26-28 GROVE HOTEL NEEDS ASSESSMENT DECEMBER 2020 MARK STANTON BRITEL FUND TRUSTEES LIMITED 150 , , EC2V 6ET

Dear Mark

In accordance with your instructions, and our proposal dated 22nd October 2020, we are pleased to present our report assessing the market and financial opportunity for the proposed Apart-Hotel at 26-28 Hammersmith Grove, W6 7HA. We have carried out desk-based research to assess the subject site’s suitability for apart-hotel use, and its accessibility and location in relation to potential demand generators, both corporate and leisure. In addition, we have conducted research into the potential future hotel supply threat in the local market of relevance as well as into local hotel market performance utilising STR market performance data. Based on this research we have provided our comments and recommendations on the identified development opportunity as well as our projections of estimated room occupancy and average room rate for the first three years of operation. We have welcomed the opportunity of preparing this report on your behalf and would be pleased to discuss it with you if so required, or to answer any queries which may arise.

Yours Sincerely,

AUREL BARKOWSKI JOE STATHER Associate Director Associate Director London, UK London, UK [email protected] [email protected] DISCLAIMER This report (the “Report”) has been prepared by CBRE Hotels Ltd (“CBRE”) exclusively for Britel Fund Trustees Limited (the “Client”) in accordance with the terms of engagement entered into between CBRE and the client dated 22/10/2020 (“the Instruction”). The Report is confidential to the Client and the Client may not disclose the Report unless expressly permitted to do so under the Instruction. If you are not the Client, then you are viewing this Report on a non-reliance basis and for informational purposes only. You may not rely on the Report for any purpose whatsoever and CBRE shall not be liable for any loss or damage you may suffer (whether direct, indirect or consequential) as a result of unauthorised use of or reliance on this Report. CBRE gives no undertaking to provide any additional information or correct any inaccuracies in the Report. Nothing in the Report is, or should be relied on as, a promise or representation as to the future. The Report may include certain statements, estimates and projections, which may or may not prove to be correct. No undertakings, representations or warranties are made by CBRE as to the accuracy of such statements, estimates or projections. None of the information in this Report constitutes advice as to the merits of entering into any form of transaction.

Novel Coronavirus (COVID-19) The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organisation as a “Global Pandemic” on the 11th March 2020, has impacted many aspects of daily life and the global economy – with the hotel markets experiencing significantly lower, or no, levels of trading activity. As at December 2020 there is a shortage of market evidence for comparison purposes, with hotel revenue streams and operational costs being impacted by many different factors, due to COVID-19. However, we have utilised data as at 31 December 2019 – where enough relevant benchmark data and other supporting research is available on which to formulate our initial projections of future cash-flow – which we have then adjusted appropriately, as set out within this report, to take into account the effects of COVID-19. Our projection of future cash flow is therefore reported as being subject to ‘material uncertainty’ as set out in VPS 3 and VPGA 10 of the RICS Valuation – Global Standards. Consequently, less certainty – and a higher degree of caution – should be attached to our projections than would normally be the case. For the avoidance of doubt, the inclusion of the ‘material uncertainty’ declaration above does not mean that the cash-flow cannot be relied upon. Rather, the declaration has been included to ensure transparency of the fact that – in the current extraordinary circumstances – less certainty can be attached to the cashflow than would otherwise be the case. The material uncertainty clause is to serve as a precaution and does not invalidate the cash-flow. Given the unknown future impact that COVID-19 might have on the real estate market and hotel operations, with many business practices and behaviours needing to change either temporarily or permanently, we recommend that you keep the market and financial feasibility and resulting cash flow projections contained within this report under frequent review. CONTENTS

01 EXECUTIVE SUMMARY 05 02 PROPOSED SCHEME 10 03 MARKET TRENDS 13 04 HOTEL MARKET 26 05 PROJECTIONS 39 06 APPENDICES 43 EXECUTIVE SUMMARY 01 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES EXECUTIVE SUMMARY 01

In our view, there is a strong market opportunity to develop a 85-bedroom Apart-Hotel at 26-28 Hammersmith Grove. This is supported by the performance of local hotels in Hammersmith, which operated close to 85.0% occupancy in 2019, indicating a supply constrained market. Should demand levels return to pre-pandemic levels, which is widely expected to be the case, there will be a need for additional quality guest accommodation in Hammersmith to capture historically unsatisfied demand as well as to support and complement future development projects, and private sector investment, in the local area. The following three slides summarise the market factors on which we have based our assessment of the development opportunity.

▪ The subject site benefits from a central location within Hammersmith, a key employment and Location, Infrastructure, Demand Generators commercial district of London. ▪ Hammersmith acts a the Western gateway to Central London with strong communication links by road and public transportation. This includes direct access to the A4, which links to Central London and four London Underground lines. ▪ The local area is an established commercial district, proving particularly popular with media and business services firms. -chip companies of national and international significance such as Disney, BBC, L'Oréal, Philip Morris and Novartis, represent strong corporate demand providers within the local hotel market. ▪ The local area around the site has established itself as a vibrant area and entertainment hub with notable demand drivers including the Westfield Shopping Centre, the Lyric Theatre and the Hammersmith Apollo area. The pedestrianised riverside, within a short-walking distance from the subject site, is also popular with tourists. ▪ With numerous public transport stations in close proximity, the subject site is also well connected to Central London’s main shopping districts and major tourist attractions such as the Natural History Museum and the . ▪ Whilst the local economy is anticipated to rebound strongly in 2021 and to recover to 2019 levels by 2022 (according to latest projections from Oxford Economics), the tourism sector is Market Recovery forecast to only fully recover by 2024. This is in part due to the reliance of London, as a major gateway city, on international demand, which will likely face a more protracted recovery. ▪ However, in line with industry experts such as Tourism Economics and STR Global, we do expect the tourism sector in London to recover from the current crisis and to have a strong come back once travel restrictions are lifted and a cure for the virus becomes widely available. This can be supported by the resilience and endurance of the tourism sector through previous demand shocks such as the global financial crisis as well as several terrorist attacks. A recovery in tourism demand will in part be driven by a number of megatrends, including Globalisation and the increased facilitation of cross-boarder travel, which are discussed in further detail in this report. ▪ The shortfalls in international accommodation demand are expected to be partially substituted by domestic demand over the short-to-medium term and to be complemented by short-haul travel from continental Europe. As a result, the latest Tourism Economics forecast estimates overall accommodation demand for London to fully recover to pre-pandemic levels by 2024. The recent news regarding a vaccine gives us greater confidence in this forecast, which predicts a material bounce back in demand from H2 2021.

CBRE | HAMMERSMITH GROVE 6 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES EXECUTIVE SUMMARY 01

▪ The local hotel market (1-mile radius from subject site) is presently dominated by 4-star Hotel Supply & Pipeline hotels, accounting for 54.0% of the total bedroom supply. ▪ The serviced-apartment sector is represented by nine properties, which are generally small in size with an average bedroom count of 27 units, and account for 12.5% of the total bedroom supply in the local market.* ▪ Whilst the current serviced apartment provision is small in size relative to other hotel categories, the presence of well-known apartment operators demonstrates that there are good levels of long-stay demand in the market. ▪ Confirmed future supply additions in a 1-mile radius of the subject site are limited to one serviced apartment development with 74 bedrooms. Based on the significant demand levels in the local market, we would expect this property to be absorbed with minimal impact into the market place.

▪ Over the past six years, the local hotel market consistently operated well above 80.0% occupancy. This was achieved despite strong supply additions in Hammersmith and the wider London area, providing evidence that new hotel openings were effectively absorbed into the market place. In fact, occupancy reached 84.7% in 2019, which was above the wider London market (+1.4 ppt) and indicates constrained supply during peak demand periods. Requirement for Serviced Accommodation Based on 2019 data, peak demand periods include Tuesday to Wednesday nights as well as Saturdays, throughout the year. During these time periods occupancy reached close to 90.0%, indicating that a significant number of room nights were displaced to neighbouring boroughs or other parts of London and demand for the local hotel market was unsatisfied. ▪ Ongoing and planned development projects in the wider local area will further increase serviced accommodation needs in the local area over the mid- to long-term. This presents an opportunity for the proposed development to support and complement new development projects and existing office occupiers by providing quality serviced accommodation. ▪ Key projects include the continued expansion of the Imperial College, White City Campus, the provision of additional office space (e.g. White City Gateway) as well as the redevelopment of Olympia London into a world-leading cultural and entertainment hub.

*This excludes the Residence Inn London Kensington with 319 bedrooms, 1.5 miles from the subject site.

CBRE | HAMMERSMITH GROVE 7 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES EXECUTIVE SUMMARY 01

▪ We consider there to be a strong opportunity for the development of a 85-bedroom Apart-Hotel as proposed by Britel Fund Trustees Limited. The proposed location of the development, as well as strong appeal of Hammersmith as a place to live and work, combined with the ongoing gentrification of the wider local area, should enable the proposed development to successfully compete within the local hotel market and attain a strong market position. ▪ The proposed type of development should complement and enhance the currently short-stay focused hotel market by providing high-quality apart-hotel accommodation that will cater to both Proposed Development leisure and corporate travellers. The accommodation offer is envisaged to include spacious, self contained rooms, equipped with additional cooking, eating and living spaces. ▪ Going forward, we expect travellers to express some apprehension about staying in transient accommodation and potentially coming into contact with others, at least in the short-to-medium term. This is likely to benefit the performance of serviced apartments over traditional hotels, as evidenced by year-to-date trading statistics of the London serviced apartment sector as presented in this report. ▪ We also note that the proposed Apart-Hotel is aligned with the 2016 London Plan (Policy 4.5) and the Intend to Publish London Plan 2019 (Policy E10), which account for the importance of London’s visitor economy. They highlight a requirement for boroughs to stimulate growth, taking account of the importance of business and leisure visitors, and to support an increase in the range and improvement in the quality of guest accommodation. The images below provide examples of serviced apartment operators in the local hotel market.

