LONG LET INDEX-LINKED MIXED-USE INVESTMENT OPPORTUNITY

Sheffield S1 2FD “A RARE OPPORTUNITY TO ACQUIRE A SECURE LONG LET INVESTMENT, SITUATED IN THE CITY OF , Sheffield S1 2FD ’S PREMIER COMMERCIAL CENTRE.

2 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 3 EXECUTIVE SUMMARY

- Mixed-use opportunity comprising 73% government let offices, 15% NCP car park and 12% retail.

- Rare opportunity to acquire a substantial investment secured for over 10 years WAULT to excellent covenants.

- Inflation proof income with 88% benefiting from RPI linked reviews, with the next reviews in 2022.

- 100% of the income secured against undoubted and 5A1 D&B Rated covenants.

- Situated in the heart of the Professional & Quarter, benefiting from easy access to amenities and transport routes.

- Sheffield is thepremier South Yorkshire commercial centre, home to two leading Universities and a wide range of national & global corporates and public sector occupiers.

- £1.3 billion will be invested into Sheffield City Region enhancing the considerable regeneration undertaken to date.

- Office availability is at an all-time historic low in Sheffield, fuelling rental growth.

- Let to The Secretary of State for Transport, Local Government and the Regions, National Car Parks Ltd, Argos Distributors Limited and Harvey & Thompson Limited.

- Part Freehold, part Long Leasehold.

- Current passing rent of £2,784,404 per annum.

- Offers sought in excess of £41,000,000 (Forty One Million Pounds). This reflects aNIY of 6.36% based on full acquisition costs. The vendor is able to sell the shares in a Jersey SPV, in which case the NIY would rise to 6.67% based on reduced costs.

- Assuming the current tenancy position, and based on current RPI forecasts, the yield will increase to 7.23% (on full costs) and 7.59% (on reduced costs assuming SPV purchase) in 2022, and annually thereafter due to annual uplifts in the NCP lease, collared and capped at 1 and 3%.

- An acquisition at this level, based on indicative debt terms, would produce an attractive cash on cash return in excess of 10%.

Subject to Contract.

“100% OF THE INCOME SECURED AGAINST UNDOUBTED AND 5A1 D&B RATED COVENANTS.

4 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 5 THE MOOR CITY LOFTS SHOPPING CENTRE RESIDENTIAL TOWER

ST PAUL’S PLACE SHEFFIELD

T SHEFFIELD HALLAM HEART OF THE CITY II UNIVERSITY

TOWN HALL,

JOHN LEWIS

BUS TERMINAL SHOPPING CENTRE O2 ACADEMY T DIGITAL CAMPUS

RECENT PLANNING PERMISSION FOR 330 INTERNATIONAL SPORTS HIGH END STUDENT T CENTRE APARTMENTS.

CASTLE SQUARE PROPOSED 280 BED T APARTMENT DEVELOPMENT SUPERTRAM REDEVELOPMENT OF 50,000 SQ FT OFFICES TO EASYHOTEL 131 BED ANGEL STREET 100 APARTMENTS DEVELOPMENT NEW 25 BED APARTMENT REDEVELOPMENT

PROPOSED DIGITAL 250 BED STUDENT INCUBATION HUB RECENTLY COMPLETED 290 BED DEVELOPMENT STUDENT SCHEME

RECENTLY COMPLETED 53 WEST BAR SQUARE £175M APARTMENT DEVELOPMENT MIXED-USE REGENERATION 6 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 7 LOCATION

Sheffield is the UK’s most centrally located city region, lying adjacent to the M1 Motorway. It is the commercial, administrative and retail centre of South Yorkshire. Sheffield is the third largest English district by population with a metropolitan population in excess of 1.5 million. The City is located 150 miles (240 km) north of London, 33 miles (53 km) south of and 38 miles (61 km) east of Manchester. Further to Sheffield City Region negotiating its unique SHEFFIELD IS THE devolution deal with Government, £1.3 billion will “COMMERCIAL, be invested into the local economy over the next 30 years. The deal gives Sheffield City Region devolved decision making powers on infrastructure, transport, ADMINISTRATIVE & skills, housing and drivers of business growth. This has ET transformed the city beyond recognition evolving the RETAIL CENTRE TRE ILLE S skyline and growing the business base serving as a SAV catalyst for future growth. OF SOUTH YORKSHIRE.

