Prime Multi-Let Grade A Quayside Office Investment

Rotterdam House 116 QUAYSIDE, NE1 3DY Investment Summary

• Prime Grade A city centre office investment occupying a prominent waterfront position on Newcastle’s Quayside, one of the city’s core office locations.

• Purpose built modern office accommodation extending to 3,315.37 sq m (35,686 sq ft) over ground and four upper floors.

• Fully let to three tenants including Ramboll, Stantec and Regus at an annual rent of £696,550 reflecting a low average rent of £17.81 psf (excluding parking), which is strongly reversionary.

• All three tenants heavily embedded in the building, with both Stantec and Ramboll not exercising recent break clauses and Regus having been in occupation since 2000.

• Good rental growth in the market with £21.50 plus parking, achieved in Quayside House and £23.50 at Central Square South

116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, • WAULT of 5.92 years to expiry • Excellent parking provision with 122 spaces, a ratio of 1:293 sq ft.

• We have been instructed to seek offers in excess of £9,500,000 reflecting a NIY of6.87% after purchasers costs of 6.69%. A purchase at this price reflects a capital value of only £266 per sq ft. Rotterdam House Newcastle upon Tyne

Newcastle upon Tyne is the commercial and administrative capital of the North East with a population of approximately 280,000 people [census 2011]. The city forms part of the wider Tyneside conurbation with a total population in the region of 1.1 million people, making it the 7th largest in the UK.

Newcastle is the largest retailing, leisure and office centre in the North East and has an international draw as a business, education and tourism centre. Major occupiers in the city include Sage Group, NPower, Bank, BSkyB and Proctor & Gamble. The city is also a major public sector hub, not just for local and regional government, but also for national operations, most notably the Department for Work and Pensions and HM Revenue & Customs.

The city is home to two leading Universities, Newcastle and Northumbria, which attract in excess of 55,000 students, from both the UK and 136 countries abroad. Newcastle University is a member of the prestigious Russell Group, comprising the leading 24 Universities in the country. 116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, Rotterdam House A 167 JEDB URGH ROAD

TO NEWCASTLE AIRPORT Communications and Transport & NORTH

Rotterdam House is well positioned within To the

the city centre and has excellent access N A1 North O & Newcastle R T International HAYMARKET H to both the regional road network and public U Airport M

B E transport links. ELDON R L SQUARE A Aberdeen SHOPPING N D L I CENTRE M

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G R Located approximately 286 miles north of London and 105 miles G I

R MONUMENT M C A HOTELK T S PREMIER N E BA south of , the city is well connected to the wider road Edinburgh E T INN DUT VIN Glasgow R ET R RE CU T G E P ST E E S R N T UR A186 CITY ROAD network, with the A1 approximately 2 miles south west and the THE GATE R E BO T E Y L N A1 E E

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S N D P ’S NN T A M6 N N ST A I B A19, 7 miles to the east. The Quayside itself is serviced by the R A P A E A P 1 ATE R E 86 DG A69 T C SAN Carlisle G IT Rotterdam NEWCASTLE Y ROAD A186 City Road, which connects this area to the rest of the city D MALMAISON E HOTEL House A18 A TRAVELODGE PITCHER 6 N DE W SI & PIANO ES AY A66 TG T S QU centre and the A167 (M) Central Motorway. This provides rapid ATE EE T LAW BALTIC A19 RO R R AD T E COURTS ARTS CENTRE Y S E MILLENNIUM E T E P transport links to the A1(M) and the rest of the North East region. Road SL P SID BRIDGE A1(M) York O AY Rail M QU Leeds 00 e 16 B t y n D Manchester A ROA M1 CENTRAL 1 RE M1 6 SHO D TH A Rail STATION B 7 SOU GATESHEAD Sheffield 1 ( r i v e r O Liverpool 3 M QUAYS R 0 S 7 W ) L Newcastle Central Station is a major transport hub and key stop on IL M6 H IN TY P England IG G THE SAGE M H N A1(M) B E the East Coast railway line. The city has direct services to London L R GATESHEAD E ID B M1 E V G R D Birmingham D E E I A I L D RO Kings Cross and Edinburgh, with journey times of less than 2 hours YS B S A COPTHORNE R HILTON G OAKWELLG K Wales U HOTEL ID E ATE W M1 Q GE HOTEL EA A A1(M) ST H and 40 minutes and 1 hour 30 minutes respectively. ST M40 M11 P Cardiff M4 Newcastle Central is also the main interchange with the Tyne & Bristol London

