Syndicated Commercial Property Investment.

New bonded whisky warehouse investment • Annual Return 8.75% p.a, distributed quarterly in advance. • Blue Chip tenant - North British Distillery Company Limited (D&B 5A1). • A new 15 year lease, with no break options, incorporating fixed rental increases. • Strategically located on the Houston Industrial Estate, junction 3 of the M8 motorway, west of Edinburgh. • Target Annual Return following proposed disposal after 5 years c.10.00% p.a.

Rougemont Limited is authorised and regulated by the Financial Conduct Authority. Ref No. 516918 August 2013 Important Legal Notice This document describes an investment in a syndicated commercial property that is partially funded with bank finance. An investment of this nature involves risk; it is illiquid in nature and may not be suitable for many investors. Investors must be prepared to bear the risk of any investment in the property, for an indefinite period, and be able to withstand the loss of all or part of their investment. All reasonable care has been taken to ensure the information and illustrations contained within this document are true and accurate, but they should not be construed as advice on which reliance should be placed. Please refer to the Risk Factors and assumptions upon which the Target Annual Returns in this document have been based. How Syndicated Property Works A syndicated commercial property investment is one where a number of private individuals, corporate entities, or pension funds collectively pool their capital to acquire a specific tenanted commercial property. Syndicate members own a percentage of the legal beneficial interest in the property pro-rata to the amount of their investment. In return members receive their share of the rental income and future capital growth. Rougemont’s operating structure has received approval from a number of major SIPP and SSAS Pension Trustee/Administrators; however, investors should contact their own pension fund advisors to ascertain whether such an investment is permissible within the rules of their own pension fund. FCA authorised Independent Financial Advisors should be aware that Rougemont is an Exempt CAD firm to which MIFID applies, except that it can receive and transmit orders in relation to one or more financial instruments, or in relation to investment advice. Accordingly, Rougemont is permitted to transmit orders with Non-MIFID Independent Financial Advisors and Professional bodies. As with any investment, syndicated property of this type carries the risk that the investment may fail to increase in value or may depreciate. Rental returns may not materialise. Your attention is drawn to the Important Legal Notice in this document and the need to take independent legal and investment advice. In summary the arrangements are as follows: 1. Properties are normally office, retail or factory premises let to a tenant with a good covenant strength on a long term lease. 2. An Independent Professional Custodian Trustee will hold the legal freehold/leasehold title to the property as Custodian Trustee. Syndicate members become beneficial owners of the property, as tenants in common, in direct proportion to their investment. 3. Syndicate members are entitled to receive their pro-rata rental income from the property together with their share of the capital receipt upon a sale of the Property. 4. A full legal pack containing a detailed Structure Note, a Syndicate Contract, Trust Deed and a Property Administration Agreement will be provided once a potential Syndicate member has made a formal reservation by completing the form at the back of this document. Any other relevant material will be available upon request. Potential Syndicate members must then arrange to receive advice from other independent advisors as necessary. 5. Acquisition of the property will take place only when sufficient Syndicate members have provided monies to fund the acquisition. Should insufficient funds be received the acquisition will not progress and any funds received will be returned immediately to Syndicate members. 6. An ‘Initial Period’ is set by Rougemont at the outset and in this instance the Initial Period will run from the Completion Date until its fifth anniversary (See No. 8). 7. Rougemont is the appointed Managing Trustee and will co-ordinate the purchase and handle routine decisions in relation to the property. The Syndicate members will retain control of major decisions such as, providing consent to assign leases or deciding to carry out structural alterations to the property. These decisions will be taken by a majority representing 75% (by value) of the Syndicate Price. Syndicate members will also employ a management company, Harlow Property Management Limited, to carry out services such as collection and distribution of rent and the provision of caretaking duties. However, if the Syndicate members collectively decide to instruct Harlow Property Management Limited to provide any non-core services then additional remuneration will be payable in respect of such services. Prior to the expiry of the Initial Period Harlow Property Management Limited will provide a quote for a continuation of its services. 8. An individual Syndicate member may sell their stake at any time. The Syndicate members may decide by a majority to sell the property at any time. However, an individual Syndicate member cannot force a sale of the whole of the property until the expiry of the Initial Period and must have attempted to sell their individual stake before making such a request. However, if a Syndicate member, being a pension fund, has beneficiaries who die during the Initial Period forcing the pension fund to be liquidated then the trustees of the pension fund have the right to force a sale of the property within 24 months of the death of the member in the event that the member’s interest in the property remained unsold.

Investor Eligibility All syndicated commercial property investment opportunities promoted by Rougemont constitute an Unregulated Collective Investment Scheme (“UCIS”) as defined in the Financial Services and Markets Act 2000 (“FSMA”). Rougemont is authorised by the UK Financial Conduct Authority (“FCA”) to establish, operate and wind up UCIS (Reg. No. 516918). In receiving this document you acknowledge and accept the following disclaimer: This document contains important information. It is being sent to you as a category of person falling within The Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001 (“the Order”). The sole purpose of this document is to assist the recipient in deciding whether they wish to proceed with further investigation. Recipients should review this document having first considered the Key Points (page 3) of the arrangements and the Important Legal Notice (page 16). The description of the arrangements contained within this document constitutes a summary of the arrangements. A detailed description of the syndicated structure is provided to potential Syndicate members with the legal purchasers pack which will be provided should a potential Syndicate member wish to proceed. ‘Exempt Persons’ falling within the Order include: • ‘Investment Professionals’, who are Authorised FCA Persons and who are defined, according to the Financial Services and Markets Act 2000, as having professional experience of participating in a UCIS for the purpose of their business. • ‘Certified Sophisticated Investors’ who are defined as investors who are self-certified, or who have been certified by an FCA Authorised Person as being sufficiently knowledgeable to understand the risks associated with participating in a UCIS and who have signed a requisite Certified Sophisticated Investor Declaration in accordance with Article 23 of the Order. • ‘Certified High Net Worth Individuals’, who are defined as investors who have self-certified or who have been certified by an FCA Authorised Person confirming that during the financial year immediately preceding the date on which the certificate was signed, held an annual income of not less than £100,000, or net assets of not less than £250,000, excluding their primary residence and benefits from life policies. • A ‘High Net Worth Company’, which is defined as a corporate entity with called-up share capital or net assets of either (a) in the case of a company with more than 20 members, or which is a subsidiary of a company with more than 20 members, not less than £500,000 or, (b) in the case of any other body corporate, not less than £5 million. • Existing Investors in similar Unregulated Collective Investment Schemes as detailed in COB 4.12 of the FCA Handbook. Confirmation of prospective clients’ investor status must be received by Rougemont in advance of any information or promotional material in respect of an investment opportunity being provided.

