INVESTMENT SALE

Centrica Plc – Scottish Gas Headquarters 1 Waterfront Avenue, Edinburgh, EH5 1SG Investment Summary

• Landmark office investment, fully occupied by British Gas as their operational headquarters in Scotland.

• Award winning, Foster & Partners’ designed Grade A office extending to 91,784 sq ft.

• High quality specification and environmental credentials, having achieved BREEAM “Excellent” certification.

• Located in Edinburgh, Scotland’s capital city and one of the UK’s Big 6 regional office markets.

• Fully let to GB Gas Holdings Ltd (5A1 Dun & Bradstreet rating) on a full repairing and insuring lease expiring 14th September 2020.

• Guaranteed by Plc, a member of the FTSE 100 index with a market capitalisation of £11.25 billion.

• Current passing rent of £1,658,268 per annum (£18.16 per sq ft) with 5 yearly upward only rent reviews.

• Absolute Ownership (Scottish equivalent of English Freehold).

• Offers in excess of £16,875,000 (Sixteen Million, Eight Hundred and Seventy Five Thousand Pounds Sterling), subject to contract and exclusive of VAT are invited for the Absolute Ownership in the property.

• A purchase at this level would represent a net initial yield of 9.25% after allowing for purchaser’s costs based on LBTT and a capital value of £183.86 per sq ft. Edinburgh Communications Edinburgh, Scotland’s capital city, sits at the heart of a CAPITAL CITY & GLOBAL BUSINESS CENTRE diverse regional economy that provides the seat of Scotland’s A926 government, is the home to the nation’s legal system and is a A933 A94

A90 Arbroath globally recognised financial centre. A92

Dundee A85 A90 A85 A85 Perth

A92 (A914) A91 St Andrews

A819 M90

A84 A9 A915 A91 (A92) A823 A914 A917

Glenrothes A82 A91 A815 M90 Buckhaven A977 A83 A814 Stirling

A81 A92 Kirkcaldy A886 A811 M9 Dunfermline Cowdenbeath M80 Helensburgh Grangemouth A198 Bo'ness Dunoon Gourock Alexandria Dumbarton M9 A1 A80 Cumbernauld Kirkintilloch Clydebank EDINBURGH Musselburgh M73 A89 Dalkeith

A78 M8 Airdrie Livingston GLASGOW M8 Bonnyrigg Paisley A8 A71 A70 A844 A68 Motherwell A702 A760 Newton Hamilton A706 Mearns A73 A703 A7 M77 East Kilbride A726 Carluke A841 Larkhall A701 Kilwinning M74 Ardrossan A721 A8089 Kilmarnock Irvine A72 A71 Galashiels

A73 Troon A702

Prestwick A708 Edinburgh is one of the UK’s Big Six office markets. It is Scotland’s Ayr AIR A74(M) RAIL A701 A70 capital city, with a population of nearly 487,500 and a wider regional A68 EdinburghA77 Airport is located just 5.8 miles west of the city centre. Edinburgh Waverley and Haymarket are the two main line stations catchment of approximately 1.6 million. Direct flights to more than 130 destinations are available, provided located within Edinburgh city centre. by a range of 40 airlines. The city is one of the most prosperous in the UK, with the highest Edinburgh Waverley is the second largest railway station in the UK, Gross Value Added after London, at an average of £34,178 per Passenger numbers have risen to over 10 million passengers per after London, and is a principal station on the East Coast service resident. Despite being home to only 9.1% of Scotland’s population, year. As this trend is expected to continue upwards, almost £250m between London and Aberdeen. Connections are available to other Edinburgh still accounts for 15.2% of the nation’s productivity, 12.8% has been pledged to upgrading the airport over the next decade. major UK cities. of employee jobs, 10.3% of registered enterprises and 18.3% of research and development expenditure. Haymarket is a major commuter station, and since renovations in 2014 serves as a key transport interchange, allowing connections Edinburgh is widely regarded for its highly skilled workforce. The Below: European destinations from Edinburgh Airport between trains, buses, trams and taxis. city is home to four universities and over 100,000 students. Many graduates choose to stay, or move to, the city. This is reflected in the FINLAND Each station is set to benefit from infrastructure investment, with fact that 53.9% of the population hold a degree or professional level NORWAY two new platforms planned for Edinburgh Waverley, and the SWEDEN qualification. ESTONIA £1 billion Edinburgh to Glasgow (Rail) Improvements Programme.

