Business Outlook 2008 Market Intelligence 2007

Business Outlook 2008 Market Intelligence 2007 Christie + Co www.christiecorporate.com AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY Cover section_08 8/1/08 11:00 Page 1 Page 11:00 8/1/08 section_08 Cover Cover section_08 8/1/08 11:00 Page 2

AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY www.christiecorporate.com

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INTERNATIONAL OFFICES

11 London 23 Madrid 39 Victoria Street María de Molina, 37 Bis, 3a Planta London SW1H 0EU 28006 Madrid, Spain T: +44 (0) 20 7227 0700 T: +34 912 99 29 92 F: +44 (0) 20 7227 0712 F: +34 912 99 29 91 E: [email protected] E: [email protected] 18 Barcelona 24 Marseilles Paseo de Gracia, 11, Esc B, 4O 3a 165 avenue du Prado 08007 Barcelona, Spain 13008 Marseilles, France T: +34 93 343 61 61 T: +33 (0) 4 91 29 12 40 F: +34 93 343 61 60 F: +33 (0) 4 91 29 12 41 E: [email protected] E: [email protected]

19 Berlin 25 Munich Markgrafenstraße 32 Platzl 3 10117 Berlin, Germany 80331 Munich, Germany T: +49 (0) 30 / 2 0 00 96-0 T: +49 (0) 89 / 2 00 00 07-0 F: +49 (0) 30 / 2 0 00 96-10 F: +49 (0) 89 / 2 00 00 07-10 E: [email protected] E: [email protected]

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21 Frankfurt 27 Rennes Bockenheimer Landstraße 93 Immeuble “Artemis” 60325 Frankfurt, Germany Parc Monier T: +49 (0) 69 / 90 74 57-0 167 Route de Lorient F: +49 (0) 69 / 90 74 57-10 35000 Rennes, France E: [email protected] T: +33 (0) 2 99 59 83 30 F: +33 (0) 2 23 46 08 95 22 Hamburg E: [email protected] Stadthausbrücke 7 20355 Hamburg, Germany T: +49 (0) 40 / 4 68 99 01-10 F: +49 (0) 40 / 4 68 99 01-20 E: [email protected] LOCATIONS www.christiecorporate.com

Contents

Introduction ...... 04

Agency ...... 10

Valuation Services ...... 12

Investment ...... 14

Consultancy ...... 16

Finance & Insurance ...... 18

UK & International Offices ...... 20

Sectors ...... 22

Hotels Public Houses Restaurants Leisure Care Retail

page 22 page 28 page 34 page 38 page 44 page 50

International ...... 56

France ...... 58

Germany ...... 60

Spain ...... 62

Contacts ...... 64 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

2007 6.1% 2007 6.5% Percentage 13.1% 8.5% 2006 2006 10.8% 5.2% movement in 2005 2005 2004 10.9% 2004 9.2% 11.6% 6.2% average prices 2003 2003 2002 4.2% 2002 8.1%

0% 5% 10% 15% 0% 2.5% 5% 7.5% 10%

Hotels Public Houses 6.1% increase 6.5% increase

Christie + Co price indices Index based on average sale prices (from a base of 100 in 1975)

1975 2002 2003 2004 2005 2006 2007 Hotel Index 100 623 695 771 854 966 1025 Public House Index 100 709 753 822 865 939 1000 Restaurant Index 100 816 837 865 906 950 1026 Care Index 100 487 579 677 775 910 1021 Retail Index 100 699 828 865 933 988 1043

Christie + Co Average Index 100 710 792 863 937 1021 1099 Retail Price Index 100 457 469 484 497 516 538 House Price Index 100 1057 1227 1411 1458 1598 1708

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2007 8.0% 2007 12.2% 2007 5.6%

2006 4.9% 2006 17.4% 2006 5.9%

2005 4.7% 2005 14.5% 2005 7.9%

2004 3.3% 2004 16.9% 2004 4.5%

2003 2.6% 2003 18.9% 2003 18.5%

2002 2.8% 2002 3.2% 2002 5.4%

0% 2.5% 5% 7.5% 10% 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%

Restaurants Care Retail 8.0% increase 12.2% increase 5.6% increase

1800 1700 1600

1500 Hotels 1400 Public Houses Restaurants 1300 Care 1200 Retail Christie + Co Index 1100 Retail Price Index 1000 House Price Index 900 800 700 600 500 400 300 200 1991 2001 1987 1997 1992 1985 1993 1984 1995 1988 1994 1990 1986 2007 1989 1998 1996 2002 1999 2003 2005 2000 2004 2006

3 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

The crisis in the US sub-prime mortgage market has been well documented and although it has caused concern in the property markets, values within our sectors all showed positive growth during 2007. Analysis of our own sales shows that, across our sectors, average business property values moved forward by 7.1% during the year.

Average property values increase during 2007 During the first half of 2007, the business Average property values within the hotel property market moved forward very sector moved forward by 6.1% during 2007, positively, as forecasted, providing early whilst in the pub sector they increased by indications of another strong year. Towards 6.5% and in the retail sector by 5.6%. the latter part of the year we witnessed a Restaurant values showed an 8% increase, smoothing of these growth levels, as a result which compares favourably to the 4.9% we of the uncertainty in the debt market, but reported for 2006. The care sector reported values within our sectors still showed a the greatest increase in prices at 12.2%. Whilst positive gain for the year as a whole. the rate of increase has declined in most sectors, when compared to the impressive growth we witnessed in 2006, we are still recording a positive increase, not a fall in property values for 2007.

“Property prices continued to move forward at encouraging levels” CHAIRMAN’S OVERVIEW

4 David Rugg,Chairman investors intheyearsahead. for boththepensionsindustryandretail these willemergeasnewfundsareraised is aplaceinourmarketsforREITsandthat entrants. Webelieve,however,thatthere arguably deterredotherwould-beearly attempt tolaunchVectorasahotelREIT chosen toconvertREITstatus.Thefailed commercial propertycompanies,whichhad share priceperformanceofmainstream property sectorwasmarredbythepoor The appetiteforREITsinthebusiness REITs toemergeinthefuture in thisway. amongst thebanks,fortransactionsfunded Finance, reportsacontinuedhealthyappetite principles. Ourownintermediary,Christie this representsareturntosoundfinancial For theindividualprivatebusinesspurchaser, buyer willneedtobeacashinvestment. likely thattheequitystakeputinby of existingassetsheld.Inthefuture,itis have securedfundsagainsttheupliftinvalue significantly increased,manybusinessbuyers Over thepastfewyears,asassetvalueshave typically 25-30%ofthetransactionvalue. required toputinarealequitystake— normality, wherebuyersofbusinessesare The forecastfor2008isareturntofinancial A returntosoundfinancialprinciples Taxing issues marketing substantialportfolios. syndicated pre-arrangedfinancewhen continuation inthetrendofoffering result incarefulunderwritingandapossible are lendingtheirownmoney.Thiswill approach lendingonthebasisthatthey In 2008,webelievethatthebankswill Cautious corporatefunding prior totheAprildeadline. owners seekingtorealisetheirinvestments believe wewillseemanylong-termbusiness arrive afterthefirstweeksof2008,we If theseconcessionsareinsubstantial,or concessions forlong-termbusinessowners. the positionofanyretirementreliefsor were waitingfortheChancellortoclarify As BusinessOutlookwenttopress,we with aflatrateCGTof18%. Relief isabolished,itwillbereplaced business. FromApril2008,whenTaper on anygaintheymakefromsellingtheir are ingeneral,currentlycharged10%tax qualifying assetformorethantwoyears, Vendors ofbusinesses,whohaveowneda the taxliabilityformanybusinessowners. abolish TaperRelief,whichcurrentlyreduces 5th April2008.TheChancellorintendsto Capital GainsTax,payablefordisposalsafter change isapotential80%increaseinthe affect businessowners.Themostsignificant number ofchangestothetaxsystemthatwill In October2007,theChancellorannounceda normally obtaintheirseedcorncapital. from whichfirsttimebuyerswould fluctuations intheresidentialmarket, of businessesislesssusceptibleto we believethatthemarketforsale than intheretailsector.Forthisreason, operators toenterourmarkets—other recent yearsisforfewernovicebusiness However, thetrendwehavewitnessedin 2007, comparedwitha9.6%risein2006. increase inresidentialpropertyvaluesduring The HousePriceIndexshoweda6.9% The HousePriceIndex acquisitions theymightotherwisemiss. international investorstocompleteasset transactions maycreateopportunitiesfor slight slowdowninthepaceofrecent portfolios andtrophyassets.However,the bidding environment,otherthanformajor to competewithUKinvestorsinacompetitive years, internationalinvestorshavestruggled the English-speakingworld.Overpastfew be afocusforpropertyinvestorsthroughout increasingly globalandtheUKcontinuesto In general,ourmarketsarebecoming International interest for businesssalesafterthepreviousbullrun. witness areturntomorenormalmarket faced during2007.Wepredictthatwewill responded welltothechallengestheyhave Businesses withinoursectorshavegenerally Looking forwardto2008 www.christiecorporate.com 5

CHAIRMAN’S OVERVIEW AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Christie + Co has provided valuable advice to clients within the hospitality, leisure, care and retail sectors for more than 70 years. The business was established in London in 1935 and has successfully expanded to provide professional brokerage and advisory services throughout the UK and across Europe. We currently employ more than 400 specialists who operate from 28 offices across the UK, France, Germany and Spain.

BUSINESS INTELLIGENCE

Who are the people behind the business intelligence?

A WEALTH OF EXPERIENCE George Christie and his partners – Business intelligence is what our clients The collective attributes of Christie + Co’s Nick Davies and James Owen – met through value most highly – along with the capability founders ensured that they complemented estate agency and had already acquired and integrity of the individuals we employ. each other perfectly and enjoyed successful considerable experience in the sale and Our clients choose to seek our professional relationships at both a personal and marketing of commercial property when they opinion, time after time, because they are professional level – the kind of relationships decided to establish Christie + Co in 1935. confident that we can add value to business we strive to build and maintain today. transactions, development schemes, advisory Christie + Co has always specialised in the projects and investment deals. The desire to provide exceptional standards hospitality, leisure, care and retail sectors of service and build lasting relationships with and, since its establishment, the company SETTING THE STANDARDS our clients has never diminished. Accuracy, has acted for literally tens of thousands We are a forward looking organisation, patience, discretion, attention to detail, of business owners. Having acted as brokers, which embraces new business methods and confidentiality and professionalism are some advisors, and consultants to these business technological advances, but we also look back of the qualities and abilities we continue to owners and operators for more than upon our heritage with great pride. Although demand from all our agents and advisors. 70 years, we have amassed considerable the business has evolved considerably since business intelligence. its foundation, the original partners were inspirational characters who were responsible “Business intelligence” is something we for setting many of the standards and proudly communicate because that’s what establishing the values that you will still differentiates us from the many other agents find at the heart of Christie + Co today. and advisors within the business property arena. According to our own definition, this Nick Davies was a man of absolute integrity, business intelligence has many elements. James Owen was the most persuasive of It not only refers to our knowledge of how negotiators, and George Christie was businesses operate within our specialist cautious and considerate, which often sectors, it also encompasses sector prompted his partners to leave the ultimate knowledge, local market understanding, decisions to him. personal experience and individual capability.

6 www.christiecorporate.com MARKET PREDICTIONS

Chris Day International Managing Director

Our experience

As trusted advisors to a multitude of corporate and individual clients, we constantly analyse the markets in which we operate in order to maximise our knowledge. The valuable information we obtain is communicated to these clients and applied to our many projects.

The specialists we employ across Europe OUR ANALYSIS OF 2007 LOOKING FORWARD TO 2008 broker hundreds of transactions and complete Our sector specialists have provided an 2007 has presented the market with a number numerous advisory projects each year so our analysis of the markets in which they operate. of challenges, which include interest rate knowledge of the markets, at a national and Within the following pages of this document rises, a crisis in the financial markets, and an local level, is completely unparalleled. our sector heads review the merger and increasingly edgy housing market. In addition acquisition activity during 2007; discuss buyer to these overarching issues, our specialist GATHERING TRANSACTIONAL DATA behaviour; explain the growth of business sectors have also faced their own challenges We broker more transactions within our values and consider issues that have affected — including the much-publicised ban on specialist sectors than any other agent. the markets. Our experts have also considered smoking in public spaces. Despite these On occasions where we haven’t been some of the key issues for 2008 and have potential threats, we are pleased to report involved in brokering the deal, it’s likely made some predictions about how the market that the buyers are still responding to that we have provided advice to one is likely to perform. opportunities and the deals are still being of the parties involved. With so much done. The UK economy has demonstrated transactional data at our fingertips, we’re its resilience many times in the past and we able to recognise trends, monitor changes don’t doubt that it will continue to do so and stay one step ahead of the market. during 2008.

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What are our core business activities?

BUSINESS ACTIVITIES

At Christie + Co, we have been selling business property and advising business owners for more than 70 years. We have always specialised in the hospitality, leisure, care and retail sectors and, as our knowledge of these markets has expanded, so too have our services. We now offer an unrivalled range of transactional, advisory and investment services to a broad range of business owners, operators, investors, financiers and developers – in the UK and across Europe.

AGENCY | VALUATION SERVICES

8 www.christiecorporate.com BUSINESS ACTIVITIES HOTELS

Simon Hughes UK Managing Director PUBLIC HOUSES

The reputation of the Christie + Co business was built on our ability RESTAURANTS to broker transactions. Although we continue to sell and acquire businesses, we also complete a vast number of advisory assignments – including valuation projects, operator search and selection, feasibility studies and development advice. We employ the largest specialist team of brokers, valuers and consultants within our operating sectors, who LEISURE work together to provide our clients with relevant and constructive advice. We have also built upon our brokerage capabilities, establishing an investment team to identify investors, create investment opportunities

and structure deals. CARE

INVESTMENT | CONSULTANCY RETAIL

9 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

THE FACILITATION OF SUCCESSFUL TRANSACTIONS Agency

Christie + Co’s reputation was built on brokering transactions, and business agency continues to be our core service. Owners, investors and operators all choose to work with us because they recognise our ability to connect people and facilitate deals. Within our specialist sectors, we consistently broker more transactions than any other business agency.

ESTABLISHING CONTACT With hundreds of specialist agents working Having gained industry recognition and built The fact that we work with such a wide range across our network of 28 offices, we initiate an enviable reputation, Christie + Co has of clients is a huge advantage. When a pub new relationships on a daily basis and our become the agency of choice for a multitude company chooses to sell or let a number database of contacts has grown steadily. of buyers and sellers within our sectors. of pubs, we are able to introduce suitable In fact, by having a focused local presence, Vendors choose to talk to us as soon as they individual buyers and lessees. Similarly, when our agents are able to familiarise themselves consider putting a business on the market, an individual restaurateur is ready to sell a with almost all the businesses operating and buyers approach us because they are quality unit in a prime location, we’re often within their area. confident we can find the right opportunity able to introduce an acquisitive national for them. operator, who we know is looking to expand Contacts are also established through our within the region. property search website www.christie.com, MAKING INTRODUCTIONS which has become one of our most powerful Good contacts are vital, but it is also Although we are always determined to get communication tools. Featuring over 3,200 important to possess the skills to bring people the job done, we also have sufficient patience businesses for sale at any one time, the site together and facilitate a successful transaction. to ensure that we secure the best deal for attracts around 36,000 visitors each month, Our agents are always aware of vendors’ our clients. viewing over 1.4 million pages. aspirations and they are also in tune with buyer needs – listening to their requirements and only recommending opportunities that they know might be suitable.

Agency

BUSINESS + We employ sector-focused agents to + Our network of offices enables us to analyse and INTELLIGENCE provide in-depth market knowledge. understand the subtleties of the local markets.

10 + 28 elderlyresidents. The GradeII-Listedhomeisregisteredfor Veny NursingHometoAvonCareHomes. in thesaleofentiresharecapitalSutton Christie +Coactedonbehalfoftheowners Sutton VenyNursingHome offers accommodation,inEdgbaston. acquired hislargersecondsite,whichalso original Simpsonsrestaurantbeforethechef Assured Group.Thepropertywashometothe celebrity chef,AndreasAntona,toMidland Simply Simpsons,inKenilworthonbehalfof Christie +CosoldtheMichelin-Starred, Simply Simpsons Case studies: of offices,withspecialistknowledgeouroperatingsectors. We employexperiencedagentsacrossourentirenetwork key ownersandoperators withinoursectors. We haveestablished relationshipswith + of theprivateowner. was soldbyChristie+Coonbehalf Lowick, Berwick-Upon-Tweed,and within eightmilesofthevillage Lowick PostOfficeistheonlyshop Lowick PostOffice Sussex, toBannatyneHotels. set inapproximately38acresEast a historicGeorgiancountryhousehotel Christie +CosoldBeauportParkHotel, Beauport ParkHotel agency experience. We havemorethan 70years’ + for inexcessof580children. for 216,thenurseryprovideschildcare was soldbyChristie+Co.Registered children’s daynurseryinNorthYorkshire, Rainbow PrivateDayNursery,thelargest Rainbow PrivateDayNursery Lavant throughChristie+Co. house intheWestSussexvillageof new leaseonTheEarlofMarchpublic of TheRitzinLondon,purchasedabrand Giles Thompson,formerlyexecutivechef The EarlofMarchpublichouse of transactionalevidence. We havegathered an unrivalledcollection www.christiecorporate.com 11

AGENCY AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

INFORMED OPINION SUPPORTED BY SOLID TRANSACTIONAL EVIDENCE Valuation Services

Our vastly experienced Valuation Services team is very highly regarded within the industry. The knowledge and judgement of the team is complemented by invaluable transactional evidence, which is gathered during the course of our many brokerage and advisory projects.

VALUED OPINIONS CREDIBLE EVIDENCE LOCAL UNDERSTANDING We employ a dedicated team of Chartered During the preparation of reports, our The geographical coverage afforded by our Surveyors and valuers who all have specialist valuers’ technical knowledge and intuitive network of offices provides the Valuation knowledge of the sectors in which we operate. skills are supported by credible evidence, Services team with unrivalled local knowledge. Working across our entire network of offices, which can be drawn from different parts In each and every one of our offices, we their personal expertise is considerable and of the Christie + Co business. Our agents – employ sector specialists and accomplished their combined knowledge is unrivalled. as the brokers of hundreds of deals each valuers who closely monitor the local year – are a particularly helpful source market and analyse trends. This local A number of individuals within the team of relevant transactional information, which presence ensures that we have a current are held in particularly high esteem. is used to support the valuers’ informed appreciation of how well local businesses Recognised by the Royal Institution of opinion. Our proprietary intelligence is are performing, as well as understanding Chartered Surveyors as specialists within used to benchmark both business business property values. their fields, they are often called upon performance and market values, ensuring to act as Independent Experts or Arbitrators that our valuers’ findings are always well The size and strength of the Valuation in disputes. researched, well informed and accurate. Services team also enables us to manage major portfolio valuation projects, which frequently require a rapid response. With a team of more than 50 people across Europe, we have the ability to complete major portfolio valuation projects within a matter of days.

It’s easy to understand why Christie + Co is the first port of call for those who need a valued opinion on business value.

Valuation Services

BUSINESS + One of the largest specialist teams of valuers + Highly regarded professionals with specialist INTELLIGENCE and Chartered Surveyors in the UK. sector knowledge.

12 www.christiecorporate.com VALUATION SERVICES

Our valuers’ technical knowledge and intuitive skills are supported by credible evidence.

Case studies:

Quercus Healthcare Property Cawston Park, Norfolk Alliance Boots Partnership Christie + Co valued Cawston Park near When Terra Firma announced its intention Christie + Co has been providing monthly Holt for NatWest Bank to secure a loan on to bid for Alliance Boots, Christie + Co staff, valuations for Quercus since December 2004. behalf of Chancellor Care. The property is from our network of 17 offices, visited over Co-owned by Morley Fund Management a Grade II-Listed, former college, which has half of Boots’ UK and Irish stores in just four and Quintain Estates & Development, the been converted into a psychiatric hospital days as part of an advisory project. investment fund is currently made up of over registered for 53 people with mental illness. 230 healthcare properties across the UK.

