OXFORD STREET/PORTLAND STREET, MANCHESTER. Prime City Centre Hotel and Leisure Investment Opportunity

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1 OXFORD STREET/PORTLAND STREET, MANCHESTER Prime City Centre Hotel and Leisure Investment Opportunity

2 Investment Summary Prime city centre leisure scheme anchored by a Premier Inn Hotel and located at the junction of the Central Business Core, Civic Quarter, Conference Quarter and University Corridor The Circus consists of a 228 bedroom hotel, a casino and 4 retail/leisure units, developed in 2001 and extending to approximately 13,051 sq m (140,482 sq ft) Circa 50% of the current income (including rental guarantee) is secured for a further 25 years to Whitbread Group Plc and is subject to a minimum uplift at the next rent review in June 2011 Current passing rent for the hotel equates to 2,796 per room per annum

3 The remainder of the accommodation is let to JD Wetherspoon Plc, Boots the Chemist Ltd, Genting Casinos and Barracuda Pub Company Ltd The property includes one vacant unit totalling 1,252 sq m (13,472 sq ft) for which the vendor will provide a rental guarantee. Total income of 1,328,884 pa (including rent guarantee) Average weighted unexpired term of approximately 18.5 years (including the rental guarantee) Offers are invited in excess of 20,000,000 (Twenty Million Pounds), exclusive of VAT and subject to contract, reflecting a net initial yield of 6.28% with a guaranteed minimum reversion in June 2011 to 6.76% based on the minimum hotel uplift only, assuming usual purchaser s costs of 5.8% All existing tenants have an Experian Rating of A (very low risk)

4 Manchester boosted by the improved rail network with Manchester Piccadilly Station now within Manchester is now the UK s second city with a growing economy. It is the economic and cultural capital of the North West, and is the largest and fastest growing regional capital centre in the UK, generating wealth equal to that of Leeds, Liverpool and Sheffield combined. It comes second only to London both in business terms and the quality of its city environment and retail and leisure amenities. Greater Manchester is home to a population of 2.6 million and accounts for 28 billion of the region s GDP. The workforce - 65% is under 45 years old - has excellent language, technical and customer service skills. The University population is one of the largest in Europe with circa 100,000 students and its importance as a cultural and media hub is underlined by the significant relocation of elements of the BBC including Sports, News and Children s television/radio from London to Manchester. Manchester s ever growing importance as a tourist destination has continued to be 2 hours travel distance of London and benefiting from 3 services an hour. Importantly, Manchester Airport is the UK s third largest Airport and is 20 minutes from the city centre, handling in the region of 22m passengers pa with this figure anticipated to rise to 50m by Cultural and Creative Centre Manchester has always been known for the versatility of its cultural spectrum. The Manchester Evening News Arena is Europe s busiest indoor concert arena. The

5 Halle Orchestra thrives in the Bridgewater Hall and the Manchester Camerata plays at the Royal College of Music. Manchester s 13 theatres create the UK s best theatre repertory scene outside London s West End and hosts top touring companies at the Royal Exchange Theatre, Manchester Opera House and the Palace Theatre. Museums come in a variety of forms, from the Urbis, to the newly refurbished Museum of Science and Industry. for its sporting achievements, home to Manchester United, Manchester City and in 2002, holder of the Commonwealth Games, each drawing in a high volume of visitors to the city for match days and events. The region s sporting importance remains strong with recent major sporting events including the Paralympic World Cup, The UEFA Cup Final, the FINA World Swimming Championships, the UCI Track Cycling World Championships and the Bupa Great Manchester Run. International Sporting Destination Manchester is recognised the world over

6 MEN Arena Victoria Station Urbis Deva Centre Central Salford Harvey Nichols Printw Lowry Hotel Retail Core Manchester Arndale Law Courts Spinningfields Central Business Core Granada TV Left Bank Town Hall Manchester Art Gallery Great Northern Manchester Central The Conference Quarter Castlefield Deansgate Station Bridgewater Hall T Southern Gateway