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8 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 9 SITUATION

Hartshead Square is situated in the heart of the The immediate vicinity of the Property is being Professional and Cathedral Quarter of Sheffield. transformed: above Sports Direct, planning The Property sits adjacent to a Premier Inn hotel permission has been granted for a 330-bed high and is well located within close vicinity of the end student scheme. The former Primark is to be numerous amenities Sheffield offers and the developed into a 131 bed EasyHotel and the former prime retail pitch of Fargate. Co-op is under going a £3m revamp to become a tech hub for 1,100 people to further transform Sheffield’s The Property benefits from excellent transport digital economy. links with Castle Square Tram Stop and Angel Street Bus Stop situated on the Angel Street/ To the north of the property is the proposed 1.2m sq High Street frontage of the Property, providing ft West Bar Square office led mixed-use development. access around the City and further afield. Stretching across 5 acres, West Bar Square is an exciting £175m regeneration scheme. Sheffield mainline train station is within a 10-

minute walk to the south of the Property. Being situated on the north east side of the City, the Property is easily accessible off Sheffield Parkway, a part dual carriage route, linking the City centre to the M1 Motorway at Junction 33 within a 10-minute drive time. THE IMMEDIATE The immediate vicinity has benefited from significant investment with numerous “VICINITY HAS BENEFITED redevelopment schemes converting obsolete office stock to residential and student FROM SIGNIFICANT residential apartments. INVESTMENT.

10 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 11 COMMUNICATIONS 4 30 Road MILES TO NEWCASTLE NEWCASTLE WORLDWIDE The city enjoys excellent access to the national motorway 1 HR 53 MINS 1 HR network, with Junctions 31 to 34 of the M1 on the eastern fringe JUNCTIONS DESTINATIONS of the city, approximately 4 miles (6.5km) from the city centre affording fast north-south access. The M18 is accessed at LEEDS LEEDS 39 MINS 19 MINS 31 TO 34 OF FROM DONCASTER- Junction 32 of the M1 Motorway, providing direct access to the A1(M) within 9 miles (14 km) and on to the Humberside ports. MANCHESTER THE M1 SHEFFIELD AIRPORT The A57 and M67 provide access to Manchester to the west. 50 MINS

Rail Sheffield mainline rail station provides direct services to major UK cities with fastest journey times as shown.

Sheffield will be one of the key stations on the HS2 Northern LIVERPOOL 1 HR 51 MINS Extension which will enhance connectivity and improve journey SHEFFIELD times further. 1. 3 M Sheffield will also benefit from the development of Northern PASSENGERS Powerhouse Rail, which will reduce journey times to Leeds and Manchester to under 30 minutes. NOTTINGHAM USE NEARBY DERBY 50 MINS 27 MINS Air DONCASTER- EAST MIDLANDS EAST MIDLANDS Sheffield benefits from four national and international airports 43 MINS 30 MINS being within an hour’s drive: Doncaster-Sheffield, Manchester, SHEFFIELD AIRPORT Leeds-Bradford and East Midlands. LEICESTER 54 MINS ABERDEEN Doncaster Sheffield airport lies within 18 miles (29.0 km) east of BIRMINGHAM the city centre. The airport has expanded rapidly and handled 48 MINS

over 1.3 million passengers in 2017. The airport provides LONDON LONDON 2 HRS 1 HR 9 MINS international services to over 30 worldwide destinations. M90 M9

