PRIME CITY CENTRE OFFICE INVESTMENT

Capital Quarter Cardiff | CF10 4BZ Investment Summary

Opportunity to acquire a prime new multi-let office investment in the heart of Cardiff city centre within close proximity to Cardiff Central Station, the prime retail core and flagship John Lewis store.

Cardiff is Wales’ capital city and one of the major regional centres in the UK.

Capital Quarter is a high profile, mixed use development located in the heart of the Cardiff’s prime office core. It forms an integral part of the Cardiff Central Enterprise Zone with Central Square and Callaghan Square.

No 2 Capital Quarter is regarded as one of the “trophy buildings” in Cardiff, and has been built to a high specification and BREEAM Seeking offers in excess of £23,200,000 (Twenty Three Million, Excellent standard. Two Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level would reflect an attractive Net Initial No 2 Capital Quarter comprises 84,759 sq.ft. over 7 storeys with open plan, flexible floor plates, 18 car parking spaces on site and a Yield of 6.41%, after deducting standard purchasers costs of 6.75%, new private multi-storey car park (296 spaces) opposite. and a low Capital Value of £274 per sq ft. Multi let with two occupational tenants, Public Health Wales and Opus Energy, with a WAULT of 8.59 years to lease expiries (7.81 years to break options).

Current rent of £1,586,506.05 per annum which equates to a low average rent of £19.34 per sq. ft.

Prime rents in Cardiff are now established at £25 per sq. ft. making No 2 Capital Quarter look significantly reversionary.

Subject to Contract & Exclusive of VAT A4232 TO M4 J 33

CARDIFF CITY FOOTBALL GROUND

SWALEC CRICKET GROUND

ROYAL WELSH COLLEGE OF MUSIC & DRAMA PRINCIPALITY STADIUM

P CARDIFF CASTLE CIVIC CENTRE

HILTON HOTEL CENTRAL SQUARE CARDIFF CENTRAL STATION BRAINS BREWERY QUEEN STREET SHOPPING PRECINCT PARK PLAZA HOTEL P ST DAVID’S HALL P P

MARRIOTT HOTEL CAFE QUARTER ST DAVID’S 2 P SHOPPING CENTRE

RADISSON HOTEL JOHN LEWIS CALLAGHAN SQUARE CINEWORLD CINEMA ADMIRAL INSURANCE HQ P

MOTORPOINT ARENA

P QUEEN STREET STATION

TO CARDIFF BAY CAR PARK

Capital Quarter CAPITAL QUARTER Cardiff | CF10 4BZ DEVELOPMENT P UNIVERSITY NO 1 CAPITAL QUARTER OF SOUTH WALES SMART BRIDGE

P

ETAP HOTEL Location Cardiff is the Capital City of Wales and has a population of over 300,000 with a further 1.2 million within a 45 minute travel time of the City Centre. The City is strategically located approximately 150 miles (240km) west of London, 106 miles (171km) south west of Birmingham and 43 miles (69km) west of Bristol. Cardiff benefits from excellent road links and can be accessed from four junctions of the M4 Motorway (29-33). Cardiff International Airport is located 12 miles (19km) to the south west of Cardiff City Centre and offers scheduled flights to a number of European destinations. Cardiff Central Railway Station provides intercity rail services to London Paddington approximately twice an hour with a journey time of 2 hours and 3 minutes. Cardiff is one of the UK’s premier business locations attracting numerous national and global companies including Admiral Insurance, Eversheds, Zurich, Atradius, Legal & General, MotoNovo, Deloitte, BT and the BBC. Cardiff is a popular tourist destination attracting millions of additional visitors every year. There are numerous attractions including the iconic Principality Stadium, Cardiff Castle, Cardiff Bay and the Cardiff International Sports Village. Cardiff has an established retail core which includes major shopping centre, St.Davids 2, which was completed in 2009. This development, together with the original St Davids Shopping Centre, comprises a combined 1.4 million sq ft of retail space, including a 260,000 sq. ft. John Lewis store. This retail development has elevated Cardiff firmly into the top 10 of the UK’s retail hierarchy and has an estimated annual footfall of 35 million people. Capital Quarter - JR Smart