La Riviera Restaurant Taking aAIM into the pub industry Voewood House Christie + Co valued the 160-cover La Riviera Christie + Co inspected and valued 279 Christie + Co valued the 20th Century Restaurant at Gateshead Quays, on the River Marston’s pubs on behalf of aAIM and its Voewood House on behalf of Barclays, for Tyne, for bank purposes. This former river partners, to assist in the preparation of its secured lending purposes. This 14-bedroom police station is held by way of a sub-lease. £82.5 million bid for the portfolio. property is Grade II-Listed, with Grade I-Listed gardens and trades as a wedding venue and location for fashion shoots.

+ Tens of thousands of completed valuations, + Unrivalled access to business intelligence. + Range of applications including loan security, rent reviews and ratings appeals. acquisition, disposal, taxation, balance sheet, dispute resolution and compensation.

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IDENTIFICATION AND CREATION OF INVESTMENT OPPORTUNITIES Investment

Appetite for business property opportunities and increasing demand for investment guidance prompted Christie + Co to create a specialist Investment & Development advisory team. Focusing on our specialist sectors, we are able to work with established and new clients to identify and create a whole range of exciting investment opportunities.

RELEASING EQUITY DEVELOPING OPPORTUNITIES INCREASING VALUE Many owners and operators within our The Investment & Development team often The introduction of a well-known brand can sectors are keen to “separate the bricks provides advice to developer clients who add significant value to a new development from the brains” and release equity from are looking to include a hotel, leisure, care scheme because it not only provides the their business by instructing us to sell their or retail element within a mixed-use scheme. business operator with all the benefits of freehold property assets. We also receive Suitable operators can be introduced at an customer recognition, it also boosts investor frequent approaches from investors who early stage to ensure that the development confidence. A number of leading operators are looking to enter, or perhaps increase progresses in line with their requirements. are equally keen to target going concern their presence within our sectors. Our businesses in key locations to enable rapid experienced team has valuable contacts and The introduction of a suitable operator is expansion and improve geographical an in-depth knowledge of finance structures, just one of the many advisory services our coverage. We have successfully negotiated which enables us to assist in the composition Investment & Development team offers to new lease agreements on a number of city of successful investment deals. developer clients. We are often invited to centre businesses, subsequently selling the provide advice throughout the life of a freehold asset to an appreciative investor. development project, from inception to completion. Typical activities may include confirming the suitability of a new business location, introducing a leading brand and, having negotiated the necessary lease or management agreements, identifying a suitable investor to acquire the freehold asset.

Investment

BUSINESS + Unrivalled sector knowledge and the ability + A network of 17 UK and 11 international offices INTELLIGENCE to access comprehensive market intelligence. providing the broadest geographical coverage.

14 + Group tomanagethehotel. Management, partoftheButterfly Hotels Banbury. Christie+Coidentified Butterfly Express byHolidayInnatStroudParknear management contractonthenew120-bedroom Developments tofindanoperatortakea Christie +CowasinstructedbyEastlake Stroud Park the largestcompletedduring2007. of £400million,thetransactionwasone from MacdonaldHotels.Atapriceinexcess properties, withatotalof2,511bedrooms, on itsacquisitionofaportfolio24 Christie +CoadvisedMoorfieldGroup Moorfield Group Case studies: performance andpropertyvalues. and rentalevidencetosupportviewsofbothbusiness Investors appreciateourabilitytoprovidetransactional of theleadingbrands withinoursectors. Established relationships withmany + investors headedbyMantisCollection. investment wasplacedwithaconsortium of Following thereceiptofseveraloffers, acquire a73.33%interestintheowningLLP. Draycott Hotel,tofindaninvestorwilling Christie +Cowasconfidentiallyinstructed,by Draycott Hotel,London Travelodge fora60-bedroomhotel. for acomprehensivemixtureofuses,to exchange building,whichisbeingdeveloped Christie +ColetpartofthisformerBT Chester Exchange all thesectorsinwhich weoperate. development opportunities across Ability toidentifyinvestment and + the RiverTees. urban regenerationprojectonthe banksof opportunity atNorthShore,amajor56-acre a 50-bedroom,gatewayhoteldevelopment Christie +Colaunchedthemarketingof Acting onbehalfofMuseandUrbanSplash, North Shore,Stockton continues tooperatethehotel. Hotel foranundisclosedsum.RadissonSAS acquisition ofthe272-bedroomPortman company, GloucesterCapital,onitsleasehold Christie +Coadvisedthenewlyformed Radisson PortmanSquare Ability tonegotiate complexfinancialtransactions. www.christiecorporate.com 15

INVESTMENT AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

INFORMED OPINION SUPPORTED BY SOLID TRANSACTIONAL EVIDENCE Consultancy

Christie + Co employs a highly experienced international team of senior consultants and valuers to provide specialist professional advice to clients within the business property sector. They are all widely respected, particularly within the hospitality industry, and are capable of providing valuable advice and up-to-the-minute market data.

AN EXPERIENCED TEAM COMPREHENSIVE ADVISORY SERVICES We choose to employ senior consultants and During 2007, the International Advisory The quality and value of our work is clearly valuers, with sector-specific knowledge and team has been further strengthened with evidenced – both by the increasing number pertinent experience. Acting for a broad range the appointment of additional valuation and of referrals we receive from major clients and of clients across Europe, our work is fully consultancy specialists. Our consultants and by the expanding geographical areas in which compliant with the standards of the RICS valuers work in close collaboration, in order we operate. (Royal Institution of Chartered Surveyors), to provide comprehensive pan-European IVSC (International Valuation Standards advisory services to a rapidly increasing Committee) and TEGoVA (The European number of clients. Group of Valuers’ Associations) and it is accepted by all the major lending banks. The range of advisory services provided by our international consultants and valuers The collective knowledge of our vastly has grown in line with this expanding experienced team is further enhanced by client database. We currently provide local market intelligence, which is drawn from advice on a wide range of subjects including our agents and valuers across the network investments, acquisitions and disposals; of 28 European offices. Our clients can be asset management and asset strategy; lease confident that they are receiving advice agreements, management contracts and from leading professionals, whose opinions rent reviews; and master planning and are highly valued within the industry, and development. We also prepare valuations; whose reports are supported by recent market and feasibility studies; detailed cash transactional evidence. flow forecasts; information memoranda; and due diligence documentation.

Consultancy

BUSINESS + Dedicated multi-lingual advisory team. + Highly-qualified consultants and valuers with vast INTELLIGENCE experience gained in relevant fields.

16 www.christiecorporate.com CONSULTANCY

Our experienced consultants and valuers join forces to provide a comprehensive range of pan-European advisory services.

Case studies:

Hotel feasibility studies across the UK Kew Green Hotels Greenwich Market hotel development Christie + Co has conducted feasibility studies Christie + Co prepared property valuations Christie + Co’s Hotel Consultancy team was for the proposed development of mid-market and a commercial due diligence report, which instructed to conduct a feasibility study for hotels across the UK — involving brands such was used by our client, Kew Green Hotels, a proposed hotel to be developed within as Hilton Garden Inn, Courtyard by Marriott and its advisors in the sale of 19 hotel Greenwich Market, as part of the exciting and Park Inn — on behalf of Oxford Hotels, properties throughout the UK. redevelopment of this well known and much Hotel Development Solutions and other visited market. regional developers.

Radisson SAS Portman Hotel, London Lensbury Club, Teddington Wynyard International Golf Resort Following Mountain Capital’s acquisition of Christie + Co was commissioned by the and Spa Hotel the hotel through Christie + Co, the Board of Lensbury, a subsidiary of the Shell Following a recent investment, the owners of Consultancy team was instructed to prepare Petroleum Company, to undertake a business Wynyard Golf Club in Billingham instructed cash flow projections and an investment plan and development strategy for the Christie + Co to prepare a feasibility study appraisal in preparation for an ambitious Lensbury Club. The club occupies a to support the development of an upmarket extension and refurbishment programme. substantial, 25-acre estate on the banks hotel with substantial conference and leisure of the River Thames. facilities, as part of a proposed golfing resort.

+ Unique combination of local knowledge and + Close ties with other parts of the Christie + Co + Access to an unequalled database of transactional extensive international experience. business, enabling the transfer of knowledge. evidence and business property performance.

17 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

INTELLIGENT FINANCE AND INSURANCE SOLUTIONS Finance & Insurance

Operating as independent brokers, Christie + Co’s sister companies Christie Finance, Christie Corporate Finance and Christie Insurance are able to provide a comprehensive range of finance and insurance solutions to businesses within the hospitality, leisure, care and retail sectors. The companies have more than 30 years’ experience and, like Christie + Co, are members of the highly regarded Christie Group.

OUR HISTORY CHRISTIE FINANCE CHRISTIE CORPORATE FINANCE Christie Group’s finance and insurance Operating from a network of 16 offices Christie Corporate Finance (CCF) was businesses were established more than across the UK, Christie Finance’s specialist established to offer innovative funding 30 years ago, in order to respond to frequent brokers work closely with their Christie + Co solutions to major clients. In addition to customer requests for specialist independent colleagues. Complementing the business providing senior debt options, CCF has mortgage and insurance advice. brokerage activities of Christie + Co, Christie developed considerable experience in the Finance helps to facilitate transactions, by provision of equity and mezzanine financing. Today, the businesses employ more than 50 securing the necessary funding to enable experts across the UK. Focusing on the same purchasers to complete deals. Over the past CHRISTIE INSURANCE specialist business sectors as Christie + Co, 30 years, Christie Finance has arranged the The experienced brokers at Christie Insurance the mortgage and insurance experts employed funding to enable the purchase, expansion have developed strong relationships with by Christie Finance, Christie Corporate Finance and refinancing of many hundreds of some of the UK’s leading insurers. Although and Christie Insurance have a thorough successful businesses. clients’ needs vary considerably, the brokers understanding of their customers’ funding have a thorough understanding of insurance and insurance needs. Christie Finance brokers develop close products and are able to ensure that the client relationships with key local banking contacts obtains the best possible protection for the and the company has established a national business. Also, by approaching underwriters reputation, amongst lenders, for the quality with a high volume of quality risks, Christie of client referrals. As the largest independent Insurance has been able to benefit from broker within its specialist sectors, a strong considerably reduced premium options — proposal from Christie Finance can mean the often improving on clients’ existing terms. difference between a bank accepting or rejecting a loan application. Christie Finance works for a broad range of clients, from the first time buyer who’s making an initial acquisition, to the experienced operator who’s looking to release capital to fund a new venture. Finance & Insurance

BUSINESS + As independent intermediaries, we are not tied + We search the market to identify the best option INTELLIGENCE to any lender or insurance company, enabling to suit our clients’ needs. us to choose the best option for clients.

18 + and ChristieInsurancearenottiedtoanylenderorinsurancecompany. As independentintermediaries,ChristieFinance,CorporateFinance for over30years. sold byChristie+Co,hadbeenfamily-owned Island FillingStation.Theproperty,whichwas the financefortheiracquisitionofColtishall experienced retailersfromEssextosource Christie Financeassistedacoupleof Coltishall IslandFillingStation to completion. managed theentirefundingprocessthrough Private Equityasinvestors,CCFproject restaurants. AswellasintroducingOctopus acquisition oftheSmollensky’sgroup funding tosupportTheShireGroup’s Christie CorporateFinance(CCF)secured Smollensky’s Case studies: of thebestterms. lenders andinsurers, enablingustosecuresome We haveestablished relationshipswiththekey + for thebusiness. Christie Insuranceprovidedtheinsurance Restaurant inAlcesterthroughChristie+Co, Once theleasewasacquiredonRossini’s to establishtheirfirstrestaurant,Essence. the 4-starBillesleyManorHotel,andhiswife enable ChristopherShort,formerchefat Christie Financeprovidedthefinanceto Former Rossini’sRestaurant a £5millionspaandadditionalbedrooms. be usedtoextendthehotel,bydeveloping Kingdom ofFife.Theadditionalfundingwill the renownedBalbirnieHouseHotel,in Clydesdale Banktotheprivateownersof Christie CorporateFinanceintroduced Balbirnie HouseHotel solution toyourbusiness requirements. sectors andcanprovide atailored,intelligent We understandbusinesses withinourspecialist + available tovisitand adviseclients. customer serviceand alwaysmakeourselves We prideourselves onofferinghighlevelsof freehold interest. family, toraisethefinanceacquire assisted first-timepurchasers,theBleatham the 17thCenturyRoyalArms,ChristieFinance When Christie+Cowasinstructedtosell Royal ArmsinLlangrove on itsHeritageproduct. to Ecclesiastical,whichoffersspecialistcover this GradeII-Listedmanorhousewasmoved in 1995.Thecommercialcombinedpolicyfor Eastwell Manorsincethefamilyacquiredit comprehensive insuranceforthe62-bedroom Christie Insurancehasprovided Eastwell Manor www.christiecorporate.com 19

BUSINESS INTELLIGENCE AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

UK & INTERNATIONAL OFFICES

Where do we provide business intelligence?

Jeremy Hill Neil Morgan Head of Hotels Head of Public Houses

UK Offices International Offices + Birmingham + London Central + Barcelona + Bristol + London Corporate + Berlin + Edinburgh + Maidstone + Dusseldorf + Enfield + Manchester + Frankfurt + Epsom + Milton Keynes + Hamburg + Exeter + Newcastle + London + Glasgow + Nottingham + Madrid + Ipswich + Winchester + Marseilles + Leeds + Munich + Paris + Rennes With further office openings planned for 2008. Hotels Public Houses

Our specialist sectors At Christie + Co, we choose to focus on providing transactional and advisory services to clients operating within the sectors we know best – Hotels, Public Houses, Restaurants, Leisure, Care and Retail.

Across our network of offices we employ intelligent sector specialists with relevant industry experience and the ability to add value to our clients’ projects. With a wealth of transactional data at their fingertips, and access to the key owners and operators within their sectors, the combined experience of our specialists is so vast, it’s almost immeasurable.

20 Restaurants Head ofRestaurants Andrew Moore Leisure Head ofLeisure Jon Patrick of thelocalmarkets. and tounderstandthesubtleties business propertyintelligence we areabletocollectin-depth Having afocusedlocalpresence, to clientprojectsacrosstheUKandEurope. offices, whichenablesustorespondeffectively We havedevelopedanextensivenetworkof Geographical coverage Care Head ofCare Richard Lunn successful cross-bordertransactions. and workcloselytogetherto facilitate international teamsmeetfrequently national andinternationalscale.The business intelligenceonaregional, local knowledgeandsector-specific Our peopleareproudtoprovide www.christiecorporate.com Retail Head ofRetail Tony Evans 21

BUSINESS INTELLIGENCE AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

BUSINESS OUTLOOK

Strong trading fundamentals The financial markets issue Most of the European hotel markets continue 2007 was very much a story of two halves to report strong trading fundamentals, with within the financial markets. The continued high occupancy levels and significantly “wall of money” was the theme during the above-inflation growth in RevPAR. Although first half of the year, with many available there is a large amount of hotel development sources of equity and debt, and demand taking place across Europe, fuelled by major for hotel assets significantly outstripping hotel groups’ ongoing expansion plans, supply. We witnessed numerous portfolio this development has been realistic and and single asset transactions in the early the markets are unlikely to be destabilised part of the year as investors competed for by oversupply. As we look to the future, opportunities. Prices boomed and yields fell the outlook for hotel trading across Europe to unprecedented levels as investors simply remains very positive. Many markets enjoyed couldn’t get enough assets in the hotel sector. RevPAR and profit growth well into double digits during 2007 and we can expect ongoing growth during 2008. Hotels Throughout 2007 the hotel sector enjoyed strong trading fundamentals, with most of the major European markets still in upswing. Despite the credit crunch, high quality hotel assets are still in scarce supply with significant deals continuing to take place.

Index based on average sale prices (from a base of 100 in 1975) 1975 2002 2003 2004 2005 2006 2007 BUSINESS INTELLIGENCE Hotels 100 623 695 771 854 966 1025 Our predictions for 2008

22 + will remainverysound. Trading fundamentals inthehotelsector ways fromthehotelmarket. issue, thecreditcrunchisseparate inmany considered incontext.Asafinancialmarkets uncertainty tothehotelsector,itshouldbe in thefinancialmarketsbroughtsome Although there’snodoubtthatthecrisis by theBankofEngland. granted emergencyfinancialsupport in SeptemberwhenNorthernRockwas the crisisbecameparticularlyevident The extentoftheUK’sinvolvementin the moneymarkets. Central Bankbeganpumpingeurosinto exposed totheUScrisisasEuropean that Europeanlenderswerealsosignificantly Just afewweekslater,itbecameapparent up to$100billion. Reserve warnedthatthecrisiscouldcost market. AttheendofJuly,Federal the sub-primedebtcrisisinUShousing the financialmarketsfirstbecameawareof loom attheendoffirsthalf2007,when The threatofacreditcrunchfirststartedto The StDavid’sHotel&Spa–Cardiff + + prices werelargelymaintained. some majordealswerestillconcludedand had beenduringthefirsthalfofyear, bullish inthelattermonthsof2007thanthey Although someinvestorswerealittleless European hotelmarketshaveremainedstrong. trading fundamentalsinalmostallmajor rises andareductioninthesupplyofdebt, Although wehavewitnessedinterestrate hotel propertiesintheUK,wereannounced. a numberofmajortransactions,involving evident duringthefirstweeksof2007,as The strengthofthehotelmarketwasvery The bigdealsof2007 to begreater thansupply. Demand for hotelpropertywill continue slightly higherpricing. loan tovalueratios andwecanexpect Debt willstillbeavailable, butwithlower Hotels 2006 2004 2005 2003 2002 2007 + %5 0 15% 10% 5% 0% 6.1% movement inaverageprices 4.2% 6.1% + in excessof£400million. 24 formerMacdonaldhotelsforafigure Permira, andMoorfieldGrouptookover £270 millionsaleandleasebackdealfrom acquired thePrincipalHotelschainina Also inthefirstmonthof2007,aAIMGroup FBI InvestmentandQuinlanPrivate. Delek BelronRealEstate,Electra to aconsortiumofinvestorsthatincluded selling 47Marriotthotels,for£1.1billion, that theRoyalBankofScotlandwouldbe New Year’sDay2007,whenitwasannounced The firstmajordealhittheheadlineson than otherclasses of commercialproperty. Hotels shouldcontinue toofferbetterreturns 10.8% 10.9% 11.6% 13.1% www.christiecorporate.com 23

HOTELS AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Single assets command high prices In March, the sale and leaseback of 30 As eager investors compete to make key Research released in September 2007 from Novotel and Ibis-branded UK hotels generated acquisitions, trophy single assets continue to MINTEL confirms that the budget hotel market more than £430 million for Accor and command high prices. The largest single asset is a rapidly expanding sector, with further prompted a partnership agreement between transaction brokered by Christie + Co during revenue growth potential. According to this Accor and Land Securities Trillium, to assist 2007 was the sale of the iconic St David’s research, the value of the UK budget hotel the operator in expanding its share of the Hotel & Spa in Cardiff on behalf of Rocco market increased by 38% between 2002 and UK hotel market. Forte Hotels. Although Rocco Forte originally 2006, to reach £1 billion. Comparatively, the planned to retain a management contract, the overall UK hotel market (worth £11.2 billion) Other major portfolio deals in the first half of £32.5 million offer from Principal Hotels, increased by just 12% over the same four-year the year included the £792 million acquisition which wished to add the property to its own period. Today, the budget hotel market is of Jurys Inns and its portfolio of 20 UK and portfolio, proved too good to refuse. worth £1.1 billion, with no less than 85,000 Irish hotels, by a group of investors led by budget rooms to choose from in the UK alone. Quinlan Private. Other single assets changing hands during 2007 included the Hilton Cardiff, which For budget hotels, a further 38% growth in The crisis in the financial markets slowed Tonstate acquired from Marcol Group, for a revenues is expected over the next five years, some of the very large transactions in the speculated £40 million, and the Caledonian with the market set to hit the £1.5 billion mark latter half of the year, but it certainly didn’t Hilton in Edinburgh, which was acquired by by 2012. The run up to the Olympics is set to prevent them from happening altogether. The Caledonian Operating Company, in a be a key factor driving this growth. Portfolio deals included RREEF Real Estate’s £51.7 million deal funded by Bank of Scotland acquisition of the Four Pillars Hotel Group Corporate. Hilton will continue to operate Movement in prices for a reported £120 million; JER Partners’ both properties. Having reported a 13.1% growth in average acquisition of Morethanhotels for a quoted prices during 2006, Christie + Co’s hotel price £115 million; JJW’s £70 million acquisition The sale of the Crowne Plaza hotel in the index shows a much more modest growth of of the Eton Collection of boutique hotels; City of London also achieved a high price, 6.1% during 2007. Menzies Hotels’ acquisition of a package selling to Gruppo Statuto for £81 million. of eight Thistle hotels from Curzon Hotel Elsewhere, WG Mitchell’s sale of the Radisson The cost of capital has increased since mid Properties for £54 million; and Whitbread’s SAS hotel in Glasgow raised £68 million and 2007 but single asset deals and portfolio acquisition of Golden Tulip UK for £44 million. the Cambridge Garden House hotel was sold deals are still very deliverable, albeit at for a reported £50 million, in a deal that has potentially higher finance costs. These higher Deals don’t come much bigger than the given Hilton its first Doubletree-branded hotel finance costs prompted some purchasers to $26 billion merger between Hilton Hotels in the UK. seek more competitive prices towards the Corporation and The Blackstone Group. end of the year. As one of the leading global hospitality Budget growth companies, Hilton owns, manages or The budget hotel sector was one of the most From mid 2008 we are hopeful that solutions franchises a hotel portfolio of nearly 2,900 active elements of the hotel market during to the ‘credit crunch’ will have emerged, and hotels totalling approximately 490,000 rooms 2007, with Premier Inn, Travelodge, Accor that interest rates will have stabilised or more worldwide. The merger, which completed at and InterContinental Hotels all expanding likely reduced. Good quality, well located the end of October, has created a global their budget property portfolios. hotel property will still be highly sought-after corporation. Hilton’s operating and marketing by a variety of buyers and such strong expertise is now supported by a real estate demand will start to push prices up from and asset management firm with apparently the middle of the year. limitless resources.

