as set out in these Terms, no variation inducement to any person to engage in investment activity for the of the Agreement, including the introduction of any additional purposes of the Financial Services and Markets Act 2000, or as the terms and conditions, shall be effective unless it is agreed in approval of any communication of any such invitation or writing and signed by both Parties. Unless otherwise expressly inducement. agreed, variation of these Terms does not require the consent of any third party (whether any employee referred to in clause 12.8 12.14. Anti-bribery. Both parties shall comply with all or otherwise). applicable laws, statutes, regulations, relating to anti-bribery and anti-corruption including but not limited to the Bribery Act 2010. 12.8. Protection of Employees. Save in respect of fraud or criminal conduct no employee of JLL or any Affiliate has any 12.15 RICS. JLL is regulated by RICS for the provision of personal liability to the Client nor to anyone representing the surveying services and agrees to uphold the RICS Rules of Client. Neither the Client nor anyone representing the Client may Conduct for Firms and all other applicable mandatory make a claim or bring proceedings against an employee or former professional practice requirements of RICS, which can be found at employee personally. Any such employee of JLL is entitled to www.rics.org. As a RICS regulated firm JLL has committed to enforce this provision pursuant to the Contracts (Rights of Third cooperate with RICS to ensure compliance with its standards. Parties) Act 1999. JLL’s nominated RICS contact is Luis Campbell, Head of Compliance: [email protected]. 12.9. Directors. Some employees of JLL have the title of “director”. The Client acknowledges that this does not mean 12.16. Governing Law. The Agreement and any disputes arising they hold the office of director for the purposes of the from it (including non-contractual claims and disputes) are Companies Act 2006. Rather, it means that they hold a senior governed by English Law. role as an employee of JLL. 12.17. Jurisdiction. Each Party irrevocably agrees that the 12.10. Complaints. JLL’s complaints procedure is available on courts of England and Wales shall have exclusive jurisdiction over request. any dispute or claim arising out of or in connection with this agreement or its subject matter or formation (including non- 12.11. Publicity. Neither Party may publicise or issue any contractual disputes or claims). specific information to the media about the Services or the Agreement’s subject matter without the consent of the other. 12.18 Language. These Terms are provided in English and JLL will communicate with the Client in English. 12.12. Criminal Activity. To comply with the law and professional rules on suspected criminal activity JLL is required to 12.19. Survival. Clauses 5 to 10 shall survive termination of the verify the identity of its clients and understand their business. Agreement. Upon request, the Client will promptly provide to JLL evidence of the Client’s identity, management or ownership. Where JLL is required by law to obtain similar evidence for another party to a transaction, the Client will provide all reasonable assistance to obtain such evidence. JLL may also need to provide such evidence to another party’s agents and the Client consents to the release of such information. If a Party fails to provide such evidence the transaction and Services may not be able to proceed. JLL is required by law to report to the appropriate authorities any knowledge or suspicion of money laundering or

General Principles (January 2019)

General Principles Adopted in the preparation of Valuations and Reports

These General Principles should be read in conjunction with JLL’s General Terms and Conditions of Business except insofar as this may be in conflict with other contractual arrangements.

1 RICS Valuation - Global Standards 2017 All work is carried out in accordance with the Professional Standards, Valuation Technical and Performance Standards and Valuation Applications contained in the RICS Valuation – Global Standards 2017 published by the Royal Institution of Chartered Surveyors and the RICS Valuation – Global Standards 2017 – UK national supplement as applicable (“the RICS Red Book”), by valuers who conform to the requirements thereof. Our valuations may be subject to monitoring by the RICS. The valuations are undertaken by currently Registered RICS Valuers.

2 Valuation Basis: Our reports state the purpose of the valuation and, unless otherwise noted, the basis of valuation is as defined in “the RICS Red Book”. The full definition of the basis, which we have adopted, is set out in our report and appended to these General Principles.

3 Assumptions and Special Assumptions: Where we make an ‘assumption’ or ‘special assumption’ in arriving at our valuations, we define these terms in accordance with “the RICS Red Book” as follows: Assumption: A supposition taken to be true. Special Assumption: An assumption that either assumes facts that differ from the actual facts existing at the valuation date, or that would not be made by a typical market participant in a transaction on the valuation date. We will not take steps to verify any assumptions.

4 Disposal Costs Taxation and Other Liabilities: No allowances are made for any expenses of realisation, or for taxation, which might arise in the event of a disposal. All property is considered as if free and clear of all mortgages or other charges, which may be secured thereon. However, we take into account purchaser’s costs in investment valuations in accordance with market conventions. No allowance is made for the possible impact of potential legislation which is under consideration. Valuations are prepared and expressed exclusive of VAT payments, unless otherwise stated.

5 Sources of Information: Where we have been provided with information by the client, or its agents, we assume that it is correct and complete and is up to date and can be relied upon. We assume that no information that has a material effect on our valuations has been withheld. In respect of valuations for loan security purposes, commissioned by a lending institution, we may also rely on information provided to us by the Borrower or its advisors. In such cases, we have similarly assumed that all information is correct, complete, up-to-date and can be relied upon and that no pertinent information has been withheld.

General Principles (January 2019)

6 Title and Tenancy Information: We do not normally read leases or documents of title. We assume, unless informed to the contrary, that each property has a good and marketable title, that all documentation is satisfactorily drawn and that there are no encumbrances, restrictions, easements or other outgoings of an onerous nature, which would have a material effect on the value of the interest under consideration, nor material litigation pending. Where we have been provided with documentation we recommend that reliance should not be placed on our interpretation without verification by your lawyers. We have assumed that all information provided by the client, or its agents, is correct, up to date and can be relied upon.

7 Tenants: Although we reflect our general understanding of a tenant’s status in our valuations i.e. the market’s general perception of their creditworthiness, enquiries as to the financial standing of actual or prospective tenants are not normally made unless specifically requested. Where properties are valued with the benefit of lettings, it is therefore assumed, unless we are informed otherwise, that the tenants are capable of meeting their financial obligations under the lease and that there are no arrears of rent or undisclosed breaches of covenant.

8 Measurements/Floor Areas: All measurement is carried out in accordance with either the International Property Measurement Standards (IPMS) or the Code of Measuring Practice (6th Edition) issued by the Royal Institution of Chartered Surveyors, except where we specifically state that we have relied on another source. The areas adopted are purely for the purpose of assisting us in forming an opinion of capital value. They should not be relied upon for other purposes nor used by other parties without our written authorisation. Where floor areas have been provided to us, we have relied upon these and have assumed that they have been properly measured in accordance with the International Property Measurement Standards (IPMS) or the Code of Measuring Practice referred to above.

9 Site Areas: Site areas are generally calculated using proprietary digital mapping software and are based on the site boundaries indicated to us either at the time of our inspection, or on plans supplied to us. No responsibility is accepted if the wrong boundaries are indicated to us.

10 Estimated Rental Values: Our assessment of rental values is formed purely for the purposes of assisting in the formation of an opinion of capital value and is generally on the basis of Market Rent, as defined in “the RICS Red Book”. Where circumstances dictate that it is necessary to utilise a different rental value in our capital valuation, we will generally set out the reasons for this in our report. Such a figure does not necessarily represent the amount that might be agreed by negotiation, or determined by an Expert, Arbitrator or Court, at rent review or lease renewal or the figure that might be obtained if the property or unit were being let on the open market.

11 Town Planning, Acts of Parliament and Other Statutory Regulations: Information on town planning is, wherever possible, obtained either verbally from local planning authority officers or publicly available electronic or other sources. It is obtained purely to assist us in forming an opinion of capital value and should not be relied upon for other purposes. If reliance is required we recommend that verification be obtained from lawyers that: i the position is correctly stated in our report; ii the property is not adversely affected by any other decisions made, or conditions prescribed, by public authorities; and iii that there are no outstanding statutory notices.

