N o 1 Royal Exchange Avenue

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1 London Ec3 RARE PRESTIGIOUS FREEHOLD INVESTMENT WITHIN 100 METRES OF THE BANK OF ENGLAND

2 Overview Proposal Rare prestigious freehold investment within 100 metres of the Bank of England Offers are invited, subject to contract, for the freehold interest. Prime City of London location Attractive refurbished period building providing 13,077 sq.ft. of office and ancillary accommodation New 15 year lease subject to a tenant s option to determine at the 10th anniversary Five yearly upward only reviews Securely let with a parent company guarantee from the ultimate holding company, Business Environment Holding Ltd Business Environment (BE) has traded for in excess of 20 years providing serviced offices Proposed rent of 751,928 per annum exclusive ( per sq.ft. overall) Excellent opportunity for rental growth and capital appreciation BE has successfully operated a business centre from the property for 10 years Highly liquid asset let to an occupier who is heavily incentivised to maintain the premises and extend the lease upon expiry 2

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4 DLR N o 1 Royal Exchange Avenue SALES FORCE TOWER 30 st mary axe TOWER leadenhall street willis AIG ZURICH MMC LATHAM & WATKINS LLP THE lloyd s BUILDING 20 fenchurch street BROADGATE LEADENHALL MARKET LIVERPOOL street HBOS Gatehouse Bank British Steel Pension Fund King & Spalding International N o 1 Royal Exchange Avenue CATLIN ROYAL LONDON GROUP monument Deutsche Bank NATIONWIDE UBS WELLS FARGO BLACKROCK Agricultural Bank of China RK Capital Management ROYAL EXCHANGE VTB BANK DAIWA CAPITAL MARKETS M&G nm rothschild & sons BAKER BOTTS BINGHAM MCCUTCHEN BANK OF ENGLAND CANADA LIFE ING soho house group bank MANSION HOUSE Arthur J Gallagher cannon street Columbia Threadneedle CBI CMS Cameron McKenna Punjab National Bank bloomberg place Bank of China Fidessa n Davis Polk & Wardwell

5 530 FOREIGN COMPANIES LISTED IN LONDON LONDON STOCK EXCHANGE: 300 YEARS OLD AND RANKED FIRST GLOBALLY IN TERMS OF INTERNATIONALITY WITH 300 COMPANIES FROM 70 NATIONS LISTED LONDON METAL EXCHANGE: 75% OF ALL NON-FERROUS METAL FUTURE BUSINESS. IN 2015 THIS EQUATED TO $12 TRILLION NATIONAL 4 BILLION TONNES 170 MILLION LOTS 400,000 PEOPLE ARE EMPLOYED IN THE CITY OF LONDON THE CITY OF LONDON ESTABLISHED AD FOREIGN BANKS IN LONDON $2.7 TRILLION OF FOREIGN EXCHANGE TURNED OVER EACH DAY - 41% OF GLOBAL FOREIGN EXCHANGE LLOYD S OF LONDON: THE WORLDS SPECIALIST INSURANCE AND RE-INSURANCE MARKET OPERATING ACROSS 200 TERRITORIES GROSS WRITTEN INSURANCE PREMIUMS INCREASED 6% IN 2015 TO 26.7 BILLION

6 E EET R G AT N ST R MOO EMA ET AT G PS O SH BI BR LD LA S E DLE STR EET RE NE ST LA W CE THR EE ADN NE ME IN OLD O LO JEW HO RY RT PR BANK OF ENGLAND E RE OGM EET D THR RY R N ST BA K IN G ST RE ET LOT H B U O O RT ST ET OA STRE CH HAM ET GE HAN EXC ROYAL FIN COL GRES TOWER 42 AVE N o 1 R o ya l E x c h a n g e Av en u e ROYAL EXCHANGE LT R Y THE lloyd s BUILDING ET M BA RD ST RE ET T STR WA LBR ET OO RE K ST M HU IA RC ILL BLOOMBERG PLACE LEADENHALL MARKET H W BIR NG LO EC MANSION HOUSE EE BANK AC TO SE S TRE REET HALL ST GR IC NV HOU KI Q E UE ST RIA RE SION ET N L ANE MAN LEADEN L C O R N H IL CHI Q U EE N ST RE ET POU FEN CAN NO NS TRE E Not to scale. RCH STRE ET T CANNON STREET n CHU 20 FENCHURCH STREET 20 fenchurch street