There is still plenty of scope in the European and global hotel markets for consolidation, and for mergers and acquisitions at the corporate level, consequently we can expect to witness further M&A activity during 2008.

+ Transaction prices should move forward + We can expect to witness a number of hotel + Watch out for continued M&A activity. during the latter part of 2008 if the financial transactions in early 2008. markets stabilise.

24 + Saleofthe60-bedroomAverardHotel + SaleofHiltonStHelenstoWGMitchell + Saleofthe18thCenturyNunsmereHallHotel + SaleofBeauportParkHoteltoBannatyneHotels + SaleofLeMéridienPhoeniciainMalta + Saleofthe69-bedroomSpaHotel + Saleofthe13thCenturyRedLionHotel, + SaleoftheCroftersHotelinPreston,Lancashire + SaleofTheThurrockHotelinEssex + Saleofthe48-bedroomQualityHotelWarwick + Saleofthe100-bedroomNovotelPreston + SaleofNantDduLodgeintheBreconBeacons + SaleofTheStDavid’sHotel&SpainCardiff + SaleofFourPillarsHotelGrouptoRREEF + MenziesHotels’acquisitionofeightThistlehotels + SaleofthreehotelstotheRiverInvestment + operator andarecognisedbrand. when theyareunderwrittenbyagood continue tochasehoteldeals,particularly classes. Finally,institutionalinvestorsalso when comparedtoothercommercialproperty seek thepremiumreturnsofferedbyhotels favour hotelassets.Propertyfirmsevennow and highnetworthindividualscontinueto still havefundstoinvestinhotelproperty continue during2008.Privateequitygroups exceed supply,andthistrendisexpectedto a widerangeofinvestorgroupscontinuesto Demand forgoodqualityhotelpropertyfrom Ongoing demand brands seekfootholds. as theestablishedbrands expandandnew The budgethotelsector willcontinuetogrow, London, W2 to PrimaHotels to HeustonHospitality in RoyalTunbridgeWells Henley-on-Thames in Kenilworth hotel inLancashire National Park on behalfofRoccoForteHotelsfor£32.5million Real Estateforareported£120million from CurzonHotelPropertiesfor£54million Group for£20million Single assettransactions: Portfolio deals: Successes in2007 + Feasibilitystudyforafullservice4-starhotel + FeasibilitystudiesintheUKforanumberof + FeasibilitystudyforaproposedJury’sInn + Feasibilitystudyforaproposed + Feasibilitystudyforaproposed150-room + Feasibilitystudyforaproposed165-room + Managementcontractadviceandfeasibilitystudy + OngoingacquisitionanddisposaladvicetoHotel + AdviceandduediligencetoJERPartnersin + AdvicetotheMoorfieldGrouponitsacquisition + SaleofTheDerwentwaterHotelandDerwent + QHotels’acquisitionoftheStratfordVictoria + the markets. will continuetostrengthen theirpositionwithin The brandplayers, such asHiltonandAccor, next totheTraffordCentreinManchester Northampton andGateshead Leeds, Luton,Warrington,Newcastle, proposed, brandedmid-markethotelsinNewport, in Krakow,Poland at RigaInternationalAirport internationally branded,280-roomhotel mid-market hotelinRiga,Latvia Hyatt RegencyHotelincentralRiga,Latvia Riga, Latvia for aproposedSheratonhotelatZ-Towersin Development Solutions support ofitsacquisitionMorethanhotels of 24Macdonaldhotels Manor toarealestateinvestmentcompany in Warwickshire Advisory assignments: reduction inthesupplyofdebt, trading fundamentalsinalmost markets haveremainedstrong. Feasibilitystudiesandvaluationadvicefor + Businessplananddevelopmentstrategy + Landmarkmarketresearchprojectevaluating + Cashflowprojectionsandinvestmentappraisal + Feasibilitystudyanddevelopmentadvice + Feasibilitystudyanddevelopmentadvicefora + Feasibilitystudyforaproposedhoteltobe + ManagementcontractadvicetoUKhotel + Commercialduediligencereportand + Marketstudyoncountryhousehotelsin + Feasibilitystudyforaproposedinternational + “Although wehavewitnessed and Madrid proposed luxuryhotelsinBarcelona,London for theLensburyClub,Teddington European markets opportunities foraparthotelsinvarious for RadissonSASPortmanHotel,London in Kotor,Montenegro for aproposedluxuryresorthotel proposed luxuryresortonSamosIsland,Greece to anoperatorsearch developed withinGreenwichMarket,leading and Luton developers inNewport,NewcastleWinchester of KewGreenHotels property valuationstosupportthesale development inOxfordshire country househotelandmembers’club South EastEnglandaspartofaproposed Club, Stockton-on-Tees golf andleisurehotelatWynyardGolf Head ofHotels Jeremy Hill all majorEuropeanhotel interest raterisesanda www.christiecorporate.com ” 25

HOTELS AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Our case studies:

Four Pillars Hotel Group Portfolio of 8 Thistle hotels The St David’s Hotel & Spa Christie + Co acted on behalf of Four Pillars Menzies Hotels acquired eight Thistle hotels from Christie + Co acted on behalf of Rocco Forte Hotel Group when RREEF Real Estate acquired Curzon Hotel Properties, through Christie + Co, Hotels to successfully identify a purchaser for the group for a reported £120 million. The for £54 million. The hotels were located in; the renowned 132-bedroom St David’s Hotel & independent hotel group owned and operated Birmingham, Luton, Swindon, Stevenage, Irvine and Spa in Cardiff Bay. Principal Hotels acquired five hotels in Oxfordshire and Gloucestershire. near; Manchester, Gatwick and Aberdeen airports. the property for £32.5 million.

Le Méridien, Phoenicia Three hotels for Wingrove Properties The Red Lion, Henley-on-Thames Acting on behalf of Starman UK Services Acting on behalf of Wingrove Properties, The 14th Century Red Lion Hotel in Oxfordshire Company, Christie + Co agreed the sale of the Christie + Co sold three South East hotels was sold by Christie + Co, on behalf of the Miller 136-bedroom Le Méridien Phoenicia in Malta’s to David Reuben Junior’s property firm — family. The purchaser was MG Hotels, which intends capital city, Valletta, to Irish hotel operators, River Investment Group — for £20 million. to fully refurbish and extend the 26-bedroom hotel. Heuston Hospitality.

Hunstrete House Hotel Nunsmere Hall Hotel, Cheshire Christie + Co acted on behalf of North American Acting on behalf of private owners, Malcolm Country Inns, Inc in the off-market sale of Hunstrete and Julie McHardy, Christie + Co sold the House Hotel, near Bath, to Von Essen Hotels for 18th Century Nunsmere Hall Hotel in Cheshire to close to £5 million. Prima Hotels. The 36-bedroom Victorian hotel has planning permission for a further 24 bedrooms.

26 coe pxEibrhItrainlEdinburgh ApexEdinburghInternational October uutHiltonLiverpool August September aeProperty Date BlakesHotel AverardHotel November LeinsterHouseHotel September July Property CrownePlazaBlackfriars January Date BewleysHotels December UK Portfolioof12Innsidehotels November Portfolioof11ExpressbyHolidayInns October EtonCollection Portfolioof10Hiltonhotels August July Portfolioof47Marriotthotels April ScandicHotelsAB UK March Portfolioof11CourtyardbyMarriotthotels February Portfolio Portfolioof6Principalhotels January Date oebrTeDretae oe Keswick TheDerwentwaterHotel & November AvonGorgeHotel September MonkbarHotel HawkstonePark May April LangsHotel March BailbrookHouse RadissonSASGlasgow February January uyHiltonCardiff July DraycottHotel June Portfolioof29Accorhotels June pi CadoganGardens April Portfolioof17Travelodges May aaHlo oe aioIsleofMan Gala HiltonHotel&Casino Portfolio of9IHG-brandedhotels Hythe ImperialHotel Cardiff The StDavid'sHotel&Spa otoi f2 hsl oesU 8£0 I ru HotelPortfolioII CITGroup £400 28 UK Portfolio of28Thistlehotels Portfolio of57hotels 7 LeMeridienhotels Hilton HotelsCorporation Portfolio of7formerCorushotels Jurys CardiffHotel Marriott Inverness Belfry HouseHotel Edinburgh Nunsmere HallHotel Caledonian HiltonEdinburgh Amberley Castle Travelodge Reading The SpaHotel Windsor Ye Harte&GarterHotel Major regionaltransactions2007 Four SeasonsParkLane London transactions2007 Bonsai Hotels Four PillarsHotelGroup Golden TulipUK Portfolio of8Thistlehotels Portfolio 86Accorhotels Hayley ConferenceCentres Portfolio of10JardindeParishotels Occidental Hoteles Villages Hotels Portfolio of24Macdonaldhotels Major portfoliotransactions2007 eMnfr oe eiwrh18UdslsdKan nepie MacdonaldHotels KhannaEnterprises Undisclosed 108 Kenilworth Cambridge Dunblane Hydro Cambridge GardenHouse De MontfortHotel Derwent Manor Deutsche Interhotels Portfolio of6HolidayInns Jurys InnGroup tafr itraHtlSrtoduo-vn102 Stratford-upon-Avon Stratford VictoriaHotel otoi f1 ofr n n ult oesIreland Portfolio of11ComfortInnandQualityhotels Portfolio of52Dorinthotels(90%) Inverness Liverpool Reading Hythe, Kent Location Bristol York Cardiff Shrewsbury Glasgow Glasgow Manchester Northwich 19 Amberley, WestSussex 69 Cardiff Royal TunbridgeWells ubae trig206 Dunblane, Stirling Bath 1 c.70 219 60 50 93 60 81 Purchaser Saleprice(£m) 203 Bedrooms 35 uti/emn/7 Netherlands Austria/Germany/ rneBlim9 France/Belgium rneSizrad57 France/Switzerland UK/Ireland Global UK France UK UK UK 86 Germany/Netherlands 70 UK France Worldwide France UK UK Germany 10 UK Across Europe UK 136 Scandinavia Purchaser Saleprice(m) Noofhotels UK Location Germany Italy UK UK Germany c.25 ofdnilConfidential c.34 20.3 Confidential ofdnilMantisCollection Confidential 132 171 136 82 251 216 96 100 122 erosSl rc £)Purchaser Saleprice(£m) Bedrooms 65 76 99 146 66 100 247 81 29 200 79 78 ,9 1,0 Blackstone Group £12,800 2,896 9£6. adScrte rlimAccor LandSecuritiesTrillium £466.4 29 2UdslsdB&BHotels Undisclosed 62 0£9 QuinlanPrivate £793 20 4£0 oril elEtt ud MacdonaldHotels MoorfieldRealEstateFund £400 24 7£,0 una rvt/glAov ru RoyalBankofScotland QuinlanPrivate/IgalAhouviGroup £1,100 47 52 9Cnieta DynamiqueHotels Confidential 19 0Cnieta MrGalabert Confidential 10 5£44 15 13 12 7£128 17 1c£1 JERPartners c.£115 11 KewGreenHotels Undisclosed 11 11 0 MoranHotelGroup c.€500 6 6 £270 6 £54 8 PrincipalHotels £358 8 £120 5 £70 5 £52 7 Premier Group(Bahrain) Paul Davies GuestInvest Minerva &Northacre Gruppo Statuto €65 1 Realestateconsortium €518 PEHAC SolMelia €49.5 €16.5 0 aaz/otgdaImblai LaCaixa/Mercapital Valanza/PontegadeaInmobiliaria €706 €566 EQTPartnersAB/ €833 5 BlackstoneGroup €757 2 BeniStabiliHotel €128 4 MoorParkRealEstate €740 15TiiyVnueCptlldKasterlee TrinityVentureCapital-led €41.5 €127 32.5 38.5 nicoe SeftonGroup Undisclosed nicoe Localoperator Undisclosed 51.7 60.0 9.6 nicoe GSEGroup Undisclosed c.50 ofdnilMoorfieldGroup Confidential 15.5 c.13 16.0 11.0 12.5 68.0 nicoe ZeusPrivateEquity Undisclosed PrimaHotels Confidential 12.0 ScraggHotels 40.0 Confidential 26.0 nicoe AbilityGroup Undisclosed 9.0 ofdnilQHotelsGroup Confidential Goodbody stockbrokers PREM Group/ Accent EquityPartners ognSalyRa saeFn HiltonHotelsCorporation Morgan StanleyRealEstateFund htra PeirIn GraphiteCapitalManagement Whitbread (PremierInn) Menzies Hotels ihrs taei diesPrivateinvestors Highcross StrategicAdvisers consortium Accor RREEF RealEstate JJW Hotels&Resorts aAIM Prestbury Holdings Principal Hotels Habro Properties h aeoinOeaigCmayHilton The CaledonianOperatingCompany Ability Group Habro Properties Ability Group Swire Properties Shiva Hotels Mountain Capital Principal Hotels WG Mitchell WGMitchell Strategic InvestmentManagement Von EssenHotels The TonstateGroup Crown Estates iwo eot oesSundialGroup Hilwood Resorts&Hotels Michael Frefsom Vendor Sir MarkWeinberg&MsHempel Private family Kingdom HotelsHolding Private investors Mr &MrsGerrard Blackfriars Hotels Undisclosed Accor Bert Allen Lehman/Starman Innside CIT Group Hilton HotelsCorporation Morethanhotels Hilton HotelsCorporation Dorint Aareal Bankandothers Jurys DoyleGroup Undisclosed 3i Groupandmanagement SFIH Bonsaï InternationalGroup Four PillarsHotelGroup Accor CDP RealEstate/GroupeErghot Square CircleHoldings Vendor Travelodge Eton collection Permira www.christiecorporate.com Rocco ForteHotels Grosvenor Estate Ahouvi Group Whitehall Funds QHotels Group Chardon Hotels Morley PropertyFund Peel Hotels Leisure Point Jurys DoyleHotels Mark Boler Prestwick Hotels Undisclosed Private investor Quinlan Private/Igal Cummings family Marcol Group Central InvestmentProperties Starwood Capital/ Vendor Private owners Unnamed investor Privately owned The Goringfamily Frankonia Hotels 27

HOTELS AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

BUSINESS OUTLOOK

Rising to the challenges The pub industry has faced a variety of The subject of pub closures has been a challenges over recent years, including prominent news story throughout 2007, licensing changes in England and Wales in with many commentators predicting that 2005, the smoking bans, which have now the smoking ban will claim a vast number been implemented in Scotland, England and of casualties. It is certainly true that large Wales, and the ongoing underage and binge numbers of unviable pubs have closed in drinking issues. More recent news stories recent years, but many of these closures have presented even greater challenges and are simply due to changing demographics, prompted some worrying predictions. The social trends and the strong appetite for crisis in the financial markets is threatening pub sites from developers. to affect consumer confidence and may have a negative effect on pub trade. Public Houses

The introduction of smoking bans across the UK prompted some industry commentators to make worrying predictions about the future of the pub sector. Although the smoking ban has claimed some victims, our analysis of 2007 demonstrates that it’s not all doom and gloom for the pub industry.

Index based on average sale prices (from a base of 100 in 1975) 1975 2002 2003 2004 2005 2006 2007 BUSINESS INTELLIGENCE Public Houses 100 709 753 822 865 939 1000 Our predictions for 2008

28 www.christiecorporate.com

Drusilla’s Inn – Dorset PUBLIC HOUSES

The evolution of the public house The Monopolies and Mergers Commission’s The public house is no longer a smoky, Supply of Beer report, which was published male-dominated, beer drinker’s environment. in 1989, suggested that there were 78,598 As the pub’s potential target audience has pubs in the UK in 1986. The British Beer & widened and drinking habits have changed, Pub Association’s statistics for November beer consumption has fallen and pub 2007 provide an updated figure of 57,530 — companies have started to seek alternative which shows that 21,000 closures have sources of income to retain competitive already taken place in the last 20 years. advantage. Although today’s pub continues On a more positive note, a number of to be the nation’s favourite drinking venue, new bars have opened, particularly in it is no longer viewed as just somewhere town centres. to go and enjoy a drink. The pub has evolved to become a leading casual dining Although the smoking ban and other destination, somewhere to entertain the challenges will undoubtedly claim further family, or a characterful place to stay. victims during 2008, public houses have generally responded well to changes in the industry and we don’t doubt that they will continue to do so. By identifying new Public Houses opportunities, reinventing or refreshing +6.5% movement in average prices pub concepts and seeking alternative income streams, the vast majority of pubs 2007 6.5%

will succeed in keeping existing customers 2006 8.5% interested and in attracting new ones. 2005 5.2%

2004 9.2%

2003 6.2%

2002 8.1%

0% 2.5% 5% 7.5% 10%

+ Pub operators will continue to respond + Leasehold prices will also continue to rise + We can expect to see some new food concepts to the industry’s many challenges. as a result of the lack of freeholds. within the pub environment. + Lack of stock will continue to drive freehold prices. 29 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Strong competition for freeholds New lettings attract premium bids The big deals of 2007 As the fierce competition for freehold assets As brewers and pub companies compete As we predicted in last year’s Business continues, pub companies are prepared to aggressively for almost every freehold Outlook, the intense merger and acquisition consider a much broader quality of free property that comes to the market, activity witnessed in recent years continued houses, in geographical locations that would experienced licensees and pub operators during 2007. previously be viewed as unfavourable. who would previously chase these freehold acquisitions are now equally keen to pursue Admiral Taverns became the UK’s third The cost of acquiring individual freehold quality lease opportunities, creating a largest pub company when it acquired pubs has also risen significantly over the vibrant second generation lease market. 869 leased and tenanted pubs from Punch last few years. It is not uncommon for pub Taverns for £326 million in April. The deal companies to pay in excess of £1 million for The quality of many of the pubs offered boosted Admiral’s estate to around 2,700 an individual pub that will subsequently be for lease for the first time during 2007 and cemented its position as one of the offered as a new lease. A few years ago, exceeded many publicans’ expectations UK’s major tenanted pub companies — pubs of this value would only be acquired and they generated significant premiums. just four years after its foundation. and operated as managed houses. Many were former managed houses with an average turnover of between £450,000 Marston’s featured prominently on the Although freehold assets are highly and £500,000 and there was no shortage transactions table during 2007, making sought-after, pub companies continue of capable lease applicants keen to take two major acquisitions during January, to churn their estates, disposing of assets on businesses of this quality. followed by a significant disposal in May. that are considered surplus to requirements. The 33-strong Sovereign Inns was bought Underperforming pubs can often be turned Impressive premiums have been achieved for £19.4 million, and Eldridge Pope, with around by a strong operator so these on a number of new lettings that we its estate of 135 pubs, was secured for “bottom end” portfolios often appeal to completed during 2007. The Duke of York £155.1 million just ten days later. Piccadilly entrepreneurs who will continue to operate at Barnet, which we were instructed to let Licensed Properties, which is owned and them as licensed businesses. on behalf of Herald Inns & Bars, is a good controlled by aAIM Group, was responsible example. The new lease attracted considerable for acquiring 279 tenanted pubs from Alternative uses prove attractive interest before it was sold to Blubeckers Marston’s for £82.5 million. A large number of freehold pubs, which for a premium close to £300,000. are suitable for redevelopment, are taken Marston’s also fulfilled another of last year’s out of the licensed industry altogether. Christie + Co was the first company to Business Outlook predictions, by acquiring a The prospect of selling pubs for conversion encourage clients to seek premiums for regional brewery. The Ringwood Brewery, and to an alternative use is attractive to pub new lettings and our advice was clearly its estate of seven freehold pubs in the South companies for a number of reasons, but justified during 2007. By August, we had of England, was bought for £19.2 million. primarily because they usually generate successfully completed the letting of 637 higher sale prices. Once a pub is sold pubs for Punch Taverns, just 15 months after Christie + Co provided advice to a private and converted, it no longer competes the first new lease agreement was signed. equity consortium led by Duke Street with other licensed premises, which may A subsequent lease assignment provided Capital in its £260 million takeover of be owned or operated by the vendor encouraging news for the many licensees CI Traders, which included an estate of within the same area. to whom the new leases have been granted. 80 pubs and restaurants in the Channel Originally acquired as a new letting off a Islands. We also brokered the sale of the premium of £113,000, the Grange at 29-strong Bold Pub Company, which was Wallingford was subsequently assigned for acquired by Calco Midlands. a sum in the region of £400,000 — indicating that new lessees can expect to receive a good return on their original investment.