LATVIA It is unsurprising that Edinburgh is popular amongst occupiers from EDINBURGH DENMARK a wide range of sectors. As the home of the Scottish Parliament, LITHUANIA ROAD the public sector is one of the major employers in the city, as is the IRELAND BELARUS financial sector. Edinburgh is also notable however for its growing Edinburgh is the hub of Scotland’s road network and provides direct UNITED KINGDOM access to the national motorway network. Connections are available NETHERLANDS importance to companies in the fields of technology, life science and POLAND GERMANY UKRAINE to Aberdeen/Inverness/the north via the M90/A9; to Glasgow/ renewable energy. BELGIUM

CZECH REPUBLIC Livingston/the west via the M8; and the south via the A1/A7. SLOVAKIA Firms that have recently been attracted to Edinburgh include AUSTRIA FRANCE HUNGARY

FanDuel and Skyscanner, while Blackrock, Baillie Gifford and Rockstar SWITZERLAND SLOVENIA ROMANIA North are amongst those who have expanded. CROATIA TRAM BOSNIA & HERZEGOVINA SERBIA Edinburgh’s tram system commenced operations in May 2014. This BULGARIA ITALY Edinburgh has seen major investment in its infrastructure and KOSOVO 14km route runs between the airport and the city centre, providing MACEDONIA attractions over recent years, and these ongoing improvement works PORTUGAL links between the city’s main commercial and residential sites. ALBANIA MADRID have seen the city win several major awards. These include the SPAIN GREECE award for Best Foreign Direct Investment Strategy (Financial Times fDi Magazine, 2014), and Favourite UK City (/Observer) received in 13 consecutive years. F O R T H

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A D TRAM Under the Llewelyn-Davies plan the

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D Under the original proposals for Granton Waterfront would be split into

G 1 Waterfront Avenue Location E Edinburgh’s tram network, the line four quarters, with the subject site located OCEAN TERMINAL The property is situated within Granton, originally extended through Leith and within the district owned by the National & ROYAL YACHT 3.3 miles north of Edinburgh city centre, at along to Granton Waterfront. A transport Grid, known as the Forthquarter. the shore of the Firth of Forth. The subject interchange would have been located LEITH property is located on the former site within the public square that fronts onto A 2003 Masterplan for the Forthquarter by GRANTON OAD A9 RY R 0 FER Q of Scotland’s largest gasworks and now the subject property. Financial constraints Foster & Partners further expanded on this, U ROAD EE FERRY N K forms part of the award winning Edinburgh limited the line to York Place in the suggesting 2000 housing units, 8,900 sq m SF ROYAL BOTANICAL L M90 E A R D GARDEN R W Waterfront regeneration. city centre, however the city council is of retail space and 9,975 sq m of business Y R R H D D IT R E reportedly now considering options to space be provided, as well as open space, D L ERRY R FO QUEENSF TEL CONNECTIVITY extend the network in accordance with the leisure and educational facilities. CALTON HILL D The following transport links provide original plans. R

Y R connections across and outwith Edinburgh Since this Masterplan was approved, the EDINBURGH U B EDINBURGH CASTLE Y Forthquarter has seen the construction AIRPORT A from the property: EDINBURGH WATERFRONT