General Principles (January 2019)

Our valuations are prepared on the basis that the premises (and any works thereto) comply with all relevant statutory and EC regulations, including fire regulations, access and use by disabled persons, control and remedial measures for asbestos in the workplace, the Energy Performance of Buildings Directive and any applicable bye laws. All buildings are assumed to have Energy Performance Certificates. Our valuation does not take into account any rights, obligations or liabilities, whether prospective or accrued, under the Defective Premises Act 1972, or the Health and Safety at Work etc. Act 1974.

12 Structural Surveys: Unless expressly instructed, we do not carry out a structural survey, nor do we test the services and we, therefore, do not give any assurance that any property is free from defect. We seek to reflect in our valuations any readily apparent defects or items of disrepair, which we note during our inspection, or costs of repair which are brought to our attention. Otherwise, we assume that each building is structurally sound and that there are no structural, latent or other material defects. Unless stated otherwise in our reports we assume any tenants are fully responsible for the repair of their demise either directly or through a service charge.

13 Deleterious Materials: We do not normally carry out or commission investigations on site to ascertain whether any building was constructed or altered using deleterious materials or techniques (including, by way of example high alumina cement concrete, woodwool as permanent shuttering, calcium chloride or asbestos). Unless we are otherwise informed, our valuations are on the basis that no such materials or techniques have been used.

14 Site Conditions: We do not normally carry out or commission investigations on site in order to determine the suitability of ground conditions and services for the purposes for which they are, or are intended to be, put; nor do we undertake archaeological, ecological or environmental surveys. Unless we are otherwise informed, our valuations are on the basis that these aspects are satisfactory and that, where development is contemplated, no extraordinary expenses, delays or restrictions will be incurred during the construction period due to these matters.

15 Environmental Contamination: Unless expressly instructed, we do not carry out or commission site surveys or environmental assessments, or investigate historical records, to establish whether any land or premises are, or have been, contaminated. Therefore, unless advised to the contrary, our valuations are carried out on the basis that properties are not affected by environmental contamination. However, should our site inspection and further reasonable enquiries during the preparation of the valuation lead us to believe that the land is likely to be contaminated we will discuss our concerns with you.

16 Insurance: Unless expressly advised to the contrary we assume that appropriate cover is and will continue to be available on commercially acceptable terms. In particular, we will have regard to the following: Composite Panels Insurance cover, for buildings incorporating certain types of composite panel may only be available subject to limitation, for additional premium, or unavailable. Information as to the type of panel used is not normally available. Accordingly, our opinions of value make no allowance for the risk that insurance cover for any property may not be available, or may only be available on onerous terms. Terrorism Our valuations have been made on the basis that the properties are insured against risks of loss or damage including damage caused by acts of Terrorism as defined by the Terrorism Act 2000. We have assumed that the insurer, with whom cover has been placed, is reinsured by the Government backed insurer, Pool Reinsurance Company Limited.

General Principles (January 2019)

Flood and Rising Water Table Our valuations have been made on the assumption that the properties are insured against damage by flood and rising water table. Unless stated to the contrary our opinions of value make no allowance for the risk that insurance cover for any property may not be available, or may only be available on onerous terms.

17 Outstanding Debts: In the case of property where construction works are in hand, or have recently been completed, we do not normally make allowance for any liability already incurred, but not yet discharged, in respect of completed works, or obligations in favour of contractors, subcontractors or any members of the professional or design team.

18 Confidentiality and Third Party Liability: Our Valuations and Reports are confidential to the party to whom they are addressed and for the specific purpose to which they refer, and no responsibility whatsoever is accepted to any third parties. Neither the whole, nor any part, nor reference thereto, may be published in any document, statement or circular, or in any communication with third parties, without our prior written approval of the form and context in which it will appear.

19 Statement of Valuation Approach: We are required to make a statement of our valuation approach. The following provides a generic summary of our approach. The majority of institutional portfolios comprise income producing properties. We usually value such properties adopting the investment approach where we apply a capitalisation rate, as a multiplier, against the current and, if any, reversionary income streams. Following market practice we construct our valuations adopting hardcore methodology where the reversions are generated from regular short term uplifts of market rent. We would normally apply a term and reversion approach where the next event is one which fundamentally changes the nature of the income or characteristics of the investment. Where there is an actual exposure or a risk thereto of irrecoverable costs, including those of achieving a letting, an allowance is reflected in the valuation. Vacant buildings, in addition to the above methodology, may also be valued and analysed on a comparison method with other capital value transactions where applicable. Where land is held for development we adopt the comparison method when there is good evidence, and/or the residual method, particularly on more complex and bespoke proposals. There are situations in valuations for accounts where we include in our valuation properties which are owner-occupied. These are valued on the basis of existing use value, thereby assuming the premises are vacant and will be required for the continuance of the existing business. Such valuations ignore any higher value that might exist from an alternative use.

20 Capital Expenditure Requirement: Where buildings are undergoing works, such as refurbishment or repairs, or where developments are in progress, we have relied upon cost information supplied to us by the client or their appointed specialist advisors.

21 Goodwill, Fixtures and Fittings: Unless otherwise stated our valuation excludes any additional value attributable to goodwill, or to fixtures and fittings which are only of value, in situ, to the present occupier.

22 Plant and Machinery: No allowance has been made for any plant, machinery or equipment unless it forms an integral part of the building and would normally be included in a sale of the building.

General Principles (January 2019)

23 Services: We do not normally carry out or commission investigations into the capacity or condition of services. Therefore we assume that the services, and any associated controls or software, are in working order and free from defect. We also assume that the services are of sufficient capacity to meet current and future needs.

24 Land and Building Apportionments: When instructed, we will provide apportionments between land and buildings for depreciation purposes only. Such apportionments are not valuations and should not be used for any other purpose unless specified in the report.

25 Portfolio Valuations: In respect of valuations of portfolios of properties, our overall valuation is an aggregate of the individual values of each individual property. The valuation assumes, therefore, that each property would be marketed as an individual property and not as part of a portfolio. Consequently no portfolio premium or discount has been reflected and any consequence of marketing a range of individual properties together has also not been reflected in our valuations. However, if adjoining or complementary properties might achieve a higher value by being marketed together (known as “prudent lotting”), we have reported the higher value that would emerge.

26 Rating: Any information regarding rating has generally been obtained from the Valuation Office website. We will not investigate whether any rating assessment is a fair assessment or considered the likelihood of an appeal being successful.

27 Plans and Maps: All plans and maps included in our report are strictly for identification purposes only, and, whilst believed to be correct, are not guaranteed and must not form part of any contract. All are published under licence and may include mapping data from Ordnance Survey © Crown Copyright. All rights are reserved.

Market Value (January 2019)

Market Value

Definition and Interpretive Commentary reproduced from the RICS Valuation – Global

Standards 2017, VPS 4 and IVS Framework

1.1 Market Value

1.1.1 The definition of Market Value as defined in IVS 104 paragraph 30.1 is:

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

1.1.2 Market value is a basis of value that is internationally recognised and has a long-established definition. It describes an exchange between parties that are unconnected and are operating freely in the marketplace and represents the figure that would appear in a hypothetical contract of sale, or equivalent legal document, at the valuation date, reflecting all those factors that would be taken into account in framing their bids by market participants at large and reflecting the highest and best use of the asset. The highest and best use of an asset is the use of an asset that maximises its productivity and that is possible, legally permissible and financially feasible – fuller treatment of this particular premise of value can be found at section 140 of IVS 104.

1.1.3 It ignores any price distortions caused by special value (an amount that reflects particular attributes of an asset that are only of value to a special purchaser) or marriage value. It represents the price that would most likely be achievable for an asset across a wide range of circumstances. Market rent applies similar criteria for estimating a recurring payment rather than a capital sum.