M8 GLASGOW EDINBURGH

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BELFAST NEWCASTLE CARLISLE HS2 A1(M) WILL FURTHER M6 ND LA ENHANCE A1(M) FIN YORK DUBLIN LEEDS SHEFFIELD’S M62 MANCHESTER DONCASTER LATVIA / LITHUANIA LIVERPOOL SHEFFIELD AIRPORT PO LAND / CONNECTIVITY ROMA HS2 PHASE 2 NIA / SHEFFIELD SLOV M6 NOTTINGHAM AKIA M1 G ERM A AN LEICESTER US Y TR / N M42 IA ETH TELFORD NORWICH / ER BU LA NORTHAMPTON LG ND BIRMINGHAM AR S M6 IA MILTON / C CY RO HS2 PHASE 1 KEYNES IPSWICH R A PU TIA M1 S M40 / S M5 TU TE R TA M4 M11 K D S CARDIFF OXFORD EY ITE A1(M) UN A / BRISTOL AD READING N M4 IT CA LONDON A L M5 M3 Y M25 / UK’S MOST CENTRALLY LOCATED CITY G DOVER R M20 E E M23 C E N SOUTHAMPTON WORTHING EA NEWQUAY BRIGHTON REGION – AT THE HUB OF KEY ROAD AND IB “ R Y R A E L C S

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12 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 13 ECONOMIC PROFILE

Sheffield has a city population of 569,700 (2015 estimate) which increases to over 1.5 million within the metropolitan district and over 2 million within a 60 minute commute. Originally known as the Steel City and famous for many inventions which fuelled the industrial revolution, Sheffield has successfully transformed itself from a city dominated by its manufacturing base to a service led economy. Approximately 240,000 people work in Sheffield in around 20,000 businesses, of which 85% are within the service sector. The commercial economy is estimated to be worth approximately £9 billion per annum. The public sector remains a major employer in the City, notably the NHS, Department for Education, Department of Work and Pensions and the Universities. There is also a thriving private sector. Major employers in the City include a strong presence from the financial sector with HSBC, Santander, Halifax and Aviva to name a few. Large offices have also been established by private sector companies to include WANdisco, CMS, Plusnet and Irwin Mitchell. Holiday company Jet2 has recently announced plans to open a new office in Sheffield to bolster its IT provision and Sky Betting and Gaming has opened an office housing more than 200 specialists. Sheffield is attracting companies due to the specialisms, talent pool and the rising digital scene. Sheffield is a major educational centre with a student population of approximately 63,000 between the (a top 100 World University) and Sheffield Hallam University (the 6th largest University in the UK). Both Universities continue to grow and invest in the city. The Universities with their research and graduates have been instrumental in fuelling the growth at the Advanced Manufacturing Park, working with a wide range of manufacturers up to global companies such as Boeing and McLaren. They are now looking into more work with the supply chain. The University has also announced it is one of the university partners of the Institute of Coding, a government-led initiative to help drive more digital skills. 2.1M 20,000 63,000+ £9BN PEOPLE LIVE WITHIN BUSINESSES ARE STUDENTS PER ANNUM (APPROX.) A 60-MINUTE COMMUTE LOCATED IN WITH 2 LEADING WORTH TO THE OF THE REGION. . UNIVERSITIES. COMMERCIAL ECONOMY

14 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 15 DONCASTER SHEFFIELD AIRPORT FURTHER TO SHEFFIELD CITY REGION ANNOUNCES AMBITION TO BUILD RAIL NEGOTIATING ITS UNIQUE DEVOLUTION DEAL STATION CONNECTED TO ECML “ Outline plans to build a new rail station connected WITH GOVERNMENT, £1.3 BILLION WILL BE to the East Coast Main Line (ECML) in its 20-year vision for the future. The airport’s Masterplan would INVESTED INTO THE LOCAL ECONOMY OVER put £3.2bn into the local economy and create over THE NEXT 30 YEARS. 73,000 jobs.

SIGNIFICANT OVERSEAS INVESTMENT INTO THE CITY. MCLAREN IS TO BUILD SUPERIOR Significant overseas investment into the City: CHASSIS IN A NEW PURPOSE BUILT Singapore-based developer QIP has just secured COMPOSITES TECHNOLOGY CENTRE. funding for a £20m student scheme, following on This will create more than 200 jobs through a the back of a scheme nearing completion with a combined investment of nearly £50 million. construction value of £67m backed by Chinese investors.

HSBC 140,000 SQ FT OFFICE UNDER CONSTRUCTION AS PART OF PHASE 1 BOEING TO INVEST £20 MILLION IN A OF THE £480M HEART OF THE CITY II. Estimated to bring in an additional £300m to the NEW PRODUCTION FACILITY. city centre economy. Recent endorsement from This will be for high-tech components for its next the Cabinet for Heart of the City II, a 7 hectare generation aircraft at Sheffield Business Park. masterplan for the remainder of the retail & leisure scheme.