A Wear Metro, the rail network which runs throughout Tyneside. 1 8 METRO 9 R RADIO E The network supports 60 stations throughout D ARENA H E To A1 U extending as far as Newcastle Airport, 6 miles to the North West G Western Bypass H To the South B R and Sunderland to the south east and is the second largest ID G system in the UK behind the London Underground. E

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116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, Newcastle International Airport is situated 7 miles to the north west of the city centre and serves in excess of 4.46m passengers annually, to 74 direct destinations globally. Flights are provided via 13 scheduled airlines, including Air France, British Airways, Flybe, Easyjet and Emirates. Newcastle International Airport is one of the leading regional airports and benefits from regular flights to London with a flight time of less than one hour. Rotterdam House Situation

Rotterdam House occupies a prominent waterfront location on Newcastle’s Quayside. The area The property occupies a very prominent position with broad views of Newcastle’s iconic was developed from the 1990's as office occupiers sought larger, more modern floor plates bridgescape and the Baltic Centre for Contemporary Art and the Sage Music Venue. Surrounding outside the traditional office core of Grey Street and Pilgrim Street. The Quayside now offers an leisure occupiers include The Malmaison Hotel, Pitcher & Piano, Gusto, and Las Iguanas. attractive, landscaped working environment, better car parking provision than the traditional CBD Office occupiers located on the Quayside include Knight Frank LLP, Womble Bond Dickinson LLP, and a good range of leisure facilities including hotels, restaurants and bars. KPMG LLP, Regus, The Northumberland Estates and NEP&I.

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1 Quayside 7 Baltic Centre for Contemporary Art 13 Tyne Bridge 19 Eldon Square 25 Central Station 2 Barclays 8 Baltic Place 14 Grey Street 20 Hilton Hotel 26 Citygate 3 Mal Maison 9 Law Courts 15 Northumbria University 21 Copthorne Hotel 27 Wellbar Central 4 Pitcher & Piano 10 The Sage Music Centre 16 Newcastle Civic Centre 22 Central Square 28 St James' Park 5 NEP&I 11 Trinity Gardens 17 Northumberland Street 23 Central Square South 29 Newcastle Science

Rotterdam House 6 Millennium Bridge 12 Central Motorway 18 Newcastle University 24 Stephenson Quarter Central Development - The Rocket/Crowne Plaza Investment and Development

Newcastle has seen extensive regional and inward investment in recent years, delivering a number of significant schemes throughout the city and the surrounding Quayside.

Science Central A 24 acre landmark development for science and business. Legal and General Capital have been brought on as an investment partner with an initial investment of £65 million into the site creating 2,000 jobs. Planning has already been sought and approved for two Grade A office buildings, the first of which will start construction in Q4 2018 and will provide 120,000 sq ft of office accommodation, with building B delivering 100,000 sq ft.

Stephenson Quarter An extensive 11 acre site in the heart of , phase one completed in Q1 2016 comprising the Crowne Plaza Hotel, The Rocket, a 35,000 sq ft grade A office building and a 24 hour 360 space multi storey car park. Phase 2 is currently under construction and includes the UTC (the North East Futures University Technical College) with plans to deliver a second 50,000 sq ft Grade A office building. Overall the regeneration scheme is valued at £200m.

Gateshead Quays A 9.49 acre site on the southern bank of the River Tyne, in between the iconic Sage Gateshead and the Baltic Centre for Contemporary Art and fronting onto the Millennium Bridge. The site is earmarked for mixed-use development with conferencing, exhibition and leisure uses being prioritised amongst office, residential and ancillary retail use and is being brought forward by Ask

116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, Developments and Gateshead Council.