SMART BRIDGE SMART Capital Quarter Master Plan Finance Wales Alert Logic WSP Network Rail Home Office Kin & Ilk Coffee Shop

Multi Storey Car Park STREET ARY 296 spaces EM N Ready S O Viridis September Viridis R Students 2017 Students John Street Capital Quarter 300,000 sq. ft. Office 80,000 sq.ft. Equiniti

NORTH SOUTH PEDESTRIAN ROUTE Eastern 95,000 sq.ft. Office Courtyard Office / Western Residential Courtyard Apartments

EAST WEST PEDESTRIAN ROUTE CANAL Ready

ACCESS ROAD ACCESS Viridis Viridis September Brookfield Students Students 2017 Utilities UK

Ready for Ready for STREET ELLEN Spring 2018 December 2018

100,000 sq.ft. 75,000 sq.ft. 82,000 sq.ft. Herbert Street Office Office Office 674 Student Beds Atlantic University of House Capital South Wales Law

HERBERT ST Public Health Wales OPUS Energy TYNDALL STREET

Key Completed Etap Hotel Under Construction Novotel Hotel Outline/Detailed Planning Atlantic Wharf Total Phase 2 Capacity 270,000sq.ft.

Situation Capital Quarter has quickly established itself as one of the premier office addresses in the city and forms part Capital Quarter is situated on Tyndall Street in the heart of Cardiff city centre and forms part of the Cardiff of the prime office core with both Callaghan Square and Central Square within close proximity. There are Central Enterprise Zone. It comprises an exciting 10 acre mixed use development including Grade A offices, over 1,000 employees onsite and nearby occupiers include Eversheds, HSBC, WSP, Finance Wales, Admiral, student housing, residential and private multi storey car park. Network Rail, Home Office, Equiniti, Deloitte and Brookfield Utilities UK. It is strategically located within easy walking distance of Cardiff Central Railway Station, the main transport hub Following the letting success of Nos. 1 & 2 Capital Quarter, developers JR Smart are now in the process of in Cardiff. In addition the prime retail core, including the flagship John Lewis department store, and other city speculatively developing No 3 and No 4 Capital Quarter on the adjacent plot. No 3 will comprise a new centre amenities are just a few minutes walk away, accessed via the new £2.5m Smart Bridge which crosses the 75,000 sq.ft. Grade A office building with practical completion forecasted for early 2018. No 4 will comprise a main railway line. The Smart Bridge enhances the accessability of Capital Quarter to Queen Street station and new 100,000 sq.ft. Grade A office building with practical completion forecasted for December 2018. the Valley Lines network. In addition there is also significant student development taking place on site. Viridis are constructing 600 high quality beds, that will be delivered in 2017 and Fusion have just gone onsite to deliver 674 beds which are expected to be delivered in September 2019. Cardiff City Centre Infrastructure Initiatives Central Square – The commitment from Legal & General to Welsh Governments Acquisition of Cardiff Airport - Welsh Cardiff City Council and Welsh Government have acknowledged that the the Central Square regeneration scheme reflects the improving Government have acquired the airport in order to boost its profile future growth of the Welsh economy is dependent on a strong and vibrant confidence in Cardiff as a centre of growth and opportunity. The and increase the number of airlines and routes around Europe and Capital City. The Enterprise Zone is just one of numerous initiatives which scheme will have a potential capital value in the order of £400 internationally to further improve Cardiff’s domestic and global form part of a detailed Master Plan for the City which will vastly improve million when fully completed. The first phase of office development, connectivity. One Central Square was completed in Q1 2016 while the BBC the infrastructure and boost the economic profile of Cardiff to firmly International Convention Centre & Arena – Work is underway to Wales relocation of its 165,000 sq. ft. Headquarters Building, which consolidate its position as one on the major regional centres in UK. These construct a new Convention Centre at Celtic Manor Resort in Newport. forms the centre of this regeneration area, is under construction initiatives include: In addition sites in Cardiff have been earmarked as a potential location for with occupation targeted by 2019. Rents of £25 per sq.ft. are being a new state of the art arena with a capacity of 10,000+. Cardiff Capital Regional City Deal - In March 2016 Cardiff was one of achieved. 10 local councils to sign the Cardiff Capital Regional City Deal (CCR). The Academic Profile – Cardiff University, which is already within the Russell Electrification of the main intercity rail line - This will CCR is a regional investment vehicle aiming to bring together region wide Group, continues to grow and raise its global academic profile. Increasingly improve Cardiff’s connectivity via faster journey times to London infrastruture projects. With a gross value of £1.2 billion, projects include the secondary office buildings in the City Centre are being converted to with the work scheduled to be completed by 2019. electrification of the South Wales Valley rail network, a metro system worth student housing to accommodate the increasing number of students and £734 million, creation of 25,000 jobs in the region and a new innovation Investment in Cardiff Central Railway station - Plans to the increase in demand for this sector from investors. The City has a hub development. create new civic scaled public squares to the north and south of the resident population of approximately 350,000, which is swelled by over Cardiff Central Enterprise Zone - The established Cardiff Central station as high quality arrival spaces and “gateways” to the City. Work 75,000 full-time students from the City’s expanding higher education Enterprise Zone is centred on the Cardiff Central Railway Station and is has already been completed at the south side of the station. sector, to include Cardiff University, Cardiff Metropolitan University, University of South Wales and the Royal Welsh College of Music and the only Enterprise Zone in the UK dedicated to attracting and growing the Improved connectivity between the city centre and Cardiff Drama. financial and professional services sector. Bay - One of the proposals is for a new tram link along the south side of Callaghan Square. Description No 2 Capital Quarter was completed in 2016 and comprises a 84,759sq ft, 7 storey, high specification, Grade A office building. The building offers open plan, flexible floor plates ensuring the building could be single or multi let plus an impressive ground floor reception and atrium, including a Kin & Ilk coffee pod for the tenants exclusive use.

