LONDON EC3 CORE CITY FREEHOLD INVESTMENT

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1 55 GRACECHURCH STREET LONDON EC3 CORE CITY FREEHOLD INVESTMENT

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3 A reversionary freehold building at the very heart of the City

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5 Investment Summary 55 Gracechurch Street is located in the core of the City of London Freehold. Core City of London location in close proximity to the Bank of England, Leadenhall Market and the Lloyd s Building. 74,622 sq ft (6,932.6 sq m) of office, leisure and ancillary accommodation arranged over basement, lower ground, ground and six upper floors. Securely let to four tenants generating a current passing rent inclusive of vendor top-ups of 3,035,449 per annum, reflecting a below market rent of only per sq ft overall. The Royal London Mutual Insurance Society Limited is the principal tenant, occupying the building as its headquarters and accounting for circa 61% of total income. Immediate opportunities to add value and improve the running yield. Offers in excess of 60 million are sought for our client s freehold interest, subject to contract. A purchase at this level reflects a net initial yield of 4.73% and a low capital value of c. 805 per sq ft assuming full purchaser s costs of 6.80%. 4 & 5

6 The Leadenhall Building Lloyd s Building Bank of England The Royal Exchange 22 Bishopsgate The Gherkin Leadenhall Market Bank Station Cannon Street Station New Bank Station Entrance

7 20 Fenchurch Street 33 Central Tower of London Plantation Place 55 Monument Station 6 & 7

8 LONDON - THE GLOBAL GATEWAY CITY 2.45bn tech sector investment - over three times more than the whole German market London is a dominant global financial centre which also boasts a rich cultural offering with a variety of internationally recognised museums and top class restaurants. London is the world s most visited global city. A third of the world s largest companies are headquartered in London 75% of the FTSE 100 call London home Over 300 languages are spoken in the city, more than any other in the world UNESCO world 4 heritage sites

9 No.1 position ahead of New York in the most recent Global Financial Centres Index (GFCI by Z/Yen Group) 75% 43 UNIVERSITIES AND 435,000 STUDENTS of Fortune 500 Companies have an office in the Capital 72 Michelin-starred restaurants 3of the top 10 museums and galleries in the world CROSSRAIL, EUROPE S LARGEST INFRASTRUCTURE PROJECT, IS OVER 85% COMPLETE No.1 European city for start-ups London s time zone position allows trading with Asia, the Middle East and the Americas CONSISTENTLY DOMINATING GLOBAL CAPITAL FLOWS, ATTRACTING MORE CROSS-BORDER CAPITAL INTO REAL ESTATE THAN ANY OTHER CITY 8 & 9

10 ST MARTINS LE-GRAND Location A prime City core location in London s financial & insurance district ALDERSGATE STREET 55 Gracechurch Street is situated in the heart of the City of London, the historic epicentre for trade and commerce in the capital. The property is within 400 metres of both the Bank of England and Leadenhall Market, traversing the border of London s globally recognised financial district and its renowned insurance quarter. The 0.38 acre freehold site occupies a prominent position on the east side of Gracechurch Street, a key thoroughfare from outside the City through EC3 to London Bridge. The property is located close to the intersection of Gracechurch Street, Fenchurch Street and Lombard Street, and is within 40 metres of 20 Fenchurch Street (the Walkie Talkie ). KING EDWARD ST GRESHAM STREET In addition to attracting some of the world s leading organisations, the micro-location offers an unrivalled retail position within close reach of international retailers such as Gap and Marks & Spencer. High end restaurants, bars and boutiques are also located nearby in Leadenhall Market and the Royal Exchange. ST PAUL S ONE NEW CHANGE Significant developments have been completed nearby in recent years. Local landmark towers include The Leadenhall Building, 20 Fenchurch Street and W.R. Berkley s 52 Lime Street which is due to be completed in These schemes have attracted some of the world s leading occupiers such as AON, RSA Group, Markel and Clydesdale Bank Plc. ST PAUL S CATHEDRAL ST PAUL S CHURCHYARD NEW CHANGE WATLING STREET QUEEN VICTORIA STREET UPPER THAMES STREET