2 The NBD Scotland Syndicate The NBD Scotland Syndicate - Key Points The Property A newly constructed stand-alone 107,650 sq. ft. bonded warehouse facility, located on one of Scotland’s most central distribution hubs to the west of Edinburgh and with immediate access to Junction 3 of the M8. The property has been divided into ten self-contained units for use as a bonded whisky maturation facility and has inherent alternative use prospects, particularly within the commercial storage market. Completion of the property took place in August 2013.

Tenancy The freehold (referred to as “heritable interest” in Scotland) of the property is being acquired with the benefit of a new 15 year lease to North British Distillery Company Limited (the ‘Tenant’), which commenced on completion of the property. The lease has been established on full repairing and insuring terms, with no tenant break options and incorporates pre-agreed, upwards only fixed rent increases throughout the term.

Tenant The North British Distillery Company Limited (www.northbritish.co.uk) was established in 1885 and is one of Scotland’s largest grain whisky producers. The company is a joint venture between two of the world’s largest and best known whisky producers, Diageo plc (www.diageo.com) and The Edrington Group (www.edringtongroup.com).

The Tenant has the highest Dun and Bradstreet credit rating of 5A1.

Syndicate Return 8.75% p.a. distributed quarterly in advance. Please see Syndicate Return on Page 11.

Syndicate Price £6,320,000 (Six million three hundred and twenty thousand pounds)

Minimum Investment £25,000 (Twenty five thousand pounds)

Structure The freehold legal title to the property will be held by SG Hambros Trust Company Ltd as Professional Independent Custodian Trustee. Syndicate members will purchase a percentage holding within the Trust and will become a registered legal beneficial owner of the title. All decisions will be taken by a majority representing 75% by value of the Syndicated Price. Syndicate members may sell their holding at any point (see page 14 ‘Individual Liquidity’). The structure is suitable for appropriately qualified private investors, corporate entities and SIPP and SSAS Pension Funds.

Capital Allowances An initial ‘desk top’ survey has been undertaken, which indicates that, subject to further detailed analysis, the available capital allowances may represent up to an additional 0.50% p.a. return to Syndicate members who are higher rate tax payers.

Proposed Exit Strategy The lease incorporates five fixed rental increases and it is proposed that the Syndicate considers selling the property shortly before the fifth anniversary of the lease term, having benefitted from two of the fixed rental increases. The assumptions that give rise to a potential total target Annual Return of c. 10.00% p.a. following a sale at this time are illustrated later in this document (See Potential Exit Strategy on page 11).

Funding The property will be purchased with a combination of Syndicate funds and suitably hedged bank finance. The introduction of a modest element of bank finance enables the return to be greatly enhanced. In arriving at the return described in this document the terms of to the bank finance (“the Facility”) that have been used are those which have been agreed, in principle, with a major bank (subject to formal credit approval). Should those terms materially change then the yield detailed in this document will also change and investors will be advised accordingly.

3 The NBD Scotland Syndicate Location The Houston Industrial Estate is located north of Livingston town centre, 10 miles west of Edinburgh City Centre and adjacent to Junction 3 of the M8 motorway. The M8 is one of the busiest motorways in the UK and connects Edinburgh with Glasgow. Edinburgh airport is 5 miles east of the property. Other occupiers on the Estate include; Iceland Frozen Foods, Booker Cash and Carry, Iron Mountain (commercial document storage), Alliance Healthcare, Mitsubishi, Nisa and a new retail trade park, incorporating Kwik fit, Screw Fix, Speedy Hire and Hertz. The Tenant’s headquarters and main distillery is located on Wheatfield Road, Edinburgh, next to the Murrayfield Rugby Stadium and approximately 1 mile from Junction 1 of the M8. Both Glenmorangie, Diageo plc and Glen Turner have main production and bottling facilities within 2.5 miles of the property.

g

M9 A8

Broxburn Uphall M8 EDINBURGH A89 Dechmont M8 DIAGEO PLC Ratho FACILITY A899

M8 B7030 B8046 GLEN TURNER FACILITY A899

B7015

East Calder A705 B8046 GLASGOW A779 Livingston A71

A705 B7015 Lizzie Bryce Roundabout GLENMORANGIE FACILITY A71

M8

JUNCTION 3

4 The NBD Scotland Syndicate The Property The property is a twin bay steel portal frame warehouse extending to 107,640 sq. ft. and divided into ten independently accessed units, each being serviced via roller shutter doors. All internal dividing walls have been built to a high fire retardant specification in order to comply with the necessary health and safety legislation associated with the storage of alcohol. The bays to the property have an eaves height of 10 metres (32 feet), which provides extensive storage capacity. The Tenant will use the property for the storage and maturation of whisky. The whisky will be stored in timber barrels, which will themselves be stored on a palletised racking system within each unit. The division of the warehouse into separate units allows for accessing pallets, without disrupting the maturation process within any of the other units. The site extends to approximately 5 acres and the property is stepped to allow for a slight change in levels. The site is accessed from Nettlehill Road, which leads to a one way service road surrounding the building. At the front of the site is a small office which will be used for security and administrative purposes. The entire site is protected by palisade fencing.

