BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY

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1 SOUTH COAST OFFICE INVESTMENT BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

2 BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY

3 02/03 INVESTMENT SUMMARY An exceptional opportunity to acquire two high quality headquarters office buildings, prominently located adjacent to the M27 and Port Solent Marina on a large, island site extending to 5.2 acres. Portsmouth is a major commercial centre on the South Coast located 21 miles east of Southampton and 73 miles south west of London. Port Solent is an established marina and commercial location located 4 miles north west of Portsmouth city centre. Unrivalled road access being just 1 mile from the M27 (Junction 12) connecting the area with key surrounding commercial towns as well as the national motorway network. Junction 12 of the M27 is a home to a number of national covenants including IBM, Regus, Pall Corporation, Capita, Marriott and Handelsbanken. One Port Way comprises two self-contained office buildings totalling 62,379 sq ft. 328 car parking spaces providing an excellent ratio of 1:190 per sq ft. Block A is currently vacant, providing asset management opportunities to drive returns. Block B is let to Ageas Insurance Ltd for 5.3 years term certain. Combined passing rent of 1,049, per annum equating to a low average rent of per sq ft overall. Ageas Insurance Ltd has a D&B rating of 5A1, representing a minimum risk of business failure. Ageas, one of the largest employers on the South Coast, have recently signed a reversionary lease at the property and are undertaking a full refurbishment including the M&E demonstrating their commitment to the property. Port Solent offers a discount to the neighbouring office markets of Southampton and Portsmouth where headline rents are per sq ft and per sq ft respectively trending upwards. Both buildings lend themselves to alternative use potential (subject to planning). Freehold. Offers are sought in excess of 11,000,000 (Eleven Million Pounds), subject to contract and exclusive of VAT. A purchase at this level reflects an attractive net initial yield of 8.94% exclusive of purchaser s costs of 6.70% and a low capital value of 176 per sq ft. EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

4 Porchester Station BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY A27 PORT SOLENT ODEON CINEMA DAVID LLOYD LEISURE CENTRE J12 M275 M27 BLAKE MORGAN M275 < Portsmouth LAKESIDE NORTH HARBOUR IBM WIGGLE BOUYGUES UK BABCOCK REGUS HANDELSBANKEN BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY

5 Southampton 04/05 M27 TESCO SUPERSTORE PREMIER INN HARBOURGATE BUSINESS PARK PALL CORPORATION SPACEMAKER WIGGLE MARRIOT HOTEL QUAY POINT ACORN BUSINESS CENTRE A27 Cosham Station NHS SOUTH CENTRAL AMBULANCE SERVICE EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

6 PORT SOLENT IS AN ESTABLISHED MARINA AND COMMERCIAL LOCATION LOCATION Portsmouth is a major commercial centre on the South Coast located 21 miles east of Southampton and 73 miles south west of London. Portsmouth benefits from excellent road communications being located just south of the M27 (accessed directly from the M275) linking the city to Southampton and the M3 to the west and the A3(M), A27 and Brighton to the east. Port Solent is an established marina and commercial location located 4 miles north west of Portsmouth city centre. The location benefits from unrivalled road access with the A27, directly north of Port Solent, providing access to the M27 (Junction 12) within 1 mile connecting the area with key surrounding commercial towns as well as the national motorway network. Port Solent has become an internationally recognised destination due to the development of Port Solent Marina. Completed in 1988, the 200 million scheme comprises an 808 berth marina, luxury residential housing estate and a range of retail and leisure amenities. The marina has attracted a number of national leisure and retail occupiers, including Snow & Rock, Runners Need, Prezzo, David Lloyd Leisure Centre and Odeon Cinemas. Port Solent benefits from easy access to two railway stations; Portchester (1 mile west) and Cosham (2 miles east). Both stations provide direct access to London Waterloo as well as surrounding towns. Portsmouth & Southsea railway station is just 5 miles south east providing additional, frequent rail services. Regular local bus services link Port Solent to the surrounding South Coast towns, including direct services to Portsmouth & Southsea railway station. Southampton International Airport is located 19 miles west of Port Solent accessed directly via the M27 (Junction 5). It is the main business airport for the South Coast catering for over 18 million passengers each year and is an important draw for global occupiers as it provides access to 40 destinations across the UK and Europe. BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY

