valuation report - vegagest · 2018. 10. 29. · askew frics cis hypzert (mlv) and michael verona...

Valuation Report Colonnades Leisure Park, Purley Way Croydon

Vegagest SGR SpA, Fondo Europa Immobiliare 1

July 2015

Colonnades Retail Park, Purley Way, Croydon July 2015

Contents

1 Introduction ...................................................................................................................................... 1 2 Basis of the Valuation ................................................................................................................. 2 3 General Principals .......................................................................................................................... 3

3.2 Measurements and Areas .....................................................................................................................................................3 3.3 Titles .......................................................................................................................................................................................3 3.4 Town Planning and Other Statutory Regulations ...............................................................................................................4 3.5 Site Visit ..................................................................................................................................................................................4 3.6 Structural Survey ...................................................................................................................................................................4 3.7 Deleterious materials and Pollution .....................................................................................................................................4 3.8 Environmental Contamination ..............................................................................................................................................4 3.9 Disposal Costs and Liabilities ..............................................................................................................................................4 3.10 Confidentiality to Third party and Liabilities .......................................................................................................................4

4 Location ............................................................................................................................................... 5 4.1 Geographical Description .....................................................................................................................................................5 4.2 Situation..................................................................................................................................................................................5 4.3 Communication ......................................................................................................................................................................5

5 Description ......................................................................................................................................... 6 5.1 Property Description .............................................................................................................................................................6 5.2 State of Repairs......................................................................................................................................................................8 5.3 Accommodation .....................................................................................................................................................................9

6 Planning ............................................................................................................................................. 10 6.1 Town Planning .....................................................................................................................................................................10

7 Non-Recoverable Costs ............................................................................................................ 11 7.1 Annual Non-recoverable Costs ..........................................................................................................................................11 7.2 Tax Matters ...........................................................................................................................................................................11 7.3 Other Non-recoverable Costs .............................................................................................................................................12

8 Tenancy .............................................................................................................................................. 13 8.1 Tenancy Status ....................................................................................................................................................................13 8.2 Lease Summaries ................................................................................................................................................................13 8.3 Covenant Status .................................................................................................................................................................16

9 Market Commentary ................................................................................................................... 18 9.1 Economy ...............................................................................................................................................................................18 9.2 Retail & Leisure Market Overview ......................................................................................................................................22 9.3 Local Market Overview ........................................................................................................................................................29

10 Valuation Commentary ............................................................................................................. 35 10.1 Valuation Approach .............................................................................................................................................................35 10.2 Value and Commentary .......................................................................................................................................................35 10.3 Discounted Cash Flow 5 Year Analysis .............................................................................................................................35

11 Valuation ........................................................................................................................................... 37 11.1 Market Rent ..........................................................................................................................................................................37 11.2 Market Value .........................................................................................................................................................................37

Colonnades Retail Park, Purley Way, Croydon July 2015

Appendices

Appendix 1……………………………………………………………………………………………………………………Location

Appendix 2……………………………………………………………………………………………………………….Photographs

Appendix 3……………………………………………………………………………………………………Valuation Calculations

Appendix 4…………………………………………………………………………...General Terms and Conditions of Business

COPYRIGHT © JLL IP, INC. 2015. All Rights Reserved 1

1 Introduction

Further to the instruction of the Independent Value assigned by Vegagest Immobiliare SGR SpA we have

performed the necessary analysis aiming to provide the valuation of The Colonnades Leisure Park, 619 Purley

Way, Croydon, CR0 4RQ.

The scope of the subject valuation exercise is to provide you with our professional opinion of the following values

as at the valuation date 30 June 2015

Market Value of the property in its current state of repair and use, subject to the existing leases;

Market Rent of the property in its current state of repair and use as at the market conditions available at the

valuation date.

We bring to your attention that the subject analysis has been carried out taking into consideration market

conditions and market information available on 30 June 2015


2 Basis of the Valuation

Our valuation has been prepared in accordance with the RICS Valuation- Professional Standards, January 2014

published by the Royal Institution of Chartered Surveyors on the basis of Market Value.

Below please find the definition and interpretive commentary reproduced from the RICS Valuation – Professional

Standards January 2014, VPS 4 and IVS Framework.

The definition of Market Value as defined in IVS Framework is:

The estimated amount for which an asset or liability should exchange on the valuation date between a willing

buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each

acted knowledgeably, prudently and without compulsion.

2.1 Market Rent

The definition of Market Rent as defined in IVS framework is:

The estimate amount for which an interest in real property should be leased on the valuation date between a

willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper

marketing and where the parties had each acted knowledgeably, prudently and without compulsion.


3 General Principals

The following are the general principles upon which our Valuations and Reports are prepared; they apply unless

we have agreed otherwise and specifically mentioned any variations in the body of the subject report.

We would like to bring to your attention that in the subject report, we refer to Vegagest SGR SpA as the Client.

(please refer to section 1 for further information).