7 N o 1 R o ya l E x c h a n g e Av en u e

8 Location 1 Royal Exchange Avenue lies at the heart of the financial centre of the City of London, within 100 metres of the Bank of England and within a five minute walk of Lloyd s of London and the City s thriving insurance district. This highly energised commercial environment is steeped in history and is home to numerous occupiers of international repute. The Lord Mayors Mansion House and Guildhall are both nearby. The property is situated in a hidden enclave bordered by two of the City s most famous thoroughfares, Threadneedle Street and Cornhill. Access is via an attractive landscaped piazza which sits adjacent to eastern entrance of The Royal Exchange. Royal Exchange is the City s premier luxury retail destination. Boutiques include; Hermes, Bulgari, Tiffany & Co, Penhaligon s, Lulu Guinness and Jo Malone. The central atrium houses a range of premier restaurants and bars. These are soon to be complemented by a much awaited development of 27 Poultry where Soho House and Sydell Group have teamed up to deliver a flagship 5 star hotel, restaurants, rooftop bar, health spa and gym. 8

9 DLR DLR N o 1 Royal Exchange Avenue Connectivity The property is within 200 metres of Bank underground station. This interchange provides access to the Central and Northern lines, District and Circle and Waterloo and City lines and Docklands Light Railway (connections to Canary Wharf). MOORGATE STATION Mainline rail and underground services are provided at Cannon Street (Mainline, Circle and District lines), Moorgate (Mainline, Circle, Northern, Metropolitan and Hammersmith & City lines), Fenchurch Street (Mainline) and Liverpool Street (Mainline, Circle, Central, Metropolitan and Hammersmith & City lines) stations, all of which are within a short walk. Communications will be further enhanced in 2018 when Crossrail (The Elizabeth Line) is scheduled to become operational. Approximate journey BANK STATION LIVERPOOL STREET STATION 1 MINN 4 MINS CANNON STREET STATION MONUMENT STATION 5 MINS FENCHURCH STREET STATION times and key stations are shown in the diagram below Travel Times From Bank (minutes) Crossrail Connections 17 N o 1 Royal Exchange Avenue Liverpool Street Waterloo Heathrow Airport Paddington Bond Street Farringdon Tottenham Court Road Liverpool Street Stratford Central Jubilee DLR Kings Cross/St Pancras Overground Bond Street Canary Wharf Victoria Piccadilly Heathrow Circle Hammersmith & City Bakerloo Central Jubilee Northern Central Circle Metropolitan Hammersmith & City Circle Metropolitan Hammersmith & City Canary Wharf London City Airport Paddington District * * Luton Gatwick * Northern Central Stansted Jubilee DLR Source:tfl.gov.uk and rac.co.uk * Airports not on the Crossrail route - to travel to these airports passengers will need to travel on other connecting rail services 9

10 Description Accommodation 1 Royal Exchange Avenue is an attractive period building benefitting from a return frontage onto Finch Lane. The property has been independently referenced in accordance with the latest RICS Code of Measuring Practice and provides the following net internal floor areas:- BE acquired the property in 2006 at which time a comprehensive refurbishment was undertaken to provide 13,077 sq.ft. (1,215 sq.m.) of office and ancillary accommodation. Continual improvement work has maintained the property to a very high standard and additional refurbishment works were undertaken recently in Arranged over lower ground, ground and four upper floors. The floorplates have excellent levels of natural daylight from two elevations and from a shared courtyard. They are typically circa 2,300 sq.ft. FLOOR USE AREA (SQ.FT.) AREA (SQ.M.) Fourth Offices 1, Third Offices 2, Second Offices 2, First Offices 2, Ground Offices & Reception 2, Lower Ground Meeting Room & Ancillary 2, TOTAL 13,077 1,215 BE has successfully operated a high quality business centre from the building for the last decade. A desire to provide clients with a premium service is such that the building is continually upgraded and refreshed. Amenities include:- A large reception. Passenger lift serving all floors. VRV air conditioning / comfort cooling throughout. Perimeter trunking. WC facilities on all floors. LG compliant light fittings (these are being upgraded to LED as and when suites revert). Large decked roof terrace. Gym, shower and changing facilities. 10