Lamington Apartments Hammersmith Residence Inn by Marriott London Kensington

CBRE | HAMMERSMITH GROVE 8 PROPOSED SCHEME 02 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES PROPOSED SCHEME 02 PROPOSED SCHEME SITE ANALYSIS CBRE ANALYSIS ▪ The subject site is centrally located within Hammersmith, in West London and on the north bank of the River Thames. Hammersmith serves as the main gateway into Central London from the west and is a key employment and commercial district. ▪ The site is positioned between Hammersmith Grove to the West and the London Underground railway tracks to the East, approximately 0.2 miles north-west of Hammersmith town centre. ▪ Hammersmith is a major transport hub benefiting from an excellent link to the road Proposed network. It is located at the junction of the A4 and several local feeder roads. The A4 Development Area runs directly through Hammersmith and provides direct access to Central London Boundary and the M4 motorway, which links to Heathrow Airport. In addition, Hammersmith is served by two Underground stations with four tube lines and a bus terminal, providing fast and frequent public transportation links to both Central London and Heathrow Airport. ▪ As a key office location, the local area is particularly popular with media and business services firms, including notable occupiers such as BBC, ITV and Walt Disney. Kensington (Olympia) Shepherds Bush Rd Strong corporate demand Western Gateway into Central London with strong SUBJECT SITE Hammersmith Rd drivers within the local area, including numerous blue-chip accessibility by road and train. occupiers.

Hammersmith King St. Hammersmith Ongoing expansion of Imperial College London, White A4 City Campus should further strengthen the local area’s A4 Barons Court reputation as a destination for research and innovation and attract companies and institutions of national and international significance.

Source: Google Maps, Britel Fund Trustees Limited, 2020

CBRE | HAMMERSMITH GROVE 10 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES PROPOSED SCHEME 02 PROPOSED SCHEME OVERVIEW SCHEME COMPONENT CHARACTERISTICS ▪ The proposed development is envisaged to be a quality mid-scale Apart-Hotel, providing the standards, security & service of a hotel but with the added comfort of larger bedrooms, Market Positioning Mid-scale including more generous living areas and self-catering facilities within each unit. Service Offer Apart-Hotel ▪ In line with the typical target market of serviced apartments, the proposed development will 61 Studio Rooms likely cater for corporate and leisure travellers requiring accommodation for medium to long- 15 One-Bedrooms term assignments, in addition to those relocating and requiring interim accommodation. Bedrooms 9 Wheelchair Accessible Rooms ▪ Based on the envisaged target market and accommodation offer, we would expect a lower 85 Rooms in Total guest turnover for the proposed Apart-Hotel than a typical hotel, driven by a longer average Food & Beverage Café on ground floor length of stay. This should reduce the overall customer traffic in and around the subject site Other Facilities Exercise Room (26m²) compared to a traditional hotel, which would typically cater to a more transient customer base. FACILITY MIX ▪ Based on the latest plans, the proposed Apart-Hotel will be developed over ground floor and five upper floors and comprise a mix of studios and one bed rooms. In total there are plans for 85 rooms of which nine rooms will be wheelchair accessible. ▪ All rooms will feature ensuite bathrooms, a fitted kitchen and a lounge/dining area. Within the larger one bed rooms, the lounge/dining area is physically separated from the bedroom. Room sizes range from approximately 20 square metres for a studio room up to 37 square metres for a one-bedroom apartment. Accessible rooms are larger and up to 44 square metres. ▪ In line with the typically limited ancillary facilities of apart-hotels, the proposed development will feature a café/ breakfast area on the ground floor as well as a small exercise room on the same level. As such, we expect local restaurants, cafes and bars to benefit from an increase in demand.

OPERATOR

▪ We understand that Britel Fund Trustees Limited are currently in discussions with an established Source: Britel Fund Trustees Limited, 2020 serviced apartment brand to operate the proposed development. This serviced apartment operator currently manages several existing properties within the wider Hammersmith area and as such has an excellent understanding of the local market dynamics. The addition of a further property to its portfolio would deliver significant operational and marketing advantages to the operator, positively impacting the feasibility and operation of the proposed development.

CBRE | HAMMERSMITH GROVE 11 MARKET TRENDS 03 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 TRAVEL & TOURISM DEMAND Travel and Tourism Is cyclical and has always bounced back…

The outbreak of COVID-19 has impacted many aspects of daily life and the global economy – with leisure and travel-related sectors amongst the worst hit. To provide further context to this report and our analysis of the Apart-Hotel development opportunity, we detail on the following slides the historic performance of the travel industry and general outlook, including impact and anticipated recovery from the pandemic.

Global International Arrivals Global International Tourism Receipts, 2000-2019 1950-2019 2000-2019

2,000 2,000 9/11 and Early (2009, -9%) 1,500 Early 1990s 2000s recession 1,500 Early 1980s recession (2001, -2%) 1,000 recession 1,000

Economic Arrivals, Arrivals, mn

500 Receipts,$US bn 500 slowdown 2007-2009 (2015, -5%) Financial Crisis 0 0

Source: United Nations World Tourism Organisation, 2020 Source: United Nations World Tourism Organisation, 2020 ▪ The number of global international arrivals has increased at a compound annual ▪ Over the period 2000-2019, the global value of tourism has grown at a CAGR of growth rate (CAGR) of 6.1% over the period 1950-2019. 5.9%; exceeding the growth in world GDP of 5.1%. In 2019, total tourism receipts ▪ There was a notable acceleration in the growth rate of international tourism arrivals in reached US$1.48 tn. the 10-years to 2019. A similar growth trajectory has only been observed during the ▪ The value of tourism (receipts) has been more volatile than the volume of tourism post-war package holiday boom of the 1960’s and in the period 2003-2007, (arrivals), with higher growth rates observed in an expansionary period and larger following 9/11 and the early-2000’s recession. declines during a period of contracting demand. These characteristics are not ▪ Growth in the last decade has been supported by a number of megatrends, which we dissimilar from other consumer discretionary sectors. expect to support the future expansion of the travel and tourism industry. This includes ▪ However, the travel and tourism industry has always recovered relatively quickly from Globalisation and the increased facilitation of cross-border travel. These trends and market shocks, partly due to the underlying megatrends mentioned opposite, but also their impact on the travel industry are presented in more detail on the following slide. due to its adaptive capacity – targeting different consumer segments to stimulate a faster recovery. This can be underpinned by recent research, which points towards the continued strong desire of people to travel. Based on a survey from the World Travel & Tourism Council in October 2020, 99.0% of the respondents indicated a continued strong motivation to travel and 70.0% planning to take a holiday in 2021 (WTTC, 2020). This suggests that as concerns about COVID-19 are addressed, travel activity is likely to rebound strongly. CBRE | HAMMERSMITH GROVE 13 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 TRAVEL & TOURISM DEMAND

There are multiple structural drivers which will support long-term growth

Economic Drivers ▪ Globalisation will continue to result in easier access across borders, which is likely ▪ Generation Y, comprising those born between the early 1980’s and early 2000’s, to facilitate further growth in the number of international business and leisure is an influential demographic group with high earning potential. The Generation Y tourists. Whilst we appreciate that there are a number of disruptors, general cohort is the biggest in history by population and is about to move into its prime factors which will promote economic dynamism and continue to support spending years. The demands of Generation Y for memorable moments and globalisation include: activities over material goods has elevated the ‘Experience Economy’, and older generations are also starting to follow the trend. Demand for travel, the ultimate − Political pressures for higher living standards; experience, has and will continue to grow as a result. Travel is increasingly seen as − Deregulation/liberalisation; a status booster and social media is supporting this change. However, it is − Rising trade and investment; and generally recognised that the travel industry needs to adapt to fully capitalise on this trend, by focusing on authenticity, local experiences and personalisation. − Increasingly dynamic private sectors. Travel Mobility ▪ Rising incomes correlate strongly with tourism flows and the expansion of the global middle class will play a major role. Emerging economies, pre COVID-19, ▪ Transport is an essential component of the tourism system. Whilst there remains led the growing demand for international tourism. The European Travel considerable uncertainty surrounding the near-term impact of the COVID-19 Commission, in 2019, predicted that the number of annual visitors to the pandemic on air travel, the International Air Transport Association (IATA), as of European Union from the Asia-Pacific region would increase from 26m to 34m by May, predict a baseline increase of 48.8% in global air passengers between 2019 2030. and 2039, to 8bn per annum. For shorter-routes, growth in high-speed rail, Social Trends including established and expanding networks in Europe, will compete with aviation. Ultimately, the Organisation for Economic Co-operation and ▪ Increasing expectations of people will generate increased demand for Development (OECD) predict that old and new destinations alike will benefit from discretionary expenditure including travel and tourism. This will be further the upward trend in passenger capacity. Notably 55% of inbound arrivals to the compounded by urbanisation and rising stress levels leading to growing emphasis EU are by land or water, versus 45% by air (UNTWO, 2016). on travel as a means to ‘escape’. To improve work-life balance we will also continue to observe growing demand for ‘bleisure’ travel – extending a business trip for leisure purposes. As people are increasingly money rich-time poor, they are more likely to fill their spare time with travel experiences and are willing to pay more.