We also bring to your attention that we, as the valuers, have previously been engaged in work upon the subject

property which was valued by ourselves for loan security purposes in December 2012. However, we do not

consider this to be a conflict of interest with regard to the valuation set out within this report.

The responsibility for the subject valuation report is Mr. Pierre Marin MRICS, CEO of Jones Lang LaSalle S.p.A.,

who has also signed the Valuation Report.

The Valuation Analysis and the related Report has been performed under the supervision of Cara Reynoldson

MRICS, Director of the Valuation Advisory Department of Jones Lang LaSalle in London assisted by Joshua

Askew FRICS CIS HypZert (MLV) and Michael Verona MSc.

3.1 Sources of Information

As per our agreement, we have carried out our analysis on the basis of the documentation and data provided by

the Client and/or its appointed representatives. For the purposes of this valuation, we have assumed that the

information provided to us – with reference to areas, cadastral information, etc. – are accurate and correct.

Below reported is the list of the documentation provided by the Client:

Report on Title;

Tenancy Schedule, as provided in DTZ’s Q1 2015 management report;

Leases as provided by DTZ;

Q1 2015 Management Report provided by DTZ;

Structural & Building Surveys;

Cost Summary for Unit 9 provided by Savills;

3.2 Measurements and Areas

For the purposes of this valuation, we have not undertaken site measurements and we have relied on the

information provided by the Client.

3.3 Titles

For the purposes of the subject valuation, we have not studied the details of the title deed, general or specific

ground lease conditions, or other restrictions or rights of third parties, if not otherwise specified in the relevant

sections of the subject report.


3.4 Town Planning and Other Statutory Regulations

We have based our opinion on the cadastral documentation information provided in writing by the Client and/or its

appointed representatives. We have in all cases assumed that the uses to which the land and buildings are put

are established for planning purposes, and that all necessary town-planning consents and byelaw approvals have

been obtained, and all other relevant statutory regulations complied with, if not otherwise specified in the relevant

sections of the subject report.

3.5 Site Visit

As per our agreement, we previously carried out a property inspection on 30 June 2015. We completed the

necessary analysis and enquiries in order to provide you with our professional opinion.

3.6 Structural Survey

It is our opinion that the data and information collected/provided by us during the inspection of the subject

property is appropriate for carrying out the subject valuation instruction. We bring to your attention that, in any

case, our inspections aim at gaining a general understanding of the state of repair of the property and of their

formal and functional qualities with a purely visual analysis. If you wish for certainty regarding the constructional

and technical state of the property, we advise you to consult a technical consultant. Based on the above we

report that any costs estimates present in the subject valuation report should be considered as indicative; if you

wish for certainty in regarding the costs estimates, we advise you to consult a cost consultant.

3.7 Deleterious materials and Pollution

We do not normally carry out investigations on site to ascertain whether any building was constructed or altered

using deleterious materials or techniques (including, by way of example, high cement concrete, wood-wool as

permanent shuttering, calcium chloride or asbestos). Unless we are otherwise informed, our valuations are on the

basis that no such materials or techniques have been used.

3.8 Environmental Contamination

We do not carry out site surveys or environmental assessments, or investigate historical records to establish

whether any land or premises are or have been contaminated. Unless we are specifically advised to the contrary,

our valuations assume that the properties are not affected by environmental contamination.

3.9 Disposal Costs and Liabilities

No allowances are made for any expenses related to any taxes and impositions. For the purposes of this

valuation, we have not taken into account the effect of the changes to VAT legislation, nor of the changes to the

provisions on property transfer and registration charges, or of the introduction of legal measures intended to close

loopholes in property-tax legislation. If you require certainty as to the possible considerable effects of changes in

legislation on the value of the property, we advise you to contact your tax advisor.

3.10 Confidentiality to Third party and Liabilities

This report is exclusively intended for the Client’s internal purposes and/or for the purposes reported in the

subject report and/or in the instruction letter. No responsibility is accepted by any third party, and neither the

whole nor any part of this report, nor reference thereto, may be published in any document, statement or circular,

nor in any communication with third parties, without our prior written approval of the form and context in which it

will appear.


4 Location

4.1 Geographical Description

The London Borough of Croydon is London’s southern-most borough and it is situated approximately 10 miles

north of the M25, and 12 miles south of Central London. According to the 2011 Census Croydon was London’s

largest Local Authority with a population of 363,400.

4.2 Situation

The subject property lies approximately 2.5 miles south of Croydon town centre and 1.4 miles north of Purley

town centre and is positioned opposite Croydon Airport. Specifically it is located on the A23, which links Croydon

to the M25, which is London’s main arterial road. The property itself is situated close to Croydon Airport and the

Aerodrome Hotel, as well as the Croydon Hilton. The Aerodrome Hotel is a Hallmark hotel.

Retailers in the general district of the subject property along Purley Way include a number of big box retailers,

road side showrooms, garages and retail parks. Roadside showrooms include a Lexus car showroom, a Toyota

car showroom and a Ford car showroom. Retail Parks on Purley Way are anchored by amongst others; Halfords,

Morrisons, Jewson’s and Somerfield’s. All the properties previously mentioned are prominently visible along

Purley Way.

