Prime Open A1 Retail Park and Foodstore Investment

Hermiston Gait Retail Park Edinburgh

Investment summaRy

■■ Edinburgh has the 10th largest shopping population in the UK.

■■ Hermiston Gait Retail Park has exceptional transport links.

■■ A 300,000 sq ft (27,870 sq m) retail park anchored by a new 75,000 sq ft (6,970 sq m) Tesco foodstore and 102,415 sq ft (9,515 sq m) B&Q Warehouse which account for over 62% of the income.

■■ The scheme benefits from a flexible Open A1 (including food) consented retail warehouse terrace along with Tesco and B&Q.

■■ The average rent on the 120,000 sq ft (11,150 sq m) retail terrace is a low £14.71 per sq ft.

■■ Current net income of £4,687,619 p.a. with a highly reversionary ERV of £4,990,169 p.a.

■■ The weighted average unexpired lease term is 15.70 years.

■■ Planning applications have been submitted to increase the total floorspace, develop a new retail and A3 terrace and refurbish the retail frontages.

Initial Yield 7.00%

Reversionary Yield – Sep-12 7.32% (B&Q guaranteed uplift)

Reversionary Yield – May-13 7.48% (tesco projected uplift*)

Reversionary Yield – Oct-13 8.03% (On completion of the 2013 reviews)* 5 year RPI forecast of 1.6% p.a. (Source: CBRE)

■■ We are instructed to seek offers in the region of

£63,340,000 subject to contract and exclusive of

VAT for our client’s interest. A purchase at this level

will reflect the following yield profile, based on

purchaser’s costs of 5.725%.

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asset manaGement

With two new key anchor retailers and low average rents, Hermiston Gait is now uniquely placed to finally unlock its latent rental growth potential.

Planning aPPlications Currently there are a number of planning applications

submitted that will fundamentally alter the park’s already

significant reversion. A final decision is expected by the end of

the year on these applications that includes the following:

Permitting up to 50% mezzanine floors across units 1-8, 1.

suiting modern retailer’s requirements.

Refurbishment of existing retail fronts including 2.

removal of dated canopy, new tenant signage

and over cladding of the brick frontages.

Construct a terrace of units to accommodate restaurants and 3.

retail uses that are aimed at increasing the customer dwell time.

Alter existing car park layout to provide increased 4.

disabled parking in front of the units while creating

new staff parking to the rear of the units.

ongoing initiativesConsent was recently granted to erect a signage board at 5.

the entrance of the scheme to increase shopper awareness.

Surrender and split Unit 7 into two 7,500 sq ft units.6.

develop the ‘teardrop’ site into a pod / retail unit which 7.

offers retailers a busy and prominent site (A profit share

agreement with new Edinburgh would be required).

Work with Tesco to locate and fund a PFS near to 8.

the scheme allowing them to offer their complete

service while further driving the parks footfall.

More detailed information on asset management is

available on request.

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GARdEn CEnTRE

BUlK STOREPlanning applications1 Mezzanine Floors2 Upgrade Retail

Frontages3 new retail and

A3 terrace4 new carpark layout

ongoing initiatives5 new Park Signage6 Split and relet

of Unit 77 Teardrop Site8 Potential PFS Site

edinburgh is the Capital of scotland and a major european city with a diverse economic base. the City benefits from excellent transport links and communications.

To the west the M8 and M9 motorways link with Glasgow 42 km

(67 miles) west and Falkirk to the north west while the A1, to the

east, connects to newcastle with the A720 forming the Edinburgh

City Bypass.

Edinburgh’s railway stations provide regular services to Glasgow

and london with approximate journey times of 50 minutes and 4½

hours respectively.

Edinburgh Airport is approximately 11 km (7 miles) west of the city

centre and offers a wide range of both domestic and international

flights. It is also earmarked for substantial expansion over the

next decade.