STANDARD ABERDEEN CONTINUE THEIR £100M INVESTMENT INTO THE RECENT COMPLETION OF REINVIGORATING THE RETAIL AND 3 ST PAUL’S PLACE. LEISURE OFFER. A prestigious 76,000 sq ft office and the third phase introducing the Moor Market, a gym, a luxury nine of the successful £130m Heart of the City mixed use screen Light cinema, an 80,000 sq ft Primark and a development. hub of restaurants.

THE INNOVATION DISTRICT, A GLOBALLY SIGNIFICANT CENTRE FOR THE COMPLETION OF THE SPECULATIVE RESEARCH-LED, TECHNOLOGY-BASED 80,000 SQ FT DEVELOPMENT OF ACERO. SOLUTIONS. Situated at , building on the Spanning over 2,000 acres and has increased the success of Electric Works and Ventana House. number of advanced manufacturing businesses in Sheffield by 53% in six years to 338 with an increase of jobs of 17%.

16 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 17 THE PROPERTY

The Property comprises approximately 73% offices (let under The retail element fronts Angel Street and comprises a 3 leases to the Secretary of State), 15% car park (let to NCP) large format retail store let to Argos and a kiosk unit let and 12% retail (let to Argos and Harvey & Thompson) across to Harvey & Thompson Ltd. The Argos unit is fitted out two buildings known as 1 Hartshead Square and Churchill as a front of house retail unit in the tenant’s corporate House. The properties are adjoining and form part of the same style with racking and storage to the remainder of the development, with the tenancies having separate entrances. ground floor and basement level. The Property occupies a sloping site from south to north. Originally developed in the 1950s, Hartshead Square was CHURCHILL HOUSE Excluded from the title. extended and refurbished in 2001. The extension consisted Churchill House also comprises two elements: of two additional storeys and the construction of a link to the A Job Centre Plus on lower ground and upper ground rear of the car park between Hartshead Square and Churchill levels extending to approximately 36,780 sq ft (3,416.98 Levels Levels House. sq m) which is accessed off Meetinghouse Lane. The A central service yard is provided to the rear elevations, accommodation comprises mainly open plan office accessed off Bank Street. A public right of way, Watsons Walk, space which has been recently refurbished with back 4-7 runs below 1 Hartshead Square linking Hartshead Square to of house areas to include staff accommodation and Angel Street and the retail core. interview space. At lower ground level, there is basement parking 1 HARTSHEAD SQUARE accessed off the rear service yard, with parking for 1-3 approximately 39 cars. The property predominantly comprises a modern office 2-4 extending to approximately 75,674 sq ft (7,030.38 sq m) Accessed at ground level from Hartshead Square and arranged on ground and three upper floors with access from comprising the upper floors of Churchill House, is a Hartshead Square and occupied by the Department of Work & 520 space car park let to NCP. The tenant has recently Pensions (DWP). invested in the car park, upgrading the entrance system and payment machines. The office specification includes the following: G • Mineral fibre suspended ceiling tiles and recessed category 1 2 lighting. HARTSHEAD • Central heating throughout all office areas. For indicative purposes only. SQUARE • Full air conditioning. • Three x 12 person passenger lifts. UG MEETINGHOUSE LANE • Full access 150mm raised flooring. TENURE G • Male, female and disabled WC facilities on all floors. The title is split into 2 elements: • Recent cosmetic refurbishment undertaken by Tenant. - Hartshead Square is held freehold (outlined in red on the plan).

ANGEL STREET - Churchill House is held under two long leasehold interests LG CAR PARK (outlined indicatively in blue on the plan): B • Upper ground floor Meetinghouse Lane Level and Entrance Lobby Area at Campo Lane/Hartshead level is held under a 125 year lease from 27 January 2003 at a rent of £1 pa (if demanded). • Levels 1 to 7 multi storey car park, part first, second and third TENANT SPLIT floor and part lower ground and part upper ground is held MALE FEMALE under a 125 year lease from 22 February 2002 at a rent of

