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Home , Burravoe, Gutcher, Lerwick, Scalloway, Tingwall Airport

CHARLOTTE HOUSE, COMMERCIAL ROAD , ZE1 0LQ

GOVERNMENT LET OFFICE INVESTMENT FOR A FURTHER 16.6 YEARS WITH FIXED UPLIFTS LERWICK CHARLOTTE HOUSE, COMMERCIAL ROAD, SHETLAND, ZE1 0LQ

INVESTMENT CONSIDERATIONS

■ Lerwick is the capital and main business centre of the ■ Charlotte House has been let to the Government since 1977 ■ 19,953 sq ft (1,853.8 sq m) NIA of office accommodation ■ Heritable (Scottish equivalent of Freehold) A purchase at this level reflects the following yield profile: ■ Over 16.6 years unexpired to the undoubted covenant of The Secretary of State for Review Date Rent pa Running Yield Communities and Local Government 15 May 2027 £579,000 5.84% ■ 15 May 2032 £676,000 6.81% Topped up rent of £496,000 per annum ■ The Government did not exercise its break option in March 2018 ■ The lease benefits from very attractive fixed uplifts in 2027 and 2032 ■ Value of income until expiry approximately £9,540,000 as of October 2020 ■ The only Job Centre in the Shetland Islands ■ The Government uses the building for additional functions including a Health Assessment Advisory Centre and Scottish PROPOSAL YIELD PROFILE Environment Protection Agency ■ Offers sought in excess of £8,860,000 Date Rent pa Running Yield Cash on Cash* ■ Historic low UK Gilts making real estate (Eight Million, Eight Hundred and Sixty October 2020 £496,000** 5.25% 9.5% investments secured against Thousand Pounds), reflecting a net initial yield 15 May 2027 £579,000 6.13% 11.84% UK Government covenants highly 15 May 2032 £676,000 7.15% 14.57% attractive (5 year UK Government Gilt of 5.25% assuming standard Scottish purchaser’s costs. * Based on 60% LTV, 3% all in interest rate -0.06% 1 October 2020) ** The vendor is topping up to the May 2022 Fixed Uplift

GOVERNMENT LET OFFICE INVESTMENT FOR A FURTHER 16.6 YEARS WITH FIXED UPLIFTS LERWICK CHARLOTTE HOUSE, COMMERCIAL ROAD, SHETLAND, ZE1 0LQ BELMONT

FUNZIE SHETLAND

The Shetland Islands are a subarctic archipelago in the of situated in the

Northern Atlantic between Great Britain, The and . The Islands lie 50 miles north east of , 110 miles from the Scottish mainland and 190 miles west of Norway. The Shetland Islands have a population of 23,200 across 16 islands and are a popular tourist BURRAVOE destination. The Islands’ two airports carry over 479,000 passengers in and out of Shetland per annum. VOE

A970

LERWICK SANDNESS Lerwick is the Capital of the Shetland Islands and operates as the main business centre of the Islands. The town is located 123 miles off the north coast of the Scottish mainland and is the WALLS most northerly and most easterly town in Great Britain. LERWICK Lerwick Harbour is described as the “Port of Shetland” and is a busy fishing and ferry port. The HAM A970 harbour also services vessels supporting the offshore oil industry. EASTER

The A970 links to Shetland, Northlink Ferries operate a daily overnight ferry

17 miles to the north and service between Lerwick and , regularly SANDWICK Sumburgh, 24 miles to the south. calling in to in the Orkney Islands.

Lerwick is served by the located a few miles SUMBURGH away and which offer direct flights from , Aberdeen, and Glasgow.

DEMOGRAPHICS

Lerwick is home to the , NHS Shetland Board Headquarters, Gilbert Bain hospital, Lerwick’s harbour has become one of the first ports to the only hospital on the island and various other Government agencies handle major oil and gas decommissioning projects

133,000 passengers travelling directly Lerwick’s harbour sees up to 94 tourist cruise Two thirds of the Shetland Islands’ population to Lerwick by ferry per annum ships and 60,000 passengers in one season lives within 10 miles of Lerwick

GOVERNMENT LET OFFICE INVESTMENT FOR A FURTHER 16.6 YEARS WITH FIXED UPLIFTS A565

LERWICK CAMBRIDGE ROAD CHARLOTTE HOUSE, COMMERCIAL ROAD, SHETLAND, ZE1 0LQ

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A SITUATION D The property is situated on SHETLAND Commercial Road at the northern MUSEUM 0 7 CO A969 9 MMERCIAL ROAD end of Commercial Street, the town’s A E S P L A N main shopping thoroughfare. FORT A D E CHARLOTTE ANDERSON A RD 9