DeMogRaPHicsEdinburgh has a large shopping population of 502,000 ranking it

10th in the UK (Source: PROMIS nSlSP). The shopping population

has above average socio economic characteristics as illustrated by

comparison of the 15 minute drivetime against the UK average in

the following tables:

social grade 15 minutes UK index

AB 29.77% 24.89% 120

C1 31.52% 29.56% 107

C2 13.70% 18.29% 75

d/E 25.00% 27.26% 92

(Source – Pitney Bowes MapInfo)

Furthermore the property ownership statistics are above the UK

average.

Property ownership 15 minutes UK Index

% Owned 73.80% 62.59% 118

% Owns outright 38.06% 37.43% 102

(Source – Pitney Bowes MapInfo)

The overall Edinburgh shopping population spends above average

on shopping as shown below.

expenditure estimates edinburgh index

Total goods 2,338.97m 103

Convenience goods 848.18m 102

Comparison goods 1,490.80m 104

Food 566.82m 102

Clothing & footware 369.35m 104

Furniture, floor coverings & h’hold textiles 181.24m 103

Audio-visual equipment & other durables 247.24m 103

Hardware and dIY supplies 126.69m 103

Other goods 475.23m 103

(Source – CBRE nSlSP)

LOCatIOn

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Edinburgh

Hermiston

Edinburgh

Hermiston

Queensferry

East Calder

Leeburn

Penicuik

Bonnyrigg

Dalkeith

Whitecraig

MusselburghGladsmuir

Tranent

Haddington

Dirleton

DremAberlady

Fala Dam

Oxton

Fountainhall

Falahill

Gorbridge

OxenfordCastle

Livingston

Broxburn

Blackness

Champany

Grangemouth

Polmont

Falkirk

Kincardine

Blairhall OakleyDunmore

Shieldhill

Binnehill

Armadale

Bathgate

Whitburn

Longridge

FauldhouseShotts

Stane

Forth

NorthQueensferry

A68

A1

A8

M8

M8

M8

M9

M9M9

M9

A1

A1

A1

A68

A90

A90

A92

A92

A71

A71

A71

A71

A720

A199

A720

A876

A985

A985A823

A902

A8000

A702

A702

A702

A702

A68

A68

drive time contours

10 minutes

15 minutes

20 minutes

DemOGRaPHICs

sItuatIOn

the park is strategically located at the junction of the edinburgh City Bypass (a720) and the m8, 8 km (5 miles) west of the city centre. It is fully accessible from either road with recently installed signage over the City Bypass in 2008. access is also now available via Cultins Road direct from the a71 that leads directly into the heart of the city.

located on the northern edge of the park is Edinburgh Park

railway station, opened in 2003, which provides regular

services to the city centre. The Edinburgh Tram project

which was started in 2008, with the first phase due to

complete in 2011 is being routed through this station.

The 362,000 sq ft (33,600 sq m) Gyle Shopping Centre is situated

1.5 km (1 mile) north and is anchored by Mark & Spencer and a

Morrison’s foodstore along with River Island, next and Boots.

directly north of the park is Edinburgh Park which is Scotland’s

largest business park that has been developed since 1990. To date

around 2.5 million sq ft (232,250 sq m) of the development has

been built out with a further 2.2 million sq ft (204,390 sq m) still

to be developed. It is owned by new Edinburgh limited which is

a joint venture between The Miller Group and CEC Holdings ltd

that is a wholly owned subsidiary of the City of Edinburgh Council.

Towards

Edinburgh airport

M8

A720

A71

A8

A720

1

2

3

4

5

Towards

Edinburgh

City CentreTowards

Edinburgh

City Centre

1 new Park Signage2 Edinburgh Park

Railway Station 3 The Proposed

Edinburgh West Tram line

4 The Gyle Shopping Centre

5 Edinburgh Park

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RetaIL WaReHOuse PROvIsIOn In eDInBuRGH

A8A8

A8

A7

A7

A1

A720

A720

A702

A701

A772

A702

A71

A71

A70

A70

M8

M9

A902

A902

A90

A90

A90

A90

A8000

A199A900

A1

A1

A68

Fort Kinnaird shopping Park 580,000 sq ft (53,400 sq m)

Fort Kinnaird is the largest shopping park in

Edinburgh. It comprises three distinct phases

and has attracted the likes of M&S, Arcadia,

River Island, new look and Monsoon with

headline rents reaching £55.00 per sq ft.