Disabled WC £1 pa (if demanded). Secretary of State (DWP) The ground floor unit adjacent to the NCP car park currently occupied by Local Care Force LLP (outlined in green) and the first and second floor offices (hatched in green) (currently used as Argos Distributors Ltd

ANGEL STREET ANGEL serviced offices) to the north west of the site are excluded from the titles. Secretary of State This presents an asset management opportunity to acquire (Job Centre Plus) the freehold interest in Churchill House, which is subject to the two units which are currently excluded from the title, and the Harvey and Thompson Ltd HARTSHEAD SQUARE adjoining property, let predominantly to Premier Inn, to complete the ownership of the block. TYPICAL OFFICE FLOOR PLAN National Car Parks Ltd

18 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 19 TENANCY SCHEDULE

Area Lease Lease Rent Rent Years % of Tenant Demise Rent Comment (sq ft) Start Expiry Review (per sq ft) Remaining Income

Part levels 1-4 Number 1 Hartshead Square 75,674 09/01/02 08/01/27 09/01/22 £1,503,266 £19.87 (DWP)

Part 1st 2nd and The Secretary 3rd floor, part of State lower ground, RPI linked for Transport Local part upper 13,466 09/01/02 08/01/27 09/01/22 £192,118 £14.27 8.8 73.0% reviews Government ground Churchill (uncapped) and the Regions House (Job Centre Plus) Part upper ground & entrance lobby, 23,314 25/11/02 08/01/27 25/11/22 £335,420.32 £14.39 Churchill House (Job Centre Plus)

First Review is 15 February 520 spaces, National Car Parks 143,296 £812 2022 and year- Multi Storey 15/02/18 14/02/43 15/02/22 £422,000 24.9 15.2% Ltd (GIA) (per cps) ly thereafter in Car Park line with RPI (1%-3%)

Ground floor Harvey and 223 Kiosk 1-3 Angel 15/10/11 14/10/21 £8,000 £35.87 3.5 0.2% Thompson Ltd Street

Shop on Lower Argos Distributors Ground, Ground 39,708* 19/08/96 18/08/21 £323,600 £8.15 3.4 11.6% Ltd and part first (GIA) floors, Angel St

Total 290,837 £2,784,404.32 10.6

(*The measured area on an NIA basis is 34,864 sq ft).

SERVICE CHARGE The leases are drawn on internal repairing bases including full maintenance of the M&E. The Landlord is responsible for the exterior, the costs of which are fully recoverable via the service charge. Further information can be provided upon request.

INCOME BY SECTOR INCOME BY UXT

0.29% 11.92% 11.63%

15.16% 15.16%

72.92% 72.92%

OFFICES CAR PARK RETAIL 8.8 24.8 3.5 3.4 YEARS

20 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 21 COVENANT INFORMATION

100% 73% OF THE INCOME IS OF THE CURRENT INCOME SECURED AGAINST IS SECURED AGAINST THE ARGOS LIMITED 12% OF CURRENT INCOME UNDOUBTED AND UNDOUBTED COVENANT Year ending 11/03/17 Year ending 27/02/16 Year ending 11/03/15 5A1 DUN & BRADSTREET OF THE SECRETARY £’000 £’000 £’000 RATED TENANTS. OF STATE. Sales/ Turnover 4,285,775 3,930,104 3,919,176 Profit Before Taxes (25,664) (180,769) 97,146

Equity Shareholders Funds 736,415 913,551 1,423,179

Tangible Net Worth 516,284 648,286 1,202,554

NATIONAL CAR PARKS LIMITED 15% OF CURRENT INCOME Argos are one of the UK’s leading digital retailers with 29 million store customers and nearly a billion online visitors every year. Argos employ around 30,000 people and have in excess of 800 stores. Argos offer same-day Fast Track Delivery and free in- store Fast Track Collection services. They have also introduced an E-bay collection service; the Property offers one of these Year ending 31/03/17 Year ending 25/03/16 Year ending 27/03/15 new line collection points. £’000 £’000 £’000 In September 2016, J Sainsbury acquired the Home Retail Group, the parent company of both Argos and Habitat in a £1.4 Sales/ Turnover 211,461 202,703 198,736 billion acquisition making J Sainsbury one of the UK’s largest food and non-food retailers.