CBRE | HAMMERSMITH GROVE 14 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 TRAVEL & TOURISM DEMAND

Europe will remain the most popular region for inbound travel

International Tourist Arrivals by World Region, Travel and Tourism Competitiveness Index 1950-2019 2019

1,600 Cultural Resources and Business Travel Natural Resources 1,400 Tourist Service Infrastructure 1,200 Ground and Port Infrastructure 1,000 Air Transport Infrastructure Environmental Sustainability 800 Price Competitiveness Global Average International Openness

Arrivals, Arrivals, mn 600 Prioritization of Travel and Tourism Europe and Eurasia 400 ICT Readiness 200 Human Resources and Labour Market Health and Hygeine 0 Safety and Security Business Environment 0 2 4 6 Africa Americas Asia Pacific Europe Middle East Score (1 = worst, 7 = best)

Source: United Nations World Tourism Organisation, 2020 Source: World Economic Forum, 2019

▪ As of 2019, the European region accounted for over half (51%) of total global ▪ The Travel and Tourism Competitiveness Index, compiled by the World Economic international arrivals (741bn). Its share has reduced by 7ppts in the last twenty Forum (2019), ranks Europe as the world’s most competitive region for Travel years due to the rapid development of the Asia-Pacific market, although the share and Tourism. One of the key drivers of Europe’s success as a travel destination is of arrivals captured by the Americas has declined to a greater extent (-9ppts). its abundant cultural resources. The large number of visitors that these attract are ▪ International arrivals to Europe increased at a CAGR of 7.9% over the period accommodated by the “world’s most robust tourism infrastructure, including 1950-2019 and 4.9% in the last decade. This is relatively strong recent growth world-class transport infrastructure”. Most European economies have strong considering the maturity of the European region as a travel destination, and enabling environments, particularly relating to business environment. The region considering volatility and setbacks resulting from various terrorist attacks and the scores strongly in terms of health and hygiene, which are likely to become UK’s decision to leave the European Union. increasingly important factors in a post-COVID-19 environment, and the region’s high degree of ICT readiness allows Travel and Tourism businesses and travellers ▪ Tourism generates 10.0% of GDP and represents 9.0% of total employment in the to leverage increased use of online and digital platforms in B2B and B2C industry Europe. For this reason, we are confident that the industry will continue to be services. prioritised in terms of public and private investment, including through the current COVID-19 pandemic and during the recovery phase which will follow. ▪ Notably, cultural resources cannot be easily replicated and infrastructure is costly and time consuming to develop. This will support Europe’s position as the leading region for travel and tourism going forward.

CBRE | HAMMERSMITH GROVE 15 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 TRAVEL & TOURISM DEMAND

Europe International Arrivals vs Domestic Arrivals Europe Domestic and International Tourism Spend % difference from 2019 levels Domestic % Share as Labels, 2019 20% 12% 500 1% 0% 2% 0% 400 -17% -17% -15% -32% -29% 300 -20% -35% -41% -12%

-55% -52% US$,bn 200 -64% 48% -40% -75% 100 39% 70% 79% 88% 35% 73% 36% 33% 52% 59% 61% 55% 73% 85% 0 -60%

-80% 2020 2021 2022 2023 Long-Haul Mid-Haul Short-Haul Domestic Inbound Domestic

Source: Tourism Economics, October 2020 Source: WTTC ▪ The COVID-19 outbreak has resulted in a sudden and large drop in travel activity ▪ It is widely accepted, that domestic demand (travel within the country of residence) will with inbound travel to Europe forecast to decline by 61.0% in 2020. Based on the drive the early phase of recovery following COVID-19. latest available information from Oxford Economics (October 2020), Europe is ▪ The United Kingdom, Germany and Italy traditionally have the highest share of assumed to see an earlier recovery than other world regions with almost all European domestic tourism spend. Notwithstanding the economic impact of the virus within countries set to regain 2019 tourism levels by 2024. each country, these nations are well positioned for a more immediate recovery. ▪ In the near term, recent trends are likely to continue with tourist remaining closer to ▪ As social distancing requirements are lifted, we also expect that pent-up demand for home and to travel either domestically or to short-haul destinations. Therefore, leisure travel, including visiting friends and relatives, will support demand in the short- domestic travel will be the key demand driver and achieve a quicker rebound, term, as evidenced during the recent summer period. Whereas corporate, group returning to pre-crisis levels by 2022. International travel will take longer to recover meetings and convention travel is unlikely to restart in earnest until there is a vaccine due to ongoing travel restrictions in some countries, reduced disposable income as or widely available treatment for COVID-19. well as associated confidence effects. These are temporary short-to medium term impacts of COVID-19 and not structural trends. ▪ Several vaccines are currently in final stage of testing with pharmaceutical company Pfizer/BioNtech and Moderna having recently reported their vaccine to be more than ▪ The comparatively swift recovery of short-haul travel (2023) will benefit Europe and 90% effective in a first analysis. Whilst some pharmaceutical companies hope to get the UK as a tourism destination as more than half of all visitor arrivals to the region their vaccine approved by the end of 2021, The World Health Organisation does not are from short-haul feeder markets. expect to see widespread vaccination against COVID-19 until the middle of 2021. We note that current baseline projections by Tourism Economics presented above and on the following slide are based on the assumption that a COVID-19 vaccine will be in circulation from the middle of next year.

CBRE | HAMMERSMITH GROVE 16 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 TRAVEL & TOURISM DEMAND

London International and Domestic Nights in Paid Accommodation (2019-2024) Domestic Nights in Paid Accommodation Recovery Index Based on 2019

151,000 150% 106% 100% 97% Paris (FR) 101,000 82% 100% 60% Brussels (BE) 38% Berlin (DE) 51,000 50%

Recovery Index Vienna (AT) (000s) Amsterdam (NL) 1,000 0% 2019 2020 2021 2022 2023 2024 Birmingham (UK) London (UK) Domestic International and Nights Domestic nights in paid accommodation International nights in paid accommodation Manchester (UK) Madrid (ES) Overall Recovery Index to 2019 lvls Barcelona (ES) Source: Tourism Economics, October 2020 50 60 70 80 90 100 110 120 ▪ Most of the European gateway cities, by definition, are highly exposed to international tourism. Whilst, for many, international demand typically comes from 2024 2022 2020 a diverse array of source markets and customer segments, which would ordinarily Source: Tourism Economics, October 2020 make a market less volatile in light of external market shocks, the nature of ▪ As a result of a strong domestic demand coupled with a rebound in short-haul travel, COVID-19 and the subsequent measures restricting cross-border tourism flows are overall accommodation demand for London is anticipated to reach approximately having a material impact. 103m by 2023 (3% below 2019) and to fully recover and exceed 2019 levels by ▪ London is positioned as the most visited city in Europe by international travellers, 2024 with 113m overnight stays. having attracted approximately 80m overnight stays in 2019, equivalent to 75% of ▪ The underlying demand drivers (as detailed on slide 13-14) will support this recovery total overnight stays. Demand from long haul feeder markets such as North and subsequent growth; however, we do expect COVID-19 to leave its mark in terms America and North East Asia (e.g. US, China) will take longer to recover to pre- of the way people travel going forward. Tourism and leisure service providers, which pandemic levels, which means for London that international overnight demand is can align their product offer with the demands of the modern-traveller, plus an forecast to only recover by 2024/2025. additional focus on safety and hygiene, are likely to perform strongly in the ▪ However, London is well placed to benefit from a recovery in demand from short- anticipated recovery. haul feeder markets, including France, Germany, Spain and Italy, which overall ▪ This is particularly the case for the serviced apartment sector (including apart-hotels), have accounted for approximately 50.0% of the city’s overnight stays in 2019. which has proven to be one of the most popular accommodation types during the ▪ In contrast to international demand, Tourism Economics forecasts domestic pandemic. Going forward, we expect travellers to express some apprehension about demand for overnight accommodation to have exceeded 2019 levels considerably staying in transient accommodation and potentially coming into contact with others, at by 2024. This would suggest that in the short-to-medium term, London, in line least in the short-to-medium term. As a result, and based on the trends to date, this is with other major European gateway destinations, are likely to adapt and cater to a likely to benefit the performance of serviced apartments over traditional hotels (further more domestic audience. As mentioned previously, the adaptability of the travel details on the London serviced apartment sector are provided on slide 30-32.) and tourism industry has supported its recovery following previous downturns.

CBRE | HAMMERSMITH GROVE 17 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 TRAVEL & TOURISM DEMAND Downside Risk Scenario Analysis UK Inbound and Domestic Overnight Visits (Recovery Index Based on 2019)

120,000

100,000 116% 111% 103% 112% 80,000 107% 90% 97% 75% 60,000 70%

40,000 47% 36% 34% 20,000

0

2019 2020 2021 2022 2023 2024 2025 Source: Tourism Economics, October 2020 Inbound Visits Domestic Visits

▪ Downside risks remain for the UK travel outlook as infections continue to rise in the absence of a widespread vaccine and new lockdown measures have been re-introduced across a number of European countries. ▪ The above graph compares the latest baseline scenario from Tourism Economics against a downside scenario. The downside scenario reflects the risk of travel restrictions lasting 18 months, compared to the 10-month period assumed in the baseline forecast. In such a scenario, a weaker economic outlook coupled with prolonged travel restrictions would further depress consumer confidence and result in a sharper drop in tourism activity. ▪ As illustrated by the above graph, this would mean that overall volume of domestic and overnight visits to the UK would only regain 2019 levels by 2024, one year later than in the baseline scenario. A similar impact would likely to be expected for the recovery of overnight stays. ▪ However, we note that even under the downside scenario, tourism demand is anticipated to ultimately recover to pre-pandemic levels.