Tenancy The freehold to the property is being purchased with the benefit of a full repairing and insuring lease, from August 2013 to North British Distillery Ltd for a term of 15 years, with no break option. The rent is reviewed upwards only and incorporates pre-agreed, fixed rent increases throughout the term.

Rent Initially £450,000 per annum, reflecting an overall rate per square foot of £4.20. The pre-agreed upwards only fixed rent increases are illustrated below.

Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Gross Rental £450,000 £450,000 £450,000 £450,000 £450,000 £472,500 £472,500 £496,125 £496,125 £520,931 £520,931 £546,977 £546,977 £546,977 £574,326 Income

Rent per sq ft £4.20 £4.20 £4.20 £4.20 £4.20 £4.40 £4.40 £4.40 £4.60 £4.60 £4.85 £4.85 £5.10 £5.10 £5.30

5 The NBD Scotland Syndicate Covenant Tenant North British Distillery Limited is one of the largest Scotch grain whisky producers in Scotland. The Company is a joint venture between two of the world’s largest and best known whisky producers, Diageo plc (www.diageo.com) and The Edrington Group (www.edringtongroup.com). Almost the entire production of North British Distillery is sold to Diageo and The Edrington Group. Diageo and The Edrington Group are, collectively, responsible for more than 35% of Scotland’s total whisky distribution capacity and more than 64% of the grain whisky distribution capacity. The Tenant has the highest Dun and Bradstreet credit rating of 5A1. North British Distillery Statutory accounts for the period ending 31st December North British Distillery Limited 2011 2010 Year to 31st December £m £m Turnover 72 55 Profit Before Tax 97 Net Assets 42 44

Parent Companies Diageo plc Headquartered in London, Diageo is the world’s leading premium drinks company and is the largest single producer of Scotch Whisky. Whisky brands in Diageo’s portfolio include Johnnie Walker (No. 1 whisky in the world), Bells (No. 1 Scotch Whisky in the UK) and J&B (No. 1 Scotch Whisky in Europe). They also boast an array of what they term ‘Classic malts’, ‘Distillery malts’ and Hidden malts’ which include brands such as Lagavulin and Talisker. Its operations in Scotland extend to four maltings, 28 malt distilleries, two grain distilleries and eight major warehousing and blending sites. In addition, currently Diageo undertakes 95% of its Scotch Whisky bottling in Scotland and produces Smirnoff Red, Tanquery Sterling, Captain Morgan, Archers Aqua, Smirnoff Ice, Gilby’s Gin, Gordon’s Gin and Tanquery Gin in Scotland.

Diageo plc Statutory Accounts for the period ending 30th June Diageo plc 2012 2011 Year to 30th June £m £m Turnover 15,487 14,594 Profit Before Tax 3,123 3,121 Net Assets 8,107 6,811

The Edrington Group The Edrington Group is headquartered in Glasgow. Unusually for the drinks industry, it is owned by a charitable family trust – the Robertson Trust. The Trust was established to ensure that the family businesses remained active and independent, and that it continued and extended the past support they had given to charities. In 1999 Edrington acquired Highland Distillers with William Grant & Sons to become a brand-led drinks company like Diageo, Pernod Ricard and William Grant & Sons. Edrington now produces over 60 different whisky products, including key brands such as The Famous Grouse, Cutty Sark, The Macallan and Highland Park, which are blended on the same site as their bottling operation in Glasgow. In 2008 Edrington also acquired a majority stake in Brugal Company in the Dominican Republic, marking its entry into the market for rum. The Robertson Trust commits significant charitable donations to almost 500 charities.

Edrington Distillers Ltd Statutory Accounts for the period ending 31st March Edrington Distillers Ltd 2013 2012 Year to 31st March £m £m Turnover 698 687 Profit Before Tax 191 165 Net Assets 771 999

6 The NBD Scotland Syndicate Planning Obligations Planning permission for the property’s current use as a Class 6 maturation warehouse was granted on 21 April 2011.

A condition of the planning permission is that an obligation exists on the landlord (the Syndicate after completion) in relation to an agreement (‘s75 agreement’) that requires the landlord to meet the cost (to a maximum of £50,000 in any 24 month period) of removing any discolouration to any of the neighbouring buildings (within a defined area), which is shown to result from the maturation process carried out at the property.

It has been claimed that properties neighbouring bonded maturation warehouses may become affected by what is known in the industry as “Whisky Black”, which is a potential discolouration of surfaces as a consequence of black growth/ deposits resulting from the evaporation of alcohol during the maturation process.

The s75 agreement applies to the property for as long as it is used as a maturation facility. To mitigate against this obligation the vendor has agreed to place in escrow the sum of £375,000 (equating to the maximum liability of the Syndicate at the commencement of the lease i.e. 15 years @ £25,000 per year), to be held to the benefit of the Syndicate, to meet such liability should it be incurred (the ‘s75 Deposit Funds’).

This obligation can only be triggered by the local authority if they conclude, acting reasonably, that any discolouration to properties in the vicinity, is beyond that which would reasonably be expected as a result of fair wear and tear and ageing of the property.

Furthermore, the obligation only extends to external cosmetic cleaning operations, not to any repairs, improvement or painting. Liability for this obligation was not included by the vendor in the Tenant’s leasehold commitments; however, the appropriate legal protection and management structure to mitigate against this issue has been established for the duration of the lease.