East Pilgrim Street The East Pilgrim Street development site is mostly owned by the Reuben brothers, who have been working closely with Newcastle City Council in creating a development framework for the prime site. The site is split into two blocks, with demolition already underway on the northern block, which has been earmarked for retail-led development. The southern block has been earmarked for residential, leisure and office uses. Rotterdam House Description

Rotterdam House comprises a five storey Grade A office building constructed in 2000 to the following high specification; • Open regular floorplates with extensive floor to ceiling glazing, giving excellent natural light and fantastic views of Newcastle’s iconic bridgescape • Raised access floors (150 mm void) • Air conditioning units throughout • Suspended ceilings incorporating fluorescent or LED lighting • Male and female w/c facilities on each floor. • Shower facilities on each floor • 2 X 10 person passenger lifts Stantec replaced all lights throughout their accommodation with LED fittings as part of their fit out in 2015 and Regus are undertaking a rolling replacement of lighting to LEDs. Ground Floor Plan Upper Floor Plan 116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, Rotterdam House Description 116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, Rotterdam House Tenancy

The property is fully let to three tenants in accordance with the following tenancy schedule.

Area Parking Rent per Sq Ft Lease Accommodation Tenant Rent Rent Review Comments Sq M Sq Ft Spaces (Excl. parking) Start Expiry

Excluded from L&T 1954 act. May 2018 break Ground Floor Ramboll UK Limited 526.0 5662 - £102,095 £18.03 29/05/2015 28/05/2020 - notice elapsed. Service charge cap of £35,004 per annum. Cap excludes utilities.

Option to determine not exercised therefore principal rent reduces to £63,227.50 from 20/06/2018 to 29/06/2019 (inclusive) plus the 25 parking spaces demised in the lease at a rent of £500 per space, which is payable in addition First Floor Stantec UK Limited 671.0 7223 25 £138,955 £17.50 01/07/2015 30/06/2020 - to the principal rent. This is to be topped up by the landlord to the full rent of £138,995. June 2018 break right lapsed. Service Charge cap of £46,824.48 reviewed annually in line with RPI subject to a cap of 3%. Service charge cap excludes utilities.

Lease includes 77 parking spaces at St Ann’s 2nd, 3rd Newcastle Quayside 2118.3 22801 77 £445,500 £17.85 27/10/2000 26/10/2025 28/10/2020 car park. Tenant in occupation since 2000. & 4th Floor Centre Limited Regus PLC guarantee of six months rent.

Car Parking Stantec UK Limited - 5 £2,500 - 01/07/2015 30/06/2020 - Excluded from L&T 1954 Act

Car Parking Stantec UK Limited - 5 £2,500 - 27/07/2015 30/06/2020 - Excluded from L&T 1954 Act

The North of England Excluded from L&T 1954 Act. 6 month rolling Car Parking Protecting and Indemnity - 10 £5,000 - 27/05/2016 26/02/2021 - mutual break. Significant neighbouring occupier Association Limited

116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, Total 3,315.3 35,686 122 £696,550 Tenure Service Charge The property is held freehold. An estate charge is payable for the upkeep, maintenance and security of the wider Quayside estate which is fully recoverable from the tenants. Full building 122 spaces are held in the adjacent St Ann’s Car Park on a and estate service charge information is available upon request. 999 year lease commencing 26th October 1999 from East Quayside Management Limited at a peppercorn rent. Rotterdam House Tenants’ Covenant Strength

Stantec UK Limited Newcastle Quayside Centre Limited (Formerly MWH UK Ltd) Company Number 6996211 Company Number 1188070 Regus is the world’s largest provider of flexible workspace solutions and provides office space, Stantec UK Limited is a global company and world class market leader specialising in solving meeting rooms and virtual offices in over 3,000 locations in 900 cities across 120 countries. complex infrastructure and environmental challenges for water and natural resources. In 2016, Regus was founded in Brussels, Belgium in 1989 and is now headquartered in Luxembourg. the company was bought by global engineering company Stantec Inc and today the company The company provides a range of office formats allowing flexibility for all users, at different operates in 35 countries employing over 22,000 people. In the UK, Stantec UK Limited employ price points. 900 people from 7 UK offices.