Profit Before Taxes 24,793 28,001 14,859

Equity Shareholders Funds 210,138 186,897 156,973

Tangible Net Worth 210,138 186,897 156,973 HARVEY & THOMPSON LTD <1% OF CURRENT INCOME

NCP is the UK’s most recognised and longest standing private car park operator being founded in 1931. NCP operates car Year ending 31/12/16 Year ending 31/12/15 Year ending 31/12/14 parking spaces across the UK at over 500 sites for approximately 150,000 cars, possessing a 30% market share. £’000 £’000 £’000 NCP Limited is jointly owned by Park24 and the Development Bank of Japan (DBJ), both investment grade rated base businesses with substantial cash generation potential and cash/capital reserves relative to the NCP Group. The joint venture Sales/ Turnover 94,223 89,244 87,627 (JV) purchased NCP Limited in July 2017 for an indicative enterprise value of £440 million. As part of the acquisition, 100% of the NCP Group’s external debt was repaid. Profit Before Taxes 9,920 7,636 6,222 Park24 is a listed Japanese company based in Tokyo and is a major parking operator with over 1 million spaces in 19,000 sites across 8 countries. DBJ is a Japanese Government-owned financial institution with a strong track record in infrastructure Equity Shareholders Funds 92,448 80,598 71,139 finance. Tangible Net Worth 83,651 71,545 66,091

Harvey & Thompson (H&T) Pawnbrokers have been operating since 1897. Originally serving communities in London, they have expanded to become one of the oldest and leading pawnbrokers in the UK. In May 2006, H&T floated on the Alternative Investment Market (AIM). Since then, H&T have accelerated its development by adding new products and services, expanding the store network and developing a complete online service.

22 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 23 PRIME RENT 2017 INVESTMENT VOLUMES 2017 £ £24.00 per sq ft £54m / -35% OCCUPATIONAL (2016-2017) +4% % OF DOMESTIC INVESTORS OVERVIEW PRIME RENT 2018 (FORECAST)

£25.00 per sq ft (2017-2018) +4% 83%

PRIME YIELD 2017 OFFICE PRIME RENT 2017 TAKE-UP 2017INVESTMENT VOLUMES 2017 - City centre Grade A availability at a historic low of only 110,000 sq ft. £ - Take-up of c. 400,000 sq ft in 2017, significantly in excess of the 10 year average of 250,000 sq ft. £24.00 per sq ft 393,700 sq ft £54m / -35% % (2016-2017) +4% Y-on-Y change +95% 6.00 - Prime headline rents of £24.00 psf, forecast to % OF DOMESTIC INVESTORS PRIME YIELD 2018 (FORECAST) increase to £25.00 psf in 2018. PRIME RENT 2018 (FORECAST) GRADE A SUPPLY - Removal of around 700,000 sq ft of office stock from the market for conversion. - Robust enquiry levels across all size brackets. £25.00 per sq ft 110,000 sq ft - Strong prospects for continued rental growth. (2017-2018) +4% Y-on-Y change -14% 83% 6.00%

PRIME YIELD 2017 TAKE-UP 2017 The Sheffield office market has strengthened over recent years, which has put pressure on rents across all grades of accommodation. Requirements have come from an increasingly diverse range of sectors and across all size brackets. In 2017, the TMT and Financial & Business Sectors were dominant showing Sheffield competes with other financial sectors in the north and the occupier base is now far broader than the traditional reliance on the Public Sector. Growing numbers of occupiers are seeking accommodation in excess of 10,000 sq ft whilst enquiry levels sq ft still remain robust of up to 5,000 sq ft, which has traditionally formed the backbone of the Sheffield occupier393,700 market. 6.00% Y-on-Y change +95% CAR PARK Supply has fallen to an all-time low. There have been few new developments to satisfy the increasing demand with 3 St Paul’s and Acero being the only speculative city centre builds to completeGRADE since A SUPPLY 2010. Together with the refurbishment ofPRIME YIELD 2018The (FORECAST) car park sector is very active, with all of the large Steel City House, these were the only 3 buildings added to the city centre stock in 2017, totalling 223,000 sq ft, of which operators seeking to expand their UK portfolios. With new nearly 50% has already let. The future development pipeline remains very restricted with no developments presently equity behind both Q Park and NCP, we anticipate seeing underway. continued merger and acquisition activity. The regional development cycle is at the stage where surface car parks Supply of Grade B & C office accommodation has also dramatically reduced. Around 700,000 sq ft (12%) of will be built on and generally we expect parking provision to accommodation has been taken out of the office market for student110,000 and residential sq conversion ft over the last few years. reduce in city centres as a consequence putting pressure on This is a trend which is likely to continue. Y-on-Y change -14% 6.00% rents.