+ Pub operators will continue to look for alternative + We will witness ongoing merger and + We will not see the demise of all wet-led pubs, income streams, improving the food offering and acquisition activity. proving that you don’t need to offer food adding letting rooms. to run a successful pub business.

30 + the recentnewlettings comeupforassignment. opportunities tocome tothemarket,assomeof We canexpectsome highqualitylease 30pubssoldonbehalfofvariousindividuals + Blubeckers’acquisitionoftheDukeYork + Rock-InnPubCompany’sacquisitionofthree + Saleoffivenewhighstreetpubs/barsonbehalf + SaleoffourpubstoNewportPubCompanyon + Marketingof10leaseopportunitiesonbehalf + Saleof11formerNewportPubCompanysites + 15newMarston’sleaseopportunities + Saleof10freeholdinvestmentopportunities,on + Completionofthesalelast15leases, + Marketingof17publichousesontheMitchells& + Marketingof81freeholdpublichousesonbehalf + SaleoftheBoldPubCompany,andits + 50newleaseopportunitiesmarketedonbehalf + Completionoftheletting637publichouseson + the 8.5%increasewewitnessedduring2006. values roseby6.5%during2007,comparedto Our priceindexshowsthataveragepub Movement inprices Century Inns. King’s £32.6millionacquisitionofNew pubs fromSaveInvestments;andGreene acquisition of30freeholdand9leasehold Taverns; LondonTown’s£16.2million Leisure’s £8millionacquisitionofWessex from theNewportPubCompany;Ladhar freehold pubsintheMidlandsandNorthWest Group’s acquisitionofaportfolio11 on behalfofTraditionalFreehouses;InnDeed of 10qualityfreeholdassets,whichwesold included CharlesWells’£9millionacquisition Other interestingdealscompletedduring2007 for inexcessof£8million near Godalming in BarnetandtheRefectoryMilford, public housesonnewleasesfromPunchTaverns of ThreeWishesGroup behalf ofFodenInns Herald Inns&Bars to InnDeedGroup for £9million behalf ofTraditionalFreehouses,toCharlesWells transferred fromCharlesWells’managedestate Butlers FranchiseLease of Pubfolio 30 freeholdpubs,toCalcoMidlands of GreeneKingPubPartners behalf ofPunchTaverns Portfolio deals: Successes in2007 + SaleofTheMaltShovelInn,inthevillage + SaleofTheHunter’sMoonfreehousein + SaleoftheHighwaymaninCheckendononbehalf + SaleoftheleaseonThreeCompassesin + SaleofTheBullHotelinWiltshiretoMarston’s + SaleoftheleaseonGradeI-ListedCrownInn + AcquisitionoftheSwanatFortonbyBritish + EnterpriseInns’acquisitionofthe18thCentury + Interpubacquiredanewleaseontheformer + SaleoftwofreeholdpubsonbehalfMitchells + Saleoffourtowncentrebarsonbehalf + SaleofthreepublichousesonbehalfCalypso + crime anddisorder. government toassist intacklingalcohol-related Pub companieswill becalleduponbythe the ButcombeBrewery Cannington, nearBridgewater,toregionalbrewer, Middlemarsh, Dorset,toEnterpriseInns of GourmetHoldings the DruidsPubCompany Hertfordshire onbehalfofPunchTavernsto Neame brewery in Sarre–thefirstleasegrantedbyShepherd Country Inns New InnHotelinClapham,NorthYorkshire Punch Taverns George publichouseinHammersmithfrom & Butlerstoprivateindividuals Marston’s toprivateindividuals £2 million Ventures toPunchTavernsforapproximately Notable singleassettransactions: and ourdecisionwasclearlyjustified “Christie +Cowasthefirstcompany successfully completedthelettingof ValuationofMerchantInns + ValuationofsixleaseholdpropertiesforGRSInns + ValuationofRingwoodBrewery + Valuationof27LivingRoombars + Valuationof279Marston’spubsonbehalf + ProvisionofadvicetoSandpiperinits£260 + AnnualrevaluationonbehalfofEnterpriseInns + Revaluationof1,911pubsonbehalfMarston’s + SaleoftheWiremill,EastGrinstead,onbehalf + SaleofthePitcher&Piano,Manchester, + SaleoftheLeatherBottle,Mattingley, + SaleofBeachBar,Yeovil,onbehalf + SaleoftheformerWalkaboutbar,Leicester, + SaleofNewEllesmere,Manchesteronbehalf + SaleofBarCenssainSolihullonbehalf + SaleoftheInnonChaseinhamlet + to seekpremiumsfornewlettings of aAIM million acquisitionofCITraders Pub Companyforsecuritisation of MassiveGroup on behalfofMarston’s to BlubeckersGroup The ChapmanGroup on behalfofRegentInns of SpiritGroup Tattershall CastleGroup,toJDWeatherspoon of Cashmoor,Dorset,toMarston's Advisory assignments: Head ofPublicHouses Neil Morgan during 2007.ByAugust,wehad 637 pubsforPunchTaverns. www.christiecorporate.com ” 31

PUBLIC HOUSES AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Our case studies:

Drusilla’s Inn Punch Taverns The Bold Pub Company Acting on behalf of the private owners, In just 18 months, Christie + Co completed the Acting on behalf of the Bold Pub Company, which Christie + Co sold the picturesque, thatched letting of 637 former Spirit pubs from Punch is financed with funds managed by Close Ventures, freehouse and restaurant, Drusilla’s Inn. The Tavern’s managed estate. The pubs were of Christie + Co sold the business, and its portfolio food-led public house overlooks the famous exceptional quality, with strong trading histories of 30 freehold properties, to Calco Midlands. Horton Tower in Dorset and was sold to and we were able to secure premiums for the experienced local restaurateurs. majority of new leases.

Acquisition for Blubeckers Mitchells & Butlers Traditional Freehouses Having previously let the Refectory, near Acting on behalf of Mitchells & Butlers, Christie + Co confidentially marketed a portfolio Godalming, to Gusto Inns on behalf of Punch Christie + Co was instructed to market of 10 freehold investment opportunities on behalf Taverns, we were subsequently instructed to a selection of public houses, as part of Traditional Freehouses. The pubs, which are acquire the desirable pub restaurant business of the innovative Mitchells & Butlers operated under lease agreements, were acquired on behalf of Blubeckers. Franchise Lease, located throughout by Charles Wells for £9 million. the UK.

InnDeed Group CI Traders Christie + Co acted on behalf of Newport Pub Christie + Co advised Sandpiper in the successful Company in the sale of 11 freehold pub assets formulation of a bid for CI Traders, the Channel in the Midlands and the North. The pubs were Islands-based conglomerate, which includes acquired by the new pub venture InnDeed pub, bar and restaurant operations. Sandpiper, Group, which is backed by Dawnay, Day an acquisition vehicle created by Duke Street Principal Investments. Capital and Europa Capital, acquired the business for £260 million.

32 ueOrchidGroup June CommunityTaverns May oebrNewCenturyInns November FrontPagePubs July eebrMoorgateLondon December CapitalPubCompany Brunning&Price PuzzlePubCompany October September BoldPubCompany August CedarPubCompany April InnDeedGroup NewportPubCompany February CharlesWells TraditionalFreehouses Vendor January Date ac rtzPbCmayEnterpriseInns BratzzPubCompany March ohFn etuat GreeneKing Loch FyneRestaurants Gusto Inns InnDeedGroup The PubPeopleCompany Ringwood Brewery Living Ventures CI Traders Rutherford Inns Gourmet Holdings Marston’s TheFoodandDrinkGroup The PuzzlePubCompany Save Investments Definitive Leisure Michael Cannon Mentor Inns Major transactions2007 The Bervies Maclay Inns h enFdlrGopTheMAMAGroup The MeanFiddlerGroup Punch Taverns Punch Taverns Luminar Punch Taverns Sovereign Inns Honeycombe Leisure Bar Room Pubs ‘n’Bars The RestaurantGroup Marston’s £260milliontakeoverofCITraders,includingitsestate80pubsandrestaurants Ultimate Leisure Duke StreetCapital Acquisitionoffour pubsintheEastMidlandsandSouthYorkshireforanundisclosedsum Private equityconsortiumledby Scottish &NewcastlePubEnterprises London Town Marston’s London Town Greene King Equable Properties AcquisitionoffourmanagedhousesinScotlandfor£1.5m Scottish &NewcastlePubEnterprises Admiral Taverns InnDeed Group Ted Kennedy/PebbleHotels AcquisitionofLuminar’sentertainmentdivisionand31non-coreunitsinadealvaluedat 3D EntertainmentGroup/subsidiaries Purchaser The ClearPubCompany Marston’s (aAIM Group) Food &Fuel Ultimate Leisure Piccadilly LicensedProperties Ladhar Leisure Pubs ‘n’Bars The RestaurantGroup Calco Midlands Robert Cain&Co Acquisition of12pubsforanundisclosedsum Sale of16freeholdandleaseholdsitesacrosstheUKforapproximately£16m by Pubs‘n’Bars,for£2.45m Acquisition ofCommunityTavernsanditsestate25pubs,whichwerealreadymanaged Acquisition ofseven“Puzzle”and“StoneHorse”leaseholdsitesinLondonfor£1. Acquisition oftheRefectoryinGodalmingforconversiontoaBlubeckerspubrestaurant Acquisition ofRingwoodBrewery,includinganestatesevenfreeholdpubsinthe Acquisition ofthe13-strongLivingRoomchainfor£28million Acquisition of30freeholdand9leaseholdpubs,for£16.24m Acquisition ofEldridgePopeanditsestate135pubsfor£155.1m Acquisition ofaportfoliofivepubslocatedinOxfordshire,SomersetandHerefordshire, in Northumberland,CountyDurham,YorkshireandDerbyshirefor£32.6m Acquisition ofNewCenturyInnsanditsestate49tenantedleasedpubs Acquisition ofaportfolio10pubsfor£4.6m Acquisition ofMeanFiddlerHoldings,anditsportfolioentertainmentvenues,for£6m Acquisition of869leasedandtenantedpubsfor£326m—makingAdmiraltheUK’sthirdlargest Acquisition ofsixtenantedpubsintheMidlandsandNorthEastfor£3.2m Acquisition ofthreepub/hotelsforanundisclosedsumintheregion£10m £95.8m. LuminartookastakeinNewCoandleasedbackthesiteson30-yearterms Acquisition of10freeholdpubs,whichoperateunderleaseagreements,for£9m Deal in theregionof£8m for £2.95m for anundisclosedsum The ClearPubCompanywaslaunchedwiththeacquisitionof25leaseholdsites South ofEngland,for£19.2m and Lincolnshirefor£19.4m Acquisition ofSovereignInnsanditsestate33freeholdpubsinYorkshire,Nottinghamshire Acquisition ofthe36-strongLochFynerestaurantgroupfor£68.1m Acquisition ofFrontPage,anditsestatefiveleaseholdpubsinLondon,foranundisclosedsu Acquisition ofthefour-strongBelandDragonpubrestaurantbusinessfor£8.75m Acquisition of279tenantedpubsfor£82.5m Acquisition ofWessexTavernsanditsestate30managedpubsforanundisclosedsum Acquisition ofMoorgateLondonanditsestate10freeholdpubsfor£9.27m Acquisition ofBrunning&Price,togetherwithitsportfolio14pubrestaurants Acquisition ofthe29-strongBoldPubCompanyforanundisclosedsum Acquisition ofPuzzlePubHoldings,withitstwofreeholdpubs,for£5.75m pub company Acquisition of11freeholdpubsintheMidlandsandNorthWestforanundisclosedsum Acquisition offourpubsinBuckinghamshireandSomersetforanundisclosedsum Reverse takeoverofHoneycombeLeisuretoformCainsBeerCompany www.christiecorporate.com 2m m 33

PUBLIC HOUSES AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

BUSINESS OUTLOOK

Restaurant chains compete with pub groups The British pub continues to occupy a An impressive 38% of the survey’s 2,000 Smollensky’s – Canary Wharf desirable position at the top of the list of the consumers reported that they had eaten UK’s most popular casual dining destinations. at a Wetherspoon’s pub in the past year. Research released by the Peach Factory The Peach Factory report tells us that over market consultancy in 2007 reveals that Fortunately, the success of the pub dining half of British adults will eat at a restaurant JD Wetherspoon pubs are now a more sector is mirrored in the UK’s many casual at least once every three months. The popular eating-out destination than fast dining restaurants, which offer an incredible percentage rises to 76% in London, where food giants Burger King and KFC. variety of high quality food and provide casual dining is now the number one choice diners with value for money. when eating out.

These latest statistics provide encouraging news for the restaurant sector and, although the current crisis in the financial markets may cause a dip in consumer spending, we expect to witness steady growth — particularly in Restaurants the casual dining sector — during 2008. Last year we reported that UK expenditure on eating out had exceeded the amount spent on food sector products eaten at home. The restaurant sector can be further encouraged by statistics released during 2007, which confirm that the number of meals eaten outside the home continues to increase.

Index based on average sale prices (from a base of 100 in 1975) 1975 2002 2003 2004 2005 2006 2007 BUSINESS INTELLIGENCE Restaurants 100 816 837 865 906 950 1026 Our predictions for 2008

34 + La Vina,andTheSlugLettuce. which includeHa!Bar&Canteen, brands withinLaurel’scasualdiningdivision, establishments. LaTascacomplementsother approximately 460drinkingandeating Pub Company,whichnowoperates La TascawasaddedtoTchenguiz’sLaurel Kaupthing Bank,for£123.4million. acquisition vehicleR20,withbackingfrom was finallyacquiredbyTchenguiz’s Following amightypublicbattle,LaTasca list andnumerouscounterbidsfollowed. chain wasalsoonRobertTchenguiz’starget board, thesuccessfulSpanishcasualdining Tragus bidreceivedthesupportofLaTasca’s Tasca Groupfor£96million.Althoughthe by anattempttoacquirethe70-strongLa chain inFebruary,whichwasswiftlyfollowed million acquisitionofthe16-strongMaPotter’s Christie +CoactedforTragusinthe£14.15 of acquisitionsitsownduring2007. particularly keentomakeanumber Group inDecember2006,Traguswas Following itsacquisitionbyTheBlackstone The bigdealsof2007 in thefinancial markets. consumer spending asaresultofthecrisis thrive, althoughwe maywitnessadipin The casualdiningsector willcontinueto + + and alsobydevelopingnewoutlets. term, byconvertingsomeofitsexistingpubs, to doublethenumberofsitesinmedium pubs andGreeneKingannounceditsintention Loch Fynerestaurantsalreadytradeinformer restaurants, for£68.1million.Anumberof Restaurants, anditsportfolioof36seafood In August,GreeneKingacquiredLochFyne operate approximately150unitsintheUK. announced planstogrowthebusiness trading asBelgoandBierdrome.Tragushas Italian restaurantsandanadditionalfiveunits deal includedall50ofStrada’scontemporary from RichardCaringfor£140million.The Tragus quicklywentontoacquireStrada Having lostthebattletoacquireLaTasca, mixed-use schemes. Branded operators will seekunitsinnew-build concepts willexpand intosecondarytowns. Ambitious restaurant groupswithsuccessful Restaurants 2006 2004 2005 2003 2002 2007 + %25 %75 10% 7.5% 5% 2.5% 0% 8.0% movement inaverageprices 2.6% 2.8% 3.3% + + considering theiroptionsduring2008. their IPOplansonholdandtheywillbe both groupsconfirmedthattheyhadput plans afewdayslater.DuringNovember, market andWagamamaalsoannouncedIPO that itwasconsideringareturntothestock 2007. GauchoGrillannouncedinSeptember a numberofplannedIPOstowardstheend uncertainty inthefinancialmarketsscuppered successfully inthelatterhalfofyear, Although anumberofmajordealscompleted Private EquitybyChristieCorporateFinance. Group’s acquisitionwassecuredfromOctopus for £6.5million.FundingTheShire which Christie+CobrokeredinSeptember Shire Group’sacquisitionofSmollensky’s, Another noteworthydealof2007wasThe 4.7% operators enteringtheUKmarket. We canexpect toseesome international others disposeofunits inpoortradinglocations. the moresuccessful coffeeshopconcepts,whilst We willwitnessthe ongoinggrowthofsome 4.9% 8.0% www.christiecorporate.com 35

RESTAURANTS AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Successes in 2007

Notable achievements: + Acquisition of Ma Potter’s on behalf of Tragus + Sale of a 4,800 sq ft restaurant business + Acquisition of the Smollensky’s group for + Sale of the two-Michelin-starred Hibiscus in Straford-upon-Avon to Carluccio’s £6.5 million, on behalf of the Shire Group restaurant in Ludlow, Shropshire + Sale of the 80-cover Just the Bridge restaurant in + Valuation of four Covent Garden restaurants + Sale of a site in Midhurst, West Sussex to Loch London on behalf of executive chef, Peter Gladwin in advance of their sale to London Brasseries Fyne Restaurants + Sale of the Michelin-starred Simply Simpsons in a joint venture with Capital & Counties + Sale of four new leases on restaurants in York, + Sale of the Leather Bottle in Mattingley to Leeds, Cardiff and Edinburgh to Gourmet Burger The Restaurant Group Kitchen (GBK) + Sale of a café bar and bistro in Hastings to Town Centre Restaurants

The burger goes upmarket Familiar faces The popularity of the high quality burger Ongoing merger and acquisition activity Most recently, the brothers have focused was confirmed during 2007, as a number of within the restaurant sector has prompted on developing the Dim T Asian dining chain, upmarket burger restaurants successfully a number of interesting people moves. which was floated on AIM in 2006 and has expanded their estates. Having established successful brands and opened several new outlets during 2007. subsequently sold out to larger restaurant A £2.2 million expansion fund was recently Gourmet Burger Kitchen (GBK) was one of groups, some of the industry’s leading figures secured through a share placing, which will 2007’s most acquisitive operators, securing developed or expanded completely new enable the group to open a number of new a number of sites through Christie + Co in concepts during 2007, which we can expect sites during 2008. various locations around the UK. The GBK to feature prominently during 2008. concept was developed by three New Movement in prices Zealanders who wanted to provide good John Gater was responsible for establishing Christie + Co completed a large number of quality, nutritious, convenient food, using the the Ma Potter’s brand, which started life as individual restaurant transactions across the best and freshest ingredients available. The a coffee shop within the Bentall’s shopping UK during 2007. Our price index shows that first restaurant was opened in 2000 and the centre in Kingston, Surrey and successfully average restaurant values rose by 8.0% during company operated six London sites at the expanded to become a 16-strong chain of 2007, compared to the 4.9% increase we time of its acquisition by the Clapham House casual dining restaurants. Gater sold his witnessed during 2006. Group in November 2004. Since then, the business to Tragus for more than £14 million multiple award-winning group has expanded in February 2007 and has since reappeared Regional activity rapidly, with a current portfolio of 37 as the Managing Director of Coal Grill & Christie + Co completed a large number of restaurants across the UK — 20 of which Bar, securing two new sites for 2008, with individual restaurant transactions across the opened during 2007. further openings planned. Having secured the UK during 2007. funding to expand his fledgling group, Gater Other successful quality burger concepts has appointed another leading industry figure include the Fine Burger Co and the Prezzo- as a new non-executive chairman. owned Ultimate Burger, which have both Ian Glyn, who co-founded Loch Fyne “Although the current crisis in the opened new outlets during 2007. Hamburger Restaurants, can provide plenty of restaurant financial markets may cause a dip Union, which currently operates six outlets industry experience to complement Gater’s in consumer spending, we expect in London and one in Derby, is also predicted own expertise. to witness steady growth — to expand following its acquisition by the Noble Organisation. The Kaye family is renowned within the particularly in the casual dining restaurant industry, as the founders of a sector — during 2008.” number of successful brands, including Garfunkel’s, Deep Pan Pizza and Zizzi. Adam and Sam Kaye are probably best known for establishing the ASK pizza and pasta brand in 1993, to which they put their initials.