Market Analysis Scotland has recently enjoyed the best lettings take-up figures for 18 months, totalling 770,000 sq ft. The majority of these lettings were contract led short term expansions, or cost conscious occupiers from south of the border, looking for good logistical regional locations, available at cost effective rents. There are signs that rents are beginning to move upwards due to the lack of good quality stock. This is likely to continue into the near future, as nothing significant is being reported with regards to future availability and while there continues to be a lack of speculative development. The prime locations for industrial and warehouse development are to the west of Edinburgh, along the central belt, where large distributors can benefit from more available space and better motorway access. The key areas consist of large industrial parks along the M8 from Newbridge to Bathgate, which are well-located to service both Edinburgh and Glasgow, and have access to Stirling via the M9. Livingston, in particular, has generally seen a much higher level of development than Edinburgh over the last decade. Livingston is home to a number of large industrial parks interspersed with smaller office developments. Whilst development has been relatively subdued, compared to the market history, Livingston has seen its fair share of what development there has been. Perhaps the most notable being Tesco’s one million sq. ft. distribution and recycling plant at the former NEC semiconductor site, situated just off the M8 between Livingston and Bathgate. Livingston is also home to Glenmorangie’s 250,000 sq. ft. bottling plant on Alba Campus, which completed in 2010 and in 2010, at Starlaw Park Livingston, Glen Turner Distillery developed over 200,000 sq. ft. of maturation warehousing and distillery space. The warehouse and industrial market in Livingston should be viewed in the context of Livingston and Edinburgh together, forming the principal area for warehouse and industrial locations in central Scotland, also catering for eastern and northern Scotland. In terms of the industrial letting market within Livingston, there is currently a good supply of secondary and tertiary type accommodation. Available capacity is most apparent on the market's older, secondary quality estates, whilst the more modern industrial and distribution parks remain relatively well let. The bonded warehouse market has traditionally been owner occupier driven with distillers developing and owning their own facilities in response to increased demand. However, the on-going expansion of the whisky industry has left the market with a shortage of accommodation. In addition, the increasing difficulties that the industry is facing with regard to stricter planning regulations relating to the storage of alcohol, combined with the increasing constraints of their existing sites, is forcing distillers into having to consider leasing accommodation on long leases to accommodate the ever growing demand.

7 The NBD Scotland Syndicate Rental Analysis Although the industrial occupier market has been subdued and the bonded warehouse market typically owner occupier lead, the below tables illustrates a number of comparative industrial and bonded warehouse evidence in the area.

Industrial Evidence

Location Tenant Area Lease Nature of Rent Comments (sq ft) Length/ Evidence (per sq ft) (Break Option) (Date) Unit 2 & 4, Schuh 33,042 & 5 yr & 1 yr OM letting £3.75 Early 1990’s building. Kingsthorne Park,Livingston 27,364 rolling licence (June/Oct 2012) 5 Nettlehill Road, Livingston Booker 334,871 Expiry 2021 Rent Review £5.28 Rent Review assumed a (May 2011) letting of a 50,000 sq ft unit on Houston Ind. Estate. Todd Square, Livingston SDS 42,964 10 yr OM letting £4.00 1993 building. (2017) (Nov 2012)

Bonded Warehouse Evidence

Location Tenant Area Lease Nature of Rent Comments (sq ft) Length/ Evidence (per sq ft) (Break Option) (Date) Unit 1, Westerton Road, McDonald & 79,021 10 yr OM letting £5.80 Located on a Broxburn Muir (April 2006) Diageo plc facility. (Glenmorangie) Unit 2 Westerton Road, McDonald & 54,000 10 yr Rent Review £5.00 Located on a Broxburn Muir (June 2010) Diageo plc facility. (Glenmorangie) Westerton Road, Broxburn North British 30,300 10 yr OM letting £5.12 Located next to the Distillery (2015) (Aug 2010) Diageo plc facility.

DTZ Edinburgh consider that in view of the current market conditions and the continued expansion of the whisky industry, the current market rent is £485,000 p.a. (£4.50 per sq ft) compared with passing rent of £450,000 p.a. (£4.20 per sq ft). Source: DTZ Edinburgh Valuation - August 2013

8 The NBD Scotland Syndicate Investment Analysis Nationally, prime yields improved in the second quarter of 2013, at an average of 5.77% across all commercial property asset classes, reflecting the continued competition for prime assets. The overall future trend is predicted to be stable, with signs of downward pressure on yields resulting in capital growth. This pressure on prime yields is not just relevant to London, but is also being felt in the regions as overseas buyers, who have dominated the investment market over the last 12 months, search for opportunities outside of the capital. The shortage of secure long leased investment properties is a common trend across all sectors throughout the country. Consequently, the pent up demand for prime opportunities is now having a positive impact on yields as competition increases. The large yield spread in comparison to other asset classes is making property more attractive and, in addition to strong income returns, high yields are providing better capital value growth prospects. This is leading to a number of industrial forecasters predicting yields in the regions to fall back towards their historical averages over the medium term, which will boost capital values. Conversely, the secondary property market remains weak with both rental and capital values continuing to disappoint. With occupier demand and investment activity for single let industrial investments being scarce, most activity has centred around multi-let industrial estates, which present asset management opportunities for the more aggressive investor. The table below illustrates a number of single long let investment transactions which have taken place within recent years.