• BREEAM Excellent • EPC Rating of A25 • VRF air conditioning heating & cooling system & mechanical ventilation to all office areas • 3 x10 person lifts and 1x13 person lift • 2.7m floor to ceiling height • Full accessed raised floors • Suspended ceilings • Male/female and disabled toilet facilities on each floor • Shower facilities within the building • 18 onsite car parking spaces plus cycle spaces • DDA Compliant • LG7 lighting throughout • Ground Floor Kin & Ilk Coffee Pod • Roof terrace

There are few offices in Cardiff that are able to rival the quality of construction and specification of No 2 Capital Quarter and consequently it is regarded as one of the Citys’ “trophy buildings”. Accommodation The offices have been measured in accordance with the RICS Code of Measuring Practise (6th Edition) and comprise the following Net Internal Areas:

Demise Description Sq m Sq ft Ground Floor Reception­­­ 253.62 2,730 11785 No2 Cap Quarter Broch 24p.qxd_No 2 Brochure- 27/10/2016 11:34 Page 14 Ground Floor Offices 438.64 4,715 Floor 1 Offices 1,148.47 12,362 Floor 2 Offices 1,249.82 13,453

Floor 3 14Offices 1,249.82 13,453 Floor 4 Offices 1,249.82 13,453 Floor 5 Offices 1,247.78 13,431 Floor 6 Offices 1,036.98 11,162 Total 7,874.95 84,759

Office Office

Office Office Office Space

Office Office Central Atrium Atrium Office Office

Office Office

Office Office

Services & Parking Reception Meeting Room

Typical Floor layout

Tenure Freehold. Tenancy The property is multi tenanted on full repairing and insuring terms as set out in the tenancy schedule below. The total rent is £1,586,506.05 per annum, reflecting an average rent of £19.34 per sq ft, with a Weighted Average Service Charge Unexpired Lease Term (WAULT) to lease expiries of 8.59 years and 7.81 years to break options. There is a full service charge budget being administered by the landlord. Full details are available Vendor to top up all current rent free incentives, but not any future rent free payments that become payable. upon request.

