NOTT1NGHAM 120 - 158 CANAL STREET, NG1 7HG FREEHOLD OFFICE AND RESIDENTIAL INVESTMENT OPPORTUNITY NOTT1NGHAM NOTT1NGHAM

Investment Summary

A rare opportunity to acquire one of the most prominent buildings in Nottingham’s central business district. Located in Nottingham, the regional and commercial capital of the , Nottingham is one of England’s eight core cities and home of many leading corporate and public sector occupiers. Nottingham One is a landmark development occupying a prominent waterfront position in Nottingham’s Southside district. 2016 RIBA East Midlands award winning development. Comprises six self-contained B1 office units and 242 residential units having been sold to the Metropolitan Housing Trust and individual owner occupiers / investors. The office accommodation totals 5,017.43 sq m (54,007 sq ft). 258 on site car parking spaces arranged over two floors. Tenure – held freehold (Title Number NT416665). The residential apartments sold on long leases for a term of 125 years with effect from 1 April 2009 having recently been increased with effect from 1 April 2019 (upward only and by reference to RPI Index). Total current passing rent of £843,395 per annum. Attractive unexpired term of approximately WAULT 7.14 years to lease expiries and WAULT 3.53 to break. The property has a high quality tenant line up being let to six tenants including: – Axiell Limited – Deep Silver Dambuster Studios Limited – Ingeus Limited – Mitrefinch Limited – Finastra International Limited – Rendall & Rittner Limited Exceptional income diversity with a strong overall covenant profile and underpinned by core residential ground rent income. Low passing rents of £14.00 per sq ft set against the current prime rent in Nottingham of £20.00 per sq ft. This offers significant future asset management potential to improve running yield and return. We are instructed to seek offers in excess of £11,110,000 subject to contract and exclusive of VAT. A purchase at this level reflects an initial yield of 7.75% on the office income and 4.00% on the residential ground rent income, equivalent yield of 7.09%, assuming standard purchasers costs.

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POSITIONED AT THE HEART OF THE UK, NOTTINGHAM IS THE ECONOMIC POWERHOUSE FOR THE EAST MIDLANDS, BEING THE PRINCIPAL COMMERCIAL AND ADMINISTRATIVE CENTRE FOR THE REGION.

The city has a catchment population of over 1.3 The city has recently benefited from a number million people and forms the centre of the UK’s of major infrastructure projects including the 8th largest urban area. It has a catchment of £150 million upgrading of over 3 million people within half an hour’s drive to create the Nottingham Transport Hub. The time. Nottingham is one of eight members of the £570 million extension of the NET Tram system English Core Cities Group and benefits from a connecting the existing line from the city centre £12.1 billion economy. to Toton at J25 of the M1 Motorway (adjacent to the new HS2 East Midlands Hub) and the dualling Nottingham has a working population of over of the A453 between the M1 Motorway at J24 850,000 people of which over 620,000 are in and . Combined, this full time employment. It is also home to two of infrastructure spend has been one of the largest the UK’s leading universities; The University of in any of the regional cities in the UK and has Nottingham and Nottingham Trent University, significantly enhanced the position of Nottingham which are attended by approximately 60,000 as a core regional location. students. This pool of educated and skilled labour is a major attraction for businesses Nottingham is located approximately 125 miles located in the city. (200 km) north of London, 55 miles (88.5 km) north east of Birmingham and 83 miles (133 km) Nottingham continues to attract a number of south east of Manchester. international corporations with over 50 Regional and National headquarters located in the city.

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CONNECTIVITY

NOTTINGHAM BENEFITS FROM A WORLD CLASS, MULTI- MODAL INTEGRATED TRANSPORT INFRASTRUCTURE, PROVIDING EXCEPTIONAL LOCAL, NATIONAL AND INTERNATIONAL CONNECTIONS. M180 MANCHESTER BARNSLEY DONCASTER

