45 EAST STREET & 9/12 CASTLE SQUARE

100% PRIME REVERSIONARY FREEHOLD MIXED-USE INVESTMENT FOR SALE 45 EAST STREET AND 9/12 CASTLE SQUARE |

INVESTMENT HIGHLIGHTS

zz Brighton is one of the largest retail centres in the UK, with a primary catchment of 515,000 persons and boasts an eclectic and vibrant mix of high end, mass market and boutique retailers. zz Catchment population is expected to grow by 7% by 2023. zz All high-income Acorn Groups over perform, Pre-family 59% above the UK average. Brighton’s average household income is 6% above the UK average. The shopping population is predicted to increase by 7% by 2023. zz Brighton ranks 6th in the UK’s top towns in terms of retail demand (Promis). zz The Brighton Office Market remains tightly supplied and prime office rents are now c. £31per sq. ft. zz Prime location on the corner of East Street and Castle Square. zz Retail/office accommodation of 12,558 sq. ft. zz Over £1 billion on ongoing seafront development and regeneration projects in Brighton. zz Freehold. zz Wault of 6.8 years to expiry and 3.13 years to break. zz Current total income of £415,000 pa. zz Asset management opportunity to convert the self-contained offices to residential use, subject to planning. zz We are instructed to seek offers in excess of £6,750,000 (Six Million Seven Hundred and Fifty Thousand Pounds) subject to contract and exclusive of VAT for the freehold interest in the subject property. This price reflects an attractive net initial yield of 5.76% and a reversionary yield of 6.03%, assuming standard purchasers’ costs of 6.64%. TOURISM ATTRACTS 10 MILLION VISITORS AND GENERATES c£267 MILLION OF NON GROCERY SPEND 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

Sevenoaks M25 LOCATION 3 6 21 Dorking Redhill Guildford Tunbridge Brighton is one of the largest commercial centres in the south 31 east of England, located 56 miles (90km) south of , 25 Golalming GATWICK East Tunbridge Grinstead Wells miles (40km) west of Eastbourne and 62 miles (100km) east of 2 21 10 26 Southampton. The City benefits from good road communications M23 with the A23 dual carriage way linking north and joining the M23 Haslemere 11 motorway and in turn, the at Junction 7. Crowborough Billingshurst The A27 dual carriage way acts as a ring road around the City 265 272 and links Brighton with Eastbourne in the east and Southampton Uckfield

Pulborough 23 to the west. Rail links are excellent, with regular train services to Heathfield

London Bridge and London Victoria, with a fastest journey time 2 22 of approximately 50 minutes. London is located 26 Lewes only 22 miles (35 kilometres) north of Brighton, via the A23 dual 27 carriage way and the M23 motorway. Hove 27 Worthing BRIGHTON Newhaven Littlehampton Bognor Regis Seaford Eastbourne DESCRIPTION

The property comprises a highly prominent corner retail/office building arranged on basement, ground and four upper floors.

The retail unit is arranged on ground floor and basement and trades from both levels. The self-contained offices are accessed from Castle Square, via a generous sized self-contained office entrance. The offices benefit from air conditioning, raised floors, perimeter trunking and an 8-person Schindler Lift. 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

NORTH

For Identification purposes only 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

CATCHMENT & DEMOGRAPHICS

Brighton dominates its primary catchment area and the total population within the Brighton catchment area is in excess of 511,000, ranking the City 36 out of the PROMIS centres.

The catchment extends east to Hastings, north to Crawley and west to Chichester and encompasses many of the popular and affluent commuter towns and villages that include Haywards Heath, Horsham, Hove, East Grinstead, Uckfield and Midhurst. The estimated shopping population of Brighton is 329,000, ranking the City 29 of the PROMIS centres. Spending in Brighton is boosted by leisure and business tourism. Brighton and Hove City Council estimated that tourist expenditure in 2014 amounted to £780m; an estimated 14,600 jobs are tourism related. Brighton also boasts a very popular student destination, attracting 32,500 students from throughout the UK and worldwide.

The age profile of Brighton’s primary catchment population includes a high proportion of adults aged 25-44 and Brighton’s population is set to grow 4.9% by 2021. In 2011 the service sector accounted for 82% of total employment in Brighton. Within this sector, financial and business services account for 27% of total employment. Major employers include Lloyds, Legal & General and American Express, which has its European headquarters in the City. Other major employers include Domestic and General, Bupa, University of Brighton, University of Sussex, Hospitals NHS Trust, Sussex Police and the City Council. (PROMIS Retail Report January 2016).