Tenancy Schedule

Floor Tenant Area Lease Start Lease Expiry Term Yrs Break Options Rent per annum Rent per Sq ft Comments

Ground Floor Rent Guarantee 4,715 1 Year £94,300 £20.00 1 year rent guarantee. Proposal out to potential tenant. 9 months rent free. A further 6 months rent free is payable if they do not exercise First Floor Opus Energy 12,362 07/07/2016 06/07/2026 10 07/07/2021 £247,240 £20.00 their 5 year break. Second Floor Rent Guarantee 13,453 1 Year £269,060 £20.00 1 year rent guarantee. Proposal out to potential tenant. 30 months rent free taken as a half rent for the first 5 years of the term. Third Floor Public Health Wales 13,453 01/07/2016 30/06/2028 12 £254,934.35 £18.95 5 yearly upward only rent review. 1st Review capped at £19.95 per sq.ft. 30 months rent free taken as a half rent for the first 5 years of the term. Fourth Floor Public Health Wales 13,453 01/07/2016 30/06/2028 12 £254,934.35 £18.95 5 yearly upward only rent review. 1st Review capped at £19.95 per sq.ft. 30 months rent free taken as a half rent for the first 5 years of the term. Fifth Floor Public Health Wales 13,431 01/07/2016 30/06/2028 12 £254,517.45 £18.95 5 yearly upward only rent review. 1st Review capped at £19.95 per sq.ft. 30 months rent free taken as a half rent for the first 5 years of the term. Sixth Floor Public Health Wales 11,162 01/07/2016 30/06/2028 12 £211,519.90 £18.95 5 yearly upward only rent review. 1st Review capped at £19.95 per sq.ft. Total 82,029 £1,586,506.05 Covenant Profile

Public Health Wales NHS Trust Public Health Wales provides professionally independent public health advice and services to protect and improve the health and wellbeing of the population of Wales. As a Public Body they are of undoubted covenant strength. For further information please see their website http://www.wales.nhs.uk/sitesplus/888/home

Opus Energy Limited Opus Energy is one of the UK’s leading business energy suppliers, ranked 19th in the Sunday Times Top Track 250 and currently 6th in the B2B energy market. The company has over 700 employees in its Northampton and Oxford-based offices, and have just launched their new Cardiff base at the subject property. Over 240,000 business sites across the UK are powered by Opus Energy, including White Stuff, Paperchase, First Group and Virgin Media. In addition to supplying power, the company also purchases power from over 2,000 independent renewable energy generators in the UK. Opus Group were acquired by Drax Group in early 2017. Drax Group are a FTSE 250 company listed on the London Stock Exchange and is one of the UK’s largest energy producers, employing 2,400 people across electricity generation, energy supply and compressed wood pallett manufacturing. Opus Energy Limited have a Dun & Bradstreet rating of 4A1 and their last three years published accounts are as follows:

31 March 2016 31 March 2015 31 March 2014 GBP (000’s) GBP (000’s) GBP (000’s) Sales Turnover 360,631 347,041 301,876 Profit Before Taxes 17,613 18,659 15,747 Tangible Net Worth 31,482 30,814 26,651 Net Current Assets 26,687 28,315 24,491