7 06/07

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9 08/09 EXCELLENT COMMUNICATIONS City M4 Reading M4 Heathrow M3 M25 M27 (Junction 12) 1 mile Portsmouth City Centre 4 miles Chichester 16 miles Southampton 21 miles Portsmouth & Southsea 11 minutes Southampton Central 29 minutes Brighton 67 minutes Gatwick Airport 78 minutes Southampton 19 miles Heathrow 68 miles Gatwick 76 miles A338 A303 A36 Salisbury A354 A36 A338 A31 Ringwood Bournemouth A34 A3 Basingstoke Andover Guildford Farnham A31 Gatwick Winchester A3 M3 Petersfield Horsham A272 Eastleigh Southampton Southampton A3(M) M27 A27 A27 M275 Chichester Worthing Portsmouth Isle of Wight M23 Brighton Winchester 28 miles London Waterloo 95 minutes Basingstoke 42 miles M27 Cheltenham Rd Brighton 49 miles Central London 73 miles A27 Lock View Port Way Binnacle Way Superstore Compass Rd Hotel M275 Southampton Rd A27 BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY Lock Approach Lock PORT SOLENT Marina Marina Keep Health Club Port Way Port W ay J12 M27 M275 EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

10 < Southampton BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY < Porchester Station A27 M27 BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY

11 10/11 A27 Cosham Station > UNRIVALLED ROAD ACCESS CONNECTING THE AREA WITH KEY SURROUNDING COMMERCIAL TOWNS AS WELL AS THE NATIONAL MOTORWAY NETWORK SITUATION Portsmouth > One Port Way is situated at the entrance of Port Solent Marina, just 1 mile from Junction 12 of the M27 accessed via the A27. Junction 12 of the M27 and its surrounds is an established commercial location and home to a number of high profile occupiers including IBM, who have their headquarters at Lakeside North Harbour, Regus, Capita, Handlesbanken, Blake Morgan and Pall Corporation who have their Aerospace, Defence & Marine principal office at Harbour Gate Business Park. Port Solent is characterised by a mixture of residential, car showrooms, industrial and office uses. The property benefits from easy access to local amenities including Premier Inn and Marriott hotels, a Tesco Extra superstore as well as the retail and leisure offering at Port Solent Marina which is within easy walking distance. EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

12 DESCRIPTION One Port Way comprises two high quality self-contained office buildings arranged over ground and two upper floors totalling 62,379 sq ft. Constructed in 1988 and subsequently modernised, the buildings are of steel frame construction with part brick and part glazed elevations, underneath a pitched tiled roof. The office accommodation provides modern, open plan accommodation with ultimate flexibility to be let as a whole, or on a floor-by-floor or part floor basis such that Blocks A & B can serve a wide range of occupier requirements. Internally, the buildings benefit from the following specification: Raised floors Suspended ceilings with Cat II lighting Air conditioning Passenger lifts Male and female WCs on each floor Disabled toilet facilities Shower facilities The majority of the M&E in Block A was replaced/upgraded in 2005 whilst Block B is currently undergoing a comprehensive tenant refurbishment which demonstrates its commitment to the property. The works include: New VRF air conditioning New suspended ceilings to the second floor Re-lamping of existing light fittings New carpets Redecoration Refurbishment of the toilets Provision of two new showers in-lieu of existing kitchenettes CAR PARKING One Port Way benefits from a total of 328 on-site car parking spaces providing an excellent ratio of 1:190 sq ft. ACCOMMODATION The property has been measured by Pure Real Estate Services Ltd in accordance with the International Property Measurement Standards (IPMS) 1st Edition, May The survey, which is assignable to the purchaser, provides the following net internal areas: BLOCK A Floor Use Area (sq m) Area (sq ft) Ground Reception Ground Offices 1, ,670 First Offices 1, ,126 Second Offices 1, ,129 Sub Total 3, ,554 BLOCK B Floor Use Area (sq m) Area (sq ft) Ground Reception Ground Offices ,074 First Offices ,618 Second Offices ,619 Sub Total 2, ,825 Total 5, ,379 BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY