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14 Tenure Freehold. Bank of England For indicative purposes only. This plan is based upon the Ordnance Survey map with the sanction of the controller of H.M. Stationary Office. Crown copyright reserved. The area shaded blue denotes basement vaults. Finch Lane

15 Tenancy A leaseback on effective full repairing and insuring terms in accordance with the tenancy schedule set out below. The lease will be subject to five yearly upwards only rent reviews. TENANT FLOOR USE AREA AREA TERM NEXT RENT RENT ( PA) RENT COMMENTS (SQ.FT.) (SQ.M.) REVIEW DATE ( P.S.F) Business Environment RE Ltd Fourth Offices 1, years from 5 yearly 751, Third Offices 2, completion, subject Second Offices 2, to a tenant s option to determine at the First Offices 2, th anniversary Ground Offices & Reception 2, Lower Ground Meeting Room 2, & Ancillary Inside 1954 Act. Business Environment Holding Ltd will act as surety for the first five years of the term. TOTAL 13,077 1, ,928 15

16 The Tenant BE is a private group of companies providing serviced offices throughout the UK with a focus on central London. The group has successfully traded for 21 years making it one of the most established in the sector, achieving an operating profit every year. BE is the second largest independent provider of serviced offices in London with a portfolio of circa 857,000 sq.ft.. There are seventeen centres, operating 14,000 workstations. Approximately 73.50% of BE s revenue is generated from London and the South East. This will rise significantly to in excess of 86% when four new centres are fully integrated. Further acquisitions are anticipated. BE places great emphasis on client and employee satisfaction and has won numerous awards including (on multiple occasions), Business Centre of the Year. The group has won this award more than any other operator. The group has appeared in the Sunday Times Best Small Companies To Work For top 100 for 7 years. The group has also achieved Investors In People status. The future prospects for BE are well placed in the serviced office sector with rising revenues being recorded across all of the group s centres with record turnover and profitability. Moreover, there is a growing trend towards occupational flexibility and service delivery across virtually all business sectors. The following summary has been set out below:- * Reduction in profit on account of new centre openings. Further information is available online at 31/12/ Forecast 2017 Forecast Audited (With New Centres) (With New Centres) Turnover 24,522,825 32,385,513 45,148,493 Operating Profit 10,555,742 8,158,965* 12,476,586 Total Assets less Liabilities 71,550,935 77,039,701 85,280,970 16