For further information please see their website http://www.opusenergyblog.com/ Prime Rents Prime Rent £ per sq ft Cardiff Office Market Prime Rents Prime Rents £ per sq ft Cardiff is the principal office market within Wales, and one of the major regional centres in the UK, with an £32.00 0% estimated office stock of approximately 11 million sq. ft. 40.00 In recent years, the Central Business District (CBD) has migrated from the eastern side of the city and £33.00 35.00 16% is now focused on the areas surrounding Cardiff Central Railway Station which includes Central Square, 30.00 £29.50 £22.00 25.00 Callaghan Square and Capital Quarter. This movement in the CBD has been a major catalyst in the 0% 2% 20.00 conception of Capital Quarter which lies at the heart of the CBD and Cardiff’s Enterprise Zone. £26.50 2% 15.00 £34.00 Currently, the City Centre office market is focused around Central Square, Callaghan Square, Capital 6% 10.00 £23.00 5.00 Quarter which together extends to circa 700,000 sq ft of Grade A office accommodation. Callaghan 15% £31.50 0.00 Square provides five buildings let to tenants such as Eversheds, Brewin Dolphin, HSBC, Centrica and 5% £28.50 f Deloitte while Capital Quarter consists of over 200,000 sq. ft. within No 1 & 2 Capital Quarter as well as 0% field £25.00 BristolCardi f Leeds 15% Glasgow Shef Driscoll Buildings. Aberdeen Edinburgh Newcastle Q2 Prime Rent & Growth% Birmingham Manchester Central Square is being developed by Rightacres and Cardiff City Council and funded by Legal & General. last 12 months. This scheme will have a potential Capital Value in the order of £400m, when fully completed. The first phase of office development, One Central Square, completed in 2016 and is fully let with rents ranging Regional Investment Comparables between £21.00 per sq ft and £25.00 per sq ft. In addition BBC have committed to occupying a new Property Area Price Net Capital WAULT Tenant Purchaser Date (sq ft) (£m) Initial Value (Years) 165,000 sq ft Foster & Partners designed office building, with completion due in 2018, by 2019. Yield (per sq ft) Grade A supply is at a low level in the city at around 150,000 sq ft with just 100,000 sq ft in the City 111 Edmund Street, 44,769 £22,544,750 5.00% £504 14.9 Gateley Overseas February 2017 Centre. The lack of Grade A supply has encouraged further development in the City with Two Central Birmingham Investor Square, a 145,000 sq ft speculative Grade A development to the north of Cardiff Central Station, and No 3 No 1 Capital Quarter, Cardiff 77,992 £21,000,000 6.65% £268 5.5 Multi-let Undisclosed October 201 Capital Quarter, a new 75,000 sq ft speculative Grade A office development in Capital Quarter, both under Waverley Gate, Edinburgh 204,514 £63,000,000 5.69% £308 5 Multi-let Triuva August 2016 construction and expected to be delivered in early 2018. Two tenants have already committed to all the Sovereign Square, Leeds 93,851 £43,750,000 5.42% £466 17.5 Addleshaw Leeds City July 2016 space in Two Central Square, with Cardiff University taking circa 50,000 sq ft on a 25 year lease and Hugh Goddard LLP Council James taking100,000 sq ft on a 15 year lease. Both ahve signed at a rent of £25 per sq ft. 4 Hardman Square, 58,362 £31,000,000 4.95% £571 5 Multi-let Orchard July 2016 Manchester Street With the current lack of Grade A supply there is evidence showing a decrease in the level of incentives Bridgewater House, Bristol 114,597 £56,300,000 5.36% £491 8.7 Multi-let Private April 2016 required to secure Grade A lettings. This trend along with the current initiatives being undertaken to Investor improve the economic profile and infrastructure of Cardiff, and the discount between it and other major 1 Byron Place, Manchester 32,464 £14,400.000 5.4% £444 10 JMW Canal & April 2016 regional centres, should help drive rental growth in Cardiff going forward. Solicitors River Trust Cardiff was the only major regional UK office market to see growth in headline rents during the downturn XYZ Building, Manchester 156,970 £85,000,000 4.75% £545 10 Multi-let Union April 2016 Investment with rents rising in 2009 to £21.00 per sq ft and £22.00 per sq ft in 2012. This has now grown further in 2016 to £25.00 per sq ft but it is important to note the rental discount to nearby Bristol where prime rents No 1 Kingsway, Cardiff 68,372 £18,150,000 6.58% £265 4.1 Multi-let Undisclosed February 2016 are at £28.50 per sq. ft. and Birmingham at £31.50 per sq ft. This is a significant discount and is a key driver 3 & 4 Callaghan Square, Cardiff 112,024 £32,125,000 6.13% £287 7.93 Multi-let Deutsche Bank January 2016 in attracting new occupiers to Cardiff, Wales’ Capital City. Wellbar Central, Newcastle 117,679 £40,000,000 6.00% £340 5.38 Multi-let Orchard January 2016 Street