13 INTERNAL PHOTOS TAKEN OUTSIDE OF BUSINESS HOURS 12/13

14 SITE FOR ILLUSTRATIVE PURPOSES ONLY The large, island site extends to 5.2 acres (2.1 ha). Accessed via Port Way directly off the M27, the site is bounded by the A27 to the north, the M27 to the east and Port Way to the south and west. TENURE Freehold. LARGE ISLAND SITE WITH ALTERNATIVE USE POTENTIAL BLOCK A BLOCK B BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY

15 14/15 TENANCY SCHEDULE BUILDING TENANT AREA (SQ FT) LEASE START RENT REVIEW BREAK OPTION LEASE EXPIRY RENT ( PA) RENT ( PSF) COMMENTS BLOCK A Vacant 36,554 26/05/ /11/ , months rent ( psf on the office accommodation), rates and service charge gurantee to be provided by the vendor from completion. BLOCK B Ageas Insurance Ltd 25,825 29/09/ /09/ /09/ /09/ , Rent reduction from 29/09/ /09/2017 to 210, will be topped up by the vendor on completion. Total 62,379 1,049, BLOCK A BLOCK B

16 BLOCKS A & B B ONE ONE PORT PORT WAY WAY PORT PORT SOLENT SOLENT PORTSMOUTH PORTSMOUTH PO6 4TY PO6 4TY

17 16/17 COVENANT PROFILE Ageas Insurance Ltd is part of the Ageas Group, an international insurance business providing non-life insurance products across three business areas; Insurance, Retail and Tesco Underwriting. Ageas employs 13,000 people and operates in 14 countries worldwide. It is headquartered in Brussels and listed on the Brussels Stock Exchange. Ageas Insurance is an award-winning provider of general insurance focussed on Personal lines and Commercial lines products. It currently employ 2,500 people across the UK and in a bid to cater for its increasing customer base which currently consists of over nine million customers, it has recruited 400 new employees in the past 12 months. Ageas Insurance s headquarters is based on Hampshire Corporate Park, Chandler s Ford, 20 miles west of One Port Way, and is owner occupied. The company has a D&B Rating of 5A1, representing a minimum risk of business failure. Its most recent financial results are summarised below: 31 DEC DEC DEC 2012 Sales Turnover 1,300,000,000 1,071,100,000 1,009,300,000 Profit Before Taxes 66,200,000 78,900,000 64,700,000 Tangible Net Worth 549,500, ,300, ,400,000 Net Current Assets 315,300, ,000, ,100,000 Further information can be found at EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