CBRE | HAMMERSMITH GROVE 18 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 TRAVEL & TOURISM DEMAND Leisure Demand Key Leisure Attractions DISTANCE FROM SITE (PUBLIC ATTRACTION CATEGORY ANNUAL VISITORS TRANSPORTATION) ▪ Hammersmith has established itself as a vibrant area, Westfield Shopping Centre Shopping Centre 27,500,000 14 minutes entertainment-hub and as a hotbed for creativity. The area is sought after by those seeking good connectivity Natural History Museum Museum & Art Galleries 5,423,932 20 minutes as well as a suburban atmosphere. Victoria & Albert Museum Museum & Art Galleries 3,992,198 18 minutes ▪ Riverside studios, the Lyric Theatre and the Science Museum Musum & Art Galleries 3,301,975 20 minutes Hammersmith are some of the main Royal Albert Hall Concert Hall 1,700,000 33 minutes demand drivers of the area. Moreover, the Saatchi Gallery Museum & Art Galleries 1,200,000 23 minutes pedestrianised riverside includes pubs, rowing clubs and Design Museum Museum & Art Galleries 600,000 15 minutes the Furnival Gardens. Kensignton Palace Historic Properties 510,304 28 minutes ▪ Further London key tourism drivers are in close WWT London Nature Reserve 190,206 40 minutes proximity as the adjacent table shows. This includes House Historic Properties 82,151 40 minutes some of London’s most visited cultural attractions such The Queens Club Sports Venue n/a 11 minutes as the Natural History Museum, V&A Museum, the Science Museum and the Royal Albert Hall, combined Kyoto Garden & Gardens n/a 27 minutes attracting close to 15m visitors per annum. ( FC) Sports Venue n/a 23 minutes ▪ The proposed Apart-Hotel is also in proximity to two Stamford Bridge (Chelsea FC) Sports Venue n/a 30 minutes football stadiums, including Stamford Bridge, home of Premier League Club Chelsea and Craven Cottage, the home ground of Premier League Club Fulham F.C. Both venues are strong accommodation demand drivers on match and event days. Adding to the local area’s sports offer is the Queens Club, a tennis venue with capacity for more than 9,000 people, hosting a number of annual tournaments including the Queen's Club The local area benefits from a multitude of leisure demand generators ranging from major retail destinations to museums and Championships, part of the ATP World Tour 500 series. sport venues. The majority of these demand generators are located within a 30-minute tube ride of the proposed Apart-Hotel ▪ The 2016 London Plan (Policy 4.5) and the Intend to site and attract a large number of international and domestic tourists throughout the year. Publish London Plan 2019 (Policy E10) both support London’s visitor economy and require boroughs to stimulate growth, taking account of the need of business and leisure visitors. The proposed development is therefore aligned with the London Plan by improving the quality and range of accommodation in proximity to major visitor attractions. Source: CBRE Research, Visit England, 2020 CBRE | HAMMERSMITH GROVE 19 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 LOCAL ECONOMY

GDP Growth, 2018-2024F CBRE ANALYSIS

▪ Hammersmith is a key business and commercial centre in the West of London. 10% 7.5% Following the closing and redevelopment of its power stations and factories, the area has moved from an industrial base towards a greater focus on commerce and 5% services. 0% ▪ The district is a dynamic and rapidly developing area, known for its diverse cultural influences. TV and new media industries are of significant and growing importance. (5)% ▪ In line with the wider city and other European regions, the local economy has been y/y growth y/y % severely impacted by the containment measures put in place to limit the spread of (10)% COVID-19 with Oxford Economics predicting GDP to contract by approximately -9.7% 10.0% in 2020. (15)% ▪ 2019 2020 2021 2022 2023 2024 For 2021, the local economy is anticipated to see a strong rebound, growing by 7.5%, fully recovering to pre-crisis levels by 2022. Between 2020 and 2024 the local UK Kensington and Chelsea & Hammersmith and Fulham European City Average economy is forecast to outpace both the UK and European city averages with GDP growing by 4.1% per annum. This highlights the underlying strength and resilience of Source: Oxford Economics, 2020 the local economy. The recovery will particularly be driven by the business services and information and communication sector, which is forecast to account for half of the GDP Structure Kensington and Chelsea & hammersmith and Fulham GDP growth over the next four years. (% Share of Total, Inner Circle 2019, Outer Circle 2024F) ▪ Due to the impact of COVID-19 on the local economy, there will undoubtedly be a decline in office demand over the short-term. With companies being forced to move their workforce to remote working, demand levels have been further impacted in 8% 2% recent months. Accelerated by the current market environment, the role of the office is 8% 2% 16% likely to continue evolving with an emphasis on the importance of collaboration and 16% innovation to employee productivity. Whilst this means that the function and design of Agriculture, mining & utilities office space will change, it is unlikely that these trends will have a considerable impact Manufacturing on the aggregate level of office space required. There will be cases of companies who Construction will reduce space requirements but the economic recovery and de-densification is likely 35% 35% Trade, transport & storage to balance this out, reducing the overall impact. 22% Information & communication ▪ Based on this, we expect Hammersmith to remain a key office location with companies 23% Finance & insurance of national and international significance providing strong levels of accommodation Public services 15% demand. Business services ▪ New quality accommodation such as the proposed Apart-Hotel will increase the area’s Hospitality & other services 14% appeal to new corporate occupiers and help to further strengthen the local economy.

Source: Oxford Economics, 2020 CBRE | HAMMERSMITH GROVE 20 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 LOCAL ECONOMY Corporate Demand Demand Drivers from the Public and Private Sector

▪ Most employment in Hammersmith is office based while non-office based employers mainly comprise of public services, including Hammersmith Hospital, Charing Cross Hospital and Queen Charlotte’s & Chelsea Hospital. ▪ The traditional office stock is located to the East of Hammersmith centre on Hammersmith Road, Butterwick and Shortlands. Due to a scarcity of development sites, office development has moved outside of these areas and includes 10 and 12 Hammersmith Grove located to the North of the Centre. Featuring some of the highest quality space in the market, both buildings are fully let to Philip Morris, Fox International and WeWork, amongst others. ▪ White City, situated to the north of Hammersmith has also developed into an important alternative office location within the marketplace. This was in part driven by the opening of the Westfield Shopping Centre in 2008 and a number of regeneration schemes, which delivered new office and residential space as well as transport upgrades and improvements to the public realm. Notable occupiers include the BBC, who partially re-occupied a re- developed a site following the transfer of more than 4,000 staff to Manchester and Central London in 2013, ITV, and Publicis Media with 2,000 employees. Further high profile media occupiers include Walt Disney Company and Virgin Media Group, both located on Hammersmith Road. ▪ White City is also home to a number of pharmaceutical companies, which are attracted to the local area due to the presence of nearby Imperial SUBJECT SITE College Campus. The most notable in-mover is Novartis, who relocated their UK HQ from Frimley in January 2020. ▪ There are also a number of retail based employers, including , Yoox Net-a-Porter, Ralph & Russo and the HQ of Victoria Beckham.

In line with pre-COVID-19 trends, we anticipate Hammersmith to remain an important economic driver of the London economy and major office location. In a post-pandemic world, the local area is likely to continue attracting occupiers who wish to capitalise Hammersmith's excellent connectivity, comparatively low occupational costs and strong amenity provision. Source: CBRE Research, Promis Office Report, 2020 CBRE | HAMMERSMITH GROVE 21 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 LOCAL ECONOMY REGENERATION SCHEMES On the following two pages we present key existing and planned development projects that will enhance the local area and positively impact existing and future hotel supply.

White City Gateway Olympia Earls Court Redevelopment (1.5 miles from site) (0.9 miles from site) (1.7 miles from site)

▪ Construction commenced in ▪ Planning permission was granted in ▪ After several years of stalled October 2020 on the Gateway 2019 for a £1.3bn project to turn progress on the proposed Central building at White City Place, Olympia London into an arts, redevelopment of Earls Court, a just south of the Westway. entertainment, events and creative new developer, Delancey, took over ▪ The scheme will provide a total floor business quarter. This will include from Capital Counties in 2019 and space of over 260,000 sq ft and is the redevelopment of the former has recently appointed architects to scheduled for completion at the end exhibition centre to provide a produce a new masterplan for the of 2022. 4,100-capacity music venue, a area. 1,400-seat performing arts theatre, ▪ In early 2020, L’Oreal confirmed ▪ The original scheme was anticipated two hotels, a cinema, and 2.5 acres to provide 7,500 new homes, plans to be an anchor tenant of the of public space. scheme, relocating from their 10,000 new jobs and state-of–the– current headquarters in ▪ The main construction contract is art health, education, cultural and Hammersmith. expected to be awarded soon with community facilities. initial work on the scheme due to begin in 2020.