17 Market Commentary Leasing Britain s economy is the 5th largest globally and the 2nd largest in Europe. Unemployment is at its lowest level for a decade. Consumer sentiment and retail sales appear strong and inflation is low. The Governor of the Bank of England has observed that the UK s financial system has consistently strengthened over the last 8 years and that the capital allocations of our largest banks is 10 times higher than pre the collapse of Lehman Brothers in Investment London remains the world s number one destination for real estate investment and is perceived to be a safe haven for overseas investors given its transparent and competitive market and established legal system. Commercial real estate continues to offer strong returns relative to other asset classes. Capital transactions reached 18 billion in 2015 making it one of the most active years on record and significantly higher than the 10 year annual average. Volumes were lower in the run up to the European referendum as investors sought clarity. Sentiment has improved during August and September and a number of transactions have taken place during this period. Wells Fargo, the world s biggest bank by capitalisation, has undertaken a circa 300m deal to buy a new European headquarters in the heart of London s financial district. The majority of acquisitions have been undertaken by overseas groups taking advantage of favourable exchange rates. Recent capital transactions: Address Date Tenure Area (Sq. Ft.) Price NIY Capital Value Cornhill, EC3 Q FH 32, m 4.60% 1, Eastcheap, EC3 Q FH 25, m 4.5% 1, Cannon Street, EC4 Q FH 26, m 4.45% 1, Cornhill, EC3 Q FH 14, m 4.25% 1,420 Watergate House, WC2 Q FH 11, m 3.77% 1,779 1 Bishopsgate, EC2 Q FH 26, m 3.33% 1, Cornhill, EC3 Q FH 20, m 2.90% 1,183 33/35 Cornhill, EC3 Q FH 14, m 2.96% 1,050 The City of London has a highly diversified occupational market. It is home to numerous global organisations from the Finance, Insurance, TMT, Legal, Professional, Accounting, Mining, Commodities and Shipping sectors. Prime Grade A rents during Q2 remained unchanged at per sq.ft. The largest share of market activity (circa 41%) in Q2 was located in the City Core. Lettings of < 5,000 sq.ft. are currently the most active sub-sector, representing 20% of take up during Q (63% of the number of transactions recorded). 47% of floor space currently under construction in the City of London is already pre-let, moreover, supply is 22% below the long term-average of 9.4 million sq.ft.. A number of speculative developments have been put on hold following the Brexit result. The development pipeline is unlikely to keep pace with tenant demand. As and when full confidence returns to the market, a supply squeeze is likely to give rise to strong rental performance. Businesses typically seek greater occupational flexibility during periods of market turbulence. The serviced office sector is very well placed to take advantage of this. Recent leasing transactions: Address Date Tenant Area (Sq.Ft.) Reported Headline Rent ( PSF) 1 Carey Lane, EC2 Q Opus Ltd 2, Cornhill, EC3 Q Mattos Filho 1, Augustine House, EC2 Q MRI Software 3, Dowgate Hill, EC4 Q Minter Ellison 2, Copthall Avenue, EC2 Q Mulvaney Capital 3, Throgmorton St, EC2 Q Monex Europe Ltd 3, /39 Lime Street, EC3 Q Norwegian Hull Club 1, Cornhill, EC3 Q EQS Great Winchester St, EC2 Q The PFA Charity 3, Dowgate Hill, EC4 Q Arrow ECS 6,

18 Floor Plans Ground Floor Typical upper Floor (second) ROYAL EXCHANGE AVENUE ENTRANCE ROYAL EXCHANGE BUILDINGS WC LIFT RECEPTION FINCH LANE WC LIFT For indicative purposes only. Not to scale. n 18

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20 Planning Proposal Grade II listed and situated within the Bank Conservation Area. Offers are invited, subject to contract, for the freehold interest. Capital Allowances Further Information No capital allowances are available. For further information please contact the Vendor s joint sole agents:- EPC The property has an Energy Performance Certificate (EPC) rating of D. HALL KEMP Lime Street London EC3M 7AY Tel: Michael Elliott 3 Hanover Square London W1S 1HD Tel: VAT Douglas Hall Tel: douglas.hall@hallkemp.com Mark Shipman Tel: markshipman@michaelelliott.co.uk Nathan Sugar Tel: nathansugar@michaelelliott.co.uk The property is elected for VAT. 20

21 MISREPRESENTATION ACT 1967 AND DECLARATION Hall Kemp (trading name of HK Property Services Ltd) and Michael Elliott LLP for themselves and for the vendors of this property who agents they are give notice that: a) the particulars are set out as general outline only for the guidance of intending purchaser s and do not constitute, not constitute part of, or an offer or contract b) all descriptions, dimensions, references or condition and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct, but any intending purchaser s should not rely on them as statements or representations of fact but satisfy themselves by inspection or otherwise as to the correctness of them c) no person in employment of Hall Kemp (trading name of HK Property Services Ltd) or Michael Elliott LLP has any authority to make or give any representation or warranty whatever in relation to this property. PROPERTY MISDESCRIPTION ACT 1991 These details are believed to be correct at the time of compilation but may be subject to subsequent amendment. November 2016.