Andrew Moore + Restaurants with outside seating areas will + Some of the established brands will be refreshed Head of Restaurants continue to increase in popularity. to compete with the incoming concepts. + We can expect some individual comebacks, + Large restaurant businesses will target some + Lower priced operators will continue to seek outlets as some of 2007’s vendors re-enter the of the smaller chains in an effort to speed in university towns. 36 restaurant market in 2008. their expansion. Christie +Co,inLeeds. (GBK) acquiredtheleaseonathirdsitethrough in YorkandEdinburgh,GourmetBurgerKitchen Following theacquisitionoftwonewrestaurants Gourmet BurgerKitchen Grill, MetroandBurgershack. operates ninerestaurantsinthreeformats,Bar& chain ofrestaurants,for£6.5million.Smollensky’s its acquisitionofSmollensky’s,thecentralLondon Christie +CoactedonbehalfofTheShireGroupin The ShireGroupacquiresSmollensky’s Our casestudies: aur ThePeople’s Vendor January Date oebrWhiteStarLine November Brunning&Price Smollensky’s October September Image Restaurants June CaféBrera May LaTasca WimpyUK April March uutOto onRsarn ru LawrenceWosskow Out of TownRestaurantGroup August eebr Conduit Street December MaPotter’s February Richard Caring Whitbread Tom Etridge Restaurant Group/PWC Major transactions2007 Hamburger Union GreeneKing Las Iguanas Loch FyneRestaurants LukeJohnson Druckers ViennaPatisserie lue&Car oiAlan Murchison Gourmet Holdings Claude &ClaireBosi DelekRealEstate Nikko PrincipalInvestments Gusto Inns Restaurants Tragus Holdings TGI Friday'sUK,ajointventurebetween First RestaurantGroup Bowmark Capital Management teambackedby R Capital Purchaser The ShireGroup D&D London R20/Kaupthing The RestaurantGroup Restaurants Carlson Restaurants&ABNAMROCapital Noble Organisation Conduit Street The RestaurantGroup Ultimate Leisure C’est Ici Famous Brands Sam andEddie Hart Tragus Holdings Stratford-upon-Avon’s towncentre. occupies aprominentpositionintheheartof which previouslytradedasa120-coverrestaurant, restaurant unitthroughChristie+Co.Theproperty, Carluccio’s acquiredtheleaseonanew4,800sqft Carluccio’s acquiresanewrestaurantsite Potters BarRestaurantbrands,for£14.15million. owners oftheMaPotter’sChargrillandM.A brands —initsacquisitionofMaPotter’s, operator oftheCaféRougeandBellaItalia Christie +CoactedonbehalfofTragus— Tragus acquiresMaPotter’s Acquisition ofStrada,the50-strongrestaurantchain,for£140m Acquisition oftheTGIFriday’sbusinessanditsestate45restaurantsfor Acquisition ofthreeLondongastropubsfor£3m £27m managementbuyoutofthe14-strong bar restaurantgroup Acquisition ofthe42-strongDruckersViennaPatisserieforapproximately£20m Acquisition of193the235LittleChefrestaurants,whichwereboughtoutadministration Deal Acquisition ofthenine-strongSmollensky’s bar andrestaurantchainfor£6.5m Acquisition oftheImageRestaurantsgroup,comprisingKensingtonPlace, which hasbeenrenamedLeBecasse Acquisition oftheleaseholdtwo-Michelin-starredHibiscusRestaurantinLudlow, Acquisition ofLaTascaandits70restaurantsfor£123.4m Acquisition ofRoadchef,theoperator29servicestations,for£375m Sale oftheRefectory near GodalminginSurreyforconversionto aBlubeckerspubrestaurant which alsoownstheAberdeen Steakhousechain The Avenue,LauncestonPlaceandFishShop,foranundisclosedsum sites, for£14.15m for anundisclosedsum Acquisition oftheHamburgerUnionby NobleOrganisation, Acquisition ofthe36-strongLochFynerestaurant groupfor£68.1m Acquisition ofthreeUK restaurants—Mirabelle,DronesandQuo Vadis— Acquisition ofBrunning&Price,togetherwith itsportfolioof14pubrestaurants Acquisition ofthefour-strongBelandDragonpubrestaurantbusinessfor£8.75m Acquisition ofthefive-strongCaféBreraGroupforanundisclosedsum Acquisition ofa75%stakeinWimpyUK,with194outletsacrossthefor£3m approximately £5m The 20-strongOutofTownRestaurantGroupwasboughtoutadministrationf Acquisition ofQuoVadisinSoho Acquisition oftheMaPotter’sGroup,comprising16tradingrestaurantsandtwodevelopment protégé AlanMurchison. Claude andClaireBosi,toformerRaymondBlanc restaurant inLudlow,Shropshire,onbehalfof Christie +Cosoldthetwo-Michelin-starredHibiscus Hibiscus Restaurant fixed canopy. area, whichaccommodates50customersundera The propertyalsohasanextensiveoutdoorseating Christie +Co,whichreopenedasaCaféGiardino. 155-cover cafébarandbistroinHastings,through Town CentreRestaurantsacquiredtheleaseona Town CentreRestaurants www.christiecorporate.com £70m or 37

RESTAURANTS AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

BUSINESS OUTLOOK

A big attraction The leisure sector’s biggest news story With the backing of The Blackstone Group, during 2007 was arguably Merlin Merlin acquired The Tussauds Group from Entertainments Group’s (MEG) acquisition Dubai International Capital (DIC) for more of the Tussauds Group, which created the than £1 billion. The deal, which completed in world’s second largest visitor attractions May, saw DCI retain a 20% stake in the new operator after Disney. Merlin Entertainments Group company and combined some of the world’s best-known attraction brands including Madame Tussauds, Legoland, Sea Life, British Airways London Eye, and Gardaland. Leisure 2007 proved exciting for some leisure sector operators, whilst others found the year more challenging. As well as observing the expansion of Next Generation Clubs, and the creation of the world’s second largest visitor attractions operator, we also witnessed the effects of the UK-wide ban on smoking in public places.

BUSINESS INTELLIGENCE Our predictions for 2008

38 + locations with strongdemographics. operators continuing totarget“infill” cinema conceptsas wellasestablished We willseethedevelopment ofboutique the futuretocreatedestinationresorts. other attractionconceptswithhotelsin in June2007andthegroupplanstolink hotel atChessingtonWorldofAdventures Group, MerlinopenedanewHolidayInn Working withtheInterContinentalHotels brands acrossEuropeandtheUSA. existing sites,aswellrollingoutkey attractions giantproposestodevelopits development programme.Thevisitor used tofundMerlin’sambitiousthree-year The proceedsfromthispropertysalewillbe on 35-yearrenewableleases. deal, whichhavebeenleasedbacktoMerlin amongst thepropertyassetsincludedin Park, AltonTowersandWarwickCastleare vehicle. MadameTussaudsLondon,Thorpe Nick Leslau’sprincipalpropertyinvestment sale andleasebackdealwithPrestbury1— acquisition, MEGcompleteda£622million Just twomonthsaftertheTussauds Staybridge Suites–Liverpool + the UK,isnowuncertain. development invariouslocationsaround small casinos,whichwereproposedfor together withtheeightlargeand votes. Thefutureoftheregionalcasino, government’s GamblingOrder,byjustthree proposal, theHouseofLordsrejected Although MPsbackedtheManchestercasino have itshopesdashedlaterintheyear. initially celebratedthedecision,onlyto “super casino”,theCityofManchester location fortheUK’soneandonlyregional 2005. Havingbeenselectedasthepreferred new casinospermittedbytheGamblingAct included locationrecommendationsforthe of StateforCulture,MediaandSport,which issued itsreporttoTessaJowell,Secretary In January2007,theCasinoAdvisoryPanel for Manchester Casino disappointment as aresult oftheparticularly poorweather. in thetraditionally weakersummers months have benefittedfrom goodtradingconditions further consolidation, althoughoperatorswill The bowlingsector willcontinuetowitness + in June2007. renamed TheO2andsuccessfullyre-launched sport andentertainmentvenue,whichwas only asmallpartofthemassiveart,music, owners, thecasinowouldhaveformed chosen. FortunatelyforAEG,theDome’s regional casinobeforeManchesterwas to beoneofthefavouritevenuesfor The formerMillenniumDomewasconsidered other regenerationoptions. Hazel Blearstoreviewtheissueandconsider the summerandaskedCommunitiesSecretary Gordon Brownputallcasinoplansonholdin operators alike. provide underlying securityforinvestorsand remain buoyantas bricks andmortarpositions Demand forfreehold leisurebusinesseswill www.christiecorporate.com 39

LEISURE AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Responding to industry challenges Tough trading conditions Interesting transactions The licensing changes that were introduced Georgica reported tough trading conditions Ultimate Leisure raised £25 million for at the end of 2005, together with the ban in the first quarter of 2007, having previously acquisitions in January 2007 and, as part of on smoking in public places, which has now reported that trading in Scottish outlets at a major exercise to reposition and expand the been implemented across the UK, have both Rileys — the snooker and pool club operator business, turned its attention to the restaurant presented leisure sector operators with — was adversely affected by the smoking ban sector. Successfully acquiring Bel & the a number of challenges. that was implemented in March 2006. Dragon for £8.75 million in May, Ultimate added four bar restaurant sites to its licensed Pubs now have an opportunity to extend In July, Georgica announced the £34.1 million portfolio. This transaction was followed, a their licensing hours, which enables them sale of Rileys to Crucible Acquisitions month later, by the £28 million acquisition to retain customers who would previously — a vehicle formed by Greenhill Capital of the Living Room brand, and its 13 venues, move on to an alternative late-night venue. Partners Europe and North Atlantic Value. from Living Ventures. Pubs are also more likely to have an In a separate transaction, which was appropriate space that can be used to create announced at the same time, Georgica’s Ultimate Leisure, which is backed by an outdoor smoking solution. Nightclubs subsidiary companies — Rileys and Tenpin — the Reuben Brothers and Dawnay, Day, and late-night town centre bars are often each contracted to sell and leaseback 44 is confident that it can reposition and land-locked, or above/below ground level and 9 freehold and long leasehold properties develop the business in order to improve and the possibility of providing a smoking for £28m and £43m respectively. Although its competitive position. At the beginning solution raises various security, health and Georgica also announced in July that it had of December, the company changed its safety, and admission issues. been approached by a number of parties trading name to Premium Bars & Restaurants, who were potentially interested in making to reflect its new strategy. It also announced Since the introduction of the smoking ban, an offer for the company, none of the the sale of three nightclub sites in Newcastle anti-social issues have appeared in the offers were deemed acceptable. In December, upon Tyne, for £1.4 million, to help balance headlines once more. Binge-drinking and the company announced that all discussions its wet-led income with quality food- alcohol misuse are of major concern to the had been terminated due to both a difficult orientated businesses. government, which published draft Alcohol banking market and deteriorating trading Disorder Zones (ADZ) Guidance at the end conditions and that it would continue to Acting on behalf of the specialist property of November. The guidance recommends that, focus on tenpin bowling. Georgica still owns investor Aprirose, Christie + Co acquired nine where it is necessary to create an ADZ, the a number of freehold and long leasehold freehold Revolution vodka bars, for more than costs of enforcement operations should be properties that it plans to sell in due course. £17 million. Aprirose is a low-profile investor allocated between individual licensed premises. in UK property, with a £300m portfolio that The Rank Group also reported that the includes a clutch of assets in the leisure smoking ban had had a negative affect market, comprising hotels, pubs and on some of its businesses. Mecca Bingo’s restaurants. Inventive Leisure, which operates Scottish operations witnessed an initial the 50-strong Revolution brand, signed 25- decline in revenue and admissions, year leases on the properties, on an initial although the company has begun to yield of about 6%. The Inventive property see some signs of recovery. portfolio became 100% leasehold on completion of the deal. The disappointing British summer actually had a positive effect on some leisure Christie + Co successfully sold a number of businesses with cinemas and bowling late night venues during 2007 — proving that in particular reporting an increase in there is still a market for businesses of this admissions as a result of the bad weather. type, particularly freeholds in prime town centre locations.

+ We anticipate further consolidation in the health + The nightclub, gaming and cue sports markets + Private equity activity will continue to dominate and fitness sector with the development of will continue to face the challenges of the the leisure sectors. strategic alliances continuing in importance and smoking ban – potentially exacerbated throughout + Operators will continue to explore ways of operators churning portfolios to add value. the autumn and winter seasons. releasing value in freehold real estate to either 40 fund future expansion plans or take profit. + the backofanongoing“strategicreview”. were reportedtobecirclingthecompany,on of potentialbuyers,includingHalabihimself, Business Outlookwenttopress,anumber the departureofmanagementteam.As made anumberofkeyappointmentsfollowing profitable andsuccessfulgroup.Thecompany wrong, Esportacontinuedtooperateasa commentators speculatingaboutwhatwent prominently inthemedia,withindustry the demiseofBellLeisurefeatured Leisure, wasputintoadministration.Although 2007, asEsporta’sholdingcompany,Bell proved disappointingforSimonHalabiduring acquisition ofEsportainNovember2006 The HalabiFamilyTrust’s£475million as partoftheirongoinginvestment. to bolstertheexistingmanagementteam with furthersitesinEurope,andwilllook operate almost80clubsacrosstheUK, brought thetwobusinessestogether,to London &RegionalPropertieshasfinally oriented NextGenerationClubsayearlater. was responsiblefordevelopingthefamily- it toWhitbreadin1995.David’ssonScott and healthclubsintheearly‘80s,selling David Lloyddevelopedhisgroupofracquets £925 millioninJune. David LloydLeisurefromWhitbreadfor off stiffcompetitionandsuccessfullyacquire with BankofScotlandCorporatetobeat & RegionalPropertiesactedinpartnership Clubs for£198millionduring2006,London Having successfullyacquiredNextGeneration Activity inthefitnesssector IdentificationofButterflyManagement,partthe + SaleoftheOaksHotel,Burnley. + SaleofHorizonsHealthandFitnessClub + Identificationofoperatorsforthenew + rental values. operation arelikely tocurtailpotentialgrowthin The risingcostsof development andsubsequent development nearBanbury. Express byHolidayInnhotelattheStroudPark Butterfly HotelsGroup,astheoperatorsofanew Health &Leisure. in Spondon,Derby,onbehalfofHorizons King’s Waterfront,Liverpool. Staybridge Suitesdevelopmentat Successes in2007 + market isparticularlystrong. considerable interestandtheprivatedisposal or leasehold—continuestogenerate Quality leisurerealestate—whetherfreehold incorporating StainesTown’sfootballstadium. Club, apurpose-builthealthandfitnessclub Staines onbehalfofSheffieldUnitedFootball Elsewhere, wemarketedtheThamesClubin Leisure, offanaskingpriceof£1.35million. was soldonbehalfofHorizonsHealth& Health andFitnessClubinDerby,which during 2007,includingthesaleofHorizons individual healthandfitnesssectorprojects Christie +Cowasinvolvedinanumberof based aroundqualityhealthcare. part ofNHG’sdriveforanintegratedbusiness Group (NHG)forareputed£200millionas Fitness, wasacquiredbyNuffieldHospitals the parentcompanyofCannonsHealth& In December,HealthClubInvestmentGroup, MarketingofTheThamesClub,inStaines, + Aprirose’sacquisitionofnineRevolution + SaleoftheFaith&Fusionnightclubin + SaleoftheAvonGorgeHotelinBristol + SaleofthePantilesnightclubsitetoSunrise + development forsurplusland holdings. to unlockvalueby way ofalternativeuse strongly withoperators exploringthepotential The holidayparkmarket willcontinuetoperform Surrey, onbehalfofSheffieldUnitedFC. vodka bars. Peterborough, offanaskingpriceof£1.6million. to SwirePropertiesfor£15.5million. Senior Living. some leisurebusinesseswithcinemas an increaseinadmissionsasaresult + Off-market saleofthePitcher&Pianoin Valuationofsixlatenightvenuesonbehalf + Valuationofanumberbarsandlatenight + Valuationofvariousnightclubsonbehalf + + Conclusion ofthefinalrestaurantlettings and bowlinginparticularreporting “The disappointingBritishsummer of JIEntertainment. Entertainment. venues throughouttheUKonbehalfofCanDu Nexum Leisure. Manchester. at BreweryWharf,Leeds. actually hadapositiveeffecton Head ofLeisure Jon Patrick www.christiecorporate.com of thebadweather. ” 41

LEISURE AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Our case studies:

Staybridge Suites, Liverpool Horizons Health and Fitness Club, Derby Pantiles nightclub On behalf of McAleer & Rushe Group, Acting on behalf of Horizons Health & Leisure, Christie + Co sold the former Pantiles nightclub Christie + Co announced the development Christie + Co sold the Horizons Health and Fitness site in Surrey, on behalf of Something Else, for of a 132-suite, £16 million Staybridge Suites Club in Derby, off an asking price of £1.35 million, in excess of £5 million. The purchaser was hotel in Liverpool, which will be managed to a Middlesex-based private individual. Sunrise Senior Living, which is currently developing by Intercontinental Hotels Group (IHG) on 78 new assisted-living units for the elderly. behalf of BDL Hotels.

Aprirose acquires nine Revolution vodka bars Nightclub sold for VIP Pitcher & Piano, Manchester Christie + Co acquired nine freehold Revolution Acting on behalf of VIP Leisure, Christie + Co Acting on behalf of Marston’s, Christie + Co vodka bars, located in the North of England, on sold the top Peterborough nightclub, Faith & completed the off-market sale of the Pitcher & Piano behalf of the specialist property investor Aprirose, Fusion, off an asking price of £1.6 million. in Manchester. The business occupies a prime in a deal worth in excess of £17 million. The freehold city centre property was location in one of the city’s main office districts, acquired by Matterhorn Capital. overlooking the Bridgewater Canal.

Brewery Wharf, Leeds The Thames Club Acting on behalf of Rushbond, Christie + Co Acting on behalf of Sheffield United Football Club, concluded the final restaurant lettings at this Christie + Co launched the marketing of the Thames 575,000 sq ft mixed-use development on the Club in Surrey – a freehold purpose-built health banks of the River Aire in Leeds. and fitness club.