Scheduled Completion: 2022 Scheduled Completion: 2024 Planning

Source: developmentfinancetoday, exhibitionworld, imperial.ac.uk, commercialnewsmedia, CBRE Research, 2020

CBRE | HAMMERSMITH GROVE 22 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 LOCAL ECONOMY REGENERATION SCHEMES (CONTINUED)

Imperial College London, White City Campus (1.4 miles from site)

▪ Imperial College London, White City Campus (ICL) has seen a rapid transformation over the past , following the opening of the first building in 2012 to accommodate postgraduate students. In line with the regeneration of the wider White City area, such as the transformation of the Television Centre (former HQ of BBC), ICL has created an integrated collaborative campus, with embedded corporate, academic and community partners. Key delivery milestones included the opening of several multidisciplinary research facilities such as the Translation & Innovation Hub in 2016 and the Molecular Sciences Research Hub in 2018. ▪ Ongoing development projects at present, include the delivery of additional office, research and laboratory space across two developments: Scale Space and the 13-storey The Sir Michael Uren Hub. The first and largest building of Scale Space was completed in Q3 2020 with the construction of the two other buildings currently underway and estimated for completion in Q1 and Q3 2021. In total, Scale space will provide approximately 200,000 sq ft of office space for smaller start-ups and biotech firms. The Sir Michael Uren Hub is earmarked for completion in 2020 and will accommodate over 500 engineers, clinicians and scientists who will work together on developing new medical technologies. ▪ In addition to ongoing development projects, the ICL was granted outline planning application in September 2019 to redevelop a 14 acre site located south of the Westway on Wood Lane. ICL’s long term vision for the £1.3bn development is to provide flexible buildings and facilities which will co-locate businesses, researchers, academia and the local community to support collaboration and innovation.

The ongoing expansion of the Imperial College London, White City Campus with additional office, research and laboratory space as well as Source: developmentfinancetoday, exhibitionworld, the current construction of the White City Gateway will further enhance the local area’s reputation as a destination for research, innovation, imperial.ac.uk, commercialnewsmedia, CBRE Research, culture, commerce and retail. The nature of these developments are likely to attract further students and high-profile companies to the area, 2020 and we foresee an increased need for quality accommodation, particularly accommodation that caters for longer staying guests on project work, for example.

CBRE | HAMMERSMITH GROVE 23 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES MARKET TRENDS 03 LOCAL ECONOMY MAP OF KEY REGENERATION PROJECTS

SUBJECT SITE

Source: Google Maps, 2020 CBRE | HAMMERSMITH GROVE 24 HOTEL MARKET 04 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET SUPPLY OVERVIEW Hotel Clusters, 1-Mile Radius of the Site

▪ There are currently 4,310 bedrooms (59 hotels) within a 1-mile radius of the proposed Apart-Hotel, the majority of which are categorised as 2-star (24 hotels). However, more than half of the total number of bedrooms are 4-star rated.

▪ The hotel stock is centred around the Hammersmith Underground station, King Street, Shepherds Bush Road and Kensington Olympia Underground station.

▪ The Hammersmith hotel market is dominated by small, independent and budget accommodation. Budget accommodation, which includes hostels and 2-star hotels, accounts for 46.0% of the total supply (in number of hotels), with the majority of these hotels having less than 50 bedrooms and no association to any brand. In terms of total hotel bedrooms, 4-star rated hotels account for the majority of rooms in the market (54%).

▪ In terms of serviced apartments, we have identified a total of nine properties with 537 bedrooms, which represents 12.5% of the total bedroom stock of the local market. This includes an number of branded properties such as Residence Inn, SACO and Clarendon Serviced Apartments. With the exception of the Residence Inn property in West Kensington with 319 keys, local serviced apartment providers are small and feature on average 27 bedrooms. Existing Supply by Class 1-Mile Radius of the Site ▪ Whilst the current serviced apartment provision is small in size relative to other hotel 2,500 30 categories, the presence of well-known apartment operators demonstrates that there are 24 good levels of long-stay demand in the market. 2,000 25

20 Hotels of Number 1,500 2,306 Hotels 59 9 10 9 15 1,000 Bedrooms 10 4,310 4 3 500 5 Number Number of Bedrooms Branded (Based on rooms) 651 411 537 30.5% 0 217 188 0 4-star 3-star 2-star Budget Apts Hostel Independent (Based on rooms) 69.5% Bedrooms Hotels Source: STR, 2020. Republication or other re-use of this data without the express >100 rooms 15.3% written permission of STR is strictly prohibited.

CBRE | HAMMERSMITH GROVE 26 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET

Pipeline Overview Hotel Pipeline by Planning Status

▪ Based on data from AM:PM, we are aware of the current development of one serviced apartment within a one-mile radius of the proposed development. In addition to this, there are a further nine 2,000 15 projects with 1,896 bedrooms currently in final planning stages and eleven projects with 923 1,800 bedrooms planned or deferred. 1881 1,600 − The only confirmed hotel project at present is the Dorsett Shepherds Bush London Apartments II 1,400 with 74 bedrooms, due for completion in May 2021. The property will be positioned adjacent 1,200 to the existing Dorsett Shepherds Bush 4-star hotel, which opened in 2014 and comprises 317 bedrooms and suites. The newly developed Dorsett property is likely to benefit from operational 1,000 29 synergies with its sister property, such as the sharing of staff and facilities, and at the same time 800 offer an accommodation product geared towards longer-stay corporate and leisure travellers. 600 799 Dorsett Shepherds Bush London Apartments II will be positioned as an upscale hotel with a bar,

Number Number of Bedrooms 400 a high-end restaurant and a café. 200 74 69 26 ▪ Whilst we are not aware of any further confirmed hotel projects, there are a total of nine projects in 0 final planning stages with full planning approval from the local council. However, we expect a number In Construction Final Planning Planning Deferred of these projects to be delayed, deferred or to be put on hold indefinitely due to the current market environment and impact of COVID-19 on the lending market. This is in line with trends observed New Construction Expansion across the wider European hotel landscape, with projects being re-evaluated due in part to anticipated financing challenges and changes in market conditions over the short to mid-term. Notable projects with full planning approval include: Based on our research there is currently one confirmed hotel development − A dual-branded hotel development by Dominvs Group, including a 425-key Hilton Garden Inn within a 1-mile radius of the proposed Apart-Hotel. However, there are and a 400-key budget hotel. The hotel complex was granted planning approval by also nine projects with 1,896 bedrooms in final planning stages. Although Hammersmith & Fulham Council in July 2020; and this represents a strong speculative pipeline, it demonstrates the growing demand for quality hotel accommodation as the local area continues to − There are approved plans for the development of two hotels as part of the wider regeneration of the Olympia site (0.9 miles from the subject site). We understand that funding for the hotels is in see high levels of regeneration and development activity. place and that the owners of the site are currently in advanced negotiations with two potential Whilst there was already a clear need for additional hotel supply pre- hotel operators, both of which are positioned within the 4-star segment. COVID-19 (see slide 35), future hotel developments, such as the proposed scheme, will further complement the local accommodation offer and support the delivery of regeneration and commercial development projects. The proposed development is therefore likely to make a positive contribution to the local economy in terms of employment, visitor spend and service contracts.

Source: STR, 2020. Republication or other re-use of this data without the express written permission of STR is strictly prohibited.

CBRE | HAMMERSMITH GROVE 27 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET Pipeline Overview HOTEL NAME GRADE ROOMS BRAND PLANNING STATUS POSTCODE PROJECT TYPE DUE 2021 Dorsett Shepherds Bush London Apartments II Apts 74 Dorsett Under Construction W12 8QE New Construction SUBTOTAL 74 FINAL PLANNING Hammersmith Magistrates Court - hotel 2 Budget 400 TBA Approved (2020) W6 8DN New Construction Hilton Garden Inn London Hammersmith 3 425 Hilton Garden Inn Approved (2020) W6 8DN New Construction Hellenic Hotel 2 1 Independent Approved (2017) W6 7LR Extension Hoxton Shepherd's Bush 4 214 The Hoxton Approved (2019) W12 8TX New Construction Landmark House site 4 288 Independent Approved (2018) W6 9DR New Construction National Hotel 4 123 Independent Approved (2019) W14 8UX New Construction Olympia Hotel 4 242 Independent Approved (2019) W14 8UX New Construction Premier Inn Shepherd's Bush Budget 189 Premier Inn Approved (2019) W6 7AN New Construction So Sienna Apts 14 Independent Approved (2018) W6 0LS Extension SUBTOTAL 1,896 PLANNING & DEFERRED 11 -114 North End Road 3 46 Independent Planning W14 9LE New Construction Aparthotel Adagio London Hammersmith Apts 240 Aparthotel Adagio Planning W6 8DA New Construction Bakery House Apts 16 Independent Planning W12 7EN New Construction Chiswick Rooms 4 25 Independent Planning W6 0SA Expansion Hammersmith Grove Hotel Apts 85 Independent Planning W6 7HA New Construction Motel One London Hammersmith Budget 400 Motel One Planning W6 0LG New Construction So Sienna Apts 4 Independent Planning W6 0LS Expansion The Clarence Hostel 12 Independent Planning W14 9PP New Construction Abercorn House Hostel Hostel 26 Independent Deferred W6 7DS New Construction Holiday Inn Express London Hammersmith Budget 60 Holiday Inn Express Deferred W6 0QU Expansion Kensington West Hotel 2 9 Best Western Deferred W14 8SN Expansion SUBTOTAL 923 TOTAL 2,893