4.3 Communication

Road

The property is prominently positioned on the A23 which affords easy access to Central London, and to the M25.

The M25 provides excellent links to the rest of the country, and in particular the South East of England via the

M2, M20 and M23.

Rail & Tram

The property is located approximately 1 mile from Waddon Railway Station which provides a regular over ground

train service to London Victoria and Croydon town centre. Further railway stations within the vicinity include

Croydon South (0.9 miles, east), Croydon East (2.4 miles, north east). Croydon also benefits from a tram network

that connects several areas of the town to various railway stations and other transport connections. Church Street

tramlink station is the closest tramlink stop to the subject property (1.2 miles, north east).

Public Transport

There are regular local buses in the area which provide access to Croydon Town Centre and Bromley which are

the two main local business districts local to the subject property.

Air

The closest airport is Croydon Airport which is opposite the subject property. Gatwick Airport is the closest

international airport, and is located approximately 17 miles south of the subject property.


5 Description

5.1 Property Description

Site Plan

We set out below our understanding of the site plan based on the title number provided. We would recommend that your

solicitors verify that we have correctly outlined the site.

General Description & External Areas

The Colonnades Retail Park was constructed between 1999 and 2001 and comprises 8 retail and leisure units.

The site includes a parade of five units, which are all part of one larger steel portal frame building with brick and

glass elevations surmounted by a flat, profile-metal-sheet clad roof.

The remaining three occupiers on site each have separate standing distinct buildings, one of which comprises a

stand-alone Premier Inn Hotel, the second is the stand-alone Gypsy Moth Pub and Restaurant, the final is stand-

alone Pizza Hut Restaurant unit. The site is directly accessible off Purley Way, via a short access road. The

parking area is split into two halves bisected by the access road and turning circle. A bus stop for the 119 bus

which terminates in the Colonnades parking area is also situated on site.

An additional ninth unit is currently under construction in the south western corner of the site adjacent to the

access road. At the time of visiting, a steel framed shell had been erected with ground works surrounding the

building ongoing with building materials, machinery and workers on site.


The building site has been cordoned off with barriers, narrowing the access road to the site although access to

the rest of the premises is unaffected.

The site is extremely prominent and well sign posted from Purley Way. The car park is asphalted throughout and

landscaping is to a high standard with a number of well-tended plants and trees throughout the site

There are approximately 475 car parking spaces fronting the retail units. The car park is free of charge.

Internal Units

The current occupier for Unit 1 is Nuffield Health, extending over two floors. This unit is currently used as a gym,

spa and physiotherapy centre. The unit contains tiled floors, plastered and painted walls and ceiling and an indoor

central atrium with swimming pool. The central atrium benefits from clear glass sky lights at roof height. This unit,

which is part of the building with the other units which forms this parade, is of steel portal frame construction with

concrete, plate glass and brick/metal sheet clad elevations. The ground floor of Unit 1 also contains the Dove Spa

and a café to the rear of the premises with a coffee bar, which is called Ringtons, run by Costa Coffee. The unit is

fitted out to Nuffield Health’s corporate standard.

Male and female changing rooms are situated on the ground floor. A passenger lift is also situated on the ground

floor and provides access to the first and second floors. The first floor benefits from several distinct and different

air conditioned gym areas with equipment; floor to ceiling double and triple glazed plate windows, tiled and

carpeted floors, ceiling mounted air conditioning units, a mixture of spot recessed and recessed fluorescent

lighting, PA and sound systems throughout and smoke detectors throughout. The first floor also benefits from

several treatment rooms. Changing rooms and showers providing access to the swimming pool are situated on

the ground floor.

The first floor also benefits from two studios, a small dance and fitness studio and a larger dance class and

fitness studio.

The exit staircase connects to both floors. At first floor level, there is also a rear storage area partitioned off from

the main reception, health, gym and fitness areas.

Unit 2 is currently occupied by McDonalds. The unit is fitted out to McDonald’s corporate standard. Unit 2 is at

ground floor level only. Roughly one-third of the unit is the customer dining area. To the rear of the unit is the

kitchen, cold store and a staff dining room/recreational area. A storage passage/storage units and the rear space

in McDonald’s unit contains two storage rooms and fire exit to the service yard. The kitchen contains a chiller

area and a cold store.

The floor is tiled and carpeted. The kitchen area benefits from a suspended ceiling, fire detectors, ceiling mounted

fluorescent strip lighting and the retail dining area of the unit is tiled with suspended ceilings, WC for retail

customers and dining customers and full glass frontage.

Unit 3 is currently occupied by Kidspace, a children’s fun park over two levels. Access to the first floor is via a

central staircase; however the unit also benefits from a customer/passenger lift providing access to the top floor.

Ceilings are recessed with ceiling mounted floodlighting. The walls are painted and plastered. Floors are variously

tiled and carpeted. The entire space is fitted out to Kidspace corporate standard and contains a number of slides,

jungle gyms and children’s’ adventure park climb and play installations. There are also a number of food counters

on the first floor.