The retail cluster also contains the only other

B&Q Warehouse in the city along with a

Tesco Home Store and additional solus units.

straiton Retail Park cluster298,000 sq ft (21,925 sq m)

Straiton Retail Park is a large cluster of retail

warehousing in Edinburgh located to the

south of the A720 and is in split ownership.

These open A1 (non food) retail parks are

arranged in three phases with the most recent

phase let to M&S Simply Food, Boots, Argos,

Brantano and next. The top rent reflects

£28.00 per sq ft while the remaining line up

on the earlier phases includes Comet, Sports

direct, Halfords and Homebase.

the craigleith (Quarry) shopping Park 182,500 sq ft (17,000 sq m)

This park is located 3 km (2 miles) west of

the city centre adjacent to a Sainsbury’s

foodstore on the A90 Queensferry Road.

The park has an Open A1 (non food)

planning consent with a highest rent of

£37.00 per sq ft. Tenants on the park

include M&S, next, new look, Argos,

Arcadia, TK Maxx, Boots and Homebase.

Meadowbank Retail Park

149,200 sq ft (13,800 sq m)

The park is situated 1.5 km (1 mile) east of

the city centre on the A1 london Road. This

Open A1 park was recently purchased and

is anchored by a Sainsbury’s foodstore with

other tenants including TK Maxx Home,

M&S Outlet, Peacocks and Gala. The

highest rent achieved is £23.00 per sq ft.

the total retail warehouse supply in edinburgh is estimated to be in excess of 2.1 million sq ft (195,000 sq m) of which 75% is located on retail parks. the subject property is the second largest classified retail park within the city.

FORT KInnAIRd SHOPPInG PARK

STRAITOn RETAIl PARK ClUSTER

MEAdOWBAnK RETAIl PARKTHE CRAIGlEITH (QUARRY) SHOPPInG PARK

DesCRIPtIOn

the retail park comprises two anchor units let to tesco and B&Q along with eight Open a1 (inc food) retail units. the park is well configured with the retail terrace and tesco located opposite the B&Q Warehouse across a central car park.

The main retail warehouse units were constructed in 1995 and are

of steel portal frame construction with brick and block cavity walls

incorporating brick and glazed retail fronts.

In 2007, the 102,415 sq ft (9,515 sq m) B&Q Warehouse was

completed providing a steel portal frame unit with brick cladding

and profile metal cladding under a pitched roof.

In 2008, units 9, 10 & 11 were combined to create a new

75,000 sq ft (6,970 sq m) Tesco foodstore to anchor the

southern end of the scheme.

The service access for the Tesco and retail terrace is off Cultins

Road while the B&Q is serviced via a road from the main customer

access. The remainder of the site comprises soft landscaping,

substantial tarmac surface car parking areas and concrete surfaced

service yards and compound areas.

siteThe site is regular in shape and extends to approximately 24 acres

(9.7 ha) providing a site cover of approximately 28%.

caR PaRKingThe scheme benefits from an extensive onsite car park providing a

total of 1,117 spaces, giving a ratio of 1:266 sq ft (1:24.7 sq m).

tenUReOutright Ownership (Scottish equivalent to English Freehold).

PlanningThe park was granted consent in March 1994 which allows for Open

A1 (including food) retail uses without minimum or maximum unit

sizes except for a condition within the reserved matters restricting

the total gross internal floor area of the park to 200,000 sq ft

(18,580 sq m). The unrestricted consent was upheld by the City of

Edinburgh Council in 2008 prior to Tesco’s occupation.

Consent was granted in January 2006 for the B&Q that states that

the unit must not be subdivided and limits 90% of the floorspace to

be used for the sale of bulky goods categories including dIY, home

maintenance, building / construction materials, garden supplies,

furnishing and fittings, floor coverings and bulky electrical goods.

tenant DeManDThe latest lettings on the scheme have been Tesco and B&Q which

opened in September 2008 and October 2007 respectively. We

understand that both are trading above expectations, delivering

significant improvements in customer footfall numbers.