31/12/2016 (000’s) 01/01/2016 (000’s) 02/01/2015 (000’s) 31/12/2016 (000’s) 31/12/2015 (000’s) 02/01/2015 (000’s)

Turnover £110,671 £103,963 £92,920 Turnover £1,079 £1,194 £1,443

Pre tax Profit £7,941 £13,041 £6,720 Pre tax Profit (£352k) (£163k) (£43k)

Net Assets £32,181 £39,878 £29,246 Net Assets (£1,154) (£802k) (£639k)

Further information is available at: https://www.stantec.com/en Further information is available at: https://www.regus.co.uk

Ramboll UK Limited Company Number 3659970

Ramboll is a leading engineering, design and consultancy company providing multidisciplinary solutions from engineering design of buildings and infrastructure to the management of precious resources. Ramboll was founded in 1945 as Ramboll & Hannemann in Denmark. The company has now expanded to become an international corporation employing 13,000 people

116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, worldwide in 35 countries from 300 offices.

31/12/2016 (000’s) 31/12/2015 (000’s) 31/12/2014 (000’s)

Turnover £75,362 £75,642 £75,080

Pre tax Profit (£1,507) (£8,321) (£6,401)

Net Assets £22,054 £23,211 £15,362

Rotterdam House Further information is available at: http://www.ramboll.co.uk/ Newcastle Office Market

Supply The supply of new office space has been highly restricted and Newcastle city centre now has in the region of 161,795 sq ft of Grade A stock remaining, which reflects just 1.46 years supply, based on the last 3 year average take-up levels. Despite no new buildings coming to the market, 2017 saw two refurbished Grade A buildings return at Central Square South and Earl Grey House. Central Square South is quoting £25 per sq ft, the highest quoting rent in the City Centre.

Building Locality Availability (sq. ft.) Quoting Rent (psf)

Wellbar Central Gallowgate 5,853 £24.00

Central Square Stephenson Quarter 7,400 £18.00 (Assignment) 13,039 Time Central Gallowgate £20.00 - £21.00 (4,851 U/O) Trinity Gardens Quayside 37,109 £22.00

Central Square South Stephenson Quarter 38,424 £25.00

No 1 St James’ Gate St James’ Boulevard 5,500 £18.00 - £20.00

Stockbridge House Quayside 28,698 £20.00

Lloyds Court Grey Street 7,410 £19.00

St Nicholas Building 6,017 £19.50

Earl Grey House Grey Street 12,345 £21.50

Total 161,795

Supply Pipeline The market has seen no new stock delivered since The Rocket and the Live Works in 2016, both of which let within three and six months of completion respectively. The next new development in what is a highly restricted pipeline is L&G’s Science Central development, with phase 1 due

116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, to complete in 2019 delivering 120,000 sq ft to the market. Two further buildings have been granted planning permission, Phase 2 at Science Central will be delivered by L&G extending to 100,000 sq ft, the second is the Phoenix Building at the Stephenson Quarter, which will deliver 50,000 sq ft. Both buildings are not expected to be completed until late 2021 at the earliest. Rental Tone Take up Prime headline rents in Newcastle are £23 per sq ft for quality core stock and are well Take up has been supressed by the lack of stock in the market. The last new space delivered established, with the market ready to take the next step. On the Quayside, a devaluation was in 2016, when The Rocket and Live Works both let in their entirety within 3 and 6 months of the 2015 lease renewal to Ward Hadaway gives £19.34 psf for Keel Row House which does of completion respectively. not have river frontage and £21.18 psf for Sandgate House, which does, excluding car parking at £500 per space. More recently, Quayside House has seen two lettings at £21.50, including 88% of 2016’s transactions and 84% of transactions in 2017 were at or below 8,000 sq ft,

Rotterdam House 6,950 sq ft to Norton Rose Fulbright. fitting well with the offering of floorplates at Rotterdam House. Newcastle Investment Market

We set out a schedule of recent comparable office investment transaction for Newcastle and competing regional cities.

Property Date Price NIY Comments

Keel Row House, Landmark Quayside building let to Ward Hadaway with 13.5 years Sept 17 £8.855m 5.57% Quayside remaining with RPI linked reviews.