Unit 4, next in the parade, comprises a food court with several different operators including China Wok, Karahi

Cuisine, BBQ XPress, Kaspa’s Desserts and Subway. Each of these operators has a small buffet style stand with

kitchens to the rear. The majority of the ground floor space which is only on one level is taken up by customer

dining area and customer booths. The ceiling is painted and plastered, part suspended with recessed spot

lighting, air conditioning units installed, ceiling installed and ceiling recessed lighting, smoke detectors and CCTV.

The walls are part clad/part brick, fitted out to each individual operator’s corporate style, floors are tiled. The unit

benefits from customer toilets and kitchens to the rear.

To the rear of the kitchen units is a storage passageway which also provides access to the service yard via a fire

escape. The basic form of construction is steel portal frame; cement and breeze block internal walls, structural

walls and facades overlaid with cladding.

External elevations for the entire Colonnades Retail Parade/Park are brick with Kingspan metal sheet cladding.

The rear of the property is a delivery and service yard providing servicing to all units and a small turning circle.

Access to the plant/ mechanical and electrical equipment/mechanical engineering equipment is situated off the

rear service yard in a lower ground alcove beneath the upper service and delivery yard.

Unit 5 is the ex-City Limits Unit. City Limits were last in occupation 3-4 years ago. The unit is now vacant but still

bears City Limits fascia and signage. Externally, the unit looks to be in poor condition and in need of repairs and

renovation/renewal to the primary façade. The ex-City Limits unit was previously used as bowling hall with Laser

Quest and function rooms. We were not able to access this unit for an internal inspection in June 2014.

Unit 6 comprises a four floor Premier Inn hotel of brick and concrete construction with a low pitched slate roof.

Outer elevations are of brick construction with part painted plaster screed. The Premier Inn contains 423 rooms

split over ground, first, second and third floors. The hotel contains 25 larger family rooms/double rooms. The

Premier Inn is fitted out to the hoteliers’ corporate standard throughout and includes; ceiling mounted spotlighting,

suspended ceilings, painted and plastered walls and carpeted floors. The unit also benefits from a passenger lift

providing access to all three floors.

Unit 7 comprises the Gypsy Moth, a ground floor Public House and Restaurant of brick and concrete construction

with traditional public house fit-out including large traditional timber serving bars/counters, wooden floor tiling,

lead brick pilasters and columns and bare timber roof trusses. The Gypsy Moth is of brick and concrete

construction with a multi-tiered pitched slate roof.

Unit 8 comprises a standalone Pizza Hut; this is all a one floor unit of brick and concrete construction with a

saddleback profile metal sheet clad roof.

The outside unit provides glass frontages to the car park. Ceilings are painted and plastered with recessed

spotlighting, air conditioning systems and smoke detectors. This Pizza Hut unit is fitted out to Pizza Hut’s

corporate standard. Floors are tiled and clad with soft materials or painted and plastered or wooden clad/timber

clad.

A kitchen unit with cold store, rear redelivery access and fire exit is situated to the rear of the Pizza Hut dining

area.

5.2 State of Repairs

JLL were not instructed to undertake any structural surveys, tests for services, or arrange for any investigations to

be carried out.

Our valuation has been undertaken on the basis that the property is in good structural repair and condition and

contains no deleterious materials and that services function satisfactorily.


From our inspection for valuation purposes we would comment that generally, with the exception of the exterior of

Unit 5, the subject premises are in a reasonable state or repair and condition.

5.3 Accommodation

We were not instructed to measure the property, and have been provided with the following accommodation

schedule from DTZ, Vegagest’s management surveyor:

Demise Use (Tenant) m² ft²

Unit 1 D2 Health & Fitness Gym (Nuffield Health)

3,803.6 40,942

Unit 2 A3 Restaurant (McDonalds) 271.27 2,920

Unit 3 D2 Leisure – Children’s soft play 2,262.17 24,350

Unit 4 A3 Food Court 463.68 4,991

Unit 5 D2 leisure & Bowling 4,626.07 49,795

Unit 6 C1 Hotel (84 Beds) 2,552.40 27,474

Unit 7 Public House 857.12 9,226

Unit 8 A3 Restaurant 327,76 3,528

Total 15,164.07 163,226


6 Planning

6.1 Town Planning

The property lies in an area covered by The London Borough of Croydon which has adopted a Local Plan as well

as adopting several master plans which focus on developing and regenerating Croydon’s town centre.

Within the Local Plan the property falls under four policies SP4, UC11 and UD11 which relate to Croydon’s

Archaeological Priority Zone and Croydon Panorama. The main principle of the policies relates to new

development, ensuring that those particular areas in Croydon are developed into open, safe areas where

community spirit is supported.

Specifically SP4 relates to urban design and local character and requires all developments to protect Croydon’s

important vistas and skylines, enhance social cohesion and wellbeing and be informed by the distinctive qualities,

identity and topography of the relevant Places of Croydon.