M M9 EDINBURGH ZOO HOLYROOD of the subject property, a public square, Edinburgh PARK The subject property lies within the TERRACE Tram Line ESTERN a Morrisons , a Pure Gym, A8 W ROAD Edinburgh Waterfront, a length of coastline GYLE SHOPPING ST JOH RD CENTRE NS Granton lies just north of Ferry Road, a running from Granton Harbour to the Leith an Edinburgh College campus and 768 MURRAYFIELD A8 GLASGOW RD main arterial route into Edinburgh city Docks, which has been earmarked for residential units. The site was an RICS RD GIE centre, and therefore allows easy access significant regeneration. International Regeneration Award winner OR A G 7 to both the A90 and the M8. The A90 is in 2004. The next steps for the quarter are 2 0 C expected to include the demolition of the I accessible within 15 minutes and the M8 Plans for regeneration originated in 2000,

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R O RD within 25 minutes. Edinburgh city centre when Llewelyn-Davies was commissioned remaining gas holder; the redevelopment F R N DE E L O M8 D CA T of the former Granton rail station; the IN S can be reached in 15 minutes. to provide a Masterplan for the mixed use D I B R U M R K G R O development of the Waterfront area. The delivery of a primary school; and a revised

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Y A 0 P L Masterplan was subsequently approved by requirement for lower density housing.

A 7 BUS RD S 0

ER A LD S 7 CA A A71 Lothian Buses operate seven routes which Edinburgh’s planning committee, and has HERIOT-WATT Proposals for the wider Granton Waterfront UNIVERSITY service Granton. One route runs directly to/ been incorporated into Area Development from 1 Waterfront Avenue, while others Frameworks and proposed Local area include 1,980 residential units; a mixed RD use development with marina and hotel at RK have stops along West Granton Road and Development Plans. NA LA Granton Harbour, and further leisure space. A70 A at Granton Square. 720 CITY OF EDINBURGH BYPASS Description AWARD WINNING HEADQUARTERS SPECIFICATION

Laid out over ground and three upper floors, the subject property was completed in 2003 as the flagship office HQ and operational call centre for Scottish Gas.

The property provides flexible, open plan Grade A office accommodation arranged around an impressive full height atrium.

The building set a new standard for call centre accommodation and has received several design awards including the AwardsScottish Design Award for Commercial Interior and the British Council for Offices National and Regional Awards for Commercial Workplace.

Each elevation of the building is fully glazed, providing spectacular views across the Firth of Forth at the rear. A silver anodised “Brise soleil” surrounds the building, delivering a striking external appearance, and combined with high performance glazing helps achieve an ideal balance between natural light penetration and solar protection.

Internally, the building benefits from the following features:

• Full height atrium with open balconies at each floor and staggered walkways. • Fully accessible raised access floors with minimum clear void of 350mm. • Large, open plan, u-shaped floorplates of approximately 22,000 sq ft. • Finished floor to ceiling height of 2.8m. • Highly efficient cooling system via a combination of displacement ventilation with passive chilled beams. • High occupational density of 1 person per 6 sq m. • Exposed mass concrete coffered soffit with ceiling rafts carrying chilled beams and LG3 compliant lighting. • BREEAM ‘Excellent’ certification • 3 x KONE 17 person passenger lifts serving all floors and 1 x 17 person goods lift. • Male, female and disabled toilets on each floor. • High quality catering and wellbeing facilities on ground floor. • Shower facilities on ground floor.

The building exploits the natural slope of the land it sits on, creating a concealed external car park, which together with a secure undercroft car park provides 198 spaces (1:464 sq ft) and provision for bicycle and motorcycle storage. Tenure Accommodation Absolute Ownership (Scottish equivalent of English Freehold).

The property has been measured on a net internal area basis in accordance with the RICS Code of Measuring Practice (Sixth Edition) and provides the following approximate areas:

Floor Description NIA Sq M NIA Sq Ft Third Office 2086.08 22,454 Second Office 2089.96 22,496 Tenancy First Office 2104.44 22,652

Ground Office 2051.33 22,080 The property is fully let to GB Gas Holdings Ltd on a Full Repairing and Insuring lease Ground Atrium 111.85 1,204 for a term of 17 years from 15th September 2003, expiring on 14th September 2020. Ground Reception 83.39 898 The lease is subject to 5 yearly, upward only rent reviews. Total 8,527.04 91,784 The current rent passing is £1,658,268 per annum excluding VAT (£18.16 per sq ft assuming the reception is rentalised at half rent).