STOCKPORT SHEFFIELD Excellent access to the national Motorway Nottingham Express Transit Tram System network by virtue of a central UK location, The city benefits from the Nottingham Express directly adjacent to junctions 24, 25 and 26 of Transit (NET) tram system, one of the UK’s most the M1 Motorway, and also in close proximity to successful rapid transport systems. The system the A42 / M42 link to the West Midlands and the M1 LINCOLN is formed of two lines which connect Phoenix A50 link to the North West. Significant upgrades A1 Park and in the north with Toton and to the road network have been carried out with Clifton in the south via the city centre. The M6 the dualling of the A453 between Junction 24 of southern extension to Toton via and the M1 and Nottingham city centre, completed Beeston was completed in 2015 at a cost of £570 in 2015, and the installation of smart motorway million. from junctions 23a to 25 of the M1, completed NOTTINGHAM February 2019. STOKE-ON-TRENT

M1 M6 GRANTHAM Nottingham benefits from extensive intercity Nottingham is served by , and regional rail services, with regular services EAST MIDLANDS located 12 miles to the south west of the to London St Pancras International every 30 city. East Midlands Airport is connected to A1 minutes, via the , with a fastest Nottingham city centre by the 24 hour Skylink journey time of 1 hour 31 minutes and connecting bus service and direct rail services to the nearby directly with Eurostar services to the continent. East Midlands Parkway, with a fastest journey Other major cities are also served by fast direct time of 10 minutes. It is the 13th busiest airport services including Derby (21 minutes), Leicester in the UK in terms of passenger traffic and is a M54 M42 LEICESTER A47 (26 minutes), Birmingham (1 hour 14 minutes) major cargo hub, being the 2nd busiest airport A47 and Manchester (1 hour 49 minutes). Nottingham for freight traffic after London Heathrow. It Station has recently undergone a £150m provides daily direct flights serving the principal PETERBOROUGH refurbishment and upgrade project to create European and International destinations. a true transport hub for the East Midlands. A M1 dedicated HS2 station is planned at Toton to the BIRMINGHAM A1(M) West of Nottingham. M6 COVENTRY A14

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THE UNITY SQ NOTTINGHAM NOTTINGHAM LACE MARKET NOTTINGHAM INTU NOTTINGHAM THE MEADOWS NHS BBC HMRC STATION CITY COUNCIL POINT COLLEGE CASTLE PARK

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N L NOTTINGHAM ONE OCCUPIES A WATERSIDE POSITION L

A E M W WITH EXTENSIVE LINER FRONTAGE TO CANAL STREET S ’ OVERLOOKING NOTTINGHAM CITY COUNCIL’SRAD- STUNNING N N

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HEADQUARTERS, CAPITAL ONE’S EUROPEAN HQ AND THE L T A S

S MIXED USE WATERFRONT PLAZA SCHEME. H NOTTINGHAM S U H N O T

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The property benefits from excellent transport In addition, the east end of Canal Street, is E E T A

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connectivity, being within five minutes’ walk the Island Business District and the Eastside T N T

D STR VICTORIA S TO E E S of central Nottingham , NET tram Regeneration Enterprise Zone, currently home to RB ET R EET T RL Y R RO E CA station and the bus interchange which is shortly the BBC, NHS and BioCity on which the Conygar AD D CENTRE C E RWOO R T HE A to be redeveloped as part of the Broadmarsh Investment Company have recently announced S N

B shopping centre. a resolution to grant planning permission for a HOCKLEY R

M O MARKET mixed use scheme for development of over 2 O The high profile redevelopment scheme ‘Building A ID SQUARE K million sq ft including offices, apartments and M S a Better Broadmarsh’ will significantly improve

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R R the environs of the property and Nottingham I A E N A City Centre in the future. The regeneration will Directly opposite the property, construction is E 6 W T

0 create a transformed southern gateway to the currently in progress for the new Nottingham A Y city, boosting the local economy by an estimated College city hub, representing a reported £58 NOTTINGHAM £1.1 billion GVA per annum. The extensive plans million investment in education for the city. It will CKLEY include the redevelopment of intu Broadmarsh, offer new facilities and resources for college THE PARK HO the demolition and reconstruction of the students and provide community facilities such INTU existing Broadmarsh Car Park and Bus Station as a new training restaurant, café and performing NOTTINGHAM BROADMARSH and pedestrianisation of numerous principle arts centre. CASTLE

A60 streets. The £250 million programme of works is 0 8 underway and is expected to be completed by Q3 2020. T CANAL ST R EE NOTTINGHAM STATION

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DESCRIPTION

NOTTINGHAM ONE COMPRISES A STYLISH MIXED USE DEVELOPMENT BOASTING IMPRESSIVE ELEVATIONS BOTH TO CANAL STREET AND WATERSIDE AND ANCHORED TO THE EAST BY AN ELEGANT RESIDENTIAL TOWER.