Location Tenant Area Lease Fixed Net Initial (sq ft) Length/ Rental Sale Yield (Break Option) Growth (Date) Moss Road, Aberdeen Hydrasun Facility 110,600 20 yr Yes 7.22% (Dec 2010) Kirkton Drive, Aberdeen Siemens plc 37,466 13 yr No 6.95% (Feb 2012) Eurocentral, Motherwell Lightbody of Hamilton 71,700 15 No 7.75% (Aug 2012) Condor Glen, Motherwell TDG 363,000 15 No 7% (April 2012) Trident Park, Normanton Kongsberg Automotive 60,000 25 yr (15 yr) Yes 7.5% (July 2013) Markham Vale, South Yorkshire Andrew Page 100,000 15 yr No 7.25% (June 2013)

The above transactions compare favourably with the proposed Syndicate purchase which reflects a net initial yield of 7.5%. Source: DTZ, CBRE, Scottish Property Quarterly Investment Property Forum & Cushman & Wakefield Investment Yield Update 2013.

9 The NBD Scotland Syndicate Syndicate Structure An independent custodian trustee (SG Harlow Trust Company Limited) will hold the legal title to the property. Syndicate members will become beneficial owners of the property, as tenants in common, in direct proportion to their investment. Rougemont Estates will act a Managing Trustee and the regulated syndicate operator. Harlow Property Management will act as the day to day property manager.

The Professional Team Managing Trustee & Syndicate Operator - Rougemont Estates (‘Rougemont’)

Rougemont Estates is a niche property investment company which is authorised and regulated by the Financial Conduct Authority to promote and operate Unregulated Collective Investments Schemes, including syndicated commercial property investments. Rougemont is an Exempt CAD firm and has the permitted exception to transmit orders with Non-MIFID Independent Financial Advisors. Rougemont provides investors with the opportunity of purchasing a direct interest in a wide range of commercial property investments. In the case of this purchase Rougemont will act as the regulated operator and managing trustee. Further information on Rougemont Estates can be found at www.rougemontestates.co.uk.

Custodian Trustee - SG Hambros Trust Company Limited

SG Hambros Trust Company Limited is a subsidiary of SG Hambros Private Banking and an independent fiduciary and custodian company. The company is specifically regulated to hold in trust the assets of its private clients. In the case of this purchase SG Hambros Trust Company Limited will independently hold the legal title to the property in trust for the benefit of the Syndicate members.

Syndicate Solicitor - Turcan Connell

Turcan Connell was founded in 1997, has 20 partners and a staff of around 300. They offer a combination of skills and expertise covering tax, estate and succession planning, employment, dispute resolution, family and private businesses, divorce and family, land and property and charity law as well as wealth and investment management. Turcan Connell has offices in Edinburgh, Glasgow, London and Guernsey. In the case of this purchase they will act on behalf of the Syndicate in undertaking the commercial conveyance of this purchase.

Property Management - Harlow Property Management (‘HPM’)

HPM is a company under common ownership with Rougemont and is regulated by the Royal Institute of Chartered Surveyors. HPM will undertake the day to day property management and administration for the Syndicate including collection of rent, insurance rent, VAT reporting and will distribute and account to the Syndicate members.

10 The NBD Scotland Syndicate Syndicate Return The Annual Return over the first five years of the lease to Syndicate members, following completion of the Syndicates purchase is illustrated below.

Year 2013/14 2014/15 2015/16 2016/17 2017/18 Gross Rental Income £450,000 £450,000 £450,000 £450,000 £450,000 Facility Interest £132,293 £132,293 £132,293 £132,293 £132,293 Custodian Charges £0 £0 £0 £0 £0 Management Charges £13,500 £13,500 £13,500 £13,500 £13,500 Net Rental Income £304,208 £304,208 £304,208 £304,208 £304,208

Syndicate Annual Return 8.75% 8.75% 8.75% 8.75% 8.75%

Rental Distribution and Taxation Rental income will be distributed quarterly in advance. Syndicate members are responsible for their own tax arrangements and a quarterly rental remittance statement will be provided to each Syndicate member enabling them to account for the rental income received.

Potential Exit Strategy It is proposed that the Syndicate will sell the property shortly before the fifth anniversary of the lease term (prior to August 2018), subject to market conditions prevailing at the time. A sale of the property at the fifth anniversary would mean that a prospective purchaser would still have the benefit of an unexpired lease term of 10 years with three further remaining fixed rental increases until expiry of the lease. This exit strategy assumes the rent at the fifth anniversary is ‘topped up’ to equate to the rent at the eighth anniversary, in order to accelerate the benefit of the rental increases and thereby maximise the Syndicate’s capital growth prospects (i.e. (£496,125 - £472,500) *2 year=£47,250 to top up).. With continued competition from institutional funds and property companies, prime assets of this type are likely to appeal to the wider property investment market. Over the next five years it is unlikely that developers will consider building speculatively, or there is a sudden increase in the level of occupiers searching for new build accommodation. It is assumed the continual shortage of prime investment property is therefore likely to remain, putting continued downward pressure on yields and producing opportunities for capital growth. Furthermore, this situation could be compounded as liquidity in the financial markets improve and funding becomes more freely available, creating greater competition. Assuming a slightly improved commercial market by 2017/18 and no material diminution in the Tenant’s strength of covenant, the following illustrates a range of Annual Total Returns to Syndicate members compared to a range of target exit yields.

Exit Yield at 5th Anniversary 6.70% 6.85% 7.00% 7.15% 7.30%

Sale Price £7m £6.85m £6.7m £6.55m £6.425m

Annual Total Return over 5 Yrs 11.50% 10.65% 9.80% 9% 8.25%

(Note: Annual Total Return = Gross income received, plus capital growth, over the period of the investment divided by the initial investment)

In calculating the Annual Total Return, following the proposed sale of the property at the fifth anniversary of the lease term, the following costs and fees have been assumed: • Rental ‘Top up’ to the eighth year rent, being £47,250 • Legal fees of 0.75% of the sale price. • Rougemont and selling agents fees of 1.50% of the sale price. Prior to agreeing a sale of the property Rougemont will provide a fee proposal for Syndicate members to approve.