1.1.4 In applying market value, regard must also be had to the requirement that the valuation amount reflects the actual market state and circumstances as of the effective valuation date. The full conceptual framework for market value can be found at paragraph 30.2 of IVS 104.

1.1.5 Notwithstanding the disregard of special value, where the price offered by prospective buyers generally in the market would reflect an expectation of a change in the circumstances of the asset in the future, the impact of that expectation is reflected in market value. Examples of where the expectation of additional value being created or obtained in the future may have an impact on the market value include:

■ the prospect of development where there is no current permission for that development and ■ the prospect of marriage value arising from merger with another property or asset, or interests within the same property or asset, at a future date.

1.1.6 The impact on value arising by use of an assumption or special assumption should not be confused with the additional value that might be attributed to an asset by a special purchaser.

1.1.7 In some jurisdictions a basis of value described as ‘highest and best use’ is adopted and this may either be defined by statute or established by common practice in individual countries or states.

Market Value (January 2019)

IVS Framework

30.2 The definition of Market Value shall be applied in accordance with the following conceptual framework:

(a) “the estimated amount” refers to a price expressed in terms of money payable for the asset in an arm’s length market transaction. Market Value is the most probable price reasonably obtainable in the market on the valuation date in keeping with the market value definition. It is the best price reasonably obtainable by the seller and the most advantageous price reasonably obtainable by the buyer. This estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted by anyone associated with the sale, or any element of value available only to a specific owner or purchaser;

(b) “an asset or liability should exchange” refers to the fact that the value of an asset or liability is an estimated amount rather than a predetermined amount or actual sale price. It is the price in a transaction that meets all the elements of the Market Value definition at the valuation date;

(c) “on the valuation date” requires that the value is time-specific as of a given date. Because markets and market conditions may change, the estimated value may be incorrect or inappropriate at another time. The valuation amount will reflect the market state and circumstances as at the valuation date, not those at any other date;

(d) “between a willing buyer” refers to one who is motivated, but not compelled to buy. This buyer is neither over eager nor determined to buy at any price. This buyer is also one who purchases in accordance with the realities of the current market and with current market expectations, rather than in relation to an imaginary or hypothetical market that cannot be demonstrated or anticipated to exist. The assumed buyer would not pay a higher price than the market requires. The present owner is included among those who constitute “the market”;

(e) “and a willing seller” is neither an over eager nor a forced seller prepared to sell at any price, nor one prepared to hold out for a price not considered reasonable in the current market. The willing seller is motivated to sell the asset at market terms for the best price attainable in the open market after proper marketing, whatever that price may be. The factual circumstances of the actual owner are not a part of this consideration because the willing seller is a hypothetical owner;

(f) “in an arm’s length transaction” is one between parties who do not have a particular or special relationship, eg parent and subsidiary companies or landlord and tenant that may make the price level uncharacteristic of the market or inflated. The Market Value transaction is presumed to be between unrelated parties, each acting independently;

(g) “after proper marketing” means that the asset has been exposed to the market in the most appropriate manner to effect its disposal at the best price reasonably obtainable in accordance with the Market Value definition. The method of sale is deemed to be that most appropriate to obtain the best price in the market to which the seller has access. The length of exposure time is not a fixed period but will vary according to the type of asset and market conditions. The only criterion is that there must have been sufficient time to allow the asset to be brought to the attention of an adequate number of market participants. The exposure period occurs prior to the valuation date;

Market Value (January 2019)

(h) “where the parties had each acted knowledgeably, prudently” presumes that both the willing buyer and the willing seller are reasonably informed about the nature and characteristics of the asset, its actual and potential uses, and the state of the market as of the valuation date. Each is further presumed to use that knowledge prudently to seek the price that is most favourable for their respective positions in the transaction. Prudence is assessed by referring to the state of the market at the valuation date, not with benefit of hindsight at some later date. For example, it is not necessarily imprudent for a seller to sell assets in a market with falling prices at a price that is lower than previous market levels. In such cases, as is true for other exchanges in markets with changing prices, the prudent buyer or seller will act in accordance with the best market information available at the time;

(i) “and without compulsion” establishes that each party is motivated to undertake the transaction, but neither is forced or unduly coerced to complete it.

30.3 The concept of Market Value presumes a price negotiated in an open and competitive market where the participants are acting freely. The market for an asset could be an international market or a local market. The market could consist of numerous buyers and sellers, or could be one characterised by a limited number of market participants. The market in which the asset is presumed exposed for sale is the one in which the asset notionally being exchanged is normally exchanged.

30.4 The Market Value of an asset will reflect its highest and best use. The highest and best use is the use of an asset that maximises its potential and that is possible, legally permissible and financially feasible. The highest and best use may be for continuation of an asset’s existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid.

30.5 The nature and source of the valuation inputs must be consistent with the basis of value, which in turn must have regard to the valuation purpose. For example, various approaches and methods may be used to arrive at an opinion of value providing they use market-derived data. The market approach will, by definition, use market-derived inputs. To indicate Market Value, the income approach should be applied, using inputs and assumptions that would be adopted by participants. To indicate Market Value using the cost approach, the cost of an asset of equal utility and the appropriate depreciation should be determined by analysis of market-based costs and depreciation.

30.6 The data available and the circumstances relating to the market for the asset being valued must determine which valuation method or methods are most relevant and appropriate. If based on appropriately analysed market-derived data, each approach or method used should provide an indication of Market Value.

30.7 Market Value does not reflect attributes of an asset that are of value to a specific owner or purchaser that are not available to other buyers in the market. Such advantages may relate to the physical, geographic, economic or legal characteristics of an asset. Market Value requires the disregard of any such element of value because, at any given date, it is only assumed that there is a willing buyer, not a particular willing buyer.

1.2 Special Value Special value is an amount that reflects particular attributes of an asset that are only of value to a special

purchaser. A special purchaser is a particular buyer for whom a particular asset has special value because of advantages arising from its ownership that would not be available to other buyers in a market.

Market Rent (January 2019)

Market Rent Definition and Interpretive Commentary reproduced from the RICS Valuation – Global Standards 2017, VPS 4 and IVS Framework

1.1 Market rent

1.1.1 Market rent is defined in IVS 104 paragraph 40.1 as:

The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

1.1.2 Market rent will vary significantly according to the terms of the assumed lease contract. The appropriate lease terms will normally reflect current practice in the market in which the property is situated, although for certain purposes unusual terms may need to be stipulated. Matters such as the duration of the lease, the frequency of rent reviews and the responsibilities of the parties for maintenance and outgoings will all impact the market rent. In certain countries or states, statutory factors may either restrict the terms that may be agreed, or influence the impact of terms in the contract. These need to be taken into account where appropriate.

1.1.3 Market rent will normally be used to indicate the amount for which a vacant property may be let, or for which a let property may be re-let when the existing lease terminates. Market rent is not a suitable basis for settling the amount of rent payable under a rent review provision in a lease, where the definitions and assumptions specified in the lease have to be used.

1.1.4 Valuers must therefore take care to set out clearly the principal lease terms that are assumed when providing an opinion of market rent. If it is the market norm for lettings to include a payment or concession by one party to the other as an incentive to enter into a lease, and this is reflected in the general level of rents agreed, the market rent should also be expressed on this basis. The nature of the incentive assumed must be stated by the valuer, along with the assumed lease terms.

IVS Framework

40.1 Market Rent is the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

40.2 Market Rent may be used as a basis of value when valuing a lease or an interest created by a lease. In such cases, it is necessary to consider the contract rent, and, where it is different, the market rent.