18 SOUTH COAST OFFICE MARKET Port Solent forms part of the wider South Coast office market, comprising the town centres of Southampton, Portsmouth and Bournemouth as well as numerous out of town business parks in the surrounding areas. Southampton is the largest and dominant office centre, with a total stock level of approximately 9.2 million sq ft incorporating Eastleigh, Chandler s Ford as well as Solent Business Park. However, the majority of stock in the wider South Coast area is located out of town, along the M27 corridor and particularly at its interchanges with the M3 and A27. Having historically been linked to maritime-related companies, the South Coast office market is now primarily driven by the service sector, in particular by finance, insurance and legal firms with occupiers such as HSBC, Grant Thornton, PwC and RBS having a presence in the market. Ageas is one of the largest employers in the wider Southampton area.. The South Coast office market has changed dramatically in the last 12 months as a result of a return in market confidence. Take-up increased by 18% year-on-year driven by historically low levels of vacancy coupled with a significant reduction in stock as traditional office stock is converted to alternative uses. There is a dearth of Grade A office space in the South Coast office market resulting in a Grade A vacancy rate of less than 3%. Permitted Development Rights continue to have a significant bearing on the office market and continue to compound the supply shortage. Supply decreased by 8.6% to 1.2 million sq ft over the course of 2015 and it is expected to decrease to below 1 million sq ft by the end of This will be exacerbated with rumours that the developers of the remaining two largest prime office sites in Southampton, The Bond and Aqua, are applying for alternative uses. As a result of the increased take up and continued supply shortage, rental levels are rising across the South Coast. Following a recent refurbishment, Mountbatten House, Southampton is now quoting per sq ft, setting a new headline quoting rent for the centre. With a limited development pipeline and a continued erosion of supply, rental levels are expected to continue to rise over the course of the year. INVESTMENT MARKET The South East office investment market remained buoyant throughout 2015 and continues to experience unprecedented investor appetite. There is a wealth of demand for opportunities where investors can add value through active asset management. A continued improvement in the occupational market coupled with the onset of rental growth has strengthened investor confidence in the South Coast office market. One Port Way provides an opportunity to acquire two high quality headquarters office buildings in an established South Coast market with asset management opportunities including alternative use potential (subject to planning). BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY

19 18/19 SOUTH COAST OFFICE MARKET TRANSACTIONS DATE ADDRESS AREA (SQ FT) TENANT LEASE TERM (BREAK) RENT (PSF) Mar-16 Mountbatten House, Southampton 13,890 Prestige Cruise Services 10 years (5 years) Mar-16 Mountbatten House, Southampton 7,182 Rockfire Capital 10 years (5 years) Feb-16 Hutwood Court, Chandler s Ford 53,425 Utilita Energy 10 years Jan-16 Mountbatten House, Southampton 13,400 NCL 10 years Dec-15 Savannah House, Southampton 24,541 PwC 10 years Nov-15 Cumberland House, Southampton 16,682 Regus 15 years (10 years) Oct-15 Burlington House, Southampton 2,500 Sheridan Maine 5 years Aug-15 Tagus House, Southampton 4,546 Your Move 10 years (5 years) Jul-15 Gateway House, Chandler s Ford 4,800 Konica Minolta 10 years (5 years) Mar-15 Gateway House, Chandler s Ford 12,300 KPMG 10 years Jan-15 1 Guildhall Square, Southampton 23,760 Southampton City Council 15 years INVESTMENT MARKET TRANSACTIONS DATE ADDRESS AREA (SQ FT) TENANT WAULT PRICE YIELD CV (PSF) Under Offer Forum, Solent Business Park, Fareham 252,981 Multi Let 5.6 Q 42.00m 7.50% 166 Jun Town Quay, Southampton 48,441 Multi Let m 7.25% 157 Apr-16 Fusion, Solent Business Park, Fareham 157,000 Multi Let m 7.60% 220 Jul Parkway, Solent Business Park, Fareham 56,033 Multi Let m 7.43% 178 Oct-15 Link 1&2, Chestnut Avenue, Eastleigh 59,157 Cisco m 8.25% 216 Sep-15 The Zurich Centre, Solent Business Park, Fareham 100,342 Zurich m 6.82% 256 Jun-15 Charlotte Place, Southampton 80,857 Multi Let m 7.60% 195 Jun-15 Oceana House, Southampton 41,564 Bond Dickinson m 8.10% 243 EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