11 The NBD Scotland Syndicate Syndicate Price £6,320,000 (Six million three hundred and twenty thousand pounds)

Funding The acquisition will be funded by Syndicate member’s funds and 5 year fixed term hedged bank funding. In calculating the Syndicate Return of 8.75%, the cost of the Facility has been based on indicative terms already proposed by a major bank (subject to formal credit approval). The terms represent a total annual funding cost of 4.65% per annum (incorporating the interest rate hedge facility). Further discussions are continuing with a number of actively interested funders and it is hoped that these indicative terms will be improved upon; however, swap rates may continue to harden and in the event that there is a material adverse change in the overall cost of money then the return will proportionately alter. In such circumstances Syndicate members will be informed accordingly. The Syndicate will pay the vendor a fixed, net purchase price on completion (the ‘Net Purchase Price’) of £5,650,000 Syndicate Funding (including all fees, costs) will be £3,475,000 Bank funding will be £2,845,000

Summary of Indicative bank finance terms Borrower: The NBD Scotland Syndicate Loan Term: 5 years Margin: 2.75% over LIBOR Interest Hedge: 1.85% Arrangement Fee: 1% of Loan amount Repayments: Quarterly, interest only Security: First and only charge on the property, debenture (including fixed and floating charge), rents mandated to lender’s bank. The Facility will be non-recourse and will be limited to the assets of the Syndicate only and not to the personal assets of any Syndicate member Covenants: Maximum loan to value and Minimum Interest Cover to be agreed The facility will also be subject to the borrower’s compliance with a range of agreed conditions precedent, which will include; appropriate due diligence, a minimum passing rent equivalent to the commencing rent, satisfactory bank valuation and such other documentation as the bank may reasonably require. Once negotiations with all interested funders have been concluded, full details of the finance terms agreed will be issued to investors within the purchase pack.

Bank Valuation The Property was independently valued, for bank finance purposes, by DTZ (Edinburgh office) on 21st August 2013 at £5,670,000, representing a current loan to value of 50%.

Funding Risks and Terms and Conditions Bank funding does involve risk. Typically, the Bank will be entitled to require the Facility to be repaid in certain circumstances that are defined as an event of default. In the event of a default, the Bank will be entitled to enforce its security, which may include a sale of the Property. In the event of such enforcement, the Syndicate would only have the right to any residual proceeds after the Facility had been repaid and all other amounts payable under the Facility agreements, and any associated agreements, had been discharged, and all other creditors had been met. In this event there is a risk that Syndicate members would not recover all of their investment in the Syndicate. In the event that the Syndicate still owns the Property following the expiry of the term of the Facility, then the Syndicate will need to refinance its debt. Where such a refinance was not possible, or was only possible on less attractive terms than the previous Facility, this may result in the return being lower than anticipated, or may result in a loss to Syndicate members.

12 The NBD Scotland Syndicate Syndicate Costs and Fees The following costs and fees have been used in calculating the annual Syndicate Return.

Property Transactional Fees: Property transaction costs associated with the acquisition of the Property including, but not limited to, legal & professional fees, Stamp Duty, acquiring agent’s fees, bank legal fees, VAT registration fees, bank legal fees and valuation / survey fees.

Bank Facility Fees: An arrangement fee of 1.00% of the facility, payable on completion.

Managing Trustee & Operator Fee: Rougemont’s fee, based on 4% of the Syndicate Price, payable on completion. No further Managing Trustee & Operator fees will be due payable during the life of the Syndicate, other than those agreed in advance with the Syndicate.

Custodian Trustee Fee: Custodian Trustee fees of £10,000, equating to £2,000 per annum for the first five years of the Syndicates’ ownership (“the Initial Period”), payable on completion. .

Property Management Fee: Harlow Property Management’s fees representing 3% of the annual rent for the Initial Period.

Annual Valuation It is the intention to have the property independently valued (annually) by a firm of independent Chartered Surveyors. The cost of the valuation will be deducted pro-rata from the annual rent.

Property Management Harlow Property Management Limited (“HPM”) will act on behalf of the Syndicate as the Property manager and will be responsible for; rental collection and distribution, co-ordinating the Syndicate’s VAT returns and for ensuring that the Tenant acts in accordance with the terms and conditions of the occupational lease. HPM is regulated by the Royal Institute of Chartered Surveyors and is a commercial property management company in common ownership with Rougemont. Property management fees will be deducted quarterly from the Syndicate’s rent. Management fees will be charged at the rate of 3.00% p.a. of the annual rent as illustrated in the ‘Syndicate Return’ page 11.

Capital Allowances Following an initial desktop survey, it has been identified that Capital Allowances of c. £500,000 may be available. It is intended that the tax transparent syndicate structure will allow members to claim their proportionate share of the available capital allowances to offset against any income tax. The benefit of these allowances could represent as much as an additional 0.50% p.a return to Syndicate members who are higher rate tax payers. It is intended that the cost of undertaking a full capital allowances survey, following completion of the purchase, will be split between the beneficiaries of the survey.

VAT The property purchase will be undertaken by way of a transfer of a going concern (‘TOGC’) and therefore the Syndicate will become VAT Registered. HPM will be responsible for the registration of the Syndicate with HMR&C. It will also be responsible for administering the Syndicate’s on going VAT returns. Rental payments will therefore be distributed exclusive of VAT.