40.3 The conceptual framework supporting the definition of Market Value… can be applied to assist in the interpretation of Market Rent. In particular, the estimated amount excludes a rent inflated or deflated by special terms, considerations or concessions. The “appropriate lease terms” are terms that would typically be agreed in the market for the type of property on the valuation date between market participants. An indication of Market Rent should only be provided in conjunction with an indication of the principal lease terms that have been assumed.

40.4 Contract Rent is the rent payable under the terms of an actual lease. It may be fixed for the duration of the lease, or variable. The frequency and basis of calculating variations in the rent will be set out in the lease and must be identified and understood in order to establish the total benefits accruing to the lessor and the liability of the lessee.

Market Rent (January 2019)

40.5 In some circumstances the Market Rent may have to be assessed based on terms of an existing lease (eg, for rental determination purposes where the lease terms are existing and therefore not to be assumed as part of a notional lease).

40.6 In calculating Market Rent, the valuer must consider the following: a) in regards to a Market Rent subject to a lease, the terms and conditions of that lease are the appropriate lease terms unless those terms and conditions are illegal or contrary to overarching legislation, and b) in regard to a Market Rent that is not subject to a lease, the assumed terms and conditions are the terms of a notional lease that would typically be agreed in a market for the type of property on the valuation date between market participants.

Appendices

Appendix 3 Location Maps and Plans

created on Plotted Scale - 1:175,000

This plan is published for the convenience of identification only and although believed to be correct is not guaranteed and it does not form any part of any contract. INTU Derby, London Rd, Derby DE1 2PL

created on Plotted Scale - 1:7,500

created on Plotted Scale - 1:2,498

This plan is published for the convenience of identification only and although believed to be correct is not guaranteed and it does not form any part of any contract. Appendices

Appendix 4 Photographs

External View – Intu Derby

Internal View – Intu Derby

Internal View - M&S Unit

Internal View - Food Court

Internal View – Top Floor

External View – Bradshaw Way Retail Park

Appendix 5 Valuation Print-Outs

Report Date 25 June 2019 Valuation Date 04 June 2019

Property

Address Intu Derby - Jun 19,Derby File/Ref No 033

Gross Valuation £375,850,621 Capital Costs -£4,344,675 Net Value Before Fees £371,505,945

Less Stamp Duty @5.00% of Net Value -£17,539,500 Agent Fee @0.50% of Net Value -£2,106,000 Legal Fees @0.25% of Net Value -£1,053,000

Fees include non recoverable VAT @ 20.00 % Net Valuation £350,807,445 Say £351,000,000

Equivalent Yield 7.2288% True Equivalent Yield 7.5551% Initial Yield (Deemed) 6.5119% Initial Yield (Contracted) 6.5117% Reversion Yield 7.6540%

Total Contracted Rent £27,589,130 Total Current Rent £27,590,080 Total Rental Value £30,244,855 No. Tenants 247 Capital value per ft² £298.93

Running Yields

Date Gross Rent Net Rent Annual Quarterly 04-Jun-2019 £27,590,080 £24,204,728 6.5119 % 6.7858 % 24-Jun-2019 £27,594,080 £24,208,728 6.5130 % 6.7870 % 03-Jul-2019 £27,529,588 £24,144,236 6.4957 % 6.7682 % 04-Jul-2019 £27,494,288 £24,108,936 6.4862 % 6.7579 % 14-Jul-2019 £27,294,288 £23,908,936 6.4323 % 6.6995 % 20-Jul-2019 £27,300,088 £23,914,736 6.4339 % 6.7012 % 24-Jul-2019 £27,302,588 £23,917,236 6.4346 % 6.7019 % 31-Jul-2019 £27,250,088 £23,897,400 6.4292 % 6.6961 % 01-Aug-2019 £27,247,256 £23,894,568 6.4285 % 6.6953 % 04-Aug-2019 £27,240,186 £23,887,498 6.4266 % 6.6932 % 12-Aug-2019 £27,237,751 £23,885,063 6.4259 % 6.6925 % 03-Sep-2019 £27,242,751 £23,890,063 6.4273 % 6.6940 % 04-Sep-2019 £27,030,028 £23,679,582 6.3706 % 6.6326 % 16-Sep-2019 £27,032,528 £23,682,082 6.3713 % 6.6333 % 18-Sep-2019 £27,000,384 £23,649,938 6.3627 % 6.6240 %

Portfolio: Intu Derby June 2019 CIRCLE VISUAL INVESTOR 2.50.079 REPORT Valuation Summary Jones Lang Lasalle

Report Date 25 June 2019 Valuation Date 04 June 2019

19-Sep-2019 £26,901,384 £23,608,577 6.3515 % 6.6119 % 21-Sep-2019 £26,555,064 £23,284,526 6.2644 % 6.5175 % 29-Sep-2019 £26,530,064 £23,259,526 6.2576 % 6.5102 % 02-Oct-2019 £26,180,064 £22,915,740 6.1651 % 6.4102 % 03-Oct-2019 £26,149,064 £22,887,401 6.1575 % 6.4020 % 04-Oct-2019 £26,144,764 £22,885,492 6.1570 % 6.4014 % 02-Nov-2019 £26,091,764 £22,832,492 6.1427 % 6.3860 % 14-Nov-2019 £26,109,014 £22,849,742 6.1474 % 6.3910 % 20-Nov-2019 £26,074,014 £22,814,742 6.1380 % 6.3809 % 04-Dec-2019 £25,763,569 £23,082,628 6.2100 % 6.4588 % 26-Dec-2019 £25,736,069 £23,055,128 6.2026 % 6.4508 % 01-Jan-2020 £25,671,069 £22,990,128 6.1852 % 6.4319 % 03-Jan-2020 £25,672,569 £22,991,628 6.1856 % 6.4323 % 01-Feb-2020 £25,657,569 £22,976,628 6.1815 % 6.4279 % 04-Feb-2020 £25,664,639 £22,983,698 6.1834 % 6.4300 % 04-Mar-2020 £25,664,639 £23,555,674 6.3373 % 6.5965 % 04-Apr-2020 £25,668,939 £23,559,974 6.3385 % 6.5977 % 11-Apr-2020 £25,628,939 £23,519,974 6.3277 % 6.5861 % 12-Apr-2020 £25,578,939 £23,469,974 6.3143 % 6.5715 % 19-Apr-2020 £25,512,939 £23,403,974 6.2965 % 6.5523 % 02-May-2020 £25,572,239 £23,463,274 6.3124 % 6.5696 % 05-May-2020 £25,392,239 £23,283,274 6.2640 % 6.5172 % 04-Jun-2020 £26,290,239 £24,927,885 6.7065 % 6.9973 % 06-Jun-2020 £26,005,239 £24,642,885 6.6298 % 6.9139 % 20-Jun-2020 £25,927,039 £24,564,685 6.6088 % 6.8910 % 23-Jun-2020 £25,887,039 £24,527,056 6.5986 % 6.8800 % 24-Jun-2020 £25,541,039 £24,184,084 6.5064 % 6.7798 % 25-Jun-2020 £25,491,039 £24,134,084 6.4929 % 6.7652 % 01-Jul-2020 £25,506,039 £24,149,084 6.4970 % 6.7696 % 03-Jul-2020 £25,622,639 £24,265,684 6.5283 % 6.8036 % 04-Jul-2020 £25,708,439 £24,351,484 6.5514 % 6.8287 % 20-Jul-2020 £25,622,639 £24,265,684 6.5283 % 6.8036 % 31-Jul-2020 £25,675,139 £24,318,184 6.5424 % 6.8190 % 01-Aug-2020 £25,745,239 £24,388,284 6.5613 % 6.8395 % 03-Aug-2020 £25,755,439 £24,398,484 6.5641 % 6.8424 % 04-Aug-2020 £25,949,739 £24,592,784 6.6163 % 6.8992 % 29-Aug-2020 £25,923,239 £24,566,284 6.6092 % 6.8915 % 03-Sep-2020 £25,928,239 £24,571,284 6.6105 % 6.8930 % 04-Sep-2020 £26,498,639 £25,141,684 6.7640 % 7.0599 % 09-Sep-2020 £26,443,639 £25,086,684 6.7492 % 7.0438 % 15-Sep-2020 £26,383,639 £25,026,684 6.7331 % 7.0262 % 16-Sep-2020 £26,328,639 £24,971,684 6.7183 % 7.0101 % 18-Sep-2020 £26,380,239 £25,023,284 6.7321 % 7.0252 %