Rents are set as a proportion of profitability. Most regional Property Size (sq ft) Headline Rent Occupier Lease Term UK city centre multi-storey car parks are currently (£ psf) supporting annual rents in excess of £1,000 per space. In Sheffield, we understand Rockingham Street, St Pauls Place Phase 1, New Retail 140,000 Confidential HSBC 15 years Quarter and Arundel Gate are all let at or above £1,500 per space, well in excess of the subject property. 3 St Pauls Place 6,000 £23.50 Freeths 10 years, 5 year break

RETAIL 3 St Paul’s Place 16,000 £23.00 Arup 10 years, 5 year break The Argos rent currently equates to only £8.15 psf overall. We understand the store is a strong trader and a key site Steel City House 11,300 £21.00 British Business Bank 10 years, 5 year break for Argos to fulfil their ‘Click & Collect’ agenda and most recently for their eBay line. Derwent House 15,000 £16.00 Mott McDonald 10 years, 5 year break

City Gate 7,800 £15.00 Zoo Digital 10 years, 5 year break.

The Balance 27,500 £12.50 Johnston Publishing 10 years, 5 break

Foundry House 20,381 £14.00 Home Office 5 years, 3 break

24 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 25 INVESTMENT MARKET

Investment volumes in Sheffield have exceeded £50m for the last two consecutive years. Prime Over recent years a significant amount of activity has taken place with standalone car parks. Much of this involves NCP office yields have hardened to 6.00% which still reflects an attractive discount to other key regional as tenant and consequently there is significant transparency in yields, which are now in the region of 4.5% for long-let centres, offering the prospect for further yield compression. RPI-linked regional city centre Multi-Storey Car Parks (MSCPs). Assets secured on public sector tenants will achieve sub- 4%. Long lease funds and institutional buyers have been particularly active as the lot sizes and income profile combine to provide a highly attractive proposition.

OFFICE INVESTMENT DEALS CAR PARK DEALS

Date Address Tenant Price Initial Capital Value Size Term Date Address Tenant Price Initial Comments Yield (per sq ft) (sq ft) Certain (yrs) Yield Feb 18 India Buildings, The Secretary of State for £130.00m 3.86% £421 308,749 21 U/O Mount Vernon Street, NCP c. £14.50m c. 3.50% 702 cps. 29 years UXT. Liverpool Communities and Local Liverpool NHS guarantor. Government (HMRC) Dec 17 Mitchell Street, NCP £10.62m 4.40% 220 cps. 19.5 years UXT. Feb 18 81 Fountain Street, Kier Ltd £22.50m 4.22% £577 39,008 18.6 Manchester Glasgow

Jul 17 Southgate, NCP £5.00m 4.75% 233 cps. 20 years UXT. Dec 17 The Meridian, Esure Group PLC £24.40m 4.87% £493 49,426 11 Bradford 25 Quay Street Rossetti Place, May 17 Jamaica Street, Q-Park £11.05m 4.64% 578 cps. 29 years UXT. Manchester Glasgow Nov 17 The Quorum, Marshall Group Properties £22.70m 5.02% £373 60,880 15 Cambridge Apr 17 Rockingham Street, Q-Park £19.10m 5.20% 531 cps. 27 years UXT. Sheffield Nov 17 10 Canons Way, Scottish Widows Limited £ 95.5m 4.94% £541 176,611 16.75 Bristol