Policy UD11 has been put in place to ensure that new developments do not have an adverse effect on Croydon’s

designated panoramas, local views and landmarks.

Policy UC11 has been implemented to ensure that any new developments will not have a negative impact on any

sites which may have archaeological heritage on a site or in the nearby locality and that any new proposals will

have been properly assessed and planned for archaeological implications.

The property is not listed.

Planning History

We have not obtained a detailed planning history. However, we understand that the property was granted outline

planning permission in April 1999 (under the application reference 98/2400/P) for the ‘Demolition of the existing

buildings and the erection of a two storey building for uses within Class D2 (Assembly and Leisure) and Class A3

(Food and Drink), a four storey hotel building and two single storey buildings for use within Class A3 (Food and

Drink). The application includes the formation of an access road, the erection of site control building, the provision

of associated parking spaces, bus standing and turning facilities. The planning permission also allows for the

provision of associated landscaping areas.’

The last significant planning application at the subject property was in 2013 under planning application

13/04302/RES. This was for the Discharge of condition 2 (additional parking provision) attached to planning

permission 13/01679/P for the erection of single storey building for use within class A3 (restaurant/cafe) and A5

(hot food take away) with a drive through facility. This was granted consent on 18th December 2013.


7 Non-Recoverable Costs

7.1 Annual Non-recoverable Costs

The current leases provide for a full recovery of all costs. In the event that the property fell vacant at the end of

the term the landlord would be liable for the following costs:

Empty Rates - £762,062 per annum following an initial full relief period of three months. The table below details

our assessment of the property.

Unit Description Rateable Value Rates Liability

Unit 1 Health & Fitness Club and Premises £460,000 £235,980

Unit 2 McDonalds, Restaurant and Premises £233,000 £119,529

Unit 3 Children’s Play Centre and premises £160,000 £82,080

Unit 4 Restaurants and Premises £79,000 £40,527

Unit 5 City Limits, Family Entertainment Centre £290,000 £148,770

Unit 6 Premier Lodge Croydon, Hotel and Premises £108,000 £55,404

Unit 7 Gypsy Moth, Public House and Premises £63,000 £32,319

Unit 8 Pizza Hut, Restaurant and premises £92,500 £47,453

Total £1,485,500 £762,062

The annual amount of rates payable is arrived at by applying a multiplier known as the Uniform Business Rate

(UBR) to the rateable value. The UBR for properties with a rateable value of over £25,500 for the tax year

2015/2016 is 49.3 pence in the (£) pound but phasing relief may apply. An additional 2.0 pence in the (£) pound

Crossrail supplement is applicable for properties in Greater London with a rateable value of above £55,000. Thus,

the applicable UBR for all of the properties within the scheme is 51.3 pence in the (£) pound.

Repairs, insurance, security, utilities and managing agent’s costs – estimated to be £410,692.03 per annum, as

per the table below.

Description Cost (£) per annum Insurance (30.06.2014 to 29.06.2015) £58,122.95 Service Charge (25.03.2015 to 24.03.2016) £352,569.08 Total £410,692.03

We have relied upon the Landlord’s Q1 2015 management report, and these figures are subject to change. It

does not appear that there are any landlord shortfalls at present.

7.2 Tax Matters

Value Added Tax

All rents and capital values stated in this report are exclusive of VAT.

Stamp Duty

Stamp Duty at the rate of 4% would be chargeable on a purchase of the property. If the transaction on this

property is seeking to take advantage of an avoidance scheme, you should be aware that the government is

trying to close avoidance loopholes. We would therefore recommend you seek advice on any avoidance schemes

in place on this property.


7.3 Other Non-recoverable Costs

Drive-Thru Unit

We understand that Costa Coffee has signed a pre lease agreement for the new drive thru unit for which planning

consent has been obtained (see 6.2) and is currently under construction. We have been informed that this unit is

due to complete in November 2015. We have been provided with information regarding costs by the project

manager, Savills, and we have used this documentation to determine costs outstanding for the works to be

£679,308 as at the valuation date based upon their projections.


8 Tenancy

8.1 Tenancy Status

The property is let in its entirety to 8 tenants although unit 5 is currently vacant. The tenant for unit 5 hasn’t been

in occupation for approximately 3 years but has been paying their outgoings. The Q1 2015 management report

advises that early indications suggest that the estate will be ‘a small underspend’ for the year ending March 2015

although this position is subject to a full reconciliation.