Nottingham One is arranged over two basement levels, and seven upper floors (including mezzanine) in the main building and residential tower over eleven floors. The office accommodation totals 5,017.43 sq m (54,007 sq ft) and benefits from a total of 258 car parking spaces (122 Commercial) giving an exceptional city centre parking ratio of 1:442 sq ft, in respect of the commercial element. The Grade A office accommodation includes the following features:

Lifts Raised access floors LG7 lighting Carpets Glass balustrade Air conditioning Waterfront outside seating

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ACCOMMODATION TENANCY SCHEDULE

The office accommodation has been measured in accordance The property is let in accordance with the following tenancy schedule: with the new RICS Property Measurement (First Edition), which Term Start Term Rent WAULT Annual Annual Rent incorporates the new International Property Measurement Unit No Tenant Break WAULT Standards (IPMS) and RICS Code of Measuring Practice (6th (Years) Date Expiry Review (to Break) Rent(£) (£/sq ft)

Edition) to provide the following net internal floor areas: Unit A Axiell Ltd* 10 07/07/15 30/06/25 01/07/20 30/06/20 5.75 0.74 108,934 14.00

Deep Silver Dambuster UNIT Sq Ft Sq M Unit B 10 23/03/13 22/03/23 23/03/18 N/A 3.47 3.47 232,650 14.00 Studios Ltd

Deep Silver Dambuster Unit A 7,781 722.879 Pavilion B 10 23/03/13 22/03/23 23/03/18 N/A 3.47 3.47 8,400 14.00 Studios Ltd Unit B 16,617 1,543.770 Unit C Ingeus UK Ltd 10 23/03/16 01/04/25 23/03/21 01/04/22 6.47 0.50 183,148 14.00 Pavilion B 600 55.742 Unit D Mitrefinch Ltd 10 01/12/17 30/11/27 01/12/22 30/11/22 8.16 3.16 85,512 14.59

Unit C 13,082 1,215.358 Finastra International Unit E 15 01/12/19 30/11/34 30/11/24 30/11/29 15.17 10.17 135,464 14.00 Ltd** Unit D 5,863 544.691 Unit F Rendall & Rittner Ltd 5 23/04/19 22/04/24 N/A N/A 4.56 4.56 5,432 14.00 Unit E 9,676 898.930 Totals 7.14 3.53 759,540 14.06 Unit F 388 36.046 *Notice to break served by tenant and ongoing negotiations with interested parties. TOTAL 54,007 5,017.416 **Lease commencement date pending completion of fit out works.

RESIDENTIAL GROUND RENT COVENANT INCOME Accounts Tenant D&B Credit risk Turnover Profit Net worth In addition to the Commercial income date above a further £83,855 per annum is Lower than Axiell Ltd 2A2 31/12/2018 £4,001,000 (£65,000) £2,212,000 receivable from 192 residential units, Average having been reviewed 1 April 2019 by Deep Silver Lower than reference to RPI and subject to further Dambuster 2A2 31/03/2019 £13,263,028 £3,226,869 £3,767,785 Average review on a ten yearly basis. Studios Ltd Ingeus UK Metropolitan Housing Trust (MHT) 3A4 High Risk 31/12/2018 £118,317,000 £1,729,000 £10,934,000 retains the long leasehold interest Ltd Lower than in the balance (50) of the units, for Mitrefinch Ltd 2A2 30/11/2018 £14,666,921 £1,777,931 £4,425,160 which ground rent is waived so long Average as they or any other Social Landlord Finastra Minimum International N1 31/05/2018 £222,186,000 (£27,709,000) (£13,965,000) (as defined by the Housing Act 1985) Risk remains Lessee. Ltd Rendall & Lower than A2 30/06/2018 - - £448,790 CAR PARKING Rittner Ltd Average Of the 261 car spaces, 37 spaces are available to rent and produce additional income. As a guide covered car parking in Nottingham ranges from £1,000- £1,500pa per space.