There is a guarantee from Centrica Plc over the term of the lease.

Ground Floor

D D D D Catering Area D D Refurbishment due 2015

D

D D D D D D D D Tenant Information

D D D D D D D D D D D D GB Gas Holdings Ltd provides energy and services to home and business customers across the UK through its British Gas subsidiaries.

D D D D D D D D British Gas is the UK’s largest energy provider serving over 11 million homes and businesses in the UK. The company was incorporated D D D D

D D D D

D D D D in 1996 following the demerger of the British Gas Corporation, and is headquartered in Windsor, United Kingdom and operates under D D D D the Scottish Gas trading name in Scotland. D D D D D D

D D D D D D

D D D D D D D D D D D D D D GB Gas Holdings is a subsidiary of Centrica Plc. Centrica Plc operates across the UK, Europe, North America and Trinidad and Tobago. It

D D D D

D D D D employs approximately 38,500 people and manages 27.9 million customer accounts globally. Centrica Plc is listed on the London Stock

D D D D D D D D Exchange and is a constituent of the FTSE 100 index with a current market capitalisation of £11.25 billion. D D D D

D D D D

GB Gas Holdings Ltd (Reg Number: 003186121) has a Dun & Bradstreet rating of 5A1, representing a minimum risk of business failure.

Typical Upper Floor Year Ending 31st December 2011 31st December 2012 31st December 2013 (000s) (000s) (000s)

D D D D D D D D D D D D D D D D D D D D D D Pre-Tax profit £2,293,077 £46,753 £433,687

D D D D D D D D D D D D D D D D D D D D D D

D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D D Total Net Worth £1,563,844 £2,239,577 £2,688,531 D D D D D D D D D D D D D D D D D D D D D D

D D D D D D D D D D D D D D D D D

D D D D D D D D D D D D D D D D D

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D D D D D D D D D D D D D D D D D

D D D D D D D D D D D D D D D D D Centrica Plc (Reg Number: 003033654) has a Dun & Bradstreet rating of N1, representing a minimum risk of business failure.

D Year Ending 31st December 2012 31st December 2013 31st December 2014

D

D (000s) (000s) (000s)

D D D D D D D D D D D D D D D D D D D D D D D D D D Turnover £23,942,000 £26,571,000 £29,408,000 D D D D D D D D D D D D D D D D D D D D D D D D D D

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D D D D D D D D D D D D D D D D D D D D D D D D D D

D D D D D D D D D D D D D D D D D D D D D D D D Pre-Tax profit £2,442,000 £1,649,000 -£1,403,000 D D

D D D D D D D D D D D D

D D D D D D D D D D D D Total Net Worth £1,805,000 £468,000 -£1,865,000

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D D D D D D D D D D D D For further information refer to www.centrica.com Edinburgh Office Occupational Market

• Edinburgh has an existing office stock supply of approximately • Following significant prelets in the past 12 months, including 22 million sq ft, and has been enjoying a resurgence in its Standard Life Investment’s 108,500 sq ft prelet at 3/8 St occupational market in recent years. Andrew Square, and Fanduel’s 58,600 sq ft prelet at Quartermile 4, just 70,000 sq ft of space under construction in Edinburgh is • 2014 saw the highest Edinburgh wide take-up since 2001, at available. There is no development activity in the out of town a total of 932,550 sq ft. 2015 looks set to continue the above market. This further limits the options available to occupiers. average trend, with 587,000 sq ft of take-up reported to the end of Q3. • These market conditions have contributed to rising rents in Edinburgh. Prime rents of £31.00 - £32.50 are achievable, and • A number of large requirements remain active including may continue to increase into 2016, while incentive packages , EY and CMS. Further significant lease events are are likely to reduce. Cushman & research suggests scheduled for 2015-2017, so it is likely that demand and take- that prime rents will continue to rise through to 2019 at up will continue to build momentum. approximately 2.5% per annum. • Available accommodation has meanwhile been decreasing. Edinburgh-wide supply stood at 1.13 million sq ft at the end of Q3 2015, with city centre space at a 10 year low. Grade A space, the preferred option amongst key occupiers, is in short supply across city centre and out of town markets, with few buildings offering the large floorplates needed. Additional Information