CBRE | HAMMERSMITH GROVE 28 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET The London Serviced Apartment Sector London Serviced Apartments Supply Evolution 2017-2022F The following four slides provide an overview of the London serviced apartment sector, including supply statistics, performance trends pre- and during the current pandemic as well as general operating characteristics. 15,000 11% ▪ The London serviced apartment landscape has seen a notable increase in development activity over the 14,000 9% last few years with rooms supply growing by 3.3% per annum between 2017 and November year-to-date. 13,000 ▪ Whilst serviced apartments were historically dominated by small scale owner operators, over recent years, 7% a number of high profile operators have opened properties in London. This includes new lifestyle brands 12,000 5% such as Locke, Wilde Aparthotels by StayCity, STAY by the LABS Collective and room2. These concepts 11,000 target a new generation of travellers who increasingly combine business travel with leisure time (i.e bleisure 3% travel) and thus desire a flexible accommodation offer, combining work and play. 10,000 ▪ In addition to new brands, established groups such as Adagio and Native have also continued to expand 1% 9,000 their presence in the market place. 8,000 -1% ▪ Driven by the ongoing success and resilience of the serviced apartment model, recent development trends 2017 2018 2019 2020 Due 2021 Due 2022 are likely to continue. Total Rooms Pipeline % change ▪ Based on data from AM:PM Hotels there are currently a total of 18 serviced apartment projects scheduled to open over the next two years in London with a total of 2,145 rooms. Pipeline projects are generally London Top 10 Branded Serviced Apartments evenly distributed across Central London. This is with the exception of the City fringe area around Aldgate, which has a notable cluster of three pipeline projects, including high profile brands such as Locke, Wilde Citadines by Staycity and Adagio. With already a strong presence of serviced apartment operators on the City fringes, development activity is likely driven by strong demand generated by existing and new office StayCity Serviced Apartments developments. This includes the Whitechapel area, which is seeing increased investment activity in Marlin Apartments anticipation of the arrival of the Elisabeth Line. Locke ▪ Canary Wharf is another area in London that has a very high density of serviced apartment Residence Inn accommodation, accounting for 22.0% of total accommodation supply. This compares against the wider Bridgestreet Accommodations London market, where serviced apartments only account for 7.0% of total bedroom supply. This highlights the popularity of extended stay product in office locations with a high proportion of national and City Apartments international companies. Cheval Residence Group SACO Based the existing presence of serviced apartments in London and future development trends, we consider the Clarendon Serviced Apartments proposed location in Hammersmith to present a highly suitable location for the development of an extended stay product. This takes into account the strategic location of the site in relation to key transportation links as well as major international corporate demand drivers and leisure attractions. Further to this, the development of an extended Existing Beds Pipeline stay product is considered to be more resilient to absorb demand shocks such as COVID-19, as will be detailed on the Source: STR, 2020. Republication or other re-use of this data without the following pages. express written permission of STR is strictly prohibited.

CBRE | HAMMERSMITH GROVE 29 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET The London Serviced Apartment Sector Annual London occupancy, serviced apartments vs. hotels, 2015-2019 Monthly London ADR, serviced apartments vs. hotels, Dec-19 to May-20

86% 4% 250 40% 85% 4% 35% 200 84% 3% 30% 83% 3% 150 25%

82% 2% 20%

Spread

Premium Occupancy 81% 2% ADR, GBP£ 100 15% 80% 1% 10% 50 79% 1% 5% 78% 0% 0 0%

Premium Serviced apartments Hotels Spread Serviced apartments Hotels

Source: STR, HotStats, 2020. Republication or other re-use of this data without the express Source: STR, HotStats, 2020.Republication or other re-use of this data without the express written permission of STR is strictly prohibited. written permission of STR is strictly prohibited.

▪ Serviced apartments and apart-hotels primarily cater for corporate travellers ▪ As mentioned, a number of emerging apart-hotel concepts, not limited to Locke requiring accommodation for medium to long term assignments, in addition to by SACO, Native and Wilde by Staycity, are looking to capitalise on increasing those relocating and requiring interim accommodation. leisure demand with a more design-led product. We believe that design and experience are also becoming key decision-making factors for corporate ▪ In recent years the target audience has widened to families on leisure trips travellers, and these ‘lifestyle’ apart-hotel brands are therefore well positioned to looking for a more suitable alternative to traditional hotels, and the short-stay appeal to all key market segments going forward. business and leisure guest; seeking the service levels of a hotel, but with a typically larger room and the design and amenities to cater for an increasingly blurred lifestyle. ▪ The two charts above show the performance of extended stay properties in London versus traditional full-service hotels. Extended stay properties have outperformed the hotel market in terms of both occupancy and average rate. This is due to appeal of the extended stay subsector to multiple market segments and the resulting ability to effectively yield rooms revenue.

CBRE | HAMMERSMITH GROVE 30 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET The London Serviced Apartment Sector Monthly London occupancy, serviced apartments vs. hotels, Dec-19 to Sep-20 Monthly London ADR, serviced apartments vs. hotels, Dec-19 to Sep-20

100% 35% 300 250% 30% 80% 250 200% 25% 200 60% 150%

20% 150 Spread

15% 100% Premium Occupancy 40% ADR, GBP€ 100 10% 20% 50 50% 5% 0% 0% 0 0%

Spread Serviced apartments Hotels Premium Serviced apartments Hotels

Source: STR, HotStats, 2020. Republication or other re-use of this data without the express Source: STR, HotStats, 2020. Republication or other re-use of this data without the express written permission of STR is strictly prohibited. written permission of STR is strictly prohibited.

▪ Based on statistics from STR, a larger proportion of serviced apartments have ▪ The above chart shows that, despite declining occupancy due to lower demand, continued to operate throughout the pandemic compared to traditional hotels, those seeking accommodation have been willing to pay a significant premium to largely accommodating key workers or those stranded due to travel restrictions. stay in a serviced apartment over a traditional hotel. Although we recognise that At present the majority of serviced apartments in London have re-opened (99%) long stays commencing pre-COVID-19 may also have supported ADR through whilst 12.0% of London hotel bedrooms remain closed. first lockdown.

▪ Whilst revenues have declined, this demand will have protected many serviced ▪ Going forward, we expect travellers to express some apprehension about staying apartment owners and operators from the acute working capital challenges in transient accommodation and potentially coming into contact with others, at observed across the traditional hotel space. least in the short-to-medium term. As a result, and based on the trends to date, this is likely to benefit the performance of serviced apartments over traditional ▪ Serviced apartments have proven to be a popular option amongst those seeking hotels. accommodation during the pandemic, as they allow for guests to effectively isolate and social distance. Typically serviced apartments have reduced social spaces, guests have less contact with staff, and the units are larger and include self catering facilities.

▪ The above points can be underpinned by a recent survey conducted by HVS of leading serviced apartment operators with circa half of the respondents indicating that operations remained profitable during 2020, albeit by a lower margin than pre-COVID-19.

CBRE | HAMMERSMITH GROVE 31 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET The London Serviced Apartment Sector Operating Characteristics Lean Operating Structure ▪ Rooms Revenue typically accounts for the largest share of serviced apartment revenues, which can be attributed to the fact that most serviced apartment concepts have limited ancillary facilities (e.g. F&B, leisure). ▪ Departmental operating costs for a serviced apartment are typically lower when compared to a hotel. This is due to a lower turnover of guests with a longer average length of stay when compared to a traditional hotel. This translates into a very lean operating structure with gross operating margins for serviced apartments typically ranging between 45 to 65%. ▪ The lower operating expense structure relative to full-service hotels, helps to insulate owner returns against market cyclicality and fluctuating accommodation demand. In the case of current market environment and the first lockdown, this meant that a large number of serviced apartments continued trading and despite a decline in revenue were able to cover their cost base and remain profitable. Wilde Aparthotels by StayCity – Self-Contained Accommodation Offer ▪ The evidenced resilience of the serviced-apartment sector can also be attributed to the accommodation type on offer, which is geared towards the extended stay market and thus lends itself to comply with COVID-19 restrictions. This includes more spacious, self contained rooms, which in most cases comprise self-catering facilities and other appliances such as washers and dryers. This reduces the interaction with hotel personnel and other guests compared to a traditional hotel, making serviced apartments a popular accommodation choice during the current pandemic. Flexible Accommodation Offer ▪ Another key factor that has enabled serviced apartments to continue trading in the COVID-19 market environment without generating a loss, has been the flexibility to adapt and cater for new types of demand. With a notable drop in MICE and international corporate demand, serviced apartments were able to attract a higher proportion of leisure demand as well as key workers. This demand was further supplemented by some serviced apartments successfully renting rooms as office space. Bermonds Locke

CBRE | HAMMERSMITH GROVE 32 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET Local Hotel Market Operating Performance

In this section, we examine the current 2019 Performance trading dynamics of the hotel market of relevance to the proposed development. Occupancy 84.7% In order to illustrate the operating characteristics of the local hotel market of ADR £95.39 relevance, we have used the STR benchmark of five hotels (476 bedrooms), ranging from economy to upscale. RevPAR £80.83

Proposed Development SUBJECT SITE

Source: STR, 2020. Republication or other re- use of this data without the express written permission of STR is strictly prohibited.

Map Legend Hotel Class Keys 1 Premier Inn Hammersmith Economy 119 2 Holiday Inn Express London - Hammersmith Midscale 195 3 Luma Hammersmith London Midscale 89 4 Lamington Apartments Upscale 65 Our selected hotel benchmark set provides a comprehensive overview of the performance of hotel supply in the Hammersmith area. 5 ibis London Shepherds Bush - Hammersmith Midscale 128 As shown on the next pages, this set has continuously operated above 80.0 per cent occupancy over the past six years, despite the opening of new hotels, demonstrating the strong existing levels of accommodation demand in the local area as well as the need for additional hotels stock to support the ongoing gentrification of the local area.