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MARKET COMMENTARY

TAKE-UP Take-up within the Nottingham City Centre office market was just above 200,000 sq ft, six months to end Q2 2019, recording continued healthy levels of demand. Most notably, a 100,000 sq ft pre-let of the Crocus Place Scheme, adjacent to Nottingham Train Station was announced at the beginning of the year. The first half of the year also saw the University of Law agree to nearly 30,000 sq ft in the City Centre and web hosting company GoDaddy take the 27,000 sq ft Waterfront House in Beeston on a ten year lease. Previously, 2018 was one of the strongest performing years in Nottingham’s recent history as HMRC pre-let the 277,000 sq ft Unity Square Development in Q4. The lack of Grade A stock has facilitated continued refurbishment of existing office buildings, leading to a sustained period of rental growth. Grade A headline rents have now reached £20.00 per sq ft. Principal tenant demand is drawn from professional services, followed by Government, education and manufacturing sector occupiers. Principal take-up is within the 5,000 to 15,000 sq ft range, however there have been a number of notable large transactions. SUPPLY There continues to be a severe shortage of Grade A supply within Nottingham City Centre and whilst new build schemes are in the pipeline, new stock is not expected to enter the market until 2020 at the earliest, the majority of which having been pre-let. The shortage of Grade A accommodation is bolstering the Grade B office market. SIGNIFICANT TRANSACTIONS

Size Headline Rent Date Property Tenant Term (Sq ft) (per Sq Ft)

Q1 2019 Equinox Building 7,981 NHS 9 years £16.75

Q1 2019 1 Royal Standard Place 28,914 University of Law 15 years £20.00

Wren Sterling Financial Q4 2018 13 – 19 Derby Road 10,065 15 years £20.00 Planning

Q2 2018 Equinox Building 15,138 NHS 10 years £16.00

Agora, Cumberland Department for Q4 2017 15,096 10 years £17.00 Place Education Water Court, Canal Q4 2016 18,867 Eversheds 10 years £18.50 Street

Q2 2016 37 Park Row 6,361 Thompsons LLP 10 years £17.00

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FURTHER INFORMATION

VAT The property has been elected for VAT. It is CONTACT anticipated the sale will be treated as a Transfer of a Going Concern (TOGC). VIEWING AND FURTHER INFORMATION DATA ROOM Strictly by appointment only with the Sole A data room has been prepared, containing Agent, Savills. relevant supporting documents and information. Victor Ktori Christine Thorn Access is available upon request. [email protected] [email protected] SERVICE CHARGE 0115 934 8171 0115 934 8152 There is a service charge operating at the property. The service charge budget for the year ending 2028 is circa £1.60 per sq ft per annum plus £125.00 per annum for car parking space. ENERGY PERFORMANCE CERTIFICATE The Energy Performance Certificate is available to view in the data room. Savills ANTI-MONEY LAUNDERING (AML) Enfield Chambers 18 Low Pavement Any offer accepted is subject to completing Nottingham AML checks. NG1 7DG PROPOSAL Important Notice We are instructed to seek offers in excess of Savills, their clients and any joint agents give notice that: £11,110,000, subject to contract and exclusive 1. They are not authorised to make or give any representations or warranties in relation to the property either here or elsewhere, either of VAT. on their own behalf or on behalf of their client or otherwise. They assume no responsibility for any statement that may be made in these A purchase at this level reflects an initial yield of particulars. These particulars do not form part of any offer or contract 7.75% on the office income and 4.00% on the and must not be relied upon as statements or representations of fact. residential ground rent income, equivalent yield of 2. Any areas, measurements or distances are approximate. The text, photographs and plans are for guidance only and are not necessarily 7.09%, assuming standard purchasers costs. comprehensive. It should not be assumed that the property has all necessary planning, building regulation or other consents and Savills The Holding SPV is available thereby offering have not tested any services, equipment or facilities. Purchasers must satisfy themselves by inspection or otherwise. purchasers a share of the potential Stamp Duty Designed and Produced by Savills Commercial Marketing: saving. 020 7499 8644 November 2019

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