The car count numbers have risen from an average of 15,000 per

week in early 2007, improving on the B&Q opening to 27,500 per

week, before settling to around 37,000 per week since the Tesco

store opened.

We believe that the 120,000 sq ft (11,150 sq m) retail terrace has

the potential to deliver superlative rental growth, particularly given

the low current average passing rent of £14.72 per sq ft.

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COvenant / InCOme

incoMe analYsis The park is well let with a weighted average unexpired lease term

of over 15.70 years (17.00 years without Tesco break clause). The

chart sets out the lease expiry profile for the park:

Tenant date of Turnover net Worth Total Assets Account (£,000) (£,000) (£,000)

Tesco Stores limited 23 Feb 2008 £34,786,000 £4,506,000 £18,130,000 24 Feb 2007 £32,687,000 £4,752,000 £16,871,000 25 Feb 2006 £30,087,000 £3,399,000 £13,257,000

B&Q Plc 02 Feb 2008 £3,854,900 £1,761,800 £2,805,800 03 Feb 2007 £3,817,900 £1,602,900 £2,632,200 28 Jan 2006 £3,753,600 £1,343,200 £2,341,800

Halfords limited 28 Mar 2008 £797,400 £194,700 £413,300 30 Mar 2007 £744,000 £185,500 £393,200 31 Mar 2006 £670,700 £154,100 £291,000

Staples UK Retail limited 02 Feb 2008 £359,707 £2,149 £165,601 03 Feb 2007 £361,129 £(16,550) £145,176 28 Jan 2006 £354,579 £(4,181) £200,714

Specialist Computer Holdings (UK) Plc 31 Mar 2008 – £15,290 £131,201 31 Mar 2007 – £14,240 £134,098 31 Mar 2006 – £12,911 £156,529

dSG Retail limited 03 May 2008 £4,657,189 £785,314 £2,125,259 28 Apr 2007 £4,500,903 £861,108 £2,119,762 29 Apr 2006 £4,203,295 £732,420 £2,019,243

Carpetright Plc 03 May 2008 £521,500 £12,100 £336,100 28 Apr 2007 £475,900 £29,100 £268,200 29 Apr 2006 £451,400 £21,700 £248,000

Blane leisure limited 27 Jan 2008 £164,268 £171,967 £201,678 28 Jan 2007 £177,407 £164,172 £189,754 29 Jan 2006 £173,308 £153,704 £177,752

Childrens World limited 29 Mar 2008 – £63,700 £63,700 31 Mar 2007 – £63,700 £63,700 01 Apr 2006 – £63,700 £63,700

Harveys Furnishing Group limited 28 Jun 2008 – £(46,746) – 30 Jun 2007 – £(46,746) – 01 Jul 2006 – £(46,746) –

tenant inFoRMationtesco Plc

Tesco remains the undisputed leader in UK grocery and the

largest retailer in the UK. It has a market share of over 30% of

the UK grocery market significantly ahead of its nearest rivals. In

recent years the company has also expanded abroad, making the

company a truly global player. The company now has significant

operations in 14 countries with 60% of Tesco floorspace now being

outside of the UK market (Source: Verdict).

B&Q Plc

B&Q is number one in the UK home improvement market, with a

market share of 14.8%, while being the third largest in the world.

B&Q is a wholly owned subsidiary of Kingfisher plc and currently

operates from a total of 330 trading stores in the UK.

We have set out to the right the recent account information

for the primary tenants:

0 10 20 30 40

% of Park Income

Leas

e Ex

piri

es

0–10 years0%

20+ years: Tesco 27.2%

10–15 years: Retail Terrace 37.7%

15–20 years: B&Q 35.0%

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13tenanCy

* Stated lease floorarea.

Unit tenant trading as size lease tenant expiry Passing Rent next eRv comments sq ft start Break Date p.a. per sq ft Rent Review p.a. per sq ft

Unit 1 dSG Retail limited Currys 22,267 16/10/95 – 15/10/20 £337,500 £15.16 16/10/08 £356,272 £16.00 Rent review outstanding.

Unit 2 Halfords limited Halfords 10,080 16/10/95 – 15/10/20 £130,117 £12.91 16/10/08 £176,400 £17.50 Rent review outstanding.