42 www.christiecorporate.com

Major transactions 2007 Date Vendor Purchaser Deal January Stax Leisure Next Generation Clubs Acquisition of the Amida Clubs in Beckenham and Hampton, and The Odyssey Health Club & Odyssey Group Holdings in High Wycombe, for undisclosed sums Luminar 3D Entertainment Group/subsidiaries Acquisition of Luminar’s entertainment division and 31 non-core units in a deal valued at £95.8m. Luminar took a stake in NewCo and leased back the sites on 30-year terms February Urbanfirst Academy Music Group (AMG) Acquisition of the leasehold interest of the Grade II-Listed Hippodrome in Brighton for an undisclosed sum March JI Entertainment Harlequin Entertainment Acquisition of JI Entertainment, owner of a chain of restaurants and an entertainment company, and Primary Capital for an undisclosed sum May Gourmet Holdings Ultimate Leisure Acquisition of the four-strong Bel and the Dragon pub restaurant business for £8.75m Dubai International Capital Merlin Entertainments Group Formation of a partnership between Merlin Entertainments Group and The Tussauds Group to and The Tussauds Group combine some of the best-known attractions brands, including Madame Tussauds, Legoland, Sea Life, British Airways London Eye, and Gardaland. Dubai International Capital received over £1 billion and retained a 20% stake in the company, investing alongside majority owner Blackstone and Lego Holding/KIRKBI Groups June Mark Birley Richard Caring Acquisition of Annabel’s Club, Harry’s Bar, Mark’s Club and the George Club, which are all in London, for £90m Whitbread London & Regional Properties Acting in partnership, London & Regional Properties and Bank of Scotland Corporate acquired and Bank of Scotland Corporate David Lloyd Leisure from Whitbread for £925m. The business was integrated with Next Generation Clubs. The combined entity operates 77 clubs in the UK Living Ventures Ultimate Leisure Acquisition of the 13-strong Living Room chain for £28 million July Merlin Entertainments Group Prestbury 1 Sale and leaseback of some of Merlin’s property assets, including Madame Tussauds London, Thorpe Park, Alton Towers and Warwick Castle, for £622m Georgica Crucible Acquisitions (Greenhill Capital Georgica agreed to sell Rileys, the snooker and pool club operator for £34.1m. In a separate Partners Europe and North Atlantic Value) transaction, Georgica’s subsidiary companies — Rileys and Tenpin — each contracted to sell and leaseback 44 and 9 freehold and long leasehold properties for £28m and £43m respectively August The Mean Fiddler Group The MAMA Group Acquisition of Mean Fiddler Holdings, and its portfolio of entertainment venues, for £6m September VIP Leisure Matterhorn Capital Acquisition of the Faith & Fusion nightclub in Peterborough for £1.6m Inventive Leisure Aprirose Acquisition of nine freehold Revolution vodka bars in a £17+m sale and leaseback transaction Southview Leisure Bryanston Kenmore Leisure Fund (BKLF) BKLF completed the acquisition of Southview Leisure Park, Hotel and Inns, in Skegness, Lincolnshire, for an undisclosed sum. The 200-acre Southview site includes 1,700 static and touring pitches, a 62-bedroom hotel and associated leisure and retail facilities November LGV Capital White Ocean Leisure South Lakeland Group, the holiday park operator, was acquired by White Ocean Leisure — a new company, which is backed by Mountain Capital — for £125m. The South Lakeland Group operates nine holiday parks in the Lake District and Morecombe Bay December Health Club Investment Group Nuffield Hospitals Nuffield Hospitals confirmed the acquisition of Health Club Investment Group, the parent company of Cannons Health & Fitness for a reported £200m. Cannons has 52 commercial clubs located throughout the UK and manages 15 government facilities, primarily through the Courtney’s brand Unknown Nexum Leisure Acquisition of three large-capacity nightclub properties — Mr Smiths in Warrington, Blu Bambu in Derby and Tramps in Worcester — for £10m LEISURE

43 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

BUSINESS OUTLOOK

Weathering the storm The crisis in the financial markets has Although the care sector is not completely prompted much speculation about the general immune to what is happening in the wider Belleaire House – Greenock strength of the property markets. Fortunately, economy, it is sheltered, to a certain extent, the outlook for the care sector is much by this government funding — which brighter than it is for many other forms provides owners and operators with some of commercial property investment. guaranteed income and investors with valuable reassurance. Investors have a long-term interest in care sector businesses, which is underwritten, in The needs-driven care sector is also less Rent review clauses in the care sector also the medium-term, by government funding. vulnerable to the effects of a possible loss differ from those in the general commercial in consumer confidence, should the crisis in property markets, where rental levels are the financial markets deepen. The demand based on open-market value and can be for care facilities and services is increasing subject to dramatic change. Care business and, because of the demographic profile of rent reviews are generally linked to RPI, or the UK care market, it will undoubtedly some other fixed index, so rental levels are continue to do so. generally more predictable. However, control Care of costs within a care business is critical to delivering profitability.

The current crisis in the financial markets has done little to dampen investors’ enthusiasm for the care sector. Demand for quality care home assets has considerably surpassed supply for a number of years and the leading care operators continue to compete aggressively for suitable acquisition opportunities.

Index based on average sale prices (from a base of 100 in 1975) 1975 2002 2003 2004 2005 2006 2007 BUSINESS INTELLIGENCE Care 100 487 579 677 775 910 1021 Our predictions for 2008

44 + extent, fromthecrisis inthefinancialmarkets. The caresectorwill besheltered,toacertain initially reluctanttosell. — particularlywherebusinessownersare often concludedafterintensivenegotiations off-market transactions.Thesedealsare specifically askedtotargetbyourclients,in a numberofcarebusinesses,whichwewere 2007, Christie+Cosuccessfullyacquired spend muchtimeontheopenmarket.During assets, itisrareforcarehomeportfoliosto As caregroupscompeteforthesequality time andoftenatrecordpricelevels. with transactionscompletinginrecord businesses wasrelentlessthroughout2007, Demand forhighqualitycarehome are keentoacquirecaresectorassets. involvement inthesectorandinvestors There isstillplentyofprivateequity acquisition opportunities Care operatorsactivelypursue to muchgreaterscrutinyduring2008. aggressive futureprojectionswillbesubject still berobust.Businessesthataresoldoff by providingthenecessaryinformation,will that areabletostandupthisscrutiny, to concludeatransaction.Carebusinesses amount ofduediligence,whichisrequired the financialmarketshasbeenincreasing One ofthenotableeffectscrisisin An increasingneedfordiligence + but thisisnolongerthecase. with residentialbuildersfordevelopmentland, have founditalmostimpossibletocompete specification. Historically,carebusinesses they canbuildnewfacilitiestotheirown keen tosecuredevelopmentlandonwhich been converted,andcaregroupsarealways in muchgreaterdemandthanunitsthathave Purpose-built carehomesareunsurprisingly and competewiththehigherqualitystock. care homes,whichwerenotabletoadapt the closureofalargenumberconverted Standards fornewregistrationsprompted introduction ofnewNationalMinimum the CareStandardsActin2000.The always beenanissue—particularlysince Availability ofqualitycarehomestockhas Development andexpansion in ordertoincrease provision. developing andexpanding theirexistingassets Care operatorswill explorethepossibilityof Care 2006 2004 2005 2003 2002 2007 + %5 0 5 20% 15% 10% 5% 0% 12.2% movement inaverageprices 3.2% achieving in2000. the pricespurpose-builtcarehomeswere sites, onaperbedbasis,arenowexceeding Interestingly, currentpricesfordevelopment dramatically overthelastsevenyears. Development landvalueshaverisen new-build sites. with residentialdevelopersforquality in amuchbetterpositiontocompete care homeassets—puttingbusinesses are willingtopaymuchhigherpricesfor and profitabilityhasimproved,purchasers As caresectorfeelevelshaveincreased 12.2% 14.5% 16.9% 17.4% 18.9% www.christiecorporate.com 45

CARE AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

A large number of new care home In the majority of cases, this is a result of We predicted that ABC would also be looking developments opened during 2007. It is poor lease structuring, with rents historically to grow with relative speed in the UK market believed that, for the first time in several assessed on a ‘rate per square foot’ basis, during 2007, so it was unsurprising to witness years, the number of care home openings rather than by analysing the underlying another major acquisition from the group at exceeded the number of closures — meaning trading potential of the asset. the end of the summer. that care provision has started to grow once more. The increase in new-build properties The market is therefore in an important The Busy Bees Group is one of Christie + Co’s over the past few years hasn’t been transitional position. Despite the potential longest standing corporate clients in the sufficiently dramatic to make a significant for high investment returns, fuelled by what children’s day nursery sector. We provided difference to the overall quality is expected to be significant future yield Busy Bees with valuation advice prior to the of available stock. It has, however, become compression, the number of care facilities ABC transaction. At the time of acquisition, more difficult to identify locations where new operated by corporate providers remains Busy Bees was the 5th largest childcare developments will not be competing with low, with over 55% of the total care facilities provider in the UK, operating a network of 33 pre-existing purpose-built care businesses. currently operated by charities. This is owned and 15 managed centres, offering more already beginning to change, however, than 4,000 places. In September 2007, the As well as building new stock, care operators as many of the leading operators are now Busy Bees Group was significantly expanded are keen to develop existing properties, in actively pursuing aggressive expansion through the acquisition of Leapfrog Nurseries, order to maximise the number of places they programmes, with a strong preference which was bought from another are able to provide and increase returns. for leasehold rather than freehold interests. of Christie + Co’s key clients, Nord Anglia When we analysed the many care home Education, for £31.2 million. This, ABC transactions that took place during 2007, we Christie + Co made significant inroads Learning Centres’ second UK acquisition, noted that a number of care properties were into the German care market during 2007. added 88 childcare centres to the Busy Bees sold with the benefit of planning permission, Our team advised on a significant number Group’s portfolio. The deal also enabled Nord which would enable future expansion. Higher of transactions, with total values in excess Anglia to redeploy funds into its International sale prices can obviously be achieved for of half a billion euros, whilst also acting Schools and Learning Services divisions. properties that offer development and for retained investor clients in the expansion possibilities. development of their portfolios. In June, Asquith Day Nurseries was sold for £95 million. Asquith, which operated from During 2007, Christie + Co was frequently Moving forward, we expect to witness 113 sites, providing approximately 6,800 asked to provide feasibility and development considerable consolidation within the registered places, was acquired from Lyceum advice to clients, who were looking to German market, which will present Capital by Dawnay, Day Principal Investments maximise the value of their existing sites. exciting opportunities for operators and Swordfish Investments. Christie + Co As care businesses strive to increase and investors alike. provided valuation advice to the vendor, provision, we predict that they will continue which was included within the confidential to review their existing stock to look for Childcare market activity increases Information Memorandum. expansion opportunities of this type. We witnessed an increase in transactional activity within the childcare market during Sovereign Capital’s sale of Alpha Plus European expansion 2007. Looking back, briefly to 2006, the Holdings, to Delancey in December, was The demographic profile of the German care largest childcare deal of that year took reported to be the largest childcare market is similar to that of the UK and the place just as the year drew to a close. transaction of 2007. Christie + Co provided demand for beds is rising, as a result of the ABC Learning Centres’ £71 million acquisition comprehensive valuation advice to Sovereign ageing population and the decrease in the of Busy Bees not only provided the Capital in advance of the sale of Alpha Plus national birth rate. Australian-based childcare giant with a and its portfolio of 17 schools, to Delancey, platform for growth in the UK and across the specialist investment advisor. Alpha Plus’ A recent study commissioned by the German Europe, it also boosted investor confidence portfolio of schools, colleges and nurseries government revealed that around 50% of in the sector and perhaps fuelled the includes some of the most prestigious names the existing care home stock is in need of subsequent increase in activity. in the country. substantial investment or redevelopment. Despite the strong macro market indicators, ABC entered the US childcare market in the German care sector has experienced 2005 and, through a number of acquisitions, mixed fortunes, with many care businesses became the largest provider in the country becoming insolvent. within just 11 months.

+ Care business developers will find it easier to + During the preparation of deals, care businesses compete for land, particularly if the residential will be under much greater scrutiny. markets suffer as a result of the credit crunch.

46 www.christiecorporate.com

Successes in 2007

Portfolio deals: + Sale of Maesteilo Care Homes to Swanton + Sale of an 11-bed learning disability business + Valuation of Positive Lifestyles, a portfolio Care & Community in Kings Lynn to CareTech of nine properties providing care for learning + Sale of Homebeech to Saffronland Homes + Sale of St Georges Care Home to Caring disabled clients + Facilitation of the merger of Happitots Day Homes Group + Valuation of Parallel Options, a portfolio of Nurseries with the Bertram Nursery Group + Acquisition of Basford Hurst Park on behalf 17 freehold and leasehold assets for care in + Sale of six care facilities to Quercus Property of Quintain Estates the community clients Partnership + Sale of Rainbow Private Day Nursery + Valuation of Rainbow Private Day Nursery + Acquisition of Corich Community Care on in North Yorkshire + Valuation of 44 assets for The Priory Group behalf of Consensus Support Services + Sale of Sutton Veny Nursing Home for internal purposes + Acquisition of Pendlebury Healthcare on behalf in Wiltshire to Avon Care Homes + Ongoing financial monitoring of the assets of of Quercus Healthcare Property Partnership + Sale of Check House in East Devon the Priory Group on behalf of the bondholders and Grosvenor Care to a regional operator + Valuation of two of the UK’s largest independent + Sale of Belmont Care to BUPA Care Services school groups + Sale of Community Support Homes to Advisory assignments: + Valuation of Asquith Nurseries, 113 nurseries and The Regard Partnership + Ongoing valuations of Quercus Property crèches, prior to the £95 million sale to Dawnay, + Sale of the Steps Portfolio, HR Care and Partnership’s entire portfolio Day and Swordfish Investments Heather Homes to Consensus Support Services + The valuation of the entire portfolio of Acorn + Valuation of Nord Anglia’s Nursery Division + Sale of Aden House to New Century Care Care, a portfolio of independent low and medium for refinancing, prior to £31.2 million sale secure hospitals to Busy Bees Single asset transactions: + Valuation and advisory work relating to healthcare + Valuation of a number of the Creative Education + Sale of the 60-bed Belleaire House nursing home properties in Germany, with an aggregate value Corporation nurseries, in administration, on in Greenock to a regional buyer of over €500 million behalf of a prospective purchaser + Sale of Ivybank House in Bath to Four Seasons + Valuation of the entire portfolio of Craegmoor + Valuation advice provided to eight of the top ten + Sale of Caton House Nursing Home to Caring Healthcare, comprising 236 properties UK children’s day nursery corporate operators Homes Group + Revaluation of Alpha Hospital’s three medium + Valuation of a former NHS secure facility – + Sale of Quality Care (Wiltshire) trading secure independent hospitals previously home to Myra Hindley – as Miranda House to Caring Homes Group + Valuation of Alpha Plus Group on behalf of for redevelopment as a medium secure Sovereign Capital psychiatric facility

Demand for single assets is also strong and The group, which traded under the Primary Christie + Co brokered a large number of Steps brand, comprised 27 nurseries, offering individual transactions during 2007. The most 1,300 registered places. Although the notable of these was the sale of the leasehold administrators successfully identified buyers interest in the Rainbow Private Day Nursery, for a number of these nurseries, Creative which Christie + Co sold off an asking price of Education’s demise unfortunately resulted “Demand for high quality care £1.25 million. in 11 nursery closures. home businesses was relentless The largest children’s day nursery in North Despite these few failures, there is still a throughout 2007, with transactions Yorkshire, Rainbow is registered for 216 very strong appetite from buyers seeking completing in record time and children and it was acquired by a new entrant to invest in individual nurseries that have often at record price levels.” to the sector. the potential to establish consistent occupancy levels and sustain fee increases. Nursery failures

During 2007, a number of failing nurseries Movement in prices CARE were put on the market. Whilst the majority Over the past five years, the values of these were former neighbourhood nurseries of quality care home assets have that had become unsustainable due to the doubled and our price indices showed expiration of grants and subsidies, a small that they rose by 17.4% in 2006 alone. proportion of private nurseries contributed The increase in prices during 2007 was to this stock. a little more modest, with average values moving forward by a very In August 2007, the Creative Education encouraging 12.2%. Corporation was placed into administration, having failed to secure a refinancing deal.

Richard Lunn + We anticipate that demand for childcare property Head of Care will remain strong and that merger and acquisition activity will continue into 2008.

47 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Our case studies:

Asquith Nurseries Sale of Aden House Maesteilo Care Homes Christie + Co acted on behalf of private equity firm, Christie + Co sold the entire share capital of Christie + Co sold Maesteilo Care Homes, Lyceum Capital, in the provision of valuation advice Aden House in Huddersfield, to New Century Care. comprising seven care facilities in the in advance of its sale of Asquith Nurseries to The group comprised five elderly care homes and Carmarthenshire area, to Swanton Care Dawnay, Day Principal Investments and Swordfish one specialist unit catering for younger clients with & Community. The business provided Investments for £95 million. physical disabilities, which were registered for a support to autistic and young adults total of 231 residents. with learning disabilities.

Merger of Happitots Day Nurseries Sale of Severn House Sale of Belmont Care to BUPA Care Services with the Bertram Nursery Group Christie + Co sold the entire share capital of John Acting on behalf of the vendors, Christie + Co sold Christie + Co facilitated the merger of Happitots Munroe Hospital (Welshpool), trading as Severn Belmont Care to BUPA Care Services. The company Day Nurseries with the Bertram Nursery Group. House, to Acorn Care. This independent hospital is comprised Elm View Nursing Home in Clevedon, Happitots Day Nurseries comprised 12 nurseries, registered with the Health Inspectorate Wales (HIW) Somerset, and Norewood Lodge in Portishead, providing 865 registered places, wrap-around for clients detained under the Mental Health Act. Bristol, with a combined registration of 94. care and an associated training business.

Consensus Support Services acquires Sale of six care facilities to Quercus Craegmoor Healthcare Corich Community Care Property Partnership Christie + Co initially provided a desktop valuation Christie + Co acquired Corich Community Care Christie + Co sold four limited companies – of Craegmoor Healthcare’s 236 assets, and was on behalf of Consensus Support Services. Parksman, Ozman Company, Samsons Atco and subsequently asked to prepare a full valuation The group comprised five units and a state- Samsons Green – and their six care homes, in advance of a refinancing exercise. A sample of-the-art purpose-built day centre in West comprising 327 registered beds, to Quercus of 114 care facilities were inspected as part of this Sussex and a vacant unit in Southampton. Healthcare Property Partnership. successful process.