CBRE | HAMMERSMITH GROVE 33 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET Local Hotel Market Operating Performance

Hotels of Competitive Relevance RATING & ONLINE REPUTATION ROOM RATE MEETING & EVENTS F&B LESIURE FACILITIES

BEST AVAILABLE RATE ONLINE 1

HOTELS

GYM

Class

STYLE)

WET FACILITIES

NUMBER OF BARS OF NUMBER

NUMBER OF ROOMS OF NUMBER

NUMBER OF RESTAURANTS OF NUMBER

MIDWEEK (£) (£)WEEKEND

TRIPADVISOR SATISFACTION 10) OF (OUT BOOKING.COM

DISTANCE DISTANCE FROM SITE (miles)

NUMBER OF MEETINGS ROOMS OF NUMBER

TRIPADVISOR RAKING (OUT OF 5) TRIPADVISOR OF (OUT RAKING CAPACITY OF LARGEST ROOM (THEATRE- CAPACITY ROOM LARGEST OF PRIMARY COMPETITIVE RELEVANCE 1 Premier Inn Hammersmith 0.7 119 Economy 71% 4.0 8.5 71.7 70.0 0 0 1 1   Holiday Inn Express London - 2 0.5 195 Midscale 84% 4.0 8.1 74.2 59.2 0 0 1 1   Hammersmith 3 Luma Hammersmith London 0.2 89 Midscale 82% 4.0 8.5 98.3 86.7 0 0 0 0   4 Lamington Apartments 0.2 65 Upscale 90% 4.5 8.6 114.7 124.6 0 0 0 0   ibis London Shepherds Bush - 5 0.8 128 Midscale 89% 4.5 8.4 100.0 108.3 0 0 1 1   Hammersmith 596 Source: CBRE Hotels Research, 2020 1 Online Best Available Published Rates, polled for April 2021, exclusive of VAT

CBRE | HAMMERSMITH GROVE 34 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET CBRE ANALYSIS STR BENCHMARK SET Performance Benchmark ▪ Over the past six years the local hotel market has consistently achieved occupancy levels in excess of 80.0%, illustrating the sustained levels of accommodation 98.27 98.15 demand in the Hammersmith area. 100 95.39 100.00 90.15 92.04 92.68 ▪ After record occupancy levels of 90.0% in 2014, the local market witnessed a notable increase in hotel supply with the addition of four hotels and 424 90 90.00 81.12 80.89 79.99 80.83 77.24 79.38 bedrooms in the same year. This combined with further supply additions in the 80 80.00 wider London market, resulted in softening occupancy levels in the following years, albeit remaining strong at above 80.0%. 70 70.00 ADR (£) ADR ▪ Between 2017 and 2019, occupancy levels followed a positive trajectory, which

Occupancy Occupancy (%) 60 90.0 60.00 was likely driven by the ongoing regeneration of the wider local area and the 87.9 83.3 84.7 80.8 81.5 successful delivery of additional office schemes (e.g. White City Place, Imperial 50 50.00 College campus) in Hammersmith. 40 40.00 ▪ In contrast to the positive increases in occupancy, Average Daily Rate (ADR) declined by 2.9% between 2017 and 2019. This can likely be attributed to the 30 30.00 discounting adopted by a few hotels included in the competitive set to successfully 2014 2015 2016 2017 2018 2019 compete with newer hotels in the market place. Occupancy ADR RevPAR ▪ Whilst occupancy levels around 80.0 per cent would already indicate a supply Hammersmith Hotel Market vs Wider London Hotel Market constrained hotel market during peak demand periods, the local hotel market achieved close to 85.0% in 2019. This provides evidence that there are several periods throughout the year where a substantial amount of demand is 89.98 displaced to other boroughs or markets, illustrating the need for additional 87.89 supply in the area once the market has successfully recovered from the current 84.74 83.34 pandemic. This presents an opportunity for the proposed development to 82.93 83.42 83.37 82.24 81.73 capture historically displaced demand and to support and complement new 81.34 81.50 80.78 development projects in the area, which in turn will result in additional hotel demand for the local market. ▪ As shown in the adjacent graph, the local hotel market has outperformed the wider London hotel market in terms of occupancy performance in four out of six years, including more recently in 2019. Following a recovery from the current pandemic, in terms of economic performance and tourism demand, we anticipate that the delivery of new offices, retail and residential units will likely contribute to additional accommodation demand in the local area. This 2014 2015 2016 2017 2018 2019 includes the continued expansion of the Imperial College, White city Campus Hotel Occupancy Hammersmith Hotel Occupancy London as well as the redevelopment of Olympia London, into a world-leading cultural and entertainment hub. Source: STR, 2020. Republication or other re-use of this data without the express written permission of STR is strictly prohibited.

CBRE | HAMMERSMITH GROVE 35 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET STR BENCHMARK SET – DAILY MARKET TRENDS The graphs below present the average monthly occupancy and ADR spread by day for the STR market sample of relevance. The charts illustrate the highest, lowest as well as average levels achieved in 2019.

Average Occupancy Spread by Day (12 Months to December 2019) Average ADR Spread by Day (12 Months to December 2019)

110% 150 100% 130 90% 88.6% 89.2% 89.4% 85.5% 84.7% 110 112.60 110.49 80% 81.8% 103.38 74.0% 70% 90 90.65 90.75 82.87 60% 70 71.45 50% 40% 50 30% 30 Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Source: STR, 2020. Republication or other re-use of this data without the express written Source: STR, 2020. Republication or other re-use of this data without the express written permission of STR is strictly prohibited. permission of STR is strictly prohibited. ▪ Under the period under review the local hotel market has achieved occupancy ▪ In terms of ADR performance, the peak occupancy performance of Tuesdays, levels well above 80.0 per cent on all but one day of the week. The market Wednesdays and Saturdays allow hoteliers to effectively yield manage and equally benefits from strong midweek demand with peaks close to 90.0 per cent achieve rate premiums compared to the rest of the week. on Tuesdays and Wednesday, as well as on Saturdays, when strong leisure demand drives occupancy close to 90.0 per cent. ▪ The comparatively lower weekend rates may be attributed to the rather price sensitive nature of leisure travellers. ▪ With average annual occupancy levels close to 85.0 per cent, there are six days of the week when hotels are likely to be displacing significant demand, which illustrates a clear demand/supply imbalance and hence, supporting the need for additional hotel supply.

CBRE | HAMMERSMITH GROVE 36 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES HOTEL MARKET 04 HOTEL MARKET The wider London Hotel Market The following graphs and commentary provide key performance statistics on the wider London hotel market including the anticipated recovery in hotel demand and revenues based on information provided by STR Global. Supply and Demand Index London Hotel Demand & Rooms Revenue Evolution (Index 2008=100) (Recovery Index Based on 2019) 140 136 150% 130 131 120 100% 110 50% 100 90 0% 2009 2011 2013 2015 2017 2019 2019 2020 2021 2022 2023 2024 Supply Demand Demand Rooms Revenue Source: STR, 2020. Republication or other re-use of this data without the express written Source: STR, 2020. Republication or other re-use of this data without the express written permission of STR is strictly prohibited. permission of STR is strictly prohibited.

▪ Over the past decade, hotel demand across London has clearly outstripped ▪ The latest STR Global forecast (August 2020) projects hotel demand levels for supply, as illustrated by the above graph. London hotels to return to pre-pandemic levels by 2023. ▪ Despite continued strong supply increases in recent years, hotel occupancy levels ▪ Following London wide occupancy levels of 83.4% with 43.3 million room remained at record high levels in 2018 and 2019 at +83%. This provides nights sold in 2019, STR predicts a significant fall in demand for 2020 of - evidence that not only supply was absorbed with minimal impact into the market 63.0%. place but also that the London hotel market was supply constrained during peak ▪ This is assumed to be followed by a strong rebound in 2021 as travel restrictions demand periods. are lifted and a vaccine becomes widely available. ▪ As the London economy rebounds and tourism demand levels return to pre- ▪ In contrast to hotel demand, STR projects Rooms Revenue to only regain 2019 pandemic levels, there will likely be a need for additional hotels to ensure that levels by 2024, one year later than the recovery in hotel demand. This reflects a the city continuous to meet the demands of corporate travellers and tourists that lagged impact on ADR for the short-term due to changes in business mix (e.g. want to visit the Capital. substitution of corporate demand by leisure demand) and discounting adopted by hoteliers to attract demand (e.g. hotel promotions). This is due to lack of high ADR segments such as MICE or corporate, lack of international travel, and increased competition as hotels are reopened or newly opened. ▪ Whilst the latest STR Global forecast does not yet account for the recently imposed lockdown measures, this downside risk is mitigated by a potential quicker availability and distribution of a vaccine.