The below table provide a summary of the net income for the tenants:

Unit Tenant Name Area (sq ft)

Lease Start

Lease Expiry

Rent Rate per sq ft

Proportion of Passing Rent

Unit 1 Nuffield Health Limited 40,942 01/12/1999 30/11/2024 £12.97 29.2%

Unit 2 McDonalds Limited 2,920 01/12/1999 30/11/2024 £24.83 4.0%

Unit 3 Kidsspace Croydon Limited 24,350 24/06/2011 06/12/2024 £8.85 11.8%

Unit 3 – Turnover

element

Kidsspace Croydon Limited

Turnover

N/A N/A N/A N/A N/A

Unit 4 Food Court Limited 4,991 17/07/2009 06/12/2024 £14.33 3.9%

Unit 5 (Not Trading) Spirit Group - City Limits (Not

Trading)

49,795 06/12/1999 05/12/2024 £8.25 22.6%

Unit 6, Budget

Hotel

Premier Travel Inn Limited 27,474 01/12/1999 30/11/2024 £10.27 15.5%

Unit 7 (Gypsy Moth) Corina Segaru t/a Gypsy Moth 9,226 01/12/1999 30/11/2024 £16.26 8.2%

Unit 8 Pizza Hut UK Limited 3,528 01/12/1999 30/11/2024 £24.80 4.8%

Total 187,576 100.00%

8.2 Lease Summaries

We have been provided with copies of the business leases of the property. Set out below are the principal terms

of the tenancy:

Unit 1

Date 6 December 1999

Parties The Greenalls Group Plc (14504) assigned to Nuffield Health Limited

Demise Unit 1

Term 6 December 1999 to 5 December 2024

Rent

£530,948 per annum.

The rent is reviewed every 5 years at fixed increases. The basic rent is compounded at 3%per annum. It is calculated from the commencement of the term until the relevant review date.

Next Rent Review 6 December 2014 (Outstanding)

Use Any D2 leisure except for a multiplex cinema or any other use approved by the Landlord in writing, such approval is not to be unreasonably withheld.

Insurance The landlord to insure and the tenant to reimburse.

Repairs

Keep in well and substantially good repair and decorative order. Keep all communal areas in clean and tidy order. Repair within 1 month of landlord’s written notice. Must clean, prepare and paint the premises once every 5 years and at least 6 months prior to the termination date

Alterations

Not to make any structural alterations. Not to make any other alterations or additions without the prior written consent of the Landlord (not to be unreasonably withheld or delayed).



Alienation Not to assign or sub-let the whole of the premises without the prior consent of the Landlord such consent not to be unreasonably withheld or delayed.

Unit 2


Parties McDonald’s Restaurants Limited

Demise Unit 2


Rent £72,500 per annum

Next Rent Review 6 December 2019

Use Class A3 (Restaurants & cafes) of the Town and Country Planning (Use Classes) Order 1987 (as originally enacted)

Insurance Landlord to insure and the tenant to reimburse.

Repairs Keep in well and substantially good repair and decorative order. Keep all communal areas in clean and tidy order. Repair within 1 month of landlord’s written notice. Must clean, prepare and paint the premises once every 5 years and at least 6 months prior to the termination date.

Alterations Not to make any structural alterations. Not to make any internal alteration work without the prior consent of the landlord which may not be unreasonably withheld.

Alienation Not to assign or sublet. The landlord may withhold consent.

Unit 3

Date 10 January 2007

Parties Vegagest SGR S.P.A Kidspace Croydon Limited

Demise Unit 3

Term 24 June 2011 to 24 June 2024

Rent & Turnover Rent

£219,686 per annum As per the Deed of Variation dated 6 October 2011, the rent is subject to fixed 2.5% annual uplifts. The lease is subject to a turnover rent at: 11.5% in respect of any Gross Turnover from £1,450,000 to £2,000,000. 12% in respect to any Gross Turnover to the extent in exceeds £2,000,000.

Use The permitted user is D2 (assembly & leisure), with the exception of multiplex cinema & casino.

Insurance Landlord to insure and the tenant to reimburse.


Alterations Not permitted to erect structural alterations within the demise. Not to make internal alterations without the landlord’s prior consent, which should not be unreasonably withheld.

Alienation Not to assign or transfer the demise without the prior consent of the landlord which should not be unreasonably withheld.

Unit 4

Date 22 September 2009

Parties The Food Court Ltd

Demise Unit 4

Term 17 July 2009 to 6 December 2024



Use Permitted use of the demised premises as a restaurant with ancillary bar within use Class A3 of the Town and Country Planning (use Classes) Order 1987.


Date 22 September 2009

Insurance The Landlord to insure the property and the tenant to reimburse.


Alterations Not to erect any structure on the demised premises. Tenant may rerect non-structural, dismountable partitioning without the landlord’s consent (subject to plans being sent to the landlord within 28 days of completion of the works.

Alienation

Not to assign or underlet. Requires landlord consent to share with other Group Companies and Subway Realty Ltd. This is subject to no new landlord and tenant relationships being created between Food Court Ltd and the Group Companies. Occupation of Subway is by way of a concession agreement.

Unit 5


Parties Scottish & Newcastle Plc assigned to Spirit Group Retail Limited

Demise Unit 5




Use Class D2 other than a multiplex cinema and casino. Class A3 is permitted after 5 years of the commencement of the term.


Repairs Keep in well and substantially good repair and decorative order. Keep all communal areas in clean and tidy order. Repair within 1 month of landlord’s written notice. Must clean, prepare and paint the premises once every 5 years and at least 6 months prior to the termination date

Alterations Not to make any alterations without prior consent from the landlord which is not to be unreasonably withheld or delayed.

