HEADROW COURT THE HEADROW, LEEDS LS1 2QS CITY CENTRE OFFICE INVESTMENT WITH ASSET MANAGEMENT OPPORTUNITIES

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1 THE HEADROW, LEEDS LS1 2QS CITY CENTRE OFFICE INVESTMENT WITH ASSET MANAGEMENT OPPORTUNITIES

2 INVESTMENT SUMMARY Leeds City Centre Freehold Office Investment years remaining to the excellent covenant of National Westminster Bank plc. Situated directly opposite Leeds Town Hall in the traditional business district. The Property comprises four separate buildings extending to a total NIA of approximately 36,502 sq ft (3,391 sq m). NatWest Group occupy the majority. They do not occupy buildings 3 & 4, presenting asset management opportunities. Future residential conversion potential in light of the extended Permitted Development Rights, subject to planning. Total rent roll of 640,000 per annum. Offers in excess of 6,600,000, subject to contract and exclusive of VAT, reflecting an attractive Net Initial Yield of 9.09% assuming usual purchase costs of 6.64%., THE HEADROW, LEEDS LS1 2QS 1

3 THE CORE BRIGGATE TRINITY LEEDS CITY SQUARE TRAIN STATION PARK ROW THE LIGHT THE HEADROW EAST PARADE HEADROW COURT ART GALLERY PARK SQ EAST TOWN HALL PARK SQ., THE HEADROW, LEEDS LS1 2QS LAW COURTS 2

4 Newcastle Liverpool By Train: 2hrs By Car: 1hr 30mins HEADROW COURT By Train: 1hr By Car: 1hr 55mins By Train: 2hrs By Car: 2hr 15mins Manchester Manchester Airport By Train: 1hr 20mins By Car: 1hr Birmingham INFIRMARY LAW COURTS Leeds Bradford Airport By Bus: 30mins By Car: 20mins M62 M6 London By Train: 2hr By Car: 3hr 40mins TOWN HALL THE LIGHT LEEDS M1 A1 M62 A1(M) TRINITY LEEDS By Train: 1hr 30mins By Car: 1hr 45mins York By Train: 25mins By Car: 40mins Hull By Train: 55mins By Car: 1hr TRADITIONAL OFFICE CORE MERRION CENTRE WEST END OFFICE CORE COMMERCIAL ST TRINITY LEEDS ROAD RAIL RETAIL CORE CIVIC QUARTER LOCATION Leeds is the principal city of the Yorkshire and Humber region with a city region population of around five million, similar to that of countries such as Denmark and Scotland. Leeds is located at the heart of the UK, approximately 56.3 km (35 miles) north of Sheffield, 71 km (44 miles) east of Manchester and 312 km (194 miles) north of London. The city benefits from excellent communications via the M621 which serves the city and links with the intersection of the M1 and M62 motorways only 12 km (7 miles) to the south and on to the A1(M) approximately 16 km (10 miles) thereafter to the east. Leeds is the UK s largest city region outside of London, economically bigger than nine EU countries with a GVA of 56bn and is nationally considered to be the 2nd largest centre for financial and legal services in the UK. It is the UK s fastest growing city with the second largest employment total outside of London. Leeds has one of the most diverse economies in the UK and is widely recognised as the largest and most important regional centre for legal, professional and financial services. LEEDS CITY STATION Leeds City train station is the largest by passenger numbers outside of the capital and serves as Yorkshire s hub to the rest of the UK. HS2 The new HS2, High Speed Rail link will reduce travel times to London to 1 hour 28 minutes. LEEDS BRADFORD AIRPORT Leeds Bradford Airport lies 11 km (7 miles) to the north west of the centre. The airport serves 70 destinations and British Airways operate four daily flights to London. RAILWAY ST EAST FIELD ST UPPER ACCOMMODATION ROAD, THE HEADROW, LEEDS LS1 2QS 3

5 ECONOMY Currently the home to over 100,000 businesses, the business sector is set to grow 51% by 2022 and Leeds is forecast as a top five UK city for growth. Leeds is an attractive home to businesses offering value for money with operating costs being 28% lower than the south east and 4.5% lower than other UK regional cities. There are some 30 national and international banks, 150 law firms and 200 accountancy firms in Leeds with major businesses in the city including HSBC, Lloyds Banking Group, RBS, KPMG, PWC, Direct Line, BSkyB, BT and ASDA to name a few. For the last five years Leeds has ranked within the top five UK cities with the lowest unemployment. 4.4bn has been invested in Commercial Property in Leeds over the last ten years with a further 5.9bn of developments currently under construction or in the pipeline, ensuring Leeds continued growth. The Leeds City Region has 9 Higher Education facilities including Leeds University and Leeds Beckett University. The region has some 93,579 students (HESA 2012/13) and 55,880 of which (HESA 2013/14) attend the two main universities in Leeds City Centre, close to the subject property. Leeds benefits from good and improving retail and leisure facilities with 617m invested in Leeds City Centre in the last decade and a further 6bn in progress or proposed. This includes the 350m Trinity Leeds, which opened in spring 2013, the state-of-the-art Leeds Arena, which opened in 2013 and the 650m Victoria Gate which is currently under construction. Leeds is the UK s 5th largest shopping location by retail floor space and is now in the top three retail destinations in the UK outside of London (Javelin). Alongside the improvement in city centre facilities, Leeds centre has become a vibrant and in demand place to live. With no new development for several years, supply is low which has led to pressure resulting in an increase in both sales values and rents, rising by 5.1% and 7.7% respectively in The lack of rental product has led to occupancy rates of in excess of 98%. To address this increased demand, recent years have seen a number of out dated office buildings sold for conversion to residential; a trend we expect to continue as more investors are attracted to the private rented sector., THE HEADROW, LEEDS LS1 2QS 4

