QUARTERLY REPORT Reporting Period: 2Q2016 DECO 11 UK Conduit 3 plc. (Deal Ticker: DECO 2006 - C3X) Wildmoor Northpoint Ltd Loan Securitisation Name Deco 11 UK Conduit 3 Loan Name Wildmoor Northpoint Ltd Report Date 24/05/2016 IPD Date 25/04/2016 Loan as % of Total Pool 14.16% SNAPSHOT OF KEY UPDATES Contact Details • Retention of existing tenants at lease expiry and the attraction of new tenants Primary Servicer Special Servicer Note Trustee continues to increase the WARLT which currently stands at 6.08%; • The occupancy rate has gone down slightly to 91.58% due to tenant Capita Asset Services Solutus Advisors Ltd Deutsche Bank Trustee Co Ltd relocations; • Three new leases have completed; Serenity Morley James Bannister Hannah Ward • Four lease renewals have completed with five tenants vacating during the +44 (0) 207 393 6227 +44 (0) 845 555 4141 +44 (0) 207 547 7629 period. [email protected] [email protected] Loan Information Property Information Loan Work Out Summary Origination Date 05/06/2006 Location Yorkshire and the Humber Date of Transfer 25/03/2010 Maturity Date 25/07/2010 Type Shopping Centre Reason for Transfer LTV Breach Interest Type 3-m LIBOR Number of Assets 1 Standstill Agreement No Current All-in Interest Rate 3.74% Number of Leases 73 Recovery Type Asset Mgmt. and Sale Origination Whole Loan Balance £45,900,000 WARLT (years) 6.08 Administration Yes Origination Senior Loan Balance £41,250,000 Net Lettable Area 198,254 LPA Receivership No Origination Junior Loan Balance £4,650,000 Current Value (OMV) £23,800,000 Appraisal Reduction? Yes Current Whole Loan Balance £41,547,561 Current Value (VPV)* £19,000,000 If (Y), Reduction Amount £22,428,647 Current Senior Loan Balance £37,094,091 Date of Valuation 19/07/2012 Swap in Place? No Current Junior Loan Balance £4,453,470 NOI Annualised** £861,170 Indicative Unwind Cost N/A Loan Status Matured/Current * Vacant Possession Value from Savills Valuation December 2009. Covenant Information Covenant @ Origination Previous Quarter Current Quarter Comment ICR Yes (Historic 12 month) >1.10x 1.03x 0.66x 0.61x ICR and DSCR have fallen due to the drop in NOI as a result of DSCR N/A 1.00x 0.66x 0.61x tenant relocations and subsequent rent free run offs. LTV Yes < 90.00% 83.45x 174.67% 174.57% ICR History DSCR History LTV History 1.00x 1.00x 178% 177% 176% 0.50x 0.50x 175% Coverage Coverage 174% 0.00x 0.00x 173% 3Q2015 4Q2015 1Q2016 2Q2016 3Q2015 4Q2015 1Q2016 2Q2016 3Q2015 4Q2015 1Q2016 2Q2016 Securitisation: Deco 11 UK Conduit 3 Loan Name: Wildmoor Northpoint Ltd Report Date: 24/05/2016 Property Address Northpoint Shopping Centre Bransholme, Hull, HU7 4EE Property Strats Title Leasehold Lease Expiry Profile Occupancy History Occupancy by Area 91.6% 100% Reserves £0 100% 90% Economic Vacancy* 30.5% 80% * based on ERVs, or passing rent where ERV not available, 80% and negative figure represents asset being over-rented. 60% AREA 70% 40% Top Five Tenants RENT Area % Total of 60% 20% 50% Somerfield Stores Limited 6.9% 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 0% Wilkinson Hardware Stores Limited 6.5% 2016 2017 2018 2019 2020 2021 2022 Poundland Limited 6.5% Iceland Foods Limited 5.3% W Boyes & Co Ltd 5.0% Top 5 Tenants as % of Total: 30.1% Valuation Information OMV / VPV (in millions) £23.8m Valuer Knight Frank Net Initial Yield 9.85% Reversionary Yield 8.55% Equivalent Yield 10.82% Costs of Sale as % of Purchase Price 5.75% Date of Next Valuation TBD Special Assumptions / comments in last valuation:- Market Value of £27,100,000 assuming units where the tenant has entered administration (Peacocks, Oakham Clothing and Ellie Louise) are let on market terms and income producing. Securitisation: Deco 11 UK Conduit 3 Loan Name: Wildmoor Northpoint Ltd Report Date: 24/05/2016 Work Out History and Strategy Interest Payment Date Waterfall Date of last Servicer site visit: Dec-15 Income Date of last Borrower meeting N/A Gross Rent £594,406.04 Service Charge £196,377.01 • Days prior to completing the Solutus appointment, the Borrower was placed into Administration by the Special Servicer and a sole Insurance £96,947.63 Director (a partner at the same firm) installed at the property-owning Propco; Other • The planning permission 100,000 sqft open retail consent) renewal was granted, protecting the future development scope at the site; Outgoings • Various Asset Management initiatives have been put into place including; targeting specific tenants in the GAP analysis; reducing Service Charge costs and landlord liabilities; Head Rent £70,743.75 • An updated valuation was completed by Knight Frank on 19th July 2012 with an OMV of £23,800,000 (NIY of 9.85%). The slight Management Fees £47,552.48 drop in value is due to the softening of the yield and three tenants entering administration (which made up 5.9 % of annual rent Administration Fees £17,500.00 roll); Receiver Fees • The head rent for the centre has been successfully negotiated at nil increase; Property Non Recoverables £293,397.90 • The centre's occupancy rate has remained stable and non-recoverables have been reduced, the focus is to create an improved Service Charge Costs £168,362.73 tenant mix and increase the ERVs as pre-recession in-place rents need re-basing for the long-term benefit of the centre; Insurance £96,947.63 • As a result of the strategic decision to prioritise value-enhancing lettings over simply securing tenants at whatever cost, the current 3rd party costs £10,000.00 increase in occupier demand is showing signs of prospective lettings on improved market rents; Other Outgoings • Some key tenants in the centre have renewed their leases and have shown a positive trend by opting for long leases, which shows commitment to the centre. W Boyes have renewed for a long-term lease, while Iceland Food has expanded its store and have also Net Income £183,226.19 renewed for the long-term lease; • Consumer Market research is being updated to understand the changes in consumer needs and habits, which also provides key statistics that help negotiations with prospective tenants; • Planning applications for an extension to a local Retail Park and a new supermarket close to North Point Shopping Centre are being appealed; • A new marketing brochure is being prepared to assist in marketing the site to retailers; • Barker Proudlove and LSH, who have extensive contacts and knowledge of local and national retailers act as joint marketing agents for the scheme. They have reviewd the GAP analysis and approached national retailers to arrive at estimated rental values of ca. £45psfI TZA; • A new lease has completed on unit 5A for a term of 1 year with Itech Repairs; • A new lease has completed on unit F for a term of 15 years with 12 months rent free with Farmfoods Ltd; • A new lease has completed on RMU 3 for a term of 2 years with Raman Preet Kataria; • A lease renewal has completed on unit 8 for a term of 5 years with Boots UK Limited; • A lease renewal has completed on unit 18 for a term of 5 years with a break option on the third anniversay with TCCT Retail Limited; • A lease renewal has completed on unit 30 for a term of 6 years with half rent for the first 12 months with North Hunberside Hospice; • A lease renewal has completed on unit 49 for a term of 1 year with Sportswift Limited. Next Steps 1) Asset Management focus is to continue strong tenant retention and improve the tenant mix by targeting uses not currently repr esented at the centre..