11 BARBICAN MOORGATE FINSBURY LIVERPOOL STREET CIRCUS LIVERPOOL STREET LONDON WALL GUILDHALL CHEAPSIDE STREET BASINGHALL STREET MANSION HOUSE POULTRY CANNON STREET MOORGATE LOTHBURY PRINCE S ST QUEEN VICTORIA STREET BANK OF ENGLAND BANK CANNON STREET ROYAL EXCHANGE LOMBARD STREET NEW BANK STATION ENTRANCE OLD BROAD STREET THREADNEEDLE STREET CORNHILL MONUMENT GRACECHURCH STREET 55 LEADENHALL MARKET 20 FENCHURCH STREET EASTCHEAP THE LEADENHALL BUILDING LLOYD S OF LONDON ST MARY AXE 30 ST MARY AXE HOUNDSDITCH BEVIS MARKS FENCHURCH STREET FENCHURCH STREET QUEEN LOWER THAMES STREET 10 & 11

12 A key destination 25 for global real estate investors For decades the City of London has been the focus for global real estate investors. The limited supply of freehold assets keeps both institutional and high net worth investors eager to acquire the best opportunities. Many assets in the vicinity of 55 Gracechurch Street are owned by some of the most discerning and demanding investors from around the world

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14 1 KGAL (2010) 60 Gracechurch Street 2 Chuang s China (2016) 10 Fenchurch Street 3 Tenacity International (2017) 70 Gracechurch Street TENACITY Credit Suisse (2017) The Monument Building 5 Al Ain (2016) Regis House 6 Shin Kong Life (2015) 40 Gracechurch Street 2 7 U City (2016) 33 Gracechurch Street 3 8 Al Ain (2017) One George Yard Ho Bee Land (2017) 67 Lombard Street 10 KanAm Grund (2016) 68 Lombard Street 7 11 Nan Fung (2016) 108 Cannon Street Renhe (2017) 110 Cannon Street

15 13 CIT (2016) 12 Arthur Street 14 Lion Group (2018) 24 Martin Lane 15 Wells Fargo (2018) 33 Central Ella Valley Capital (2018) ELLA VALLEY CAPITAL 24 King William Street TfL - New Bank Station Entrance 10 King William Street 18 ICBC (2010) 81 King William Street 4 19 Ivanhoé Cambridge (2015) 21 Lombard Street 5 20 Alpha Asset Management / Keppel Land (2015) 75 King William Street 6 21 Aviva / Northwood (2013) 20 Gracechurch Street LKKHPG (2017) 20 Fenchurch Street 23 Moise Safra (2012) Plantation Place Brookfield (2012) Leadenhall Court

16 Transport Superb connectivity will be further improved with the completion of the Bank station upgrades in 2022 Bank and Monument Underground stations are used by more than 52 million passengers a year. The two stations form the third busiest interchange on the London Underground network, with demand doubling over the last ten years. Transport for London has started work to substantially upgrade the capacity of Bank station by 40%. The 600 million modernisation will include a new station entrance on the 10 King William Steet site in the block which is bounded by Cannon Street, Abchurch Lane, King William Street and Nicholas Lane. The new entrance will be on Cannon Street, approximately 175 metres from 55 Gracechurch Street. 175m from new Cannon Street Bank station entrance CGI of the new Bank station entrance on Cannon Street CGI of the new Bank station entrance on Cannon Street 40% increase of Bank station capacity 52m passengers a year

17 Luton Airport Stansted Airport Paddington Heathrow Airport King s Cross St Pancras Stratford Bond Street Moorgate Liverpool Street Oxford Circus Bank Currently: 320m New entrance: 175m Fenchurch Street 550m Mansion House 620m Cannon Street 320m Monument 75m Tower Hill 820m London Bridge Waterloo Canary Wharf Bakerloo Central Circle District Gatwick Airport London City Airport Hammersmith & City Jubilee Metropolitan National Rail Crossrail Northern Underground Piccadilly Victoria Waterloo & City DLR Pier With excellent transport links, including six stations within a 10 minute walk, the property has easy access to the rest of Central London and the commuter suburbs beyond 14 & 15

18 Crossrail The most significant addition to London s transport capacity since World War II Crossrail will, for the first time, deliver a direct connection between all of London s main employment centres, linking Heathrow with Paddington, the West End, the City and Canary Wharf. In peak times a train will run every two and a half minutes in each direction. Two new ticket halls are being constructed at Liverpool Street and Moorgate and will be connected by underground platforms. The railway will have an estimated 200 million travellers each year and is expected to reduce London journey times by up to 70% as a result. The new Crossrail network will support major regeneration across London and add an estimated 42bn to the UK economy. 30% increase in number of commuters within 45 mins of Central London CGI of new Liverpool Street Station entrance CGI of new Liverpool Street Station 10mins to Liverpool Street Crossrail station CGI of new Liverpool Street Station Heathrow Paddington Bond Street Tottenham Court Road Farringdon Liverpool Street Whitechapel Canary Wharf Stratford 35 mins 10 mins 7 mins 4 mins 2 mins 2 mins 6 mins 8 mins