Unit 3 Harveys Furnishing Group limited Harveys 7,529 16/10/95 – 15/10/20 £97,396 £12.94 16/10/08 £135,522 £18.00 Rent review outstanding.

Unit 4 Carpetright Plc Carpetright 9,897 16/10/95 – 15/10/20 £130,078 £13.14 16/10/08 £178,146 £18.00 Rent review outstanding.

Unit 5 Staples UK Retail limited Staples 15,096 10/01/96 – 15/10/20 £330,396 £21.89 16/10/13 £271,728 £18.00

Unit 6 Childrens World limited Mothercare 14,948 16/10/95 – 15/10/20 £189,277 £12.66 16/10/08 £269,064 £18.00 Rent review outstanding.

Unit 7 Specialist Computer Holdings (UK) Plc – 15,015 16/10/95 – 15/10/20 £255,255 £17.00 16/10/08 £270,270 £18.00 Rent review outstanding.

Unit 8 Blane leisure limited JJB Sports 25,101 16/10/95 – 15/10/20 £299,000 £11.91 16/10/10 £414,167 £16.50

Units 9,10,11 Tesco Stores limited* Tesco 75,000 19/05/08 19/05/28 18/05/33 £1,275,000 £17.00 19/05/13 £1,275,000 £17.00 Reviewed 5 yearly to RPI capped at 3.5% p.a. Tenant’s option to extend the term for a further 10 years.

– B&Q Plc* B&Q 102,415 03/09/07 – 02/09/27 £1,638,400 £16.00 03/09/12 £1,638,400 £16.00 Rent to be reviewed to higher of OMRV or £1,853,713 pa (£18.10 per sq ft).

Burger Van Ewan Wisniewska – – 20/12/07 – – £5,200 – – £5,200 – licence

total 297,348 £4,687,619 £4,990,169

the property is let in accordance with the schedule below. the current contracted rent is £4,687,619 p.a. with a number of units still having outstanding reviews from October 2008. the leases are all drawn on FRI terms, subject to five yearly upwards only reviews (unless stated below):

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15PROPOsaL

vatThe subject property is elected for VAT. The vendor would expect

to treat the sale as a transfer of a going concern (TOGC), with the

intention that no VAT would be payable on the purchase price.

PRoPosalWe are instructed to seek offers in the region of £63,340,000

subject to contract and exclusive of VAT for our client’s interest.

A purchase at this level will reflect the following yield profile,

based on purchaser’s costs of 5.725%.

Initial Yield 7.00%

Reversionary Yield – Sep-12 7.32% (B&Q guaranteed uplift)

Reversionary Yield – May-13 7.48% (tesco projected uplift*)

Reversionary Yield – Oct-13 8.03% (On completion of the 2013 reviews)* 5 year RPI forecast of 1.6% (Source: CBRE)

James gullifordt: 020 7182 2216F: 020 7491 4921e: james.gulliford@cbre.com

Will atkinsont: 020 7182 2401F: 020 7491 4921e: william.atkinson@cbre.com

cB Richard ellis limitedKingsley HouseWimpole streetLondonW1G 0Ret: 020 7182 2000F: 020 7182 2001

Miller Mathieson t: 0131 243 4168 F: 0131 469 0131e: miller.mathieson@cbre.com

cB Richard ellis limited7 Castle streetedinburgheH2 3aHt: 0131 469 7666F: 0131 469 0131

contactsFor further information please contact:

disclaimer: CB Richard Ellis 2009

CB Richard ellis on its behalf and for the vendors or Lessors of this property whose agents they are, give notice that:

1. these particulars are set out as a general outline only for guidance to intending Purchasers or Lessees, and do not constitute any part of an offer or contract.

2. Details are given without any responsibility and any intending Purchasers, Lessees or third Parties 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.

3. no person in the employment of CB Richard ellis has any authority to make any representation or warranty whatsoever in relation to this property.

4. unless otherwise stated, all priced and rents are quoted exclusive of vat.

Edinburgh | Hermiston Gait Retail Park | July 09 | Ref: 105906

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