13 The NBD Scotland Syndicate Individual Liquidity A Syndicate member can sell, or transfer, their holding to whomsoever they wish, as long as the acquiring party qualifies as being a suitable ‘Exempt Person’. A sale, or transfer, of a holding can occur at any point during a Syndicate member’s ownership and does not require the sale of the whole property at that time. As Managing Trustee, Rougemont is authorised to co-ordinate and assist in the sale of a Syndicate holding by promoting it to its approved client base. An administration fee of £550 plus VAT (including all legal documentation) is payable for this service. Other than between other Syndicate members and Rougemont’s client base, there is no established secondary market for the sale of a holding in a property purchased under these arrangements and there can be no guarantee that a holding will sell. As with any property, values can vary at any given time and will depend on factors such as; economic conditions, tenant covenant and length of lease remaining. For further information regarding the above please see ‘Investor Eligibility’ and ‘How Syndicated Property Works’ on page 2.

Rationale for the Purchase This is a rare opportunity to acquire a newly constructed building that is subject to a fifteen year lease, without a tenant’s break option and incorporating pre-agreed upwards only rental increases, to a tenant who has the highest Dun and Bradstreet credit rating of 5A1 and is operating in a mature, growing and highly profitable sector. With interest rates being forecast to remain at their current low levels for the next three years, this opportunity provides an attractive annual income of 8.75% per annum, distributed quarterly in advance, with the potential for future capital growth as competition for quality property investments increases. Furthermore, as liquidity in the financial markets improves and funding becomes more freely available, interest in investments of this nature have traditionally driven higher capital values. Typically, syndicated property promotions by Rougemont have not involved bank finance. However, in view of the quality of the Tenant, the length of lease, the fixed rental growth and the attractive bank finance terms available, we believe that this is an appropriate investment to benefit from the enhanced return that an acquisition with an element of funding can deliver. In particularly, where there is a proposed exit strategy in place. The Syndicate structure is ideal for SIPP and SSAS pension fund investors. Non pension fund high rate tax payers will be able to take advantage of any available capital allowances, which will enhance their annual return. The strength of the Tenant and the industry in which they operate is attractive. Scottish whisky exports hit a record £4.3 billion, in 2012, representing an increase of 87% in the last 10 years. Rising demand for whisky from both mature and emerging global markets saw the value of exports grow for the eighth consecutive year. Scottish whisky currently represents 80% of Scottish food and drinks exports and 25% of UK food and drink exports. With the continued expansion of the whisky industry, distillers are actively expanding their maturation storage requirements and are seeking accommodation across Scotland. The ability to obtain planning permission for a maturation facility is becoming increasingly more difficult to obtain due to the local authorises concerns over the environmental implications of storing alcohol. It is therefore possible to see bonded warehouse rental values adjust to a premium above traditional industrial rents. The Property is a new warehouse facility, adjacent to Scotland’s busiest motorway corridor, strategically located for the Tenant. It is also likely to appeal to other surrounding distilleries. The property also has inherent alternative use prospects, particularly within the commercial storage market. Due to the nature of the Tenant’s operations, particularly in relation to the period of time required for whisky to mature, which is typically three to six years dependant on the blend, it is unlikely that there will be a time when all of the individual units within the facility will become empty at the time the lease expires; consequently, there is the potential to engage with the tenant at an early stage, to discuss extending the lease term.

14 The NBD Scotland Syndicate Risk Factors The table below sets out potential risks and risk mitigation measures.

Risk Risk Mitigation

Market Value As with any investment class there is a risk that the values may decline or the target exit price may not be achieved. This may result in a reduced Annual Return when the property is sold and the bank facility repaid.

The property being acquired represents an attractive, secure income that is rare in today’s property investment market. The addition of fixed rental increases provides certainty of rental growth and potential capital growth in the medium term.

Bank Funding The nature of bank funding adds an element of additional risk to any purchase; however, the Syndicate is employing the following strategy to mitigate that risk. Firstly, the Facility will be non-recourse and in the event that the bank needs to enforce its security it will be limited to the assets of the Syndicate and the Bank will not have recourse to any other personal assets of Syndicate members. Secondly, the element of funding will be limited to a modest c. 50% loan to value. Thirdly, the Syndicate will fix the cost of the Facility for the life of its 5 year term via a suitable hedging instrument, thereby ensuring certainty of the funding cost. Fourthly, should the syndicate chose not to seek a sale of the property in 2018, or should a sale not be attained, then the length of the lease and strength of the Tenant’s covenant will assist in being able to either refinance or amortise down the Facility from rental income.

S75 Agreement The necessary financial and management structure has been implemented to ensure that no financial liability is incurred by the Syndicate during the term of the lease.

Alternative use Whilst the property has been specifically designed as a maturation facility and is therefore likely to appeal to other local distilleries, the property does have potential alternative use prospects. The most likely use being within the commercial storage market which would allow the units to be let to a single occupier, or as individual units to smaller occupiers.

Scottish Independence Whilst it is widely predicted that Scotland will continue to remain part of the United Kingdom after 2014, there remains potential uncertainty surrounding the possible impact of Scottish Independence on the Scottish property market. The subject property, however, is occupied by a tenant producing a Scottish whisky for an international market place. By definition, it cannot produce this product outside Scotland and the demand for Scottish whisky is predicted to grow as international demand continues to increase. The requirement for Scottish based maturation facilities is therefore likely to increase and become more sought after.

15 The NBD Scotland Syndicate Important Legal Notice 1. Syndicated investment opportunities that are promoted by Rougemont qualify as Unregulated Collective Investment Schemes and may only be promoted to; Investment Professionals, Certified High Net Worth Individuals/Companies, Certified Sophisticated Investors and Existing Investors in Unregulated Collective Investment Schemes as detailed in COB 4.12 of the FCA Handbook (“Exempt Persons”). The protections normally afforded by the FSMA and compensation entitlements under the UK Financial Services Compensation Scheme may not apply.

2. No contract is formed by the provision of this material or any subsequent oral or written communication between Rougemont and an ‘Exempt Person’. A contract is only formed on the completion of a valid Syndicate Contract in a form approved by Rougemont and executed by both parties. The Syndicate Contract forms the entire Agreement between the parties unless the Syndicate Contract is expressly varied by the parties.