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20 The Building 55 Gracechurch Street was developed by Land Securities to an institutional standard and provides 74,622 sq ft of well specified office, leisure and ancillary accommodation arranged over basement, lower ground, ground and six upper floors. The property provides open plan floorplates which range in size from circa 5,000 sq ft to 11,000 sq ft. The floors are regularly configured and benefit from excellent levels of natural light. The elevation fronting Gracechurch Street is finished with Portland stone and granite. The side elevations are finished with metal and glass curtain walling. Access to the property is via a large contemporary reception area which leads to four thirteen-person passenger lifts. A rear entrance also provides separate access onto Brabant Court and Philpot Lane. There is a gym and a car park in the basement. These are accessed via St. Benet s Place and Talbot Court respectively.

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24 Specification 55 Gracechurch Street has recently undergone a significant programme of refurbishment to upgrade the building s plant and machinery. This includes works to the air conditioning systems and replacement of all lifts within the building. > VAV/ VRF air conditioning systems; > Metal tiled suspended ceilings; > Integrated LG7 compliant lighting; > 150mm raised floors; > Minimum 2.60 metre finished floor to ceiling height across all floors; > Male, female and disabled WCs on all floors; > Refurbished reception; > Four x 13 person passenger lifts; > Goods lift serving all floors; > Vehicle lift serving ground and basement levels; > Secure car parking and bicycle storage; > Tenant shower and changing facilities; > Roof terrace on the 6th floor. 5th floor - recently let to Royal London

25 Floor Areas A measured survey of the property has been undertaken by Plowman Craven in accordance with the guidelines as described in the Sixth Edition of the Code of Measuring Practice, published by the Royal Institution of Chartered Surveyors. Floor Use Area Area (sq ft) (sq m) 6th Office 5, th Office 7, th Office 8, rd Office 11,202 1, nd Office 11,034 1, st Office 11,048 1,026.4 Ground Office 6, Ground Reception 1, Ground Storage Lower Ground Gymnasium 10, Basement Storage Basement BMO Total 74,622 6, car parking space is located in Talbot Court together with 4 car spaces and dedicated storage for bikes at basement level. 22 & 23

26 Office Floor Plans Core Storage Reception Terrace GRACECHURCH STREET WC ST BENET S PLACE STORAGE WC CAR BRABANT COURT TALBOT COURT Ground Floor 8,317 sq ft WC WC WC First Floor 11,048 sq ft

27 N Not to scale. For indicative purposes only. WC WC WC OFFICES Fifth Floor 7,855 sq ft WC WC WC TERRACE Sixth Floor 5,063 sq ft 24 & 25

28 4 L Large Freehold Site Site Area The property occupies a large freehold site extending to approximately 0.38 acres (0.15 ha). Tenure The property is held freehold under title number NGL Planning 55 Gracechurch Street is situated within the jurisdiction of the Corporation of London, which is the local authority for the City of London. The property is not listed. However, a set of attractive iron gates to the rear of the property fronting Brabant Court are Grade II listed. The property is located on the border of the Eastcheap Conservation Area with part of the freehold title falling within it. 55 Gracechurch Street sits in close proximity to the Eastern Tower Cluster of the City. Lombard Street N Fenchurch Street 33 Gracechurch Street East Cheap 2b 5 Fish Street Hill 2a 2a ane Plan not to scale. For identification purposes only. This plan is based upon the Ordnance Survey Map with the sanction of the controller of H.M. Stationery Office. Crown Copyright reserved.