Portfolio: Intu Derby June 2019 CIRCLE VISUAL INVESTOR 2.50.079 Page 2 REPORT Valuation Summary Jones Lang Lasalle

Report Date 25 June 2019 Valuation Date 04 June 2019

19-Sep-2020 £26,466,239 £25,109,284 6.7553 % 7.0504 % 27-Sep-2020 £26,336,039 £24,984,224 6.7216 % 7.0138 % 30-Sep-2020 £26,361,039 £25,009,224 6.7284 % 7.0211 % 06-Oct-2020 £26,236,039 £24,884,224 6.6947 % 6.9845 % 10-Oct-2020 £26,169,789 £24,817,974 6.6769 % 6.9651 % 26-Oct-2020 £26,109,789 £24,757,974 6.6608 % 6.9476 % 20-Nov-2020 £26,140,689 £24,788,874 6.6691 % 6.9566 % 04-Dec-2020 £26,479,189 £25,127,374 6.7601 % 7.0557 % 09-Dec-2020 £26,461,689 £25,109,874 6.7554 % 7.0506 % 25-Dec-2020 £26,383,189 £25,031,374 6.7343 % 7.0276 % 26-Dec-2020 £26,421,289 £25,069,474 6.7446 % 7.0388 % 03-Jan-2021 £26,422,289 £25,070,474 6.7448 % 7.0391 % 10-Jan-2021 £26,337,289 £24,985,474 6.7220 % 7.0142 % 14-Jan-2021 £26,489,289 £25,137,474 6.7629 % 7.0587 % 04-Feb-2021 £26,427,289 £25,075,474 6.7462 % 7.0405 % 12-Feb-2021 £26,294,789 £24,942,974 6.7105 % 7.0017 % 04-Mar-2021 £26,580,689 £25,228,874 6.7875 % 7.0855 % 06-Mar-2021 £26,499,689 £25,147,874 6.7657 % 7.0617 % 07-Mar-2021 £26,332,689 £24,981,426 6.7209 % 7.0130 % 25-Mar-2021 £26,225,689 £24,874,426 6.6921 % 6.9816 % 29-Mar-2021 £26,250,689 £24,899,426 6.6988 % 6.9890 % 01-Apr-2021 £26,339,489 £24,988,226 6.7227 % 7.0150 % 04-Apr-2021 £26,330,489 £24,979,226 6.7203 % 7.0123 % 11-Apr-2021 £26,400,689 £25,049,426 6.7392 % 7.0329 % 12-Apr-2021 £26,457,589 £25,106,326 6.7545 % 7.0496 % 19-Apr-2021 £26,518,689 £25,167,426 6.7709 % 7.0675 % 28-Apr-2021 £26,453,689 £25,102,426 6.7534 % 7.0484 % 01-May-2021 £26,526,289 £25,175,026 6.7730 % 7.0697 % 05-May-2021 £26,619,129 £25,267,866 6.7979 % 7.0969 % 23-May-2021 £26,594,129 £25,242,866 6.7912 % 7.0896 % 29-May-2021 £26,614,529 £25,263,266 6.7967 % 7.0955 % 04-Jun-2021 £27,707,069 £26,356,891 7.0909 % 7.4167 % 20-Jun-2021 £27,777,069 £26,426,891 7.1098 % 7.4373 % 23-Jun-2021 £27,815,669 £26,465,491 7.1202 % 7.4486 % 24-Jun-2021 £27,906,069 £26,555,891 7.1445 % 7.4753 % 27-Jun-2021 £27,806,069 £26,455,891 7.1176 % 7.4458 % 02-Jul-2021 £27,788,069 £26,437,891 7.1127 % 7.4405 % 08-Jul-2021 £27,652,869 £26,302,691 7.0764 % 7.4007 % 18-Jul-2021 £27,654,869 £26,304,691 7.0769 % 7.4013 % 27-Jul-2021 £27,664,869 £26,314,691 7.0796 % 7.4043 % 03-Aug-2021 £27,604,669 £26,254,491 7.0634 % 7.3866 % 05-Aug-2021 £27,693,769 £26,343,591 7.0874 % 7.4128 % 20-Aug-2021 £27,717,669 £26,367,491 7.0938 % 7.4198 %

Portfolio: Intu Derby June 2019 CIRCLE VISUAL INVESTOR 2.50.079 Page 3 REPORT Valuation Summary Jones Lang Lasalle

Report Date 25 June 2019 Valuation Date 04 June 2019

16-Sep-2021 £27,773,069 £26,422,891 7.1087 % 7.4361 % 19-Sep-2021 £27,703,069 £26,352,891 7.0899 % 7.4155 % 21-Sep-2021 £27,980,125 £26,629,947 7.1644 % 7.4971 % 24-Sep-2021 £28,149,425 £26,799,247 7.2099 % 7.5469 % 25-Sep-2021 £28,206,825 £26,856,647 7.2254 % 7.5638 % 26-Sep-2021 £28,046,825 £26,696,647 7.1823 % 7.5167 % 28-Sep-2021 £27,882,825 £26,532,647 7.1382 % 7.4684 % 02-Oct-2021 £28,159,725 £26,811,227 7.2132 % 7.5505 % 10-Oct-2021 £28,225,925 £26,877,427 7.2310 % 7.5700 % 20-Oct-2021 £28,311,725 £26,963,227 7.2541 % 7.5953 % 09-Dec-2021 £28,391,525 £27,043,027 7.2755 % 7.6188 % 15-Dec-2021 £28,464,525 £27,116,027 7.2952 % 7.6403 % 27-Dec-2021 £28,597,225 £27,248,727 7.3309 % 7.6795 % 03-Jan-2022 £28,598,225 £27,249,727 7.3311 % 7.6798 % 04-Jan-2022 £28,616,625 £27,268,127 7.3361 % 7.6852 % 06-Jan-2022 £28,722,425 £27,373,927 7.3646 % 7.7164 % 10-Jan-2022 £28,796,525 £27,448,027 7.3845 % 7.7383 % 26-Jan-2022 £28,847,925 £27,499,427 7.3983 % 7.7535 % 27-Jan-2022 £28,689,925 £27,341,427 7.3558 % 7.7068 % 04-Feb-2022 £28,744,325 £27,395,827 7.3704 % 7.7229 % 13-Feb-2022 £28,694,325 £27,388,242 7.3684 % 7.7207 % 23-Feb-2022 £28,716,825 £27,410,742 7.3745 % 7.7273 % 06-Mar-2022 £29,196,025 £27,889,942 7.5034 % 7.8689 % 09-Mar-2022 £29,221,425 £27,915,342 7.5102 % 7.8764 % 24-Mar-2022 £29,371,425 £28,065,342 7.5506 % 7.9208 % 25-Mar-2022 £28,488,988 £27,203,193 7.3186 % 7.6660 % 02-Apr-2022 £28,506,988 £27,221,193 7.3235 % 7.6713 % 01-May-2022 £28,508,188 £27,222,393 7.3238 % 7.6717 % 03-May-2022 £28,568,388 £27,282,593 7.3400 % 7.6895 % 04-Jun-2022 £28,568,388 £26,161,379 7.0383 % 7.3592 % 07-Jun-2022 £28,748,788 £26,341,779 7.0869 % 7.4122 % 23-Jun-2022 £28,259,038 £25,853,562 6.9555 % 7.2687 % 24-Jun-2022 £25,959,810 £23,576,940 6.3430 % 6.6027 % 25-Jun-2022 £26,079,910 £23,697,040 6.3753 % 6.6377 % 24-Jul-2022 £26,039,910 £23,657,040 6.3646 % 6.6260 % 28-Jul-2022 £26,080,310 £23,697,440 6.3754 % 6.6378 % 01-Aug-2022 £26,082,310 £23,699,440 6.3760 % 6.6384 % 12-Aug-2022 £26,085,508 £23,702,638 6.3768 % 6.6393 % 03-Sep-2022 £25,870,508 £23,487,638 6.3190 % 6.5767 % 04-Sep-2022 £25,820,508 £23,437,638 6.3056 % 6.5621 % 12-Sep-2022 £25,830,308 £23,447,438 6.3082 % 6.5650 % 19-Sep-2022 £25,899,708 £23,516,838 6.3269 % 6.5852 % 20-Sep-2022 £25,844,708 £23,461,838 6.3121 % 6.5692 %