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TSO Gilbertson G The property is positioned adjacent A Park H ROAD LERWICK E

N D TOWN HALL I

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H to the main bus station and a large A C

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H LIBRARY public car park is to the rear, which T

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O S C is free to use. A IR N F IE L D 9 R GILBERT BAIN 96 Clickimin O A A HOSPITAL Commercial Street is the heart of Loch D D ROA TH U the town centre just across from the SO main harbour and is home to a mix of K The Knab NAB

Golf Club R 70 OA national and local occupiers. A9 D AD RO H UT O S Lerwick

Neighbouring occupiers include the D Cemetery

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Royal Bank of Scotland and Lerwick’s E S

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main Post Office. R

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DESCRIPTION The property was constructed in the 1970’s and comprises a purpose built detached office building. The property is arranged over ground and three upper floors and totals approximately 19,953 sq ft (1,853.8 sq m). Internally the property features a mix of open plan and partitioned office accommodation. The staff entrance is at ground floor level to the north end of the building, the public entrance is to the rear elevation at first floor level. SPECIFICATION • High proportion of internal meeting rooms serving the tenant’s operational demand well due to the sensitive nature of its business at the property • Suspended ceilings with inset fluorescent lighting • Double glazing throughout • 8 person passenger lift serving all floors • WC’s on each floor • Employee kitchen and break out area • There is a public car park located adjacent to the subject property.

GOVERNMENT LET OFFICE INVESTMENT FOR A FURTHER 16.6 YEARS WITH FIXED UPLIFTS Healthcraft, 12 Commercial Road, Lerwick, Shetland, ZE1 0LX LERWICK CHARLOTTE HOUSE, COMMERCIAL ROAD, SHETLAND, ZE1 0LQ

ACCOMMODATION SCHEDULE The property has been measured by Hollis in accordance with the RICS Code of Measuring Practice. The report is assignable and a copy is available in the Dataroom.

Floor NIA (sq ft) NIA (sq m)

Ground 5,441 505.5

First 4,815 447.3

Second 4,842 449.9

Third 4,855 451.1

Total 19,953 1,853.8

SITE AREA 0.233 acres (0.094 ha).

For identification purposes only.

TENANCY TENURE created on Plotted Scale - 1:617

The property is let in its entirety to The Secretary of State for CommunitiesMisrepresentation Act: 1. andAllsop LLP Local on their own Government behalf and on behalf of the instructing party, whose agents Allsop are, givesHeritable notice that: (a) these – particulars Scottish do not equivalent to constitute in whole or in part an offer or contract for sale or lease; (b) none of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact; and (c) the instructing party does not make or give, and neither Allsop nor any of their members nor any person in their employment on a Full Repairing and Insuring lease. The tenant took occupationhas onany authority 17 toMay make or 1977give, any representation for a orterm warranty whatsoeverof in relation to the property. The only representatiEnglishons, warranties, Freehold. undertakings and contractual obligations to be given or undertaken by the instructing party are those contained and expressly referred to in the written contract for sale or agreement for lease between the instructing party and a purchaser or tenant. 2. Prospective purchasers or tenants are strongly advised to: (a) satisfy themselves as to the correctness of 60 years expiring on 24th May 2037 providing an unexpired term eachof statement 16.6 contained years. in these particulars; (b) inspect the property and the neighbouring area; (c) ensure that any items expressed to be included are available and in working order; (d) arrange a full structural (and where appropriate environmental) survey of the property; and (e) carry out all necessary searches and enquiries. Allsop is the trading name of Allsop LLP. The vendor is topping up the rent to the May 2022 fixed uplift providing a passing rent of COVENANT £496,000 per annum. The Secretary of State for Communities and Local The lease benefits from the following fixed uplifts:- Government have been in occupation since 1977. The Jobcentre in Lerwick is the only Jobcentre in the Shetland Review Date Reviewed Rent per annum Islands and is of strategic importance. 15 May 2027 £579,000 15 May 2032 £676,000

GOVERNMENT LET OFFICE INVESTMENT FOR A FURTHER 16.6 YEARS WITH FIXED UPLIFTS LERWICK CHARLOTTE HOUSE, COMMERCIAL ROAD, SHETLAND, ZE1 0LQ