7 Millennium Quarter orks Northern Quarter Piccadilly Gardens China Town Piccadilly Gateway The Village Piccadilly Station Eastern Gateway he Palace Theatre Manchester University Higher Education Precinct Manchester Metropolitan University

8 Retail Core Spinningfields Central Business Core Civic Quarter The Conference Quarter China Town Culture Hub Oxford Road Station Albert Square Central Library Town Hall Manchester Art Gallery Oxford Road/ University Corridor Bus Station Midland Hotel Manchester Central Bridgewater Hall P

9 Location ChinaTown The Circus occupies an unrivalled position in Manchester City Centre being at the junction of the traditional Central Business Core, China Town, Civic Quarter, Conference Quarter and University Quarter. The property is situated at the junction of Oxford Street and Portland Street within close proximity of St Peter s Square and its Metrolink Stations. Oxford Street forms a corridor link from the city centre to Manchester s Universities which are approximately half a mile from The Circus. The student catchment provides the main focus for Oxford Street and is very much complemented by Portland Street which provides direct access to both the vibrant China Town quarter of the city centre and the Conference Quarter which includes Manchester Central (GMEX) and the Manchester International Conference Centre which in recent years has hosted both Labour and Conservative Party Conferences and the BCSC (British Council of Shopping Centres) Conference. Manchester Central Description The property forms a substantial island site bounded by Portland Street, Oxford Street, St James Street and Dickinson Street. The scheme was developed in 2001, partially behind an attractive listed façade, and comprises 4 ground floor retail/leisure units totalling 2,787 sq and basement level. The upper levels comprise a 228 bed hotel with reception at ground floor level and restaurant facility on the first floor. The scheme extends to approximately 13,051 sq m (140,482 sq ft) in total. m (30,003 sq ft) with a casino totalling 1,961 sq m (21,104 sq ft) at ground Bridgewater Hall Accommodation The property provides the following gross internal floor areas: The Metrolink Tenant Trading As Unit Sq M Sq Ft Barracuda Pub Company Ltd The Alibi 1 Ground 559 6,018 JD Wetherspoon Plc The Paramount 2 Ground 711 7,653 Boots The Chemist Ltd Boots 3a Ground Basement Genting Casinos Circus Casino 3b Ground Basement ,713 1,638 1,222 2,669 18,435 Vacant 4/5 Ground 1,252 13,472 Whitbread Group Plc Premier Inn 6/7 Hotel 8,303 89,375 Total 13, ,482

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11 Tenancies All leases are on effectively full repairing and insuring terms subject to service charge, details of which can be provided on request. The principal tenancy highlights are as follows: Circa 50% of the current income is secured for a further 25 years to Whitbread Group Plc The rental uplift on the hotel in June 2011 is to the greater of 739,154 pa or 77.5% of the open market rental value A highly reversionary hotel rental rate of 637,600 pa, equating to circa 2,796 per room ( 3,608 per room before allowance of the 77.5% gearing) Unit 4/5 is currently vacant. The vendor will provide a 3 year rent and service charge guarantee on this unit Average weighted unexpired term of circa 18.5 years (including rent guarantee) All existing tenants have an Experian Rating of A (very low risk) The total rent passing is 1,328,884 pa, (including guarantee on unit 4/5) rising to a minimum of 1,430,437 pa assuming the minimum rental uplift only on the hotel in June 2011 Tenant Demise Lease Start Lease Expiry Next Review Annual Rent Rent psf (psm) Comments Barracuda Pub Company Ltd guaranteed by Barracuda 2009 Limited t/a The Alibi J D Wetherspoon Plc t/a The Paramount Unit 1 24/06/ /06/ /06/ ,000 Unit 2 24/06/ /06/ /06/ ,060 Boots The Chemist Ltd Unit 3A 24/06/ /06/ /06/ ,000 Genting Casinos guaranteed by Genting UK PLC t/a Circus Casino Unit 3B 24/06/ /06/ /06/ ,224 * Vacant Unit 4/5 3 Years n/a 115,000 Whitbread Group Plc t/a Premier Inn ( ) ( ) ground ( ) 7.00 basement ( 75.35) overall ( ) 8.53 ( 91.82) RR assumes area of 6,000 sq ft. RR assumes an area of 1,438 sf for unit 3B and 19,995 sf for the basement. ** Vacant. Subject to a 3 year rent and service charge guarantee. Unit 6 / 7 24/06/ /06/ /06/ ,600 2,796 per room 2011 rent review is greater of 739,154pa or 77.5% of OMV. Subsequent reviews are to 77.5% of OMV for a budget hotel, upward only. 228 Rooms Total 1,328,884 * The current passing rent is 230,000 pa with a fixed uplift to 260,224 in June The vendor is proposing to top up the difference. ** Future rent reviews are upwards only and to the greater of (i) the market rent for the premises as a whole, or (ii) the sum of the two individual units, being unit 3B and the basement unit. The income split on the current rent passing is as follows: 5-10 years 4% Rental Guarantee 9% Rental Guarantee 9% Barracuda 8% Boots 4% Wetherspoons 12% Whitbread 47% 15 years+ 87% Genting 20%