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30 Income Low overall passing rent of per sq ft Royal London occupy the building as their Headquarters 55 Gracechurch Street is let to an enviable list of tenants from the insurance, leisure and professional industries including Royal London, Shepherd Compello and Fitness First. The property is multi-let to three office tenants and one leisure tenant (by way of eight leases). The newly refurbished 5th floor has recently been let to Royal London at a rent of per sq ft. 9% Shepherd Compello 5% Fitness First The weighted average unexpired lease term is circa 4.3 years to expiries. Total income, assuming a vendor top-up in respect of the vacant car parking and storage, is 3,035, per annum equating to a low overall rent of only per sq ft. This compares favourably to prime City of London rental levels currently in excess of 65 per sq ft. 25% Lee Hecht Harrison Penna Income by Tenant 61% Royal London 6th Floor 5th Floor 4th Floor 3rd Floor 2nd Floor 1st Floor Ground Floor Lower Ground

31 Rental Performance The property provides an attractive combination of secure income together with more immediate opportunities to add value and improve the running yield. 55 Gracechurch Street is approximately 15% reversionary on a headline basis. 46% of the income is subject to review offering the opportunity to improve the running yield in the near term. The sixth floor lease expires in 2021 providing an opportunity for an uplift to a new headline rent. 28 & 29

32 Tenancy Schedule Tenant Floor Use Area Area Lease Rent (sq ft) (sq m) Start Review Shepherd Compello Limited 6th Office 5, /09/ The Royal London Mutual 5th Office 7, /05/ Insurance Society Limited The Royal London Mutual 4th Office 8, /05/ /05/2018 Insurance Society Limited The Royal London Mutual 3rd Office 11,202 1, /06/ /12/2017 Insurance Society Limited Basement Parking 1 space 1 space - - The Royal London Mutual 2nd Office 11,034 1, /06/ /12/2017 Insurance Society Limited Basement Storage Penna Consulting Limited 1st Office 11,048 1, /12/ Penna Consulting Limited Ground Office 6, /02/ /02/2020 Ground Storage Ground Reception 1, Vacant Ground Parking 1 space 1 space - - (Talbot Court) Fitness First (Curzons) Lower Ground Gymnasium 10, /03/ Limited & Part Ground Vacant Basement Parking 3 spaces 3 spaces - - Vacant Basement Storage Building Management Office Basement BMA London Electricity PLC Part Basement Sub-station Total 74,622 6,932.7

33 Lease Passing Passing 1954 Comments Expiry Rent (psf) Rent (pa) Act 13/09/ ,288 Outside Rent settled at September 2016 review. Part sublet to Seer Group Ltd. Service charge cap increases each year by RPI. Cap excludes Landlord s Fuel Expenses. 30/04/ ,445 Outside Initial rent free period of 10 months to be topped up by vendor. 30/04/ ,757 Inside Outstanding rent review. Service charge cap increases each year by RPI. Cap excludes Landlord s Fuel Expenses. 30/04/ , Inside Outstanding rent review. Service charge cap increases each year by RPI. Cap excludes Landlord s Fuel Expenses /04/ ,432 Inside Outstanding rent review. Service charge cap increases each year by RPI. Cap excludes Landlord s Fuel Expenses /06/ ,300 Outside Lease currently being assigned to Lee Hecht Harrison Penna Limited (guaranteed by Olsten (UK) Holdings Ltd). Service charge cap increases each year by CPI. Cap includes Landlord s Fuel Expenses. 23/06/ ,635 Outside Lease currently being assigned to Lee Hecht Harrison Penna Limited (guaranteed by Olsten (UK) Holdings Ltd). Service charge cap increases each year by RPI. Cap excludes Landlord s Fuel Expenses ,000 - Vendor to provide an 18 month rent, rates and service charge guarantee. 24/03/ ,000 Inside ,000 - Vendor to provide an 18 month rent, rates and service charge guarantee ,565 - Vendor to provide an 18 month rent, rates and service charge guarantee License Agreement ,035, & 31

34 Covenants Royal London is the largest mutual insurer in the United Kingdom, with funds under management of over 100 billion The Royal London Mutual Insurance Society Limited 61% of total income Royal London Mutual Insurance Society Limited forms part of the Royal London Group, the UK s largest mutual life and pensions company with 106 billion of total assets under management. The organisation, headquartered at 55 Gracechurch Street, was founded during 1861 in a London coffee shop. Since then, Royal London has grown to become one of the country s most trusted providers of life insurance and investment products. Record sales levels and increased profits were generated during Pre-tax profits rose 16% from 2015 to reach 282 million and the Present Value of New Business Premiums increased by 28% to 8,686 million. Total sales of personal pensions and drawdown rose 17% from 2015 levels to 3.8 billion. Royal London won the Outstanding Achievement award at the 27th Financial Adviser Service Awards in 2017 and company of the year in The organisation s Pension and Investment services were recognised and deemed to have delivered five-star service throughout the previous 12 months. Mutual organisations such as Royal London are owned by their members so have no shareholders to pay. This safeguards the distribution of profits which are shared to members or reinvested to provide greater returns and service. The 2016 profit share distributed to the one million members of Royal London totalled 114 million, an increase of 63% from the previous year. Other subsidiaries within the group include Royal Liver Assurance, Scottish Life, Royal London Asset Management and Caledonian Life. Further information can be obtained from the company website: A A2 5A1