Tourism attracts over 10 million visitors (www.brighton-hove.go.uk) and generates c. £267 million of non-grocery spend (Shoppertrack). 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

RETAILING IN BRIGHTON

Brighton’s retail City Centre floor space is estimated at 1.58m sq. ft and is comparable with the Promis regional centre average, ranking the city 27 of the PROMIS centres on this measure.

Brighton’s retail core is predominantly linear in nature, stretching along Western Road and North Street, which together with Churchill Square Shopping Centre are the main focus of mass multiple retailing in the City. East Street and the Lanes to the east of the core retail area provides a mix of more upmarket fashion, independent/ local and specialist retailers.

Brighton ranks 10 on the basis of its PMA retail score and 8 on the PMA fashion score. Brighton’s retail offer is very extensive for a city of its size. Its fashion offer is well above the average for regional centres. The City faces below average competition from competing retail centres and has limited out of town competition. As a result, demand for the City is particularly strong with outstanding requirements including Anthropology and Ikea.

The ownership sits at the entrance to East Street the premier destination for upmarket fashion in Brighton and is opposite the Redevco owned Hannington Estate which is being extended and refurbished and sits at the heart of the Lanes.

Brighton ranks 1st of the Promis Centres on the basis of rental performance between 2008-2014 and it will undoubtedly continue to be a strong performer, given the limited supply compared to tenant demand. 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

OFFICE MARKET

Brighton is a major south coast office centre with an estimated total office stock of c. 4.6m sq. ft and is home to a number of blue-chip companies.

The office market is categorised by a lack of Grade A office supply due to development constraints, physical geography and pressure from alternative use values.

Brighton has a highly qualified and creative population, driving high levels of business start-ups, ranked eighth in the UK by Centre for Cities.

The creative sector in Brighton is at the forefront of its growth, with a plethora of digital advertising and marketing agencies, design and gaming studios.

Development activity has been limited over the past 5 years, which combined with an upturn in demand has meant that vacancy rates have fallen below 4%.

The prime office rent is now c. £31 per sq. ft and is predicted to rise to £33.50 per sq. ft by 2021. (Knight Frank M25 Report 2018). 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

ACCOMMODATION

We have inspected the property which comprises the following approximate net internal floor areas: - RETAIL

45 East Street (COS)

Ground Floor Sales 1,695 sq. ft (157.47 sq. m)

Ground Floor ITZA 1,110 units

Basement Sales 1,086 sq. ft (100.89 sq. m)

Basement Stock 809 sq. ft (75.16 sq. m)

3,590 sq. ft 333.52 sq. m

OFFICES

9/12 Castle Square (PROPELLERNET)

The offices are arranged on part ground, basement and four upper floors comprising a total area of 8,968 sq. ft, having a self-contained entrance/reception area accessed from Castle Square.

The offices comprise of the following areas: -

Ground Floor Reception 475 sq. ft (39.48 sq. m)

Basement Ancillary 254 sq. ft (24.34 sq. m)

First Floor Offices 2,080 sq. ft (204.57 sq. m)

Second Floor Offices 2,012 sq. ft (191.75 sq. m)

Third Floor Offices 2,047 sq. ft (192.68 sq. m)

Fourth Floor Offices 2,100 sq. ft (184.04 sq. m)

8,968 sq. ft 833.15 sq. m

The offices have the benefit of air conditioning, distribution trunking, raised floors and suspended ceilings. The offices are served by an 8-person 625kg Schinder Lift. 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

TENURE

The property is held freehold.

TENANCIES

45 East Street is let to H&M Hennes & Mauritz UK Limited (trading as COS) on an effectively Full Repairing and Insuring lease, to expire on 28th September 2025, subject to a rent review on 29th September 2020 at a current rent of £245,000 pax. The tenant has a break clause effective 28th September 2023 on 6 months’ notice. The tenant extended the term via a reversionary lease from September 2020 for a term of 5 years, subject to the break clause stated.

Propellernet Ltd occupy the self-contained offices at 9/12 Castle Square on an effectively Full Repairing and Insuring lease from 8th March 2014 to expire 24th December 2025 at a current rent of £170,000 pa. The lease is contracted outside the security of tenure provisions of the Landlord and Tenant Act 1954 and is subject to a rent review on 25th December 2019 and 25th December 2022. The lease is subject to a tenant only break clause, effective 24th December 2019 and 24th December 2022 on 6 months’ notice. The tenant did not operate the December 2016 break clause, which was coterminous with the December 2016 rent review, where the rent increased.