Cardiff & Regional Investment market Meridian Court, 65,822 £23,850,000 6.01% £362 8 Scottish Private December The regional investment market continues to attract strong interest from a diverse range of domestic and Glasgow Ministers Overseas 2015 international investors who view it as good value compared to the Central London and South East markets. These investors are generally chasing modern, well located offices situated in core locations in the major regional centres. As the Capital of Wales, Cardiff is regarded as one of the major centres in the UK and is Capital Allowances the focus for investor demand for offices. Information to be provided on request. Investors are being increasingly attracted to Cardiff by the infrastructure improvements and the major developments/regeneration projects which are under way. The drive by the public sector to attract more VAT occupiers and the attractive demand/supply dynamics, which is driving rental growth, will all have a positive The property is elected for VAT. It’s anticipated the transaction will be treated as a Transfer of a Going impact on the Cardiff office and investment markets. Concern (TOGC). This demand was particularly evident with the sales of No 1 Capital Quarter and 3 & 4 Callaghan Square EPC in 2016, which both secured strong interest from a diverse range of investors, including Pension Funds, No 2 Capitial Quarter has an EPC rating of A25. A copy of the report is available on request. No 2 Capital Opportunity Funds and Overseas Investors. Quarter is one of only two prime office buildings in Cardifff with an EPC Rating of A. Investment Considerations • Cardiff is the Capital City of Wales and one of the major regional centres in the UK. • Current rent of £1,586,506.05 per annum reflects an average rent of £19.34 per sq ft which looks low when compared to the prime rents for Cardiff offices • Freehold. of £25 per sq ft. • Located in the heart of the city centre within close proximity to Cardiff Central Station, • Rents at Capital Quarter have already reached £20 per sq. ft. and are set to grow further as the prime retail core and the flagship John Lewis department store. future phases of the Capital Quarter development progress. • Located in the established Cardiff Central Enterprise Zone - the only Enterprise Zone in • No 3 and No 4 Capital Quarter are now under construction on the plot opposite and will the UK dedicated to growing and attracting the financial and professional service sectors. further establish the location and drive rental growth. Quoting rents are £22.95 per sq. ft. • Capital Quarter is fully established as one of the premier business addresses in Cardiff. • Vacant floors offer the opportunity to drive the rental tone and add further value. Circa 1,000 employees already at Capital Quarter. • Existing tenants have expressed an interest in the vacant space. • Recently developed offices built to a high specification and benefiting from open plan flexible floor plates. • Significant infrastructure improvements currently underway or in the pipeline which will further enhance Cardiff’s domestic and international profile and connectivity, creating a • Regarded as one of the premier offices in Cardiff. One of only three BREEAM Excellent positive impact on the economy and office market in Cardiff and the region. buildings in the City and one of only two with an EPC rating of A. • In a market characterised by a shortage of prime office investments this represents an • Cardiff ‘trophy’ asset with striking features including full height atrium, spacious reception, excellent opportunity to acquire a modern Grade A office building in a major regional centre, imposing lift lobby and roof terrace. offering opportunities for proactive asset management and rental growth as well as long • 11.25 years secure income to Public Health Wales. secure income to an undoubted covenant. Capital Quarter Cardiff | CF10 4BZ

ADMIRAL HQ

CALLAGHAN SQUARE

JOHN LEWIS

Proposal ST DAVID’S 2 SHOPPING CENTRE Seeking offers in excess of £23,200,000 (Twenty Three Million, Two Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level would reflect an attractive Net Initial Yield of 6.41%, after deducting purchasers costs of 6.75%, and a low Capital Value of £274 per sq ft.

For further information or Gareth Lloyd to arrange an inspection Tel: 029 2044 0141 Important Notice please contact the following: [email protected] 1. Particulars: These particulars are not an offer or contract, nor part of one. You should not rely on statements by Knight Frank LLP in the particulars or by word of mouth or in writing (“information”) as being factually accurate about the property, its condition or its value. Neither Knight Frank LLP nor any joint agent has any authority to make any representations about the property, and accordingly any information given is entirely without responsibility on the part of the agents, seller(s) or lessor(s). Rob Jones 2. Photos etc: The photographs show only certain parts of the property as they appeared at the time they were taken. Areas, measurements and distances given are approximate only. Tel: 029 2044 0128 3. Regulations etc: Any reference to alterations to, or use of, any part of the property does not mean that any necessary planning, building regulations or other consent has been obtained. A buyer or lessee must find out by inspection or in other ways that these matters have been properly dealt with and that all information is correct. [email protected] 4. VAT: The VAT position relating to the property may change without notice. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London W1U 8AN, where you may look at a list of Simon Rickards members’ names. Tel: 020 7861 1158

Subject to contract Design by Martin Hopkins Partnership, Cardiff. Tel: 029 2046 1233 www.martinhopkins.co.uk April 2017 [email protected]

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