Portfolio: Intu Derby June 2019 CIRCLE VISUAL INVESTOR 2.50.079 Page 4 REPORT Valuation Summary Jones Lang Lasalle

Report Date 25 June 2019 Valuation Date 04 June 2019

25-Sep-2022 £25,776,180 £23,393,310 6.2936 % 6.5492 % 26-Sep-2022 £25,866,380 £23,483,510 6.3179 % 6.5755 % 27-Sep-2022 £25,950,880 £23,568,010 6.3406 % 6.6001 % 28-Sep-2022 £26,037,180 £23,654,310 6.3638 % 6.6252 % 29-Sep-2022 £25,553,886 £23,177,684 6.2356 % 6.4864 % 01-Oct-2022 £25,515,586 £23,139,384 6.2253 % 6.4753 % 02-Oct-2022 £25,542,086 £23,165,884 6.2324 % 6.4830 % 15-Oct-2022 £25,462,086 £23,086,222 6.2110 % 6.4598 % 24-Oct-2022 £25,504,586 £23,128,722 6.2224 % 6.4722 % 08-Nov-2022 £25,404,586 £23,028,722 6.1955 % 6.4431 % 04-Dec-2022 £25,397,986 £23,022,122 6.1938 % 6.4412 % 20-Dec-2022 £25,325,186 £22,949,322 6.1742 % 6.4200 % 29-Dec-2022 £25,354,786 £22,978,922 6.1821 % 6.4286 % 31-Dec-2022 £25,307,286 £22,931,422 6.1694 % 6.4148 % 03-Jan-2023 £25,308,286 £22,932,422 6.1696 % 6.4151 % 04-Feb-2023 £25,098,286 £22,722,422 6.1131 % 6.3540 % 12-Feb-2023 £25,226,286 £22,850,422 6.1476 % 6.3912 % 27-Feb-2023 £25,208,786 £22,832,922 6.1429 % 6.3861 % 03-Mar-2023 £25,361,886 £22,986,022 6.1841 % 6.4307 % 12-Mar-2023 £25,186,886 £22,811,022 6.1370 % 6.3798 % 14-Mar-2023 £25,046,886 £22,671,022 6.0993 % 6.3391 % 20-Mar-2023 £25,117,086 £22,741,222 6.1182 % 6.3595 % 25-Mar-2023 £25,180,186 £22,804,322 6.1352 % 6.3778 % 28-Mar-2023 £25,312,686 £22,936,822 6.1708 % 6.4164 % 29-Mar-2023 £25,399,786 £23,023,922 6.1942 % 6.4417 % 08-Apr-2023 £25,564,986 £23,189,122 6.2387 % 6.4897 % 15-Apr-2023 £25,632,286 £23,256,422 6.2568 % 6.5093 % 22-Apr-2023 £25,640,186 £23,264,322 6.2589 % 6.5116 % 24-Apr-2023 £25,557,286 £23,181,422 6.2366 % 6.4875 % 01-May-2023 £25,504,786 £23,128,922 6.2225 % 6.4722 % 13-May-2023 £25,564,686 £23,188,822 6.2386 % 6.4897 % 17-May-2023 £25,726,346 £23,350,482 6.2821 % 6.5367 % 23-May-2023 £25,661,346 £23,285,482 6.2646 % 6.5178 % 04-Jun-2023 £25,672,946 £23,297,108 6.2677 % 6.5212 % 18-Jun-2023 £25,575,196 £23,199,358 6.2414 % 6.4927 % 23-Jun-2023 £25,645,796 £23,269,958 6.2604 % 6.5133 % 24-Jun-2023 £25,727,196 £23,351,358 6.2823 % 6.5370 % 25-Jun-2023 £25,825,196 £23,449,358 6.3087 % 6.5655 % 29-Jun-2023 £25,920,796 £23,544,958 6.3344 % 6.5934 % 30-Jun-2023 £25,708,296 £23,332,458 6.2773 % 6.5315 % 01-Jul-2023 £25,752,396 £23,376,558 6.2891 % 6.5443 % 01-Aug-2023 £25,807,296 £23,431,458 6.3039 % 6.5603 % 11-Aug-2023 £25,695,296 £23,320,899 6.2741 % 6.5281 %

Portfolio: Intu Derby June 2019 CIRCLE VISUAL INVESTOR 2.50.079 Page 5 REPORT Valuation Summary Jones Lang Lasalle

Report Date 25 June 2019 Valuation Date 04 June 2019

12-Aug-2023 £25,495,296 £23,120,899 6.2203 % 6.4699 % 27-Aug-2023 £25,506,496 £23,132,099 6.2234 % 6.4732 % 09-Sep-2023 £25,286,496 £22,912,099 6.1642 % 6.4092 % 10-Sep-2023 £25,266,496 £22,892,099 6.1588 % 6.4033 % 14-Sep-2023 £25,318,196 £22,979,010 6.1822 % 6.4286 % 16-Sep-2023 £25,315,496 £22,976,310 6.1814 % 6.4278 % 23-Sep-2023 £25,575,296 £23,236,110 6.2513 % 6.5034 % 24-Sep-2023 £26,282,856 £23,943,670 6.4417 % 6.7096 % 01-Oct-2023 £26,290,365 £23,951,179 6.4437 % 6.7118 % 07-Oct-2023 £26,195,365 £23,856,179 6.4182 % 6.6841 % 08-Oct-2023 £26,130,365 £23,798,471 6.4026 % 6.6673 % 24-Oct-2023 £26,213,265 £23,881,371 6.4249 % 6.6915 % 27-Oct-2023 £26,356,165 £24,024,271 6.4634 % 6.7332 % 01-Nov-2023 £26,377,465 £24,045,571 6.4691 % 6.7394 % 23-Nov-2023 £26,427,565 £24,095,671 6.4826 % 6.7540 % 04-Dec-2023 £26,434,565 £24,102,671 6.4845 % 6.7560 % 10-Dec-2023 £26,455,965 £24,124,071 6.4902 % 6.7623 % 12-Dec-2023 £26,594,565 £24,262,671 6.5275 % 6.8028 % 18-Dec-2023 £26,682,765 £24,350,871 6.5512 % 6.8285 % 20-Dec-2023 £26,764,865 £24,432,971 6.5733 % 6.8525 % 23-Dec-2023 £26,856,165 £24,524,271 6.5979 % 6.8792 % 24-Dec-2023 £27,114,365 £24,782,471 6.6674 % 6.9547 % 30-Dec-2023 £27,256,165 £24,924,271 6.7055 % 6.9962 % 03-Jan-2024 £27,204,165 £24,872,271 6.6915 % 6.9810 % 28-Jan-2024 £27,205,565 £24,873,671 6.6919 % 6.9814 % 04-Feb-2024 £27,345,265 £25,013,371 6.7295 % 7.0223 % 08-Feb-2024 £27,491,865 £25,159,971 6.7689 % 7.0653 % 25-Feb-2024 £27,461,865 £25,129,971 6.7608 % 7.0565 % 04-Mar-2024 £27,369,865 £25,037,971 6.7361 % 7.0295 % 07-Mar-2024 £27,339,865 £25,007,971 6.7280 % 7.0207 % 14-Mar-2024 £27,387,365 £25,055,471 6.7408 % 7.0347 % 17-Mar-2024 £27,417,365 £25,085,471 6.7489 % 7.0434 % 24-Mar-2024 £27,997,165 £25,665,271 6.9049 % 7.2135 % 25-Mar-2024 £27,863,915 £25,532,021 6.8690 % 7.1744 % 30-Mar-2024 £27,961,415 £25,629,521 6.8952 % 7.2030 % 01-Apr-2024 £27,981,015 £25,649,121 6.9005 % 7.2087 % 07-Apr-2024 £28,102,415 £25,770,521 6.9332 % 7.2443 % 08-Apr-2024 £28,188,815 £25,856,921 6.9564 % 7.2697 % 11-May-2024 £28,300,915 £25,969,021 6.9866 % 7.3027 % 12-May-2024 £28,537,015 £26,205,121 7.0501 % 7.3720 % 25-May-2024 £28,559,415 £26,227,521 7.0561 % 7.3786 % 24-Jun-2024 £28,923,115 £26,591,221 7.1540 % 7.4857 % 03-Jul-2024 £28,962,115 £26,630,221 7.1645 % 7.4971 %

