A portfolio of 34 public houses for sale Contents Executive Summary 3 Property Schedule & Locations 4 Background to the Portfolio 5 Market Sector Overview 7 The Opportunity & Expressions of Interest 9 Further Information & Disclaimer 10 Individual Property Details 11 2 Executive Summary CBRE have been appointed by JD Wetherspoon plc to handle the sale of 34 public houses which have been identified for disposal and brought to the market for the first time in many years. The properties, which are being considered for sale either as a portfolio, in small packages or individually, are located in major town and city centre locations within England, Scotland and Wales. Highlights include: 27 freehold/long leasehold Excellent town and city centre High volume outlets Strong food element and 7 leasehold outlets locations on established generating total net sales in representing 34% of turnover A3/A4 circuits. excess of £38 million in 2014/15 Of interest to existing Average net turnover per Large sites which have a very Landmark character buildings operators, new entrants, pub of £22,273 per week high standard of fit out investors and developers 3 Property Schedule & Locations REF PUB NAME ADDRESS TOWN POSTCODE STATUS TENURE 1 Banker's Draft 115-117 High Street Bedford MK40 1NU Under Offer Freehold 2 Auctioneer 235-237 Lytham Road Blackpool FY1 6ET Under Offer Freehold 3 Sir Thomas Mildmay 77 French's Walk Chelmsford CM2 6QR Withdrawn Leasehold 4 Forest House 1 Love Street Chester CH1 1QY Under Offer Freehold 5 Thomas Leaper 27 Iron Gate Derby DE1 3GL Available Leasehold 6 Milson Rhodes 1d School Lane Didsbury M20 6RD Withdrawn Leasehold 7 Old Angel Cleveland Street Doncaster DN1 3EF Available Freehold 8 Capitol 7-9 Seagate Dundee DD1 2EG Available Heritable 9 Picture Palace Lincoln Road Enfield EN3 4AQ Under Offer Long Leasehold 10 Society Room 151 West George Street Glasgow G2 2JJ Available Leasehold 11 Water Poet 61-63 Eastgate Street Gloucester GL1 1PN Under Offer Freehold 8 12 Earl of Zetland Bo'Ness Road Grangemouth FK3 8AF Under Offer Heritable 29 2 13 Plough and Harrow 120-124 King Street Hammersmith W6 0QU Available Leasehold 10 17 14 Red Lion 2 Derby Road Heanor DE75 7QG Under Offer Freehold 15 Zachariah Pearson 386 Beverley Road Hull HU5 1LN Available Freehold 16 Lattice House Chapel Street King's Lynn PE30 1EG Available Long Leasehold 17 Clydesdale Inn 15 Bloomgate Lanark ML11 9ET Under Offer Heritable 18 Lime Kiln 1 Fleet Street Liverpool L1 4AN Withdrawn Long Leasehold 19 Twitchel Inn Howitt Street Long Eaton NG10 1ED Under Offer Freehold 20 Courthouse Marketplace Mansfield NG18 1HX Under Offer Long Leasehold 1515 6 21 Secklow Hundred 316 Midsummer Boulevard Milton Keynes MK9 1EA Under Offer Leasehold 33 25 7 22 John Capel Hanbury 130-131 Osborne Road Pontypool NP4 6LT Under Offer Long Leasehold 4 26 7 23 Trafalgar 16 Edinburgh Road Portsmouth PO1 1DE Available Freehold 14 5 19 24 Rocket Brewhouse Lane Putney SW15 2JQ Withdrawn Leasehold 16 27 25 Corn Law Rymer 35-37 High St Rotherham S60 1PT Under Offer Freehold 1 26 Swim Inn 217-231 Glossop Road Sheffield S10 2GW Under Offer Long Leasehold 22 21 11 3 27 Edward Rutland 77-78 High Street Stourbridge DY8 1DX Under Offer Freehold 2 30 9 28 Ye Old Crown Inn 9 Bridge St Stourport-on- DY13 8XB Under Offer Freehold 31 13 24 Severn 29 Pub & Hotel Site 43-51 King Street Stirling FK8 1DN Available Heritable 23 34 30 Groves Company Inn 22-23 Fleet St Swindon SN1 1RQ Available Freehold 31 Albany Palace 1 Park Rd Trowbridge BA14 0AT Available Freehold 32 Dee Hotel 44 Grange Rd West Kirby CH48 4EF Under Offer Freehold 33 Bollin Fee 6-12 Swan St Wilmslow SK9 1HE Under Offer Freehold 34 Sir Timothy Shelley 49 Chapel Rd Worthing BN11 1EG4 Available Freehold Background to the Portfolio The portfolio consists of 34 properties all of which are situated in town or city centre locations. Of the 34 outlets, 27 (79%) are owned* either freehold or held on a long lease at a nominal rent with the remaining 7 outlets held on standard commercial leases with an average unexpired term of more than 18 years. JD Wetherspoon have always been renowned for the strong level of investment that they commit to their venues and this portfolio is typical of their broader estate with the pubs being very well presented and fitted to a high standard. The properties which trade under the JD Wetherspoon and Lloyds No.1 trading formats also tend to be some of the largest pubs in their towns with an average total GIA (Gross Internal Area) of approximately 8,900 sq ft and an average ground floor GIA of 4,850 sq ft. All of the properties have the benefit of a late licence and a number also benefit from external seating areas. The performance of the pubs has