Alienation Not to transfer or assign part only, may assign or sub-let the whole which may not be unreasonably withheld by the landlord.

Unit 6


Parties National Mutual Life Assurance Society

Scottish and Newcastle Plc assigned to Premier Travel Inn Limited

Demise Unit 6

Term 25 years from 6 December 1999 to 5 December 2024



Use Hotel (C1) of Town and Country Planning use Class Order (1987). May include restaurant and/or licensed bar.


Repairs Standard. To repair, maintain, keep in good and substantial repair.

Alterations Not to make structural alterations without the Landlord’s prior written consent (not to be unreasonably withheld).

Alienation Not to assign part. Underlet whole or part only with landlords prior written consent (not to be unreasonably withheld). Assign whole only with landlord prior written permission.


Unit 7


Parties National Mutual Life Assurance Society Tom Cobleigh Plc - assigned to Orchid Pubs & Restaurants limited – assigned to Corina Segaru

Demise Unit 7

Term 25 years from 6th December 1999 to 5 December 2024



Use A3, pub, restaurant and manager’s residential accommodation

Insurance Landlord to insure, tenant to reimburse

Repairs To repair maintain and keep clean and is in good substantial repair and good decorative order

Alterations Not to erect new structure, or to make changes which will be structural. Non-structural changes

may be made with landlord’s prior written consent.

Alienation Not to assign whole with landlord’s prior written consent (not to be unreasonably withheld). Not to assign part or under-let part. Under let whole with landlord’s prior written consent.

Unit 8


Parties National Mutual Life Assurance Society Pizza Hut (UK) Limited

Demise Unit 8

Term 25 years from 6th December 1999 to 5th December 2024



Use A3, Restaurant

Insurance Landlord to insure, tenant to reimburse

Repairs To repair, maintain and keep the demised premises in good and substantial repair and good decorative order.

Alterations No new or structural alterations without consent.

Alienation Only to assign whole with landlord’s prior written consent. To underlet part or whole only with landlord’s prior written consent (not to unreasonably withheld) Underlet or part remaining is less than 1,500 sq ft. May not be 2 Tenants/Occupiers.

8.3 Covenant Status

Although we reflect our general understanding of the status of the tenants, we are not qualified to advise you on

the financial standing of the tenants. Based on the information available to use, we have formed the following

view with regard to the covenant status of the tenants:

Nuffield Health, McDonald’s Restaurants, Kidspace Croydon Limited, Spirit Group Retail Limited, Premier

Travel Inn Limited and Pizza Hut (UK) Limited all represent a low risk potential. This suggests that 87.9% of

the current passing rent is at a low risk.

Nuffield Health operates under a number of different umbrella companies with many of their subsidiaries

carrying considerably weaker covenant strengths, because they do not hold an overall group guarantee. In

this case the tenant appears to be the ultimate parent company (Nuffield Health) and therefore the income

produced appears to be extremely secure. This is likely to further benefit the value of the subject property

considering that the income produced through Nuffield Health represents 29.2% of the annual income.


It should be noted that Spirit Group Retail Limited made a pre-tax profit of -£90,000,000 in 2011, and

approximately £5,000,000 pre-tax profit in 2012, and appears to have made a nil pre-tax profit in 2013. This

returned to a pre-tax-profit of £3,000,000 in 2014. This company was acquired by Greene King for £774m in

June 2015. The tenant is not currently operating out of Unit 5, and appears to be meeting all the obligations

under their lease. The current passing rent for this unit comprises 22.6% of the total income for the subject

property, should the tenant incur financial difficulty a significant proportion of the income of the property would

be at risk and we have therefore reflected this in our valuation.

On 9 April 2015, a surrender and regrant of the lease of Unit 7 was agreed with a new tenant, Corina

Segarum following on from the previous tenant, Orchid Pubs & Restaurants Limited, going into administration.

The new tenant has retained existing staff and business operation and is set to continue in the same way as

the previous tenant. The new lease is at the same rent and for the same term.

Subsequent to the planning permission obtained for the creation of a new drive-thru unit at the site, Costa

Coffee have signed a pre lease agreement to occupy the unit upon its completion. We believe this interest has

developed into the prospective tenant signing an agreement for lease. We have been informed that this

agreement is for a 15 year lease of £75,000pa with 3 months’ rent free and 5 yearly upwards only rent reviews

with a minimum of 2% compounded. Costa has a strong covenant with a score of 92 which represents a low

risk potential. This £75,000pa rent would represent 4.0% of the total income within the scheme.