CBRE | HAMMERSMITH GROVE 37 PROJECTIONS 05 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES PROJECTIONS 05 CBRE PROJECTIONS Bases for our Financial Projections MARKET FAIR SHARE ANALYSIS Opening Year 2023 We have adopted a fair share approach to projecting roomnight demand, taking into Stabilised Trading Year 3 account the evident demand trends in the market, historic and current market-mix information, price positioning and relative attributes of competitive hotels. Number of Bedrooms 85 We have prepared our projections based on data collected during our market Market Positioning Mid-Scale Apart-Hotel research and an analysis of the performance of competitor hotels in the market area, taking into consideration the following; Assumed Inflation Rate 2.0% per annum ▪ The relative strengths and weaknesses of the project site; ▪ Monthly seasonality patterns and weekday, weekend patterns of demand; In this section we detail our methodology, assumptions and calculations on which we have based our projections of occupancy and ADR for the proposed Apart-Hotel. ▪ The pricing and discounting structure adopted by competing hotels; ▪ Development projects in the wider Hammersmith area; KEY ASSUMPTIONS FOR OUR FINANCIAL PROJECTIONS ▪ Growth prospects for each market segment; ▪ A detailed and comprehensive pre-opening plan; ▪ A comprehensive sales and marketing programme; and ▪ We have assumed that the proposed development will be operated by an experienced operator under a mid-scale Apart-Hotel brand. The development will ▪ Trading information of hotels of competitive relevance provided by CBRE Hotels. feature 85 keys, including one-bedrooms and studios as presented on slide 11 of this report; ▪ recovery of the wider London tourism sector to pre-COVID-19 levels by the end of 2024; and ▪ assumed opening date of Q1 2023. Fair share definition On an equitable basis a hotel will accommodate room night demand in a given We have benchmarked our projected financial performance of the proposed Apart-Hotel market in direct proportion to its share of market accommodation supply. If room night against the current performance of identified hotels of competitive relevance. In addition, demand in a given market is such that, on an equitable basis, every Hotel should we have utilised our primary and secondary research into the hotel market of relevance, achieve, say, 65.0 per cent annual room occupancy regardless of size, brand, to assist in our forecasts. location etc., then any Hotel achieving an occupancy above or below this figure is regarded as trading above or below fair share. Hotels will trade above and below fair share as a result of their individual product, brand, condition and locational attributes and the changing preference of sources of demand.

CBRE | HAMMERSMITH GROVE 39 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES PROJECTIONS 05 CBRE PROJECTIONS Competitive Market – Projections

Competitive Market - Demand and Supply Projections Competitive Market - Occupancy and ADR Projections

90.0% 120.00 300,000 80.0% 100.00 250,000 70.0% 80.00 200,000 60.0% 60.00

Rooms 150,000 50.0% 40.00 100,000 Occupancy 40.0% 20.00 50,000 (£), ADR Future Values 0 30.0% - 2017 2018 2019 2020P 2021P 2022P 2023P 2024P 2025P

Occupancy ADR (£, Future Values) Annual Rooms Sold Annual Rooms Available Source: CBRE Hotels, 2020 Source: CBRE Hotels, 2020 ▪ Our projection of rooms available (supply) accounts for future openings that we ▪ We have reflected a gradual recovery in accommodation demand for 2021 and expect to be of competitive relevance. As per the information presented on slide the following years, assuming that restrictions are lifted and a vaccine become 27, we are at present only aware of one confirmed hotel project: The Dorsett widely available. Our estimations of occupancy performance are broadly in line Shepherds Bush London Apartments II with 74 bedrooms in 2021. Given the with those projected by STR Global, presented on slide 37. market positioning and envisaged accommodation offer, we consider this ▪ By 2024 we estimate the local hotel market to reach again occupancy levels serviced apartment to become a primary competitor of the proposed Apart- above 80.0% in line with pre-pandemic trends. Our stabilised occupancy Hotel. projections in 2025 are 83.2%, which is marginally lower than the 84.7% ▪ Our projected evolution of hotel supply also takes into account the opening of recorded in 2019. This reflects the increases in supply, taking into account the the proposed development in Q1 2023 and the recently completed 60- opening of both the proposed Apart-Hotel and The Dorsett Shepherds Bush bedroom extension of the Holiday Inn Express. London Apartments II as well as the recent 60-bedroome extension of the ▪ Our market occupancy projections for 2020 reflect the severe impact of the Holiday Inn Express. current pandemic on accommodation demand, including world-wide travel ▪ In future values, we expect ADR to reach £100.0 by 2025, which is restrictions and the forced closure of hotels during the first lockdown (March to approximately 5.0% above the achieved performance by the set in 2019. This July) as well as a second, but less stringent, lockdown in November. accounts for the envisaged quality of the new supply, which is anticipated to ▪ Taking into account the year-to-date trading data of the competitive set, as well command a premium over the existing economy hotels within the set. as two lockdown periods, we anticipate occupancy levels for the whole year to decline to approximately 41.0%, a year-on-year drop of approximately 44.0 ppts. This reflects that a few hotels remained open during the lockdown period and continued to attract some demand from key workers and medical staff. CBRE | HAMMERSMITH GROVE 40 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES PROJECTIONS 05 CBRE PROJECTIONS Proposed Apart-Hotel Projections

Proposed Apart-Hotel - Penetration Index Proposed Apart-Hotel – Rooms Performance 130% 95.0% 125.00 90.2% 120% 118% 119% 120% 90.0% 86.2% 120.00 110% 109% 85.0% 120.03 105% 80.0% 116.35 100% 99% 115.00 75.0% 76.2% Index 90% 70.0%

Occupancy 110.00 80% 65.0% 107.06 70% 60.0% 105.00 (£), ADR Future Values 55.0% 60% 50.0% 100.00

Market Pentration Index (MPI) Average Rate Index (ARI) Occupancy ADR (£, Future Values) Source: CBRE Hotels, 2020 Source: CBRE Hotels, 2020 ▪ Based on an assumed opening date of Q1 2023, we have projected the market ▪ Our stabilised occupancy projections are 7.0 ppts above the local hotel market penetration index (MPI) and average rate index (ARI) for the proposed Apart- in 2025, and reflect the quality of the proposed development as a newly build Hotel relative to its competitive market, in order to arrive at our projections of Apart-Hotel and its comparatively smaller size with 85 keys. Further to this, the occupancy and ADR. proposed accommodation offer (i.e. one-bedrooms and studios) will likely attract a good proportion of longer staying guests and as a result reduce the occupancy fluctuations compared to traditional hotels. ▪ Considering the characteristics of the proposed Apart-Hotel in the context of the competitive market, and based on internal benchmarks not limited to other serviced apartments in the local area, we expect the proposed development to ▪ We project the proposed Apart-Hotel to achieve a stabilised ADR of £120.03 by outperform in terms of occupancy (MPI of 109%, stabilised) and ADR (ARI of 2025 (in future values). This is a premium of 20.0% compared to the projected 120%, stabilised). performance of the local competitive set in 2025. We consider this reasonable and to primarily reflect the size of the proposed accommodation offer equipped with additional cooking, eating and living spaces, resulting in larger average room sizes than the majority of the hotels included in the benchmark sample.

▪ Both our ADR and occupancy projections have been benchmarked against trading performance data of national and international serviced apartment providers in the wider locality pre-COVID-19.

CBRE | HAMMERSMITH GROVE 41 APPENDICES 06 EXECUTIVE SUMMARY PROPOSED SCHEME MARKET TRENDS HOTEL MARKET PROJECTIONS APPENDICES APPENDICES 06 APPENDICES APPENDIX 1: GLOSSARY ARR – Average Room Rate Double Occupancy Factor Management Fees Defined as the average room rate charged per paid A measurement to denote the incidence of two people Management Fees are fees charged by an organisation room occupied and is calculated by dividing total rooms occupying double or twin room. A double occupancy managing a property for management services and revenues by the number of rooms sold. factor of 1.2 denotes that 20 per cent of the time, two supervision of the property. Bed nights people share the room, while a double occupancy factor MOD – Minor Operated Departments of 2.0 denotes that two people share the room all of the Quantifies the number of guests resident in the hotel. time. Minor Operated Departments include equipment rental, telephone and business centre revenues. Cost of Sales Fair Share Rack Rate Expenses directly related to the sale of goods or services Based on analysis of current accommodation demand such as raw materials but excluding indirect expenses. and supply in any given hotel market. It includes an The standard price of a hotel room before any Demand Build-Up assessment of demand growth in the market, the impacts discounting has taken place and is often a statement of position in the market. Demand build-up is a methodology used to project of future competitive supply and displaced and created room night demand, and includes an assessment of demand. The term ‘fair share’ relates to each hotel Room Yield seasonality, source of demand, and future trading achieving an equal proportion of demand in the Calculated by dividing total room revenues by the potential of any given hotel. specified market. number of rooms available for sale in the same period. Direct Expenses GOP – Gross Operating Profit Room Occupancy Direct expenses relates to direct variable costs incurred in Gross Operating Profit is defined as total revenue less all Calculated by dividing the number of roomnights sold the operation of each department and varies from departmental and undistributed operating expenses, also during a period by the total number of rooms available property to property. Examples include satellite television referred to as IBFC (Income before Fixed Costs) in the same period. subscription, laundry and dry cleaning, guest and Limited – Service Hotels Roomnights cleaning supplies costs. Originally defined as a hotel without restaurant or Describes the number of rooms that are occupied in a DOP – Departmental Operating Profit banquet facilities, the services and amenities offered to hotel, regardless of the number of people staying in the Total departmental revenue less cost of sales, payroll guests of limited-service hotels are typically simple. room. costs and direct operating expenses. However, these services and amenities have expanded over the past decade, and in today’s market a limited- Sales per Employee Double Occupancy service hotel’s range of amenities might include a Calculated by dividing total sales by the total number of Double occupancy describes a double or twin room that business centre, a fitness room, a guest laundry facility, a full-time employees (i.e. part-time employees count as is occupied by two people as opposed to single market pantry, an indoor and/or outdoor pool and fewer than one). occupancy in which case one person occupies a double whirlpool, and small meeting rooms. “Budget” limited- UOE – Undistributed Operating Expenses or twin room. service hotels offer no-frills rooms at modest prices. More robust limited-service hotels offer many of the This classification is used for administrative and general same high-quality amenities that guests would expect expenses, marketing expenses, energy costs, and from full-service hotels, with one significant difference: property operation and maintenance expenses. limited-service hotels lack a dedicated, revenue- producing food and beverage component. CBRE | HAMMERSMITH GROVE 43