been particularly impressive with total sales increasing annually in each of the last five years to their current level in 2014/15 of £38.22 million, reflecting average net weekly sales of £22,273**. This compares favourably with the estates of a number of the other leading pub groups. NUMBER OF PUBS TURNOVER PER PUB OPERATOR AT YEAR END (WEEKLY NET) Mitchells & Butlers (inc Orchid) 1,775 £23,000 Marston's (Managed) 372 £20,000 Greene King (Managed) 1,060 £18,000 Spirit Pub Company (now part of Greene King) 774 £18,000 Stonegate Pub Co (excluding Maclay & TCG) 623 £17,000 Source: Company statements, CBRE rounding *The vendor has exchanged unconditional contracts to acquire the properties in Doncaster and Rotherham but has not yet completed the purchases so the completion of these operational sales will need to be delayed until April 2016 **Based on the 33 operational sites at the time of sale 5 Background to the Portfolio Strong growth in food sales During the last five years there has been considerable growth in food sales in the estate which have increased by more than 40% and now represent more than one third of total turnover. With eating outside of the home expected to increase by a further 16% to £38.9 billion by 2019 (Source: Mintel), the properties are ideally positioned to benefit from this anticipated growth. The outlets have extensive kitchen facilities and particularly impressive food hygiene ratings with those properties in England and Wales which are given a Food Standard Agency rating averaging 4.9 out of 5. A number of the pubs feature in the CAMRA Good Beer Guide and benefit from the Cask Marque accreditation. TOTAL SALES AND FOOD SALES 2010-2015 £40,000,000 £35,000,000 £30,000,000 £25,000,000 £20,000,000 £15,000,000 £10,000,000 £5,000,000 26% 27% 29% 32% 34% £0 2010/11 2011/12 2012/13 2013/14 2014/15 Source: JD Wetherspoon Total Sales Food Sales 6 Market Sector Overview The managed house sector continues to stimulate interest from a broad range of existing operators, investors and new entrants Whilst the number of pubs trading in the UK has declined in recent years to around 51,900 in 2014 (Source: BBPA) only a small proportion of those which have closed have been managed houses. Managed outlets have always generated the highest turnover and unit profit returns in the sector and have also been better placed to adapt to changing trends and new legislation which has increased the significance of being able to provide a strong food offer. The vast majority of new pubs that have opened in recent years have been large managed outlets with the likes of JD Wetherspoon, Greene King, Marston’s and Mitchells & Butlers leading the way in either building new pubs or converting other commercial buildings into large managed venues. Increased transactional activity Transactional activity in the managed sector has been restricted by the availability of stock in the market, although there have been several transactions of note in the last two years. Court House, Mansfield In May 2014 the Amber Taverns estate of 95 managed pubs located throughout the Midlands and the north of England were acquired by MxP Partners for £85 million (£894,000 per site). At the time their most recently published accounts were for the year ending February 2014 where their 93 pubs were generating average weekly sales of £8,000 per week (Source: Company Accounts/CBRE Estimate). These pubs, which don’t tend to offer food and are typically smaller than those operated by JD Wetherspoon, are all located in town centre positions. This was followed a month later by Mitchells and Butlers announcing their acquisition of 173 managed pubs from Orchid, of which 158 were held freehold or long leasehold, along with the head office, for £266 million (£1.53 million per site). At the time of acquisition the average weekly sales of these outlets was just over £15,000 per week (Source: Company Statement/CBRE Estimate). The company has since been investing across the estate converting the properties into their established brands. More recently in June 2015 Greene King completed the acquisition of the Spirit Pub Company for a total consideration of £774 million*** which added a further 1,227 properties to their estate creating a combined business of 3,100 pubs. As a result of this takeover Greene King were required to sell 16 outlets, 10 of which were managed outlets Albany Palace, Trowbridge and were sold to Star Pubs & Bars, Marston’s and Hall & Woodhouse. *** Based on Greene King shares at the time of initial offer 7 Market Sector Overview Stonegate Pub Company, the owner of the Slug & Lettuce, Yates and Missoula brands, have also been aggressively growing their estate of primarily town centre venues.