VAT

The property has been elected for VAT and the sale is intended to be treated as a Transfer Of a Going Concern (TOGC).

EPC

The EPC is currently being updated and can be provided upon request.

Investment Market Proposal In the past 18 months there has been increased investment activity outside of London, as a result of higher relative yields in regional cities. Investors are seeking assets in improving locations with scope for rental growth. Offices have been the favourite asset class of local and overseas investors, as business confidence and the economic outlook continues to improve. We are instructed to seek offers in excess of £16,875,000 (Sixteen Million, Eight Hundred and Seventy Five Thousand Pounds Sterling) subject to contract and exclusive of VAT for the Absolute Scotland’s commercial property investment market impressed in 2014, with transaction volumes of £3.066bn, the highest level since 2007. Ownership in the property. A purchase at this level would represent a net initial yield of 9.25%, Cushman & Wakefield estimate that £1.6 billion has been transacted in the three quarters ending September 2015, surpassing the ten year after allowing for purchaser’s costs based on Land & Buildings Transaction Tax. average for this time period.

In Edinburgh, prime city centre yields sit at 5.50%, showing a discount to other major UK cities such as and . CONTACTS

Given the strength of the occupational market, the opportunity exists for investors to capitalize on the current market conditions and achieve Steven Newlands strong returns and sustained performance. Tel: 0131 226 8756 Email: [email protected] Recent comparable city centre office investment transactions are highlighted in the table below: Calum Cowe Tel: 0131 226 8759 Address Date Purchaser Price Net Initial Capital Value Comments Yield Per Sq Ft Email: [email protected]

Sainsbury’s Bank HQ, On market N/A £19.0m 6.31% £225 Let to Sainsbury’s Bank until September 2029 Natasha Ross 3 Lochside Avenue, (quoting) (quoting) with tenant break option in September 2024. Edinburgh Tel: 0131 226 8735 Email: [email protected] Ocean Point, Under offer N/A £14.25m 8.75% £228 Let to AWG Group until February 2024. 1 Ocean Drive, Edinburgh Tanfield 1, Edinburgh March 2015 Rockspring £54.0m 7.00% £283 Multi-let with AWULT of 7.15 years. Lomond & Leven March 2015 CCLA £6.05m 7.97% £204 Multi-let with AWULT of 8.1 years. House, Lochside Place, Edinburgh 7 Lochside View March 2015 Kames Capital £11.698m 7.58% £182 Multi-let with AWULT of 3.5 years.

Elgin House, April 2015 Kames Capital £14.82m 6.14% £297 Let to The Secretary of State for Communities Cushman & Wakefield LLP on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: (1) The particulars 20 Haymarket Yards, and Local Government until December 2028 with are produced in good faith, but are a general guide only and do not constitute any part of a contract. (2) No person in the employment of the Edinburgh tenant break option in December 2023. agent(s) has any authority to make or give any representation or warranty whatsoever in relation to this property. (3) The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. (4) Nothing in these particulars should be deemed 1/5 Rutland Court, December Private £14.75m 6.50% £381 Let to Anderson Strathern until December 2023. a statement that the property is in good condition, or that any services or facilities are in working order. (5) Unless otherwise stated, no Edinburgh 2014 investigations have been made regarding pollution, or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required. November 2015. Designed and produced by Creativeworld: 01282 858200. Centrica Plc – Scottish Gas Headquarters 1 Waterfront Avenue, Edinburgh, EH5 1SG