6 21 22 Civic Quarter SITUATION The property is situated at the junction of Park Cross Street and The Headrow within the City s traditional business district, directly opposite Leeds Town Hall. Nearby occupiers include legal and financial sector firms. Over recent years, a number of properties have been sold for conversion to residential given that the area has a good mix of public space, attractions such as the Leeds Art Gallery, Millennium Square, restaurants and leisure users and The Light, all within close proximity. The property is a short walk from Leeds Railway Station, the commercial business district, Leeds University, Leeds Metropolitan University and the City Centre retail core. or Oxford El Sub Sta Oxford Chambers OXFORD P The Town Hall TCBs Oxford Place Methodist Centre Leeds Town Hall Leeds Art Gallery (PW) VICTORIA SQUARE El Sub Sta Posts Methodist Church & Law Chambers THE HEADROW 39.6m 36.6m TCB Aspect Court LB to Headrow Court PH a K SQUARE EAST 5 El Sub Sta PARK CROSS STREET 23 5 Coverdale House 13 to a 39.3m 8, THE HEADROW, LEEDS LS1 2QS 5

7 TENANCIES The Property comprises 4 separate buildings and is let in accordance with the following schedule. The leases are drawn on full repairing and insuring terms, with upwards only five yearly rent reviews. All 4 leases were assigned in March 2000 from the Partners of Simpson Curtis (now Pinsent Masons) to the current tenant. Building Tenant Lease Start Lease Expiry Rent Review Rent PA ONE TWO THREE FOUR National Westminster Bank Plc National Westminster Bank Plc National Westminster Bank Plc National Westminster Bank Plc Total NIA (Sq ft) 23/4/ /9/ /9/ ,500 21,937 23/4/ /9/ /9/ ,500 7,858 23/4/ /9/ /9/ ,000 3,747 23/4/ /9/ /9/ ,000 2,960 TOTAL 640,000 36, to Headrow Court Sub Sta 4 4, THE HEADROW, LEEDS LS1 2QS 6

8 SAMPLE FLOOR (FIRST) BUILDING ONE No 1 Headrow Court is the largest building of the four with frontage to The Headrow and comprising some 22,000 sq ft. Developed in the early 1990 s, No 1 Headrow Court comprises a 5 storey office building of steel frame construction, a combination of timber and concrete floors, brick clad elevations, with aluminium casement double glazed windows and surmounted by a pitched slate tile covered roof. Internally, the office space is predominately open plan with some internal glazed and stud partitioning. The property has a suspended ceiling with Cat II lighting and cooling. The building is heated by a gas central heating system serving wall mounted radiators. Power and data is supplied through perimeter trunking and floor boxes in parts. The property has two passenger lifts with male and female WC s available on each floor. The property is used as a NatWest and RBS web help customer service centre for internet banking with ancillary space including server room, meeting rooms and a staff canteen. The top floor within the roof space is used as storage as it currently has no natural light. SAMPLE FLOOR (SECOND) Car parking for all the buildings is within the courtyard to the rear of the property and in garages on the ground floors of units 1 and 2. Parking spaces are not clearly defined but parking is evident for at least 13 vehicles., THE HEADROW, LEEDS LS1 2QS Net Internal Area Unit 1 RICS 6th Edition IPMS 3 Gross Internal Area Ground 389 4, , ,371 First 412 4, , ,274 Second 442 4, , ,716 Third 389 4, , ,994 Fourth 297 3, , ,026 Fifth 109 1, , ,896 Total 2,038 21,937 2,039 21,948 2,627 28,277 The property has been measured in accordance with the RICS Code of Measuring Practice 6th Edition and the International Property Measuring Standards 3. A measured survey is available in the data room. 7