INVESTMENT RATIONALE • Over 16.6 years secured to the UK Government • Value of income until expiry approximately £9,540,000 as of October 2020 • Charlotte House is the only Job Centre in the Shetland Islands and is of strategic importance • Significantly superior income return in comparison to UK Government GILTs • The tenant did not exercise its break option in March 2018 • The Government uses the building for additional functions including a Health Assessment Advisory Centre and Scottish Environment Protection Agency COMPARISON WITH GOVERNMENT GILTS AND FTSE RETURNS Return UK 5 year GILT -0.06% (1 October 2020, Bloomberg) UK 10 year GILT 0.23% (1 October 2020, Bloomberg) UK 30 year GILT 0.78% (1 October 2020, Bloomberg) FTSE 250 Index Dividend yield 2.72% (10 year average, Siblis) FTSE 100 Index Dividend yield 3.80% (10 year average, Siblis) CASH ON CASH RETURNS Cash on Cash* October 2020 £496,000 9.5% May-27 £579,000 11.84% May-32 £676,000 14.57% * Based on 60% LTV, 3% all in interest rate.

COMPARABLE INVESTMENT TRANSACTIONS

Date Town Address Tenant WAULT Price NIY Purchaser Available Heathrow Amadeus, The Quartet, Bath Road Secretary of State for Communities and Local Government 16 TBC c.4.5% TBC Dec 2019 Various South East Stratton Portfolio Secretary of State (DWP) 8.8 £20.4m (£254 psf) 4.45% Elite Dec 2019 Basingstoke Florence Building Sovereign Housing Association 20 £29.0m (£472 psf) 4.16% L&G Aug 2019 Bristol Temple Quay House, 2 The Square The Secretary of State for Housing, Communications and Local Government 17.8 £73.7m (£478 psf) 4.02% Alpha Real Capital Jan 2019 Cardiff Crickhowell House National Assembly for Wales 14 £47.0m (£373 psf) 4.58% Equitix

GOVERNMENT LET OFFICE INVESTMENT FOR A FURTHER 16.6 YEARS WITH FIXED UPLIFTS EPC C32 - A copy is available in the dataroom. VAT The property has been elected for VAT. It is anticipated that the transaction will be treated as a Transfer of a Going Concern. ANTI-MONEY-LAUNDERING A successful bidder will be required to provide information to satisfy the AML requirements when Head of Terms are agreed. DATAROOM For access to the Allsop dataroom please use the following link: https://datarooms.allsop.co.uk/register/lerwick Assignable Measured and Building surveys are available in the dataroom. VIRTUAL TOUR A 360 video tour is available on request.

PROPOSAL Offers sought in excess of £8,860,000 (Eight Million, Eight Hundred and Sixty Thousand Pounds), reflecting a net initial yield of 5.25% assuming standard Scottish purchaser’s costs. A purchase at this level reflects the following yield profile:

Review Date Rent pa Running Yield 15 May 2027 £579,000 6.13% 15 May 2032 £676,000 7.15%

For further information or to make arrangements for viewing please contact:

Dale Johnstone Lottie Hayward 020 7543 6796 020 7543 6750 [email protected] [email protected]

allsop.co.uk

Misrepresentation Act: 1. Allsop LLP on its own behalf and on behalf of the vendor/lessor of this property whose agent Allsop LLP is, gives notice that: (a) these particulars do not constitute in whole or in part an offer or contract for sale or lease; (b) none of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact; and (c) the vendor/lessor does not make or give, and neither Allsop LLP nor any of its members or any person in its employment has any authority to make or give, any representation or warranty whatsoever in relation to the property. The only representations, warranties, undertakings and contractual obligations to be given or undertaken by the vendor/lessor are those contained and expressly referred to in the written contract for sale or agreement for lease between the vendor/lessor and a purchaser or tenant. 2. Prospective purchasers or tenants are strongly advised to: (a) satisfy themselves as to the correctness of each statement contained in these particulars; (b) inspect the property and the neighbouring area; (c) ensure that any items expressed to be included are available and in working order; (d) arrange a full structural (and where appropriate environmental) survey of the property; and (e) carry out all necessary searches and enquiries. Allsop is the trading name of Allsop LLP. Design CommandD www.commandHQ.co.uk 10.20