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21 20/21 ALTERNATIVE USE POTENTIAL As a result of the property s location in an attractive South Coast destination, its unique, picturesque micro location, the self-contained nature and size of the site and the underlying building appearance and characteristics, we consider that the property lends itself to longer term alternative use potential (subject to planning). Potential uses include: Hotel Healthcare care home facility or retirement living village Residential conventional planning route for the entire site or change of use of Block A via PDR in the short term INVESTMENT RATIONALE Port Solent is an established commercial location, benefitting from strong transport connections. Two high quality office buildings located on a large island site a unique product in the market. The South Coast office market is experiencing net effective rental growth with increasing headline rents and declining tenant incentives. Supply decreased by 8.6% to 1.2 million sq ft over the course of 2015 and is expected to decrease below 1 million sq ft by the end of Ageas Insurance Ltd has a D&B rating of 5A1 providing a secure income stream. Ageas is one of the largest employers on the South Coast and has recently signed a reversionary lease, demonstrating its commitment to the property. Ageas is undertaking a full refurbishment of its building which will significantly improve the specification of Block B. Opportunity to reposition Block A through refurbishment and reletting thereby improving the rental tone and driving returns. Block A is the only available self-contained office building in the region of 35,000 sq ft in the M27 corridor. Internally, the buildings offer ultimate flexibility to be let as a whole, or on a floor by floor or part floor basis. Negotiating the removal of Ageas break option would extend the WAULT. Asset management opportunities. The site has longer term alternative use potential (subject to planning). Excellent car parking ratio of 1:190 sq ft. EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

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23 22/23 AN EXCEPTIONAL OPPORTUNITY TO ACQUIRE TWO HIGH QUALITY HEADQUARTERS OFFICE BUILDINGS EPC Block A has an EPC rating of D (97). Block B has an EPC rating of D (83). ESTATE CHARGE There is an estate charge payable by both buildings. The estimated annual charge for the year ending 28 September 2016 for Block A is 26,280 per annum ( 0.72 per sq ft). RATES The rateable value of Block A totals 450,000 per annum. The Uniform Business Rate for 2016/2017 is 49.7p such that the total rates payable equates to 223,650 per annum ( 6.12 per sq ft). CAPITAL ALLOWANCES The benefit of any unclaimed capital allowances could be made available to the purchaser. VAT We understand the property is elected for VAT. It is the intention of the parties that the transaction will be treated as a transfer of a going concern (TOGC). PROPOSAL We are instructed to seek offers in excess of 11,000,000 (Eleven Million Pounds), subject to contract and exclusive of VAT. A purchase at this level reflects an attractive net initial yield of 8.94% exclusive of purchaser s costs of 6.70% and a low capital value of 176 per sq ft. EXCEPTIONAL ASSET MANAGEMENT OPPORTUNITY

24 SOUTH COAST OFFICE INVESTMENT BLOCKS A & B ONE PORT WAY PORT SOLENT PORTSMOUTH PO6 4TY CONTACTS To arrange a viewing, or to obtain access to the data room, please contact: Noel Lander noel.lander@eu.jll.com Laura Houghton laura.houghton@eu.jll.com Tom Woolven tom.woolven@eu.jll.com Disclaimer Jones Lang LaSalle Limited (JLL) for themselves and for the vendors or lessors of this property whose agents they are, give notice that:- a. the particulars are a general outline only for guidance and do not constitute, nor constitute part of, an offer or contract; b. all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are believed to be correct, but any intending purchasers, tenants or third parties should not rely on them as statements or representations of fact but satisfy themselves that they are correct by inspection or otherwise; c. no person in the employment of JLL has any authority to make or give any representation or warranty whatever in relation to the property; d. the photographs show only parts of the property as they appeared when taken; e. unless otherwise stated, all prices are quoted exclusive of VAT, if applicable; f. reference to any mechanical or electrical equipment or other facilities at the property shall not constitute a representation (unless otherwise stated) as to its state or condition or that it is capable of fulfilling its intended function; 2016 Jones Lang LaSalle IP, Inc. All rights reserved.