Fringe Grade A building let to 5 tenants including UBS, Serco, National Lottery and Charities Board. WAULT of 5.8 years to expiry No 2. St James’ Gate July 17 £20m 7.92% and 4 years to break. Total passing rent of £1,690,694 per annum. Sale included 3 additional retail units.

Sandgate House, New 15 year lease to Ward Hadaway Solicitors off a passing rent Dec 16 £10.75m 5.88% Quayside, Newcastle of £675,000 per annum.

Purchased off market. Let to KPMG, Pantheon Macroeconomics, Quayside House, July 16 £11.25m 6.90% Arthur J Gallagher & Clydesdale Bank with a passing rent of Quayside, Newcastle £535,087 per annum.

Citygate 2, Gallowgate, Purchased off market. Tenants included Ernst & Young & Grainger Jan 16 £19.25m 6.47% Newcastle PLC. Total rental income of £1,345,884 per annum.

The property is let to 10 tenants including established names such as Svenska Handlesbanken, , Rathbone Brothers Plc Earl Grey House, Jan 16 £11.9m 7.60% and Grant Thornton UK LLP. The total passing rent is £956,639 per Grey Street, Newcastle annum with a WAULT of 13.86 years to break and 15.73 years to expiry. 30% vacant.

Multi-let with total passing rent of £2,561,242 and a WAULT of 7 Wellbar Central, Dec 15 £40.075m 6.04% years to expiry, Two retail units on ground floor, one let to , Gallowgate, Newcastle one vacant. Fixed rental uplift on Sky income in July 2016.

Fully let to 9 tenants with WAULT to lease expiry 8.8 years and Central Square, Dec 15 £21.580m 6.42% to break 8.2 years. Total passing rent is £1,446,126, transacted Forth Street, Newcastle above asking. 116 QUAYSIDE, NEWCASTLE UPON TYNE NE1 3DY NEWCASTLE 116 QUAYSIDE, EPC VAT

Both the EPC and recommendation report are available The property has been elected for VAT and it therefore upon request. VAT will be payable on the purchase price. It is envisaged the sale will be treated as a Transfer of a going concern (TOGC). Rotterdam House Proposal WeKeel have been Row instructed toHouse seek offers in excess of £9,500,000 for our clients freehold intertestEAST QUAYSIDE, reflecting NEWCASTLE an attractive UPON TYNE NIY NE1 of 6.87% XXX after deducting purchaser’s costs of 6.69%. A purchase at this level reflects a capital value of£266 per sq ft.

Rotterdam House

For further information

Richard Turner Katy Paxton +44(0)191 223 5720 +44(0)191 223 5752 Cushman & Wakefield Debenham Tie Leung Limited ("C&W") gives notice to anyone who may read these particulars as follows: 1. These particulars are prepared for the guidance only of [email protected] [email protected] prospective purchasers. They are intended to give a fair overall description of the property only and do not constitute any part of an offer or contract. 2. Any information contained in these particulars (whether in the text, plans or photographs) is given in good faith but should not be relied upon as being a statement or representation of fact or that the property is in good condition or otherwise nor that any services or facilities are in good working order. 3. The photographs appearing in these particulars show only certain parts and aspects of the property Peter Atkinson Gagan Jagpal at the time when the photographs were taken. Certain aspects may have changed since the photographs were taken and it should not be assumed that the property remains precisely as displayed in the photographs. Furthermore no assumptions should be made in respect of parts of the property which are not shown in the photographs. Any areas, measurements or +44(0)191 223 5715 +44(0)191 223 5709 distances referred to herein are approximate only. 4. Where there is reference in these particulars to the fact that alterations have been carried out or that a particular use is made of any part of the property this is not intended to be a statement that any necessary planning, building regulations or other consents have been obtained and these matters must be verified by [email protected] [email protected] any intending purchaser. 5. No person in the employment of C&W has any authority to make or give any representation or warranty whatsoever in relation to this property. 6. This property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. 7. Unless otherwise stated, no investigations have been made by or on behalf of C&W regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations as required. Particulars prepared January 2018.

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