Propellernet Ltd is in control of the maintenance of the building and H&M are responsible for reimbursing their portion of the cost. 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON RENTAL VALUE

The passing rent on the Cos reflects a Zone A rent of £194.59 per sq ft while the Propellernet office rent passing reflects c. £19.76 per sq ft.

We are of the opinion that the estimated rental value of the property as of today’s date would lie in the region of £434,300 pa. This is based on applying a Zone A rent of £194.59 per sq. ft to the Cos demise, applying A/10 to the basement sales and A/20 to the basement ancillary and £22 per sq. ft to the offices, applying ½ rate to the ground floor and basement space. 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

TENANTS COVENANT

Cos are part of H&M Hennes & Mauritz UK Ltd, which was incorporated in 1979 and operates as a fashion retailer with 6 different brands. H&M has expanded substantially, and today has around 3,900 stores worldwide. Cos was launched in 2007 and is an upmarket fashion brand for women and men who want modern, functional considered design. Cos currently trade from 23 individual stores in the UK.

Propellernet are an insight driven digital marketing agency and have consistently been named as a top UK work place by the Great Place To Work Institute. Clients of the business include N Power, Long Tall Sally, Waitrose, Kuoni and Neilson.

30/11/2015 30/11/2016 30/11/2017 GBP 000 GBP 000 GBP 000

Sales Turnover 1,013,000 1,040,814 1,062,484

Pre-Tax Profit 50,437 50,386 37,300

Tangible Net Worth 121,359 142,198 156,360

31/03/2015 31/03/2016 31/03/2017 GBP 000 GBP 000 GBP 000

Sales Turnover

Pre-Tax Profit

Tangible Net Worth 867,167 939,278 842,894

H&M Hennes & Mauritz UK Ltd have an Experian credit score of 100 / 100. Propellernet Ltd have an Experian credit score of 78 / 100. 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

INVESTMENT COMPARABLE EVIDENCE

The most salient comparable sales transactions can be set out as follows: -

Property Date Price Net Initial Purchaser Yield

129/132 North July £31.55m 4.52% Merseyside Pension Street, Brighton 2017 Fund (Boots)

38/42 East December £14.375m 4.1% Redevco Street, Brighton 2016 Mixed use building (Sandro, Majé, of 5 retail units, with Estée Lauder, office and residential Lush and Pret A on the upper floors. Manger)

Brinell Building, December c £37.1m c.4.75% Orchard Street Brighton 2018 forward commitment to purchase. c.65,000 sq. ft of Grade A multi-let office building due to pc June 2019. VAT

The property is elected for VAT and it is proposed that the sale will be treated as a Transfer of a Going Concern (TOGC).

EPC

The property has the following EPC ratings: - H&M C 62 PROPELLERNET C 74 45 EAST STREET AND 9/12 CASTLE SQUARE | BRIGHTON

PROPOSAL

Our clients are seeking offers for the freehold interest in the subject property in excess of £6,750,000 (Six Million Seven Hundred and Fifty Thousand Pounds) subject to contract and exclusive of VAT.

A purchase at this price reflects a blended net initial yield of 5.76%, reversionary yield of 6.03% and an equivalent yield of 6.01%, after allowing for normal purchaser’s costs of 6.64%.

For further information or to arrange an inspection please contact:

Messrs. Jackson Criss for themselves and for the vendors or lessors of this property whose agents they are to give notice that: (i) the particulars are set PHILIP HAY out as a general outline only for the guidance of intending purchasers or lessees, and do not constitute, nor constitute part of, an offer or contract; (ii) all descriptions, dimensions, references to condition and necessary permissions for 020 7637 7100 use and occupation, and other details are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them [email protected] as statements of representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them; (iii) no person in the employment of Messrs. Jackson Criss has any authority to make or give any representation or Messrs.warranty Jackson whatever Criss for in themselves relation to thisand property.for the vendors 101258. or Designedlessors of bythis TCC property 01/19. whose agents they are to give notice that: (i) the particulars are set out as a general outline only for the guidance of intending purchasers or lessees, and do not constitute, nor constitute part of, an offer or contract; (ii) all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct but any intending purchasers or tenants should not rely on them as statements of representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them; (iii) no person in the employment of Messrs. Jackson Criss has any authority to make or give any representation or warranty whatever in relation to this property. 101258. Designed by TCC 01/19.