Jun 17 2 Cutlers Gate, Capita plc £20.16m 4.90% £330 61,000 22 Sheffield

Jun 17 Nunnery Square, DSG Retail £17.10m 6.20% £238 71,699 12.5 Sheffield

26 HARTSHEAD SQUARE, SHEFF IELD S1 2FD HARTSHEAD SQUARE, SHEFF IELD S1 2FD 27 INVESTMENT RATIONALE - Very attractive cash on cash returns in excess of 10% - 100% let to undoubted and 5A1 covenants. Sheffield S1 2FD - 88% inflation proof income with linked RPI increases. - Annual RPI increases after 2022 on 15% of the income. - The Secretary of State has openly stated they wish to remain DEBT at the Property. With the Government reviewing its longer term estate requirements currently as part of the GPU project, Knight Frank’s Commercial Debt Advisory team provides this provides an opportunity to negotiate a lease extension, unbiased, trusted advice to real estate investors. We have further increasing the income security. access to over 150 lenders in the market and are experienced in arranging acquisition finance across all property asset - Significant on-going investment and development into classes. We have long-standing relationships with senior, Sheffield. stretched senior and mezzanine financiers both in - Opportunity to simplify the title structure and to buy in commercial banks and alternative lenders. The combination freehold ownership of Churchill House which would of extensive lender relationships along with a track record in include the two areas currently excluded from the title. executing commercial real estate deals across the capital stack means that we can optimise debt terms and transact - The same freeholder is also the owner of the adjoining deals at speed. premises let predominantly to Premier Inn which, if acquired, would complete the ownership of contiguous Based on the indicative debt terms highlighted below, the properties. property can provide a cash on cash return in excess of 10%. EPCS All-in Interest Cost @ Gross Cash on Copy EPCs are available on the data room. 60% LTV Cash Return 2.50% 12.14% PROPOSAL Offers sought in excess of £41,000,000 (Forty One Million 3.00% 11.39% Pounds). This reflects a NIY of 6.36% based on full acquisition 3.50% 10.64% costs. The vendor is able to sell the shares in a Jersey SPV, in which case the net initial yield would rise to 6.67% based on reduced costs. VAT Assuming the current tenancy position, and based on current The Property is elected for VAT and therefore VAT will RPI forecasts, the yield will increase to 7.23% (on full costs) be applicable to the purchase price. It is anticipated the and 7.59% (on reduced costs assuming SPV purchase) in transaction will be undertaken by way of a Transfer of a 2022, and annually thereafter due to annual uplifts in the NCP Going Concern. lease, collared and capped at 1 and 3%.

CONTACT For further information or to arrange an inspection please contact the following: ON THE INSTRUCTIONS OF Freddie Owen Rebecca Farnsworth T : +44 20 7861 1225 T: +44 113 297 2420 M: +44 7436 109 666 M: +44 7776 342 315 E: [email protected] E: [email protected]

Richard Claxton Henrie Westlake T : +44 20 7861 1221 T : +44 113 297 2413 M: +44 7774 826 558 M: +44 7879 434 028 E: [email protected] E: [email protected]

Lisa Attenborough Alastair Coates Head of Commercial Debt Specialist Investment T : +44 20 3909 6846 T : +44 113 297 1956 M: +44 7773 258 673 M: +44 7773 967 748 E: [email protected] E: [email protected]

IMPORTANT NOTICE (1) Particulars: These particulars are not an offer or contract, nor part of one. You should not rely on statements by Knight Frank LLP in the particulars or by word of mouth or in writing (“information”) as being factually accurate about the property, its condition or its value. Knight Frank LLP has no authority to make any representations about the property, and accordingly any information given is entirely without responsibility on the part of the agents, seller(s) or lessor(s). (2) Photos etc: The photographs show only certain parts of the property as they appeared at the time they were taken. Areas, measurements and distances given are approximate only. (3) Regulations etc: Any reference to alterations to, or use of, any part of the property does not mean that any necessary planning, building regulations or other consent has been obtained. A buyer or lessee must find out by inspection or in other ways that these matters have been properly dealt with and that all information is correct. (4) VAT: The VAT position relating to the property may change without notice. Knight Frank LLP is a limited liability partnership registered in with registered number OC305934. Knight Frank LLP registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names. April 2018.

Knight Frank LLP will act as agents in respect of the sale of the property interest only. Knight Frank is not authorised to advise in relation to any sale of shares and will not be liable for any information or opinions provided in this respect. We recommend that you seek independent professional advice in relation to any sale of shares or other corporate structure.