Portfolio: Intu Derby June 2019 CIRCLE VISUAL INVESTOR 2.50.079 Page 6 REPORT Valuation Summary Jones Lang Lasalle

Report Date 25 June 2019 Valuation Date 04 June 2019

30-Jul-2024 £28,974,815 £26,642,921 7.1679 % 7.5009 % 09-Sep-2024 £29,168,415 £26,836,521 7.2200 % 7.5579 % 22-Sep-2024 £29,131,515 £26,799,621 7.2100 % 7.5470 % 24-Sep-2024 £29,184,715 £26,852,821 7.2244 % 7.5627 % 25-Sep-2024 £30,318,015 £27,986,121 7.5293 % 7.8974 % 01-Oct-2024 £30,410,383 £28,078,489 7.5541 % 7.9247 % 11-Oct-2024 £30,355,383 £28,023,489 7.5393 % 7.9084 % 17-Nov-2024 £30,300,383 £27,968,489 7.5245 % 7.8921 % 03-Dec-2024 £30,305,383 £27,973,489 7.5259 % 7.8936 % 04-Dec-2024 £30,285,083 £27,959,804 7.5222 % 7.8896 % 07-Dec-2024 £30,313,283 £27,988,004 7.5298 % 7.8979 % 05-Jan-2025 £30,305,833 £27,980,554 7.5278 % 7.8957 % 01-Apr-2025 £30,360,533 £28,035,254 7.5425 % 7.9119 % 11-Apr-2025 £30,410,533 £28,085,254 7.5559 % 7.9267 % 17-May-2025 £30,469,933 £28,144,654 7.5719 % 7.9443 % 04-Jun-2025 £30,523,033 £28,197,754 7.5862 % 7.9600 % 04-Sep-2025 £30,622,533 £28,297,254 7.6130 % 7.9895 % 16-Oct-2025 £30,560,433 £28,235,154 7.5963 % 7.9711 % 10-Jan-2026 £30,485,133 £28,159,854 7.5760 % 7.9488 % 17-Mar-2026 £30,467,233 £28,173,801 7.5797 % 7.9529 % 24-Jun-2026 £30,467,233 £28,206,136 7.5884 % 7.9625 % 18-Jul-2026 £30,458,633 £28,197,536 7.5861 % 7.9599 % 22-Aug-2026 £30,428,033 £28,166,936 7.5779 % 7.9509 % 01-May-2027 £30,428,033 £28,266,849 7.6048 % 7.9804 % 24-Jun-2027 £30,408,533 £28,247,349 7.5995 % 7.9747 % 04-Sep-2027 £30,441,595 £28,280,411 7.6084 % 7.9845 % 23-Feb-2028 £30,433,595 £28,272,411 7.6063 % 7.9821 % 31-Mar-2028 £30,434,095 £28,272,911 7.6064 % 7.9822 % 16-May-2028 £30,272,435 £28,358,745 7.6295 % 8.0077 % 30-Jun-2028 £30,236,085 £28,322,395 7.6197 % 7.9969 % 02-Jul-2028 £30,231,885 £28,318,195 7.6186 % 7.9957 % 01-Aug-2028 £30,230,385 £28,316,695 7.6182 % 7.9952 % 04-Sep-2029 £30,230,385 £28,321,949 7.6196 % 7.9968 % 06-Oct-2029 £30,194,885 £28,286,449 7.6101 % 7.9863 % 04-Dec-2029 £30,186,285 £28,277,849 7.6077 % 7.9837 % 18-May-2030 £30,141,385 £28,232,949 7.5957 % 7.9704 % 02-Oct-2030 £30,125,344 £28,216,908 7.5913 % 7.9657 % 06-Jan-2031 £30,148,244 £28,239,808 7.5975 % 7.9724 % 09-Oct-2032 £30,070,371 £28,240,445 7.5977 % 7.9726 % 25-Dec-2037 £30,070,371 £28,415,121 7.6447 % 8.0244 % 24-Jan-2042 £30,038,371 £28,425,838 7.6476 % 8.0275 % 07-Jul-2074 £30,038,371 £28,448,800 7.6537 % 8.0343 % 29-Sep-2097 £30,038,371 £28,449,700 7.6540 % 8.0346 %

Portfolio: Intu Derby June 2019 CIRCLE VISUAL INVESTOR 2.50.079 Page 7 REPORT Valuation Summary Jones Lang Lasalle

Report Date 25 June 2019 Valuation Date 04 June 2019

Yields based on £371,698,500

Portfolio: Intu Derby June 2019 CIRCLE VISUAL INVESTOR 2.50.079 Page 8 Appendices

Appendix 6 UK Economic and Property Market Commentary

United Kingdom | May 2019

Capital Markets Research

Supporting Copy

1 Summary

Property

• Capital value growth turns negative at the All-Property level

• Rental growth is at its lowest level since 2013, pulled down by an accelerating fall in retail rents

• Brexit uncertainty weights on Central London office sector, with rental growth at just 1% since the start of 2019

Economy

• Consumer spending softens in Q2 2019

• Bank of England likely to cut interest rates in the event of a ‘No deal’ Brexit

Table 1 - JLL Annual Forecast: IPD UK (%)

2019 2020 2021

Total returns

All Property 3.4 3.7 3.8

Office 4.2 4.5 4.4

Retail -0.1 1.3 2.2

Industrial 7.9 7.7 6.4

Capital growth

All Property -0.9 -0.7 -0.7

Office 0.3 0.5 0.4

Retail -4.7 -3.6 -2.8

Industrial 3.5 3.4 2.1

Source: JLL

2 Property Market

Annual capital value growth turns negative for the first time since 2013 at the all-property level

Capital value growth in the 12 months to May recorded a fall of 0.5%. With monthly capital values being negative for the past six consecutive months, annual growth will likely continue to decline in the coming months. Indeed, since the beginning of the year, capital values have fallen by 0.6%.

Within the sectors, annual capital value growth was -9.1% in Retail, 1.4% in Office and 7.4% in Industrial.

Upward pressure on yields has led to a negative yield impact in the last five consecutive months, and that has been the driver of falling capital value growth.