48 2006 2007 coe opeeCr odnsClaimarCareGroup CompleteCareHoldings October oebrCrc omnt aeConsensusSupportServices CorichCommunityCare November eebrBelmontCare December StoneleaHealthcare September CoombeLtdPartnership Homebeech NewVictoriaHospital April March BarclaysVentures Vendor January Date uyBUPA July RavenstoneHouse Privatebuyer May WildernessExperience March LittleIslands February Vendor IBO December Date uutMna elhCr KCastlebeckGroup MentalHealthCareUK August 3i July SouthernCrossacquiredAveryHealthcare,anditsportfolioof15 nursinghomes,providing845 SouthernCrossHealthcareGroup GraphiteCapitalManagement June AllanWater May eebrSovereignCapital December PINEFund TreetopsNurseryGroup September Bertram HappitotsNurseryGroup April LifestyleCare February ueLyceum Capital June aur Daisybrook January Counticare Group akmn za opn,QuercusHealthcare Property Partnership Samsons Atco&Green Parksman, OzmanCompany, EuropeanCareGroup Rhondda CareGroup TheRegard Partnership Community SupportHomes Managementbuyout Orchard CareHomes MaesteiloCareHomes Swanton Care&Community Parallel Options Sovereign Capital Ivybank Care Busy BeesGroup Major childcaretransactions2007 Southern Cross Autism North Major caretransactions2007 odAgi dcto BusyBees Group Nord AngliaEducation Tribal Group B MOSrcue MichaelAshcroft Capital Markets Structured ABN AMRO Aden House (Wiltshire) Quality Care ano rvt a usr Privatebuyer Rainbow PrivateDayNursery Sovereign Capital Claimar CareGroup Four SeasonsHealthCare Majesticare Care UK Care TechHoldings Aermid HealthCare Purchaser Care UK Purchaser The DeltaFund Delancey any a rnia netet Dawnay,DayPrincipalInvestments,together withSwordfishInvestments,acquiredAsquithDay and SwordfishInvestments Dawnay, DayPrincipalInvestments and EatonSquareSchools CareTech CommunityServices ABC LearningCentres Swanton Care&Community BUPA CareServices HCP Stonelea Saffronland Homes Emergency ChildandHomeCare Child First,MagicNurseries Sovereign Capital New CenturyCare Caring HomesGroup Executive CareGroup otenCosHatcr ru SouthernCrossacquiredLifeStyleCare,whichownedtheleaseholdinterest in23elderlycare Southern CrossHealthcareGroup Delancey acquiredAlpha PlusHoldings,whichoperatednurseries, schoolsandcolleges, Capital Partners,for£33.1m Claimar CareGroupacquiredCompleteHoldings,fromitsmanagementandSove Nursery Group and itsportfolioofsixunits,foranundisclosedsum Consensus SupportServices(partoftheCaringHomesGroup)acquiredCorichCommunityCare, of sixpurpose-builtcarehomes,providing327registeredbedrooms Quercus HealthcarePropertyPartnershipacquiredfourlimitedcompanies,togetherwith aportfolio European CareGroupacquiredRhonddaforanundisclosedsum. The RegardPartnershipacquiredCommunitySupportHomesanditsportfoliooffiveproperties Sovereign CapitalacquiredParallelOptions,aproviderofsupportedlivingcareservicesto Sale ofCompleteGroup,aspecialisthomecareservicesprovider,for£33m Four SeasonsacquiredIvybankHouseinBathforanundisclosedsum Acquisition offivecarehomesfromSouthernCross,aspartitsdivestmentprogramme Care UKacquiredMercuryHealthHoldingsfor£31.5m disability residentswithatotalof101registrations,foranundisclosedsum Acquisition oftheCounticareGroup,comprising12homesspecialisingincarelearning Acquisition ofasubstantialstakeinCareHoldingsfor£22m Deal BUPA’s corporatechildcarebusinesswasacquired byEmergencyChildandHomeCare,partof the Sale oftheWildernessExperience—aspecialistremoteassessmentcentreforchildren with Care UKacquiredLittleIslands—aresidentialchildren’sservicebasedinBristoland Wales. Deal in Norfolk,whichprovide46registeredbedsandanadditionalfivesupportedlivingplaces properties provided978beds,withalargenumberofadditionalhomesunderconstruction facilities, withatotalregistrationof65,foranundisclosedsum adults withlearningdisabilityormentalhealthneedsinGloucestershire which areregisteredfor162residents,anundisclosedsum homes inSomersetwithacombinedregistrationof94 gained twonursinghomes,fourlearningdisabilityunitsandadomiciliarycarebusiness Healthcare for£23m. three independenthospitals,18residentialhomesandtwosupportedtenancyschemes behavioural challenges,whichhasmorethan380occupiedbeds,toTheDeltaFundfor£270m 3i soldCarePrinciples,thespecialistcareproviderforadultswithlearningdisabilitiesand Miranda House–a68-bedroomcarehome,providingnursingtoelderlymentallyillclients beds, for£96.5m.SouthernCrosslaterdivestedthefreeholdinterestofAveryhomes homes, foranundisclosedsum.Thetransactionadded1,737bedstoSouthernCross’portfolio activity centre.Thetransactionadded34bedstoSwanton’sportfolio from SovereignCapital, foranundisclosedsum Leapfrog had88childcare centresandapropertyportfolioof41 centresvaluedat£40.9m. The PINEFund,saleandleasebackvehicle, acquired 18freeholdpropertiesfromTreetop Family CareCompany(FCC).FCCprovides corporatechildcaresolutionstolargeorganisations Scotland, providing865registeredplaces Bertram’s portfolioofthreedaynurseriesandHappitots12propertiesacross Merger betweenBertramandHappitotsforanundisclosedsum.Thedealbroughttogether challenging behaviour Little Islandsprovides24bedsacross13homes 6,800 registeredplaces Nurseries fromLyceumCapitalfor£95m.Asquith operatedfrom113sites,withapproximately for approximately£8m Orchard CareHomeswassubjecttoa£175mmanagementbuyout.Orchard’sportfolioof26 Swanton Care&CommunityacquiredMaesteiloHomesanditsportfolioofsevenc Busy BeesGroupacquiredLeapfrogDayNurseries fromNordAngliaEducationfor£31.2m. range ofdisabilities,foranundisclosedsum Acquisition ofDaisybrook,operatoraresidentialhomecaringforupto10children witha ABC LearningCentresacquiredtheBusyBeesGroupfor£71m Acquisition ofAutismNorth,comprisingfiveautismcarehomesandanautism-specific BUPA CareServicesacquiredtheentiresharecapitalofBelmontCare,includingtwonursi HCP Stonelea,theacquisitionvehicleofPublicServicePropertiesInvestments,acquired Stonelea Saffronland HomesacquiredHomebeech,anditsportfoliooffourcarehomesinWestSussex, Acquisition oftheNewVictoriaHospitalfor£21m Ravenstone Housesoldoff10ofits13daynurseriesandschoolstofourdifferent buyers Sovereign CapitalledtheinstitutionalbuyoutofNationalFosteringAgency(NFA) Acquisition ofa32.5%stakeinPrioryHealthcareHoldingsfor£44m of purpose-builtcarehomesinWestYorkshire,whichwasregisteredfor231residents New CenturyCareacquiredtheentiresharecapitalofAdenHouse,togetherwithitsportfolio Caring HomesGroupacquiredtheentiresharecapitalofQualityCare(Wiltshire),tradingas Acquisition offourcarehomesinScotland,increasingExecutiveCare’sbedsbymorethan300 Castlebeck GroupacquiredMentalHealthCare(UK)for£255m,adding195beds,together with nursery provideschildcareforinexcessof580children—onethesector’slargest single assets Sale oftheRainbowPrivateDayNurseryforanundisclosedsum.Registered216children, the www.christiecorporate.com reign s are ng 49

CARE AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

BUSINESS OUTLOOK

Focus on forecourts Forecourt sites were targeted by acquisitive In August 2007, the confidential off-market operators throughout 2007 and activity within sale of a group of four petrol filling stations the sector continued to increase significantly in Wales prompted a competitive bidding for Christie + Co’s specialist forecourts team. process. We successfully concluded the deal on behalf of Powell Garages, for a sum in Having acquired forecourt businesses through excess of the original £4 million asking price. Christie + Co in previous years, United Co-operatives challenged us to identify target As 2007 drew to a close, the Co-operative sites, which would complement its existing Group, which by then included United trading geography. We succeeded in Co-operatives, acquired the independent identifying some suitable opportunities QMP group through Christie + Co for an and, in May 2007, we acted for United undisclosed sum. QMP was established with Co-operatives in the acquisition of three major the acquisition of Quarry Moor Services in forecourt businesses in Northumberland. 1997 and grew, through further acquisitions, to operate seven sites in North Yorkshire Retail and Cleveland, which all feature Spar stores.

2007 was a remarkable year for Christie + Co’s Retail team, during which we completed a large number of both portfolio and individual transactions. Our Advisory team also broke some records, by visiting more than half of Boots’ 2,500 UK and Irish stores in just four days, as part of a major advisory project.

Index based on average sale prices (from a base of 100 in 1975) 1975 2002 2003 2004 2005 2006 2007 BUSINESS INTELLIGENCE Retail 100 699 828 865 933 988 1043 Our predictions for 2008

50 www.christiecorporate.com

Interestingly, Quarry Moor Services in Ripon was the first petrol filling station in the UK to incorporate a McDonald’s drive-through Willow Tree Service Station – Alnwick restaurant, which provides valuable rental income and encourages additional traffic flow to boost shop and fuel sales.

Other major forecourt transactions during Forecourts continue to be targeted, as an The rapidly expanding Subway food chain, 2007 included Bishop Commercial Holdings’ area of expansion, by a number of leading which now operates more than 1,000 stores £15 million acquisition of the nine-strong convenience, fast-food and off-licence sector in the UK and Ireland, has also secured a independent operator Philip Wilks & Sons, and brands, who pursue franchise and brand limited number of forecourt outlets and has new holding company MRH (GB)’s acquisition partnership opportunities. The Musgrave declared its interest in opening further of Refined Holdings, Refined Petroleum, Group, which owns the Budgens and Londis forecourt sites in the future. Refined Estates and Malthurst (UK). This brands, has already secured a number of restructuring deal included more than 280 independent forecourt outlets and opened We don’t doubt that this ongoing interest forecourts, and completed for £167 million. several new sites during 2007. in the sector will continue to drive forecourt property prices during 2008. Like many other operators within the retail industry’s specialist sectors, forecourt businesses are currently looking at ways of expanding their product and service offerings Retail in order to increase custom. In addition to +5.6% movement in average prices the many thriving convenience stores, which 5.6% are now commonly located within forecourt 2007 businesses, it is not unusual to find cafés, 2006 5.9%

off-licences and post offices on forecourt 2005 7.9% sites. In fact, the Garage Watch Campaign, 2004 4.5% which has now become part of the Federation 18.5% of Petroleum Suppliers, lobbied the 2003 government in 2007 to consider re-siting 2002 5.4% post offices in rural filling station shops. 0% 5% 10% 15% 20% RETAIL

+ Retail businesses will continue to expand their + Forecourts will be actively targeted by some of + Christie + Co will be targeting new markets, product offerings in order to increase custom. the leading convenience, fast-food and off-licence including the pharmacy sector. brands, which will fuel property values.

51 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Convenience consolidation Off-licence sales We witnessed considerable consolidation As the leading CTN and convenience store Alcohol sales featured particularly within the CTN and convenience sectors businesses continue to focus on expanding prominently in the media during December throughout 2007 and Christie + Co was and improving their estates, this inevitably 2007, when John Grogan MP, the chairman responsible for completing a number of prompts some disposals. Major disposal of the all-party Parliamentary beer portfolio transactions. projects awarded to Christie + Co during 2007 group, criticised Tesco during a Commons included the instruction to market 54 retail debate about the health consequences Christie + Co’s first portfolio transaction of opportunities on behalf of Martin McColl in of cheap alcohol. the year was the sale of the 20-strong Anglian March, and an instruction to offer 16 Spar Convenience Stores business in January, food retail stores on behalf of A F Blakemore John Grogan backed up his criticism by which was acquired by the East of England & Son in September. The sale of these units referring to the Competition Commission’s Co-operative Society for an undisclosed sum. generated considerable demand from findings that Tesco underpriced beer and During the same month, the Midcounties independent operators. lager to the extent of £15.1 million during the Co-operative acquired 150 Star-branded World cup in 2006. Ministers have called for convenience stores and newsagents from The subject of tobacco sales featured a review into the relationship between pricing News Shops. prominently in the trade media during 2007 and promotion of alcohol and the harm to as the CTN sector was presented with a health. The review’s findings are expected In July, the world’s largest consumer number of challenges. The implementation of to be published in the summer of 2008. co-operative was created when the a ban on smoking in public places prompted Co-operative Group and United Co-operatives some concern about a possible drop in Although the main focus of the headline- amalgamated. The new organisation operates tobacco sales, but a change to the law for grabbing Commons debate was public health, over 4,500 trading outlets throughout the selling tobacco presented retailers with even it also highlighted the fact that supermarkets UK, including food stores, pharmacies, travel greater concerns. As of 1st October 2007, it are selling alcohol at incredibly low prices. branches and funeral businesses. During became illegal for retailers to sell tobacco The off-licence sector faces stiff competition the same month, Rippleglen acquired products to anyone under the age of 18 from the supermarket giants and off-licence Northcliffe Retail, together with a portfolio and further measures to prevent underage businesses evolved during 2007 in an attempt of approximately 60 retail outlets, for a sum sales are currently under discussion. to retain and increase custom. in the region of £8 million. Rippleglen’s CTN shops trade under the Arden News, The Competition Commission’s Groceries The Thresher Group has recognised the Supernews and Supercigs fascias. Since Market Provisional Finding document also benefits of offering a wider product range the acquisition, Northcliffe Retail has disappointed some within the convenience and the company converted a large number been renamed Eastcliffe News Shops sector when it was published at the end of of stores to a licensed convenience format with outlets trading under Mercury News October 2007. The Competition Commission during 2007, with more conversions planned Shops, Post News Shops and Telegraph did not “see evidence of unfair distortions in for 2008. Other off-licence businesses that News Shops fascias. competition between large grocery retailers choose to operate convenience format stores and small stores”. Furthermore, the document include Bargain Booze, which opened a In September, Christie + Co acted on behalf explained that “below-cost selling by national number of new Select Convenience franchises of Rusts’ shareholders to negotiate the sale retailers is not part of a predatory strategy during 2007, and Wine Cellar, which of the company’s entire share capital to aimed at convenience stores or specialist significantly expanded the number of its Midcounties Co-operatives. The Rusts family stores and is not having significant unintended outlets by negotiating a deal with Martin business operated 10 convenience stores effects on smaller stores.” McColl to include Booze Busters within across the South of England and Midcounties some of its convenience stores. Co-operatives agreed to continue operating Although convenience retailers undoubtedly the stores under the Rusts brand, retaining operate within a challenging market, demand The Castel Group also reviewed its estate all the existing staff. for retail property is still strong. Christie + Co during 2007 and converted a number of successfully sold a large number of Oddbins stores to the successful Nicolas Two further notable acquisitions took place in independent convenience store businesses and wine shop format. Majestic Wines also had September 2007, when Martin McColl acquired CTNs during 2007 and we are confident that success with its Wine Warehouse format, the 92-strong Smile Stores, and Botterills quality businesses in key locations will reporting strong growth throughout 2007 Convenience Stores acquired the 7-strong continue to sell during 2008. and opening a number of new outlets. D&M Edgar Group in Scotland.

+ We are likely to witness further consolidation + Leading retailers will continue to review their + Quality post office units will continue to attract within the off-licence sector during 2008. estates during 2008, prompting further disposals buyers, despite the threat of closure. and creating acquisition opportunities for independent retailers. 52 + Saleofagroupfourpetrolfillingstations + UnitedCo-operatives’acquisitionofthree + Marketingof54conveniencestoresandCTNs + SaleofQMP–aportfoliosevenpetrolfilling + generate enquiriesasweenter2008. properties continuetoattractinterestand across theUKduring2007andavailable continued tosellanumberofpostoffices the threatoftheseclosures,Christie+Co sustainable networkinthefuture.Despite to providefundingsupportamore current levelofover14,000,whilecontinuing Post Officebranchesbyupto2,500fromits plans toreducetheUK-widenetworkof the PostOfficenetwork.TheGovernment opened publicconsultationsonchangesto the factthatPostOfficehasrecently Some buyersareapparentlyundeterredby Post officesprovepopular Oddbins’ futureearlyin2008. perhaps expectfurtherannouncementsabout Group hasdeniedthemergerreports,wecan mooted inthepress.AlthoughCastel a possiblemergerwithOddbinshasbeen been undertheownershipofVisionCapital, hands twiceduringtheyearand,sinceithas transactions, theThresherGroupchanged prominently inthe2007tableofmajor Although off-licencedealsdonotfeature concern businessesforsale. to marketasignificantnumberofgoing Christie +Coisworkingwiththecompany to improvethequalityofitsestate, profitable locations.AsThresherscontinues the OddbinsandNicolasbanners,inmore and isplanningtoopennewstores,under disposed ofanumberstoresduring2007 off-licence disposalsduring2007.Oddbins Estate reviewspromptedanumberof and alcohol. particularly relating tothesaleoftobacco CTNs willfacefurther legislativechallenges– Successes in2007 in WalesonbehalfofPowellGarages forecourt sitesintheNorthEast on behalfofMartinMcColl stations –toTheCo-operativeGroup Notable deals: SaleoftheQueenswaySupermarketin + Ongoingmarketingofanumberoff-licences + SaleofRustsconveniencestorestoMidcounties + Saleof16Sparretailstoresonbehalf + business closure. likely tosurviveintheeventofapostoffice appeals toawideraudienceandismore traditional postofficessothatthebusiness expand theproductandserviceofferingof Entrepreneurial buyersarepreparedto sustainable, havealsoattractedsomeinterest. which areperhapsconsideredtobeless always provedpopular,butruralpostoffices, Quality postofficesinkeylocationshave assignments during2008. completing agreaternumberofadvisory for retailsectorclientsandlookforwardto undertaken anumberofothermajorprojects our advisorycapability.Wehavesince network of17offices,perfectlydemonstrated Christie +Covaluationspecialistsacrossour for TerraFirma.Theproject,whichinvolved four daysaspartofaprojectwecompleted than halfofBoots’UKandIrishstoresinjust Christie +Co’sAdvisoryteamvisitedmore As wementionedinouropeningstatement, Advisory activity to TescoStores Wellingborough, whichtradedasCostcutter, on behalfofThresherGroup Co-operatives A FBlakemore&Son Valuationof25conveniencestoresand17post + InspectionofmorethanhalfBoots’UKand + during 2007,comparedwith5.9%2006. it wasin2006.Pricesmovedforwardby5.6% values wasslightlymoremodestin2007than that theincreaseinaverageretailproperty Christie +Co’saveragepriceindicesshow Movement inprices 2007 andactivitywithinthesector continued toincreasesignificantly Nearby Stores offices, acrosstheSouthofEngland,onbehalf acquisition bid Terra FirmainadvanceofitsAllianceBoots Irish storesaspartofanadvisoryprojectfor Advisory assignments: “Forecourt sitesweretargetedby acquisitive operatorsthroughout Head ofRetail Tony Evans for Christie+Co’sspecialist www.christiecorporate.com forecourts team. ” 53

RETAIL AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Our case studies:

United Co-operatives Martin McColl A F Blakemore & Son Christie + Co acted for United Co-operatives in After successfully selling many of the 54 retail Spar is the world’s largest food retail chain, the acquisition of three petrol forecourt businesses stores Christie + Co was originally asked to operating in 34 countries with 2,700 stores in in the North East. These included the Willow Tree market on behalf of Martin McColl, we were the UK alone. AF Blakemore & Son instructed Service Station, which incorporates a substantial later instructed to offer 14 additional Christie + Co’s Corporate Retail team to sell convenience store and is possibly the largest opportunities. The units included a variety of 16 Spar food retail stores across the UK. forecourt site in Northumberland. CTNs and convenience stores.

Powell Garages Thresher Group Rusts Acting on behalf of Powell Garages, Christie + Co In September 2007, Thresher Group instructed Christie + Co successfully negotiated the sale sold a group of four petrol filling stations in South Christie + Co to sell 45 stores in a variety of key of the entire share capital of Rusts. The family Wales by way of a share transfer to Capper & Co, trading locations across the UK. A subsequent business operated 10 convenience stores across for a figure in excess of the £4 million guide price. disposal project followed towards the end of the South of England. It was acquired by the year. Midcounties Co-operatives.

QMP Queensway Supermarket, Wellingborough Milton Abbas Post Office Christie + Co sold the independent QMP group to Christie + Co was instructed to discreetly market Christie + Co sold the 200-year-old Grade II-Listed United Co-operatives. QMP was established with the the Queensway Supermarket in Wellingborough. thatched cob cottage and post office in Milton acquisition of Quarry Moor Services in 1997 and The business, which traded as a Costcutter- Abbas, one of the most picturesque villages in grew, through further acquisitions, to operate seven branded licensed convenience store, was quickly Dorset. It was sold to private buyers who relocated sites in North Yorkshire and Cleveland, which all sold to Tesco Stores. from Leicestershire. feature Spar stores.