9 BUILDING TWO Building 2 comprises self-contained offices of traditional brick construction, timber floors and a pitched slate tiled roof. Building 2 is detached and currently occupied by Entrepreneurial Spark Ltd (a subsidiary of NatWest RBS). It has been fully refurbished to a high standard with modern lighting and suspended ceilings. The building has gas central heating and single glazed timber sash windows. SAMPLE FLOOR (FIRST) SAMPLE FLOOR (GROUND) GARAGE Net Internal Area Gross Internal Area Unit 1 RICS 6th Edition IPMS 3 RICS 6th Edition Ground 152 1, , ,045 First 200 2, , ,454 Second 206 2, , ,519 Third 172 1, , ,121 Total 730 7, , ,139 The property has been measured in accordance with the RICS Code of Measuring Practice 6th Edition and the International Property Measuring Standards 3. A measured survey is available in the data room., THE HEADROW, LEEDS LS1 2QS 8

10 BUILDINGS THREE & FOUR Buildings 3 and 4 comprise self-contained offices of traditional brick construction, timber floors and pitched slate tiled roofs. In need of some refurbishment, both buildings feature gas central heating and single glazed timber sash windows. NatWest/RBS are not in occupation and have recently put them on the market. BUILDING 3 SAMPLE FLOOR (FIRST) BUILDING 4 SAMPLE FLOOR (FIRST) BUILDING 3 BUILDING 4 Net Internal Area Gross Internal Area RICS 6th Edition IPMS 3 RICS 6th Edition Building 3 Ground First 95 1, , ,238 Second 96 1, , ,259 Third ,087 Total 348 3, , ,553 Building 4 Ground First Second Third Total 275 2, , ,724 The property has been measured in accordance with the RICS Code of Measuring Practice 6th Edition and the International Property Measuring Standards 3. A measured survey is available in the data room., THE HEADROW, LEEDS LS1 2QS 9

11 COVENANT The property is let to National Westminster Bank Plc, which is part of the Royal Bank of Scotland Group and is the largest retailing commercial bank in the United Kingdom. As of August 2015, the UK Government owns a 73% stake in RBS with a market capitalisation of billion (Dec 2015). National Westminster Bank plc is rated by Dun & Bradstreet as 5A1 and has the following financial summary: GBP 31/12/ s GBP 31/12/ s GBP 31/12/ s Turnover 9,697,000 11,316,000 10,297,000 Profit (Loss) 2,577,000 (6,805,000) (3,322,000) Tangible Net Worth 16,009,000 12,075,000 19,964,000 Net Current Assets 27,400,000 19,852,000 20,502,000, THE HEADROW, LEEDS LS1 2QS 10

12 TENURE The property is held freehold. ASSET MANAGEMENT The tenant is in occupation of Building 1 comprising the majority of the scheme. Building 2 is occupied by Entrepreneurial Spark, who work in partnership with the RBS Group. NatWest are not in occupation of the remainder(buildings 3 & 4) which have recently been made available by way of subletting. This may lead to the potential to agree surrenders of these buildings. The properties will lend themselves well to a residential conversion and the opportunity to surrender could bring the development potential forward. Alternatively, a surrender of these two leases would open up the ability for individual sales or lettings as offices. OPPORTUNITIES INCLUDE: Potential residential conversion, benefitting from extended Permitted Development Rights (subject to the relevant consents). There are no restrictions on the title to prevent this. Potential regear opportunity with the tenant who utilise the majority of the space but not all. Potential to agree an early surrender of some of the leases. Individual freehold sales of Buildings 3 & 4 to owner occupiers and private investors. Reletting., THE HEADROW, LEEDS LS1 2QS 11

13 VAT The property is registered for VAT and it is envisaged that the sale will be treated as a TOGC. EPC The property has an EPC rating of D (85). PROPOSAL We are instructed to seek offers in excess of 6,600,000, subject to contract and exclusive of VAT. A purchase at this level would reflect a Net Initial Yield of 9.09% assuming usual purchasers costs of 6.64% (taking into account SDLT changes with effect of 17 March 2016). CONTACT & FURTHER INFORMATION Please contact the sole agent for access to the data room for further information or to arrange a viewing. GRAHAM FOXTON graham.foxton@knightfrank.com REBECCA FARNSWORTH rebecca.farnsworth@knightfrank.com SIMON RICKARDS simon.rickards@knightfrank.com , THE HEADROW, LEEDS LS1 2QS MISREPRESENTATION ACT: Knight Frank LLP for themselves and for the vendors or lessors of this property, whose agents they are give notice that: a) all particulars are set out as general out-line only for the guidance of intending purchasers or lessees, and do not comprise part of an offer or contract: b) all descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are given in good faith and are believe to be correct but any intending purchasers or tenants should not rely on them as statements or representations of fact but must satisfy themselves by inspection or otherwise as to the correctness of each of them. c) no person in the employment of Knight Frank LLP has any authority to make any representation of warranty whatsoever in relation to this property. DESIGN & PRODUCTION DS.EMOTION.COM MAR (1544) 12