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13 Covenant Strength Tenant Year Ending Pre-Tax Profits (Loss) GBP 000 s Turnover GBP 000 s Net Worth GBP 000 s Experian Rating Whitbread Group Plc 04/03/10 208,000 1,435, ,000 A (very low risk) Barracuda Pub Company Limited 26/09/09 1,157 22,755 18,836 A (very low risk) Barracuda 2009 Ltd 26/09/09 (336) 33,094 (336) A (very low risk) J D Wetherspoon Plc 25/07/10 60, , ,441 A (very low risk) Boots The Chemist Limited 31/03/10 337,000 40, ,000 A (very low risk) Genting Casinos 31/12/09 17, ,600 (82,300) A (very low risk) Genting UK Plc 31/12/09 12, ,600 18,100 A (very low risk) Estimated Rental Value In our opinion the retail and leisure rents offer the potential for rental growth whilst the hotel income is subject to a rent review in June 2011 based on the higher of 739,154 pa or 77.5% of open market rental value. This minimum level equates to a room rate of 3,241 and 4,183 before the gearing adjustment. The Budget Hotel market in Manchester City Centre has seen several recent transactions and would highlight the following examples: Hotel Address Estimated Rent Per Room Transaction Travelodge Manchester Great Ducie Street 4,500 New Letting 2010 Travelodge Manchester Piccadilly Gardens 4,500 New Letting 2010 Premier Inn Manchester Piccadilly, Dale Street 5,450 New Letting 2010 Service Charge There is a comprehensive service charge provision for recovery of landlords costs. The budget for the year ending June 2011 is 188,230 which equates to per sq m ( 1.34 per sq ft). Further information is available on request

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15 Tenure The property is held on a long lease from The Trustees of the Booth Charities for a term of 150 years with effect from 25 August 1999 at a peppercorn rent. VAT We understand the property has been elected for VAT and it is anticipated that the sale will be structured as a Transfer of a Going Concern (TOGC) Proposal The vendor is seeking offers for their long leasehold interest in excess of 20,000,000 (Twenty Million Pounds) subject to contract and exclusive of VAT. An acquisition at this level would provide a purchaser with the following yield profile assuming usual purchaser s costs of 5.8%:- Net Initial Yield 6.28% Minimum Reversionary Yield % (June 2011)

16 Further Enquiries For further information please contact: Jonathan Mills DD: Matthew Stretton DD: Adam Roberts DD: Jones Lang LaSalle Chancery Place 50 Brown Street Manchester M2 4JT James Welch DD: Jonnie Ray DD: Tim Cuzens DD: Cortex Partners 7 Cork Street London W1S 3LH CHARTERED SURVEYORS The Joint Agents for themselves and for the vendors or lessors of this property whose agents they are, give notice that: (1) The particulars are produced in good faith, are set out as a general guide only and do not constitute part of a contract, (2) No person in the employment of The Joint Agents has any authority to make or give any representation or warranty whatsoever in relation to this property, (3) Unless otherwise stated all prices and rents are quoted exclusive of VAT. April Quest Design