54 www.christiecorporate.com

Major transactions 2007 Date Vendor Purchaser Deal January News Shops Midcounties Co-operatives Midcounties Co-operative acquired 150 convenience stores and newsagents, which traded as Star News from News Shops, the retail division of Claverley Company, for an undisclosed sum Anglian Convenience Stores East of England Co-operative Society The East of England Co-operative Society acquired Anglian Convenience Stores, and its estate of 20 stores, for an undisclosed sum April Philip Wilks & Sons Bishop Commercial Holdings Philip Wilks & Sons, the operator of nine forecourts, was acquired by Bishop Commercial Holdings for £15m Somerfield Martin McColl Acquisition of six Somerfield Essentials stores in Scotland for an undisclosed sum May Private individuals United Co-operatives Acquisition of three petrol forecourt businesses in the North East. West Wylam Garage, Crawcrook Filling Station and Willow Tree Service Station were acquired for an undisclosed sum Good 2 Go (Scotland) Martin McColl Acquisition of three stores in Castletown, Thurso and Helmsdale Channel Islands Newsagents Hunnyhill Group Sale of six stores, which trade under the Spar banner, in the Isle of Wight June Terra Firma Pension Corporation Investments Acquisition of the Thresher Group, and its portfolio of around 2,000 stores, (Edmund Truell) for an undisclosed sum Pension Corporation Investments Vision Capital Sale of a 75% stake in the Thresher Group to Vision Capital Oddbins Wine Cellar Wine Cellar bought back two stores, in Cumbria and Northumberland, from Oddbins, having sold them to Oddbins two years previously July Northcliffe Retail Rippleglen Rippleglen acquired Northcliffe Retail, together with approximately 60 retail outlets, for a sum in the region of £8m United Co-operatives Co-operative Retail Services The Co-operative Group and United Co-operatives amalgamated when Co-operative Retail Services acquired United Co-operatives for an undisclosed sum August Powell Garages Undisclosed operator Powell Garages, a group of four petrol filling stations in Wales, was sold to an undisclosed operator for a sum in excess of £4m September Rusts Midcounties Co-operatives Midcounties Co-operatives acquired Rusts, the operator of 10 convenience stores, for an undisclosed sum Kaupthing Bibby Line Group Bibby Line Group acquired a 51% shareholding in the Costcutter Supermarkets Group, which included the previous shareholding held by Kaupthing Smile Stores Martin McColl The Bristol-based Smile Stores, together with its estate of 92 stores, was acquired by Martin McColl for an undisclosed sum D&M Edgar Group Botterills Convenience Stores Botterills Convenience Stores acquired the seven-strong D&M Edgar Group November Budgens Sainsbury’s Acquisition of a 10,000 sq ft Budgens Store in Mildenhall, Suffolk Land Securities Sainsbury’s Sainsbury’s announced a new “Harvest Partnership” property joint venture with Land Securities. In a separate transaction, Sainsbury’s announced that it had agreed to acquire two existing stores from Land Securities in Winchester and Wednesfield for an undisclosed sum Various shareholders MRH (GB) Refined Holdings, Refined Petroleum, Refined Estates and Malthurst (UK) were sold for £167m to a new holding company called MRH (GB). The combined group operates more than 280 forecourts Bond Hamill Petrol Express Acquisition of Bond Hamill and its eight BP-branded petrol retailing sites, for approximately £8.4m December QMP Co-operative Group The Co-operative Group acquired QMP and its group of seven forecourt businesses in the North of England for an undisclosed sum RETAIL

55 AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Having opened our first international offices in Paris and Frankfurt in 1998, Christie + Co rapidly expanded its activities and operations across Continental Europe. Additional offices have since been established in Barcelona, Berlin, Dusseldorf, Hamburg, Madrid, Marseilles, Munich and Rennes. International

European expansion continues Christie + Co’s international brokerage and As well as expanding our geographical Our clients are often keen to expand their advisory business continued to expand during coverage, we have also increased our sector coverage and enter new markets, so their 2007 and we received an increasing number penetration with great success during 2007. international acquisition requirements are of client referrals, particularly from major In Germany, for example, we have applied communicated across all our European hotel businesses. Our growing reputation our sector knowledge and business expertise offices, as are any disposal instructions as a leading force within the European hotel to the care market, where we have already in key locations, which might appeal to an investment community has undoubtedly advised a number of investors and care international audience. This collaborative prompted this increase in activity. business operators. approach enables us to facilitate cross-border transactions and deliver useful and relevant Hamburg was the latest city to join the list Facilitating cross-border transactions advice to our European clients. of Christie + Co office locations during 2007, Our specialist European agency and advisory becoming our fifth German operation. A teams communicate frequently and meet Pan-European advisory activity further new office will be opening in Rennes, regularly. Having established successful Our International Advisory team has also Brittany, in January 2008, and Christie + Co’s and cooperative relationships with their grown in both strength and reputation during first Scandinavian office is planned for Helsinki colleagues, our agents share their market 2007. The highly experienced consultants and in the spring. knowledge and work together to identify valuers we employ are widely respected suitable acquisition, disposal and within their fields and, as well as receiving The opening of these new offices will development opportunities. numerous advisory assignments, they are further improve Christie + Co’s geographical often invited to contribute to international coverage, providing a local presence to industry events and forums. help ensure that our customers continue to receive the best possible service.

HAMBURG Delivering business intelligence to our international markets

56 Our casestudies: Yugoslavian navyinTivat,Montenegro. Montenegro developmentattheformerbaseof end luxuryresorthoteltoformpartofthePorto provide developmentadviceforaproposedhigh- conduct anindependentfeasibilitystudyand PM SecuritiescommissionedChristie+Coto Proposed luxuryresorthotel,Kotor,Montenegro aparthotel brand–Element. in ordertoevaluatethepotentialfortheir project intheUK,France,AustriaandRussia, Group toconductafocusedmarketresearch Christie +Co’sInternationalHotelAdvisory Starwood Hotels&Resortscommissioned Market ResearchintoaparthotelsinEurope LONDON | BARCELONA | BERLIN | DUSSELDORF ‘embassy district’ofRiga. a sitelocatedonKatrinaStreet,closetothe study foraproposed150-roommid-markethotelat developer, KVGroupaSIAtoconductafeasibility Christie +CowascommissionedbyLatvian Mid-market hoteldevelopment,Riga,Latvia Hyatt toagreeamanagementcontract. development aswellinnegotiationswith was usedtosecurefinanceforthemixed-use 165-room HyattRegencyhotelinRiga.Thestudy to conductafeasibilitystudyforproposed Christie +CowasinstructedbySIATangoProjekts Proposed HyattRegencyhotel,Riga,Latvia | FRANKFURT | HAMBURGMADRID | MARSEILLES development. other facilities,whichwouldmakeupthe recommendations forthemixofluxuryvillasand proposed luxuryresortonSamos,producingclear establish theoptimumtradingperformanceofa Christie +Cotoconductafeasibilitystudy An independentdevelopercommissioned Greek IslandofSamos Proposed luxuryresortonthe Krakow, Poland. mid-market hotelinthehistoriccityof an independentfeasibilitystudyforaproposed Group wasinstructedbyJurysInntoconduct Christie +Co’sInternationalHotelAdvisory Jurys Inn,Krakow,Poland | MUNICH www.christiecorporate.com | PARIS | RENNES 57

INTERNATIONAL AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

New office in Rennes Budget sector consolidation Having opened an office in Marseilles during Although the luxury hotel market has 2006, in order to strengthen our position historically attracted the greatest amount of in the South of France, we are pleased to investor interest, the budget sector continues announce the opening of a new office in to gain popularity. Occupancy levels within Rennes, Brittany, in January 2008. The hotel budget hotels are consistently high and the market in Brittany has been particularly active sector is therefore much more robust than the in recent years, with the area attracting mid and luxury markets, where occupancy visitors and hotel investors from both the levels are much more liable to fluctuate. Channel Islands and the UK. The new Rennes office will enable us to serve the needs of As the budget sector continues to thrive, our growing number of clients in Brittany, with property values increasing, we have and also throughout western France. witnessed considerable consolidation during 2007, which has resulted in a reduction in the number of budget brands. In January, B&B Hotels acquired a portfolio of 57 Villages Hotels and, in November 2007, Christie + Co acted for CBRE Investors in the acquisition France of Bonsaï International Group.

During 2007, Christie + Co consolidated its position as the leading broker within the budget and mid-market hotel sector. Having previously been involved in the sale of Mister Bed, Marmotte and Jardins de Paris, we acted for CBRE Investors in the acquisition of a portfolio of 19 Bonsaï Escale, Bonsaï Etape and Bonsaï Relais-branded hotels.

58 www.christiecorporate.com

Montparnasse Hotel – Paris

The portfolio of 19 Bonsaï hotels, totalling Landmark properties in Paris attract a Christie + Co was also involved in one of 1,000 bedrooms, was bought through CBRE particularly wide investor audience, as do the other major portfolio transactions of Investors’ acquisition vehicle Dynamique prestigious hotels on the French Riviera. In 2007, acquiring a portfolio of 10 Jardins de Hotels, for an undisclosed sum. June 2007, Christie + Co sold the 152-bedroom Paris hotels on behalf of a private investor. Sofitel Nice to INVESCO Real Estate. This hotel Following these acquisitions, there are now was subsequently let to NH Hotels of Spain. Restaurants and bars very few independent budget brands, such The Parisian bar and restaurant market as Quick Palace and Brit Hotels, and we can Aggressive acquisitions continues to be buoyant, where entry-level expect the pace of transactions within this Investment activity has recently been driven sandwich shops are particularly popular. As sector to slow down during 2008. by CBRE Investors’ Dynamique Hotels, which an increasing number of people have moved made a number of acquisitions during 2007 out into the suburbs, the capital’s boundaries International investors target to quickly become the fourth largest hotel are expanding, with new restaurants opening French hotels chain in France. Having previously acquired on the outskirts of the city. The vast majority The French hotel market has attracted a hotel portfolios from Akena, Groupe Soghest of bars and restaurants are in independent greater number of foreign investors in and Géo, Dynamique Hotels’ recent ownership and Christie + Co completed a recent years. Following Starwood Capital’s acquisitions have included the 95-bedroom number of individual transactions during 2007. acquisition of Louvre Hotels (Concorde Hotels Royal Mirabeau hotel in Aix-en-Provence, & Resorts and Envergure) in 2005, a number the RMH group, comprising Balladins hotels of other French portfolios and single assets with its 32 subsidiaries and 125 franchisees, have been acquired by foreign investors. and the previously mentioned portfolio of 19 Bonsaï hotels.

Our case studies:

Hotel Sofitel, Nice Bonsaï portfolio Jardins de Paris Following a competitive bidding process, Christie + Co acted for CBRE Investors in the Christie + Co acted on behalf of a private investor Christie + Co sold the 152-bedroom acquisition of a portfolio of Bonsaï Escale, Bonsaï to acquire a portfolio of 10 Jardins de Paris hotels. Hotel Sofitel in Nice to INVESCO Real Etape and Bonsaï Relais-branded hotels. The The hotels, which provide a total of 430 bedrooms, Estate. The renowned 4-star hotel was portfolio of 19 hotels, totalling 1,000 bedrooms, was occupy prime trading locations, across the heart of subsequently let to NH Hotels of Spain. bought through CBRE Investors’ acquisition vehicle Paris and the city’s inner suburbs. Dynamique Hotels, for an undisclosed sum.

59 INTERNATIONAL AGENCY | VALUATION SERVICES | INVESTMENT | CONSULTANCY

Consolidation at Christie + Co Christie + Co’s German operation has Good geographical coverage is of particular The majority of German hotel transactions are expanded rapidly since the first office opened importance in Germany, a country that has driven by US private equity and, although the in Frankfurt in 1998. Our network of offices, a number of competing “capital” cities with cost of deal financing has increased, equity in Berlin, Dusseldorf, Frankfurt, Hamburg thriving hotel industries. In addition to Berlin is still available to enable hotel transactions and Munich, provides excellent geographical — the official capital and largest city — to take place. Hotel development is also coverage and we are now focusing on Dusseldorf, Frankfurt, Hamburg, Munich and becoming more common, following a period of consolidation — employing additional Stuttgart are all well-established economic relative inactivity, and we have undertaken a sector specialists to complement our existing and cultural centres, which all have different large number of feasibility studies during 2007. experience and improve the strength of specialist industries. our brokerage and advisory teams. Care sector attracts interest The German economy is currently in upswing As we have already mentioned within the and although the credit crisis has slowed this Care section of Business Outlook, the German economic growth, the outlook for the hotel care market has attracted increasing interest market remains positive. Hotel occupancy from UK investors during 2007. The market and RevPAR in Germany are currently lower is currently very fragmented and, as than the European average, but they are both Christie + Co has a thorough understanding on the increase, ensuring that investor interest of the legal and economic environment, as is maintained. well as an awareness of the key players, we have frequently been called upon to provide specialist property and operational advice to clients within this dynamic sector. We look forward to undertaking additional care sector Germany advisory and brokerage projects during 2008. Christie + Co’s successful German operation continues to expand and we opened our fifth office in Hamburg in May 2007. Our decision to establish a presence in the Hanseatic city, which is Germany’s second largest, has been rewarded with the completion of numerous hotel transactions.

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Ibis Hotel, Reinickendorf – Berlin

Healthy hotel market in Hamburg Activity in Saxony Christie + Co’s reasons for opening an office The health of Hamburg’s hotel market is One of the other key areas of hotel sector in Hamburg are clear, as the city’s hotel further evidenced by the transactions development is Saxony, with Dresden and market continues to thrive. As well as hosting completed by Christie + Co during 2007. Leipzig witnessing some of the greatest many conferences, exhibitions and sporting Acting on behalf a German investment fund, increases in RevPAR in recent months. Recent events, Hamburg’s hotel trade is also we sold the 303-bedroom Maritim Hotel transactions completed by Christie + Co in supported by its many weekend visitors. Reichshof, which is located in the heart Saxony include the sale of two hotels in Christie + Co conducted a survey of the of the city. The hotel was acquired by the Leipzig, which had 110 and 72 bedrooms, and market during the first half of 2007, US-based Blackstone Group following a the sale of a 160-bedroom hotel in Dresden. questioning approximately 70 owners, competitive process. This transaction was lessees and operators across a whole range followed by the sale of the leasehold interest of hotel businesses. The survey revealed in the 100-bedroom Graf Moltke Hotel, which that hoteliers believe the Hamburg market was acquired by an experienced local is at its most buoyant for some time, with operator. Finally, we acted on behalf of occupancy levels and room rates increasing. Starman Hotels in the sale of Le Meridien Hamburg, which was acquired by Fattal Hotels following a structured auction process.

Our case studies:

Maritim Hotel Reichshof Holiday Inn hotels Feasibility studies in Germany and Austria Acting on behalf of a German investment fund, Christie + Co acted for Zech Hotel Holding Acting on behalf of a large German development Christie + Co sold the 303-bedroom Maritim GmbH in the sale of the two business hotels company, Christie + Co conducted feasibility Hotel Reichshof, which is located in the heart in Neu-Isenburg and Essen, comprising 164 studies, which considered the development potential of Hamburg, to the US-based Blackstone Group. and 168 rooms respectively. Both properties, of hotels in various locations in Germany and which are operated under the Holiday Inn Austria — including Munich, Hamburg, Berlin, brand, were acquired by LB Immo Invest. Dresden, and Vienna.

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Increasing demand for city hotels Over the past few years, Spanish city hotel As the country’s capital and main financial These include a new International Convention property has increased in popularity and centre, Madrid attracted a large number of Centre, which is currently under construction this trend continued throughout 2007. In business visitors and generated high midweek in Madrid, and a new terminal at Barcelona’s September, Christie + Co joined research occupancy levels and ARRs during 2007. Hotel El Prat airport, which is expected to expand forces with The Bench, which provides trade in Barcelona was more consistent, with annual traffic from 30 million to 55 million benchmarking data to more than 34,000 weekend leisure visitors complementing the passengers when it opens in 2009. hotels worldwide, to produce a short analysis midweek commercial demand. The Catalan of the hotel markets in Madrid and Barcelona. capital also enjoyed reasonably consistent As Madrid and Barcelona offer such Both cities have exhibited strong growth in demand throughout the calendar year, encouraging trading environments, with future RevPAR and average room rates (ARR) whereas Madrid reported a dip in midweek growth predicted, it’s unsurprising that throughout 2006 and into 2007. trade during the summer holiday months. demand for hotel property, from both Spanish and international investors and operators is Although average hotel occupancy levels in high. Despite this fact, we witnessed a limited both cities are relatively stable, demand is number of hotel transactions in Madrid and predicted to increase in the future as a result Barcelona during 2007 — simply because of some major developments. of the shortage in supply. In the absence of opportunities in Spain’s two largest cities, acquisitive hotel operators have been prompted to target secondary cities, including Valencia, which is also beginning Spain to grow in popularity. During 2007, demand for city hotels continued to increase, particularly in Madrid and Barcelona, where it is rare for hotel assets to come onto the market. Many of the hotel companies, which have previously been most active in coastal resorts, are now looking to acquire property in Spain’s primary and secondary cities.

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Café Kilimanjaro – Barcelona

Coastal tourist destinations Activity in the bar and restaurant sector Unlike the coastal resorts on the Spanish The hotel market in the Canary Islands is Christie + Co’s activity within the bar mainland, which attract some domestic much more challenging than it is in the and restaurant sector is focused on Madrid, customers, the Balearic Islands depend largely Balearics. Occupancy levels are low and Barcelona and the surrounding areas, on foreign tourist trade, particularly from the ARRs are also poor. Thousands of hotels are where the markets continued to be buoyant UK and Germany. World events took their toll in need of refurbishment and the islands’ during 2007. on the Balearic hotel market during 2003 and tourist destinations have been struggling 2004, but the islands’ tourist industry has to compete with other emerging markets to Madrid has historically been much more shown clear signs of recovery during 2007. attract visitors. Christie + Co has received traditional than Barcelona, in terms of a number of instructions to confidentially concepts and offerings, but the city’s Most of the Balearic tourist resorts are well- market hotel assets on the Canary Islands, restaurant market has developed recently, established and extensively developed so the some of which are large resorts with between with some more fashionable outlets opening. focus during 2007 has been on refurbishment 200 and 400 rooms. There is a moratorium and redevelopment. Some assets were offered on hotel development in the Canary Islands, Although restaurant chains are looking to to the market during the year, as hotel so the sale of these larger assets provides increase their presence in Spanish cities, companies rationalised their estates. These investors with an opportunity to enter the vast majority of bars and restaurants included a few properties that were suitable the market, refurbish the property and in Spain are still independently operated for conversion to residential use, which reposition the business. and Christie + Co was responsible for generated higher sale prices. brokering a number of individual business transactions during 2007.

Our case studies:

Hotel Misiana Hotel Santiago Barcelo Hotels & Resorts Christie + Co sold the Hotel Misiana in Cadiz to Christie + Co brokered the sale of a new hotel In December 2007, Christie + Co was instructed, a private investor from the UK. The boutique hotel, development in Leon. The 140-bedroom Hotel by Barcelo Hotels & Resorts, to sell a portfolio which has 12 double bedrooms and one suite, is Santiago was acquired by a local developer, who of five hotels in the Balearics and the Canary located in the historic centre of the city. already owns and operates two hotels in the area. Islands with a total of 1,870 bedrooms.

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1 Birmingham 8 Ipswich 15 Newcastle Edgbaston House, 3 Duchess Place Wolsey House, 16-18 Princes Street Shakespeare House Hagley Road, Birmingham B16 8NH Ipswich IP1 1QT 18 Shakespeare Street T: 0121 456 1222 T: 01473 256588 Newcastle Upon Tyne NE1 6AQ F: 0121 455 0114 F: 01473 230071 T: 0191 222 1740 E: [email protected] E: [email protected] F: 0191 222 1749 E: [email protected] 2 Bristol 9 Leeds Embassy House, Queens Avenue Aquis House, Greek Street 16 Nottingham Clifton, Bristol BS8 1SB Leeds LS1 5RU Alan House, Clumber Street T: 0117 946 8500 T: 0113 389 2700 Nottingham NG1 3ED F: 0117 946 8501 F: 0113 389 2701 T: 0115 948 3100 E: [email protected] E: [email protected] F: 0115 948 3865 E: [email protected] 3 Edinburgh 10 London Central 5 Logie Mill, Beaverbank Office Park 10 Finsbury Square 17 Winchester Logie Green Road, Edinburgh EH7 4HG London EC2A 1AD Star Lane House, Staple Gardens T: 0131 557 6666 T: 020 7638 7777 Winchester SO23 8SR F: 0131 557 6000 F: 020 7448 9844 T: 01962 844455 E: [email protected] E: [email protected] F: 01962 840171 E: [email protected] 4 Enfield 11 London Corporate Lough Point, 2 Gladbeck Way 39 Victoria Street Enfield EN2 7JA London SW1H 0EU 11 Christie Corporate Finance T: 020 8370 3100 T: 020 7227 0700 39 Victoria Street F: 020 8370 3101 F: 020 7227 0701 London SW1H 0EU E: [email protected] E: [email protected] T: 020 7227 0780 F: 020 7227 0704 5 Epsom 12 Maidstone E: [email protected] Oaks House, 12-22 West Street Vaughan Chambers, 4 Tonbridge Road Epsom KT18 7RG Maidstone ME16 8RP 10 Christie Finance T: 01372 731330 T: 01622 656000 10 Finsbury Square F: 01372 731331 F: 01622 656001 London EC2A 1AD E: [email protected] E: [email protected] T: 0844 4124944 F: 0844 4124925 6 Exeter 13 Manchester E: [email protected] Kings Wharf, The Quay Acresfield, St. Ann’s Square Exeter EX2 4AN Manchester M2 7HA 10 Christie Insurance T: 01392 285600 T: 0161 833 3311 10 Finsbury Square F: 01392 285601 F: 0161 835 2949 London EC2A 1AD E: [email protected] E: [email protected] T: 0844 4124924 F: 0844 4124925 7 Glasgow 14 Milton Keynes E: [email protected] 120 Bath Street Chancery House, 199 Silbury Boulevard Glasgow G2 2EN Milton Keynes MK9 1JL T: 0141 352 7300 T: 01908 300950 F: 0141 352 7301 F: 01908 300951 E: [email protected] E: [email protected]

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