35 Lee Hecht Harrison Penna Limited, guaranteed by Olsten (UK) Holdings Limited * 25% of total income Lee Hecht Harrison Penna Limited is a global firm specialising in career transition, leadership development and workplace transformation. The organisation recorded a turnover of 23 million in 2016, up 132% from 2015 levels. The volume of total assets also rose during 2016 by 127% to reach 35 million. Olsten (UK) Holdings Limited is a wholly owned indirect subsidiary of Adecco Group AG and reported a pre-tax profit of 17.8 million in Dun & Bradstreet - 5A1 (Olsten (UK) Holdings Limited) Further information can be obtained from the company website: * After completion of lease assignment from Penna Consulting Limited Shepherd Compello Limited Fitness First (Curzons) Limited 9% of total income Shepherd Compello Limited specialise in automobile, machinery and heavy equipment insurance. Shepherd Compello increased turnover during 2016/17 by 58% to reach almost 10 million. Profits before taxes have doubled from 2015 levels. Dun & Bradstreet - A1 Further information can be obtained from the company website: 5% of total income Fitness First is the largest privately owned health club group in the world, consisting of more than 360 clubs capturing over 900,000 members in 16 countries. The company recorded a turnover in 2017 of 101 million, an increase of 35% from the previous year. Dun & Bradstreet - N2 Further information can be obtained from the company website: 32 & 33

36 Opportunities to Add Value 55 Gracechurch Street benefits from numerous asset management opportunities in the short, medium and long term, allowing prospective purchasers the potential to enhance returns. These include: > Settle outstanding rent reviews on the second, third and fourth floor leases. Royal London are currently paying a low passing rent of 45.37, and per sq ft respectively. The rent review on the sixth floor was recently settled at per sq ft. > Potential restructuring of the occupational leases with Penna and Royal London who are long term occupiers of the building. > Longer term opportunity to redevelop the site which currently sits in close proximity to the Eastern Tower Cluster of the City.

37 Capital Allowances Capital Allowances may be available. VAT The property is elected for VAT. EPC Data Room An Energy Performance Certificate (EPC) is available on request. The building has a D rating of 98. Please contact the vendor s agent, Cushman & Wakefield, for a user name and password to access the data room. Proposal Our client is seeking offers in excess of 60,000,000, subject to contract and exclusive of VAT. A purchase at this level reflects a net initial yield of 4.73% (assuming full purchaser s costs) and a low capital value of c. 805 per sq ft. Contacts If you would like the opportunity to inspect the property, or if you require any further information, then please contact: Martin Lay T: E: martin.lay@cushwake.com David Hookey T: E: david.hookey@cushwake.com James Ball T: E: james.ball@cushwake.com Important Notice Subject to Contract. May Cushman & Wakefield gives notice to anyone who may read these particulars as follows: 1. These particulars are prepared for the guidance only of prospective purchasers. They are intended to give a fair overall description of the property but are not intended to constitute part of an offer or contract. 2. Any information contained herein (whether in the text, plans or photographs) is given in good faith but should not be relied upon as being a statement or representation of fact. 3. Nothing in these particulars shall be deemed to be a statement that the property is in good condition or otherwise nor that any services or facilities are in good working order. 4. The photographs appearing in this brochure show only certain parts and aspects of the property at the time when the photographs were taken. Certain aspects may have changed since the photographs were taken and it should not be assumed that the property remains precisely as displayed in the photographs. Furthermore no assumptions should be made in respect of parts of the property which are not shown in the photographs. 5. Any areas, measurements or distances referred to herein are approximate only. 6. Where there is reference in these particulars to the fact that alterations have been carried out or that a particular use is made of any part of the property this is not intended to be a statement that any necessary planning, building regulations or other consents have been obtained and these matters must be verified by any intending purchaser. 7. Descriptions of a property are inevitably subjective and the descriptions contained herein are used in good faith as an opinion and not by way of statement of fact. Designed and produced by The Looking Glass Design 34 & 35

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