3. Commentary and other materials provided to you in any manner are not intended to amount to advice on which reliance should be placed. Rougemont therefore disclaims all liability and responsibility arising from any reliance placed on such materials or by anyone who may be informed of any of its contents. Rougemont does not provide or hold itself out as permitted to provide specific investment advice. Potential syndicate members should consult with an FCA regulated Independent Financial Advisor (authorised to provide such advice under the FSMA) as to the suitability of any investment opportunity promoted by Rougemont and the risks associated with it. You are also advised to take independent legal advice.

4. Rougemont has taken all reasonable care to ensure that the information provided in any material supplied to you, or in any written or oral communication with you, is true and accurate. However, all information is capable of independent verification and we advise you to seek such verification. Copies of any documents referred to or source material are available for inspection at Rougemont’s Offices. While all reasonable care has been taken no liability or responsibility is accepted for any errors and omissions within this prospectus.

5. To maximise returns, Syndicate members may need to hold their investments on a long-term basis. As a consequence the arrangement is not suitable for short-term investment.

6. Other than between other Syndicate members and Rougemont’s approved client base there is no established secondary market for the sale of a holding in any properties purchased under the arrangements and therefore there can be no guarantee that you will be able to readily dispose of your holding, or sell it at a particular price.

7. Property values may fall as well as rise and purchasers should be aware that property values are a matter of valuer’s opinion, are subject to market forces. There can be no guarantee as to future performance. Tenants may default, thus leaving a void in rental income, rates and service charge payments that may need to be covered by Syndicate members until such default is remedied or the property is sold/re-let. There may also be costs incurred in dealing with any default, re-letting, improvement or repair works or irrecoverable costs relating to the damage or destruction of the property which the Syndicate members will be responsible for.

8. Syndicate members should appreciate that the value of property is dependent upon a range of factors many of which are outside the control of Syndicate members; these include but are not limited to, fluctuations in land prices, construction costs, interest rates, changes in taxation, changes in supply and demand, and environmental factors. The financial strength and standing of a tenant can change at any time.

9. You are only entitled to use any promotional materials provided by Rougemont for your own use. Such materials are expressly not intended for distribution to any other party. Reproduction of the whole or any part of any materials provided is strictly prohibited.

Complaints

1. Should you wish to make a formal complaint concerning the services provided by Rougemont then please contact, in the first instance, Rougemont Limited at; Montpellier House, 4 Cold Bath Road, Harrogate, HG2 0NQ tel. 01423 877 910 and a copy of the company’s Complaints Handling Procedure will be issued to you immediately.

2. Once a complaint has been made to us we will acknowledge receipt within 14 days and seek to resolve the issue. Rougemont Limited is regulated by the FCA and in certain circumstances you may be eligible to refer complaints to the Financial Ombudsman Service.

Availability The property is available for syndication with a minimum investment of £25,000. Interested parties are therefore invited to review the above Important Legal Notice and make a formal reservation by completing the Reservation Form on page 17/18. On receipt of a Reservation Form Rougemont will issue a purchase pack for completion.

Montpellier House 4 Cold Bath Road, Harrogate, HG2 0NQ T: +44 (0)1423 877 910 | F: +44 (0)1423 877 901 www.rougemontestates.co.uk

16 The NBD Scotland Syndicate NBD Scotland Syndicate Reservation Form I confirm I have read and understand the Important Legal Notice on page 16. I would like to acquire a syndicate holding within the NBD Scotland Syndicate and would like to be issued with the purchase pack.

Please reserve a holding in the above syndicate for: (NB. Minimum holding £25,000)

£

Investor Details:

I confirm I wish to make this purchase in the name of:

(Full Name in Block Capitals (pension funds should list all Trustees/signatories names and addresses in full))

Following the completion of the syndicate I wish all future correspondence and rental remittances to be sent for the attention of:

At the following address:

Postcode:

Financial Advisers Details:

Please provide details of your financial adviser (the ‘adviser’) where applicable. If this is not applicable please tick this box and then proceed to signing the Declaration.

Name of Adviser Contact:

Name of Adviser Firm:

Adviser Firms FCS reference number:

Address of Adviser Firm

Postcode:

Email of Adviser Telephone

17 The NBD Scotland Syndicate NBD Scotland Syndicate Reservation Form

Financial Advisers Details continued:

By signing this Reservation Form, I instruct you to pay the adviser, who’s details have been provided, the fees (if any) indicated below.

Single Advice fee (including any VAT chargeable by the adviser) payable following completion of the purchase, for advice related to this investment.

(Amount £ or “nil”)

Annual Advice fee (including any VAT chargeable by the adviser) payable quarterly in arrears following completion. The Annual Advice fee is to be deducted from my/our rental payments and paid to the adviser for undertaking annual reviews of my/our investment in the Syndicate.

(Amount £ or “nil”)

I hereby instruct Rougemont to deduct the Single Advice Fee and/or the Annual Advice Fee from my/our rental payments and to remit the sums to my/our adviser.

I confirm that I have read and understand the terms and conditions attached to this promotion. I have considered the risk involved in proceeding with this purchase and have sought all the recommended advice required. I confirm that I qualify as Exempt Persons (as defined within ‘Investor Eligibility’ on page 2). I would like to be issued with the purchase pack.

Signature Date / /

Name (BLOCK CAPITALS)

Please return this form to:

Rougemont Limited, Montpellier House, 4 Cold Bath Road, Harrogate, HG2 0NQ. Tel: 01423 877910, Fax: 01423 877901 Email: [email protected] or [email protected]

18 The NBD Scotland Syndicate