Table 2 – IPD UK Monthly Index, May 2019

Income return Capital value growth Rental growth Total returns

All Property 0.4 -0.2 0.0 0.2

Office 0.4 -0.1 0.0 0.3

Retail 0.5 -0.7 -0.3 -0.2

Industrial 0.4 0.2 0.2 0.6 Source: IPD

Annual rental growth has slowed to its lowest rate since 2013

Annual rental growth declined from 0.4% to 0.3% in the 12 months to May, the slowest rate of growth since 2013. This was driven the accelerating decline in retail rents, which fell by 3.9% (the quickest decline since 2010).

The decline in retail rents, combined with the outward movement of yields has led to capital values in the sector to decline by 9.1% in the past year. In 2019 alone retail capital values have shed 3.5%. With the monthly readings continuing to be negative, it looks likely to continue to fall in the coming months.

Shopping Centres – Opportunity amongst the rubble

The retail industry’s struggles have been extensively documented, with a combination of rising business rates, falling footfall, migration to online commerce and high levels of indebtness all adding up to a growing numnber of retail businesses going bust or starting CVA proceedings.

Company voluntary agreements (CVAs) allows retailers to negotiate with their creditors (including landlords) to pay back their debt over a set period of time. CVAs are most popular with legacy retailers with a large footprint - the likes of Debenhams, House of Fraser (and potentially Arcadia) – as it allows them to renegotiate their rents (typically one of their largest costs) which otherwise would be locked into long, upward only rent review leases. It also enables them to close underperforming stores.

This brings us to why Shopping Centres have been some of the worst performers within the retail sector. Retailers currently in or potentially heading to CVA typically have a large proportion of their stores in Shopping centres, often large department stores acting as anchor tenants.

Indeed, the downward pressure on rents is highlighted by the latest monthly IPD index, showing rental values falling by 5% over the past 12 months. But it’s the prospect of further insolvencies and CVAs amongst retailers that has investors questioning the security of income streams of shopping centres. This is reflected in the significant outward movement of yields, resulting in capital values falling by over 20% since 2016 (and even more in real terms).

Investors avoided the Shopping Centre market in Q1 2019, with our data suggesting only 5 shopping centres traded in the first quarter (equating to £50mn in value). This is in stark contrast to the average quarterly value of just under £1 billion of shopping centres traded in the period 2012-2017.

As rental income falls, and capital values decline, the likelihood that shopping centre landlords will start breaching their debt covenants will increase. This in turn will lead to a spike in distressed sales. Two of the most significant covenants in a debt contract are the maximum LTV (Loan-to-value) ratio and the Debt Service Coverage Ratio (DSCR).

The maximum LTV ratio will typically state that if a borrower exceeds a certain LTV ratio, they will be in breach of the contract and the property can be foreclosed. As mentioned earlier, with capital values now 20% lower, there’s a real possibility of LTV maximum ratios being breached.

Typically lenders are reluctant to directly foreclose without letting the borrower either inject further equity to reduce the LTV ratio or secure further financing. A recent report by the Laxfield Group highlights this trend, with a spike in demand for financing on smaller retail assets suggesting a large pool of secondary assets sought financing. Investors appear to be seeking more support from lenders to replace existing funding against deteriorating values and finance acquisitions. At the same time, lenders are imposing stricter lending criteria for retail assets with higher required LTVs and higher lending margins (margins on loans backed by retail assets have double since 2014). This higher cost of finance as well as falling capital values puts landlords between a rock and a hard place.

Some lenders will also have a DSCR minimum, below which a borrower will be in breach of the contract. The DSCR is a measure of the cash flow available to pay current debt obligations. A DSCR of less than 1 means there is not enough income from the asset to service the debt. As mentioned earlier, with rental income declining and loan margins rising this is another avenue for potential breach of contract.

All this points to the potential of a rising number of distressed sales in the short to medium term within the shopping centre sector.

And whilst there are significant challenges in this sector, there is also a contagion effect, where all Shopping Centres have been tarnished with the same brush. JLL believes that the vast majority of super-prime, prime, heritage and convenience locations will thrive and survive in the new retail world. Populous centres within the South East, and in particular those on or close to transport hubs, will be particularly resilient and offer growth opportunities.

We analysed the 32 Shopping Centres that transacted since the beginning of 2018 focusing on Secondary Shopping Centres (defined as either being in a secondary location or of secondary quality).

The majority of this sample were on average 0.4 miles from the nearest train station and in most cases in a commuter town. This suggests that not only Regionally Dominant Shopping Centres with a large leisure and F&B offering will be sought by investors, but also smaller Shopping Centres that offer convenience by being near transport links such as rail stations.

If you can’t be the destination as in the case of Super Prime Shopping Centres, it doesn’t hurt to be near one (such as a train station).

3 Economy

Consumer spending softens in Q2

The ONS reported that retail sales fell by 0.5% in May month-on-month, with the unseasonably cold period leading to a decline in clothing sales in particular. However, on a three-month basis, sales grew by 1.6%, albeit this was down on the 1.7% growth recorded over the three months to April. According to the ONS, department stores saw the most acute decline, failing by 0.9% in the three-month period – indeed, department store sales have not grown since September last year. The ONS data certainly paints a more positive picture than the BRC's reported earlier in the month, with total sales down by 2.7%, and up by only 0.2% on a three-month rolling basis. However, it appears that, despite the fact that consumers have thus far largely taken Brexit in their stride (helped by stable inflation and stronger growth in wages), consumer spending has indeed softened in the second quarter.

Bank of England (BoE) suggests stimulus will be required in the event of ‘No deal’ Brexit

The Governor of the BoE, Mark Carney recently stated that the central bank will provide some monetary stimulus to the economy in the case of a ‘No deal’ Brexit, in the form of an interest rate cut. This is on the back of his view that a disorderly exit from the EU would be a significant demand shock to the economy. Other members of the BoE’s monetary policy committee were downbeat about the current economic outlook, saying that uncertainty over Brexit was depressing corporate investment. The committee members thought the unexpected increase in business investment in the first quarter of the year was more likely to be related to a change in the way investment was counted rather than associated with a rise in business confidence.

Another warning by the Governor was the danger posed by open ended funds that promise investors instant liquidity despite holding potentially illiquid assets.

Chart 2 – Bank of England, Base interest rate, %

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: ONS

Table 3 – UK economic forecasts

2019 2020 2021

GDP 1.4 1.9 2.1

Retail Sales Index (volumes) 2.7 2.4 2.5

Inflation (CPI) 1.8 1.7 1.6

Bank of England Base Rate 1.0 1.25 1.75

10-year Gilt Yield 1.6 2.0 2.3

Source: Oxford Economics

Table 4 – Current Economic Indicators

Retail Sales (Y-o-Y): 1.8% p Consumer Confidence: -8 p Unemployment: 3.8% q

Inflation (CPI): 2.1% p UK 10-year gilt yield 0.89% q BoE base rate 0.75% tu

Source: BRC, ONS, GfK NOP, Refinitiv. Note: Arrows indicate movement on last month. *Retail sales on total basis in April 2019 are BRC, Consumer confidence April 2019, Inflation April 2019; Unemployment rate is the ILO figure from April 2019.

Links to other research publications

UK Capital Markets Blog – The latest insight and opinions on the commercial property investment market. UK Research: All the latest UK research on the office, retail, industrial and residential sectors. Includes quarterly and topical reports on the latest trends in UK real estate. Central London Office Market Report – Quarterly update on leasing and investment activity in the Central London office market. UK Regional City Quarterly Reports - City based overview giving a high-level summary of the key occupier and investor activity over the quarter. UK Property Market Index - Tracking the performance of UK commercial real estate, looking at total returns, income return and capital value growth. One of the few indices in the market to track both prime and secondary property asset.

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