9 Market Commentary

9.1 Economy

Real Estate Fundamentals - UK Monthly Economic and Property Market Commentary Economy:

UK inflation turns positive again

Labour market remains robust

Government borrowing falls over the year

Retail sector continues positive trend Property:

All-Property : Annual total returns edge down to 17.6%

Offices: South East rental growth remains robust

Retail: Capital growth falls

Industrial: Annual total returns continue to moderate

+ UK inflation turns positive again UK inflation turned positive in May, after falling into negative territory for just one month in April. The Consumer Prices Index (CPI) rose to 0.1% in May, up from -0.1% in April. The largest upward contribution to the rise came from transport services, notably air fares, according to the Office for National Statistics (ONS). There were also significant upward effects from both food and motor fuels. Bank of England Governor Mark Carney had previously stated that the UK was not heading into a damaging period of deflation, as inflation is likely to rise again after last year's sharp fall in global oil prices works itself out of the numbers. Latest forecasts from Oxford Economics indicated that prices will remain broadly stable this year averaging 0.3% in 2015, reverting closer to long-term trend of around 2% by 2016. Chart: Inflation to converge back to 2% target rate


+ Labour market remains robust The labour market continued to show further strength, as both the number of jobs and wages increased in recent months. According to the ONS, the total number in employment rose by 110,000 over the three months to April and 424,000 more than a year earlier. Meanwhile, wage growth has hit a near four-year high, rising by 2.7% both including and excluding bonuses. The upturn coupled with current low prices has lifted consumer’s purchasing power and will help drive spending going forward. There are some concerns that the strength of the labour market may increase the likelihood of an early interest rate hike as we move into the second half of the year, although our central expectation is still for a rise in 2016.

+ Government borrowing falls over the year

Government borrowing fell to £10.1bn in May, down from £12.4bn a year previously, the lowest borrowing figure in May in eight years. These lower borrowing numbers were primarily driven by higher income tax and VAT receipts which rose over the year by 5.3% and 5.6% respectively. This reflects the increased consumer purchasing power as a result of the improving labour market. While a fall in borrowing is a small step towards reducing the UK’s total debt, which currently stands at £1.5 trillion (80% of GDP), there will still be a significant number of spending cuts to come to reduce the level of debt. A further £30bn of cuts to departmental spending and £12bn of cuts to welfare spending have been announced, although exactly what will be cut from these areas has yet to be revealed. + Retail sector continues positive trend Upward momentum on the retail sector continued in May, with sales volumes increasing by 4.6% over the year, marking the 26th consecutive month of annual growth. Average store prices fell over the year, with prices falling 2.7% since May 2014. This was once again driven by falling oil prices as prices at petrol stations fell by 10.2% over the same period. The quantity of purchases made online increased by 7.4% over the year, indicating that consumers are continuing to embrace online retail and are continuing to move away from more traditional retail channels.

+ All-Property annual total returns edge down

All-property annual total returns edged down to 17.6% from 17.9% last month. This brings total returns down by

1.3% since the start of 2015. The moderation in total returns can be attributed to a smaller yield impact as capital

value growth slows. Indeed, the yield impact has declined from 11.7% at the end of last year to 8.8% this month.

That said, rental value growth has accelerated of late, rising to 3.7% in May, from 1.3% at the same time last

year. This is the highest rental growth value since November 2007.

Offices were the only sector that saw an acceleration in total monthly returns. Offices total returns were 1.9%,

retail total returns came in at 0.5%, and total returns in the industrial sector were 1.2%.


FIGURE: Annual total returns moderate

Source: IPD Monthly Digest

+ Offices: Annual total returns accelerate UK offices recorded 1.9% total monthly returns in May, up from 1.4% the previous month. This resulted in annual total returns also rising from 22.4% to 22.7% and halting three consecutive months of declining annual returns. This is being driven by robust rental growth, increasing from 7.6% to 7.8%, whilst the yield impact remained broadly unchanged at 10.5%. All the office sub markets bar Rest of UK recorded rising annual total returns this month. The City recording the highest total returns, at 24.8% Y-on-Y, Mid-town & West End at 24.4% followed by South East (23.9%) and Rest of the UK (16.8%). Rental growth is strongest in Central London, at 11% and 13% in the City and Mid-town & West End respectively, compared to just 1.4% in Rest of UK.

FIGURE: Office – Rest of UK capital values still 10% below their 2009 level



+ Retail: Rental growth continues to tick upwards

Total monthly returns were 0.7% in May, up slightly from the previous month, bringing total annual returns to

12.2% this month. This is a significant decline from late 2014, when total returns peaked at 14.8%, on the back of

a fading yield impact. On the other hand, rental value growth has picked up in 2015, and now stands at 0.6%, the

highest since October 2008. Income return edged down to 6.1%.

Within the retail sub sectors, the South East recorded the highest total returns of 15.3%, followed by Shopping

centres (13.4%), retail warehouses (12.2%), standard Retail (11.9%) and Rest of UK (8.8%). Within all the sub

sectors, income return has remained broadly unchanged and it has been the larger yield impact driving total

returns. In addition, all sub sectors except Shopping Centres and Rest of UK retail recorded positive rental

growth, with the South East recording the largest rental growth, at 3.5% (the highest since 2000).

FIGURE: Retail – South East recording the highest capital value growth


+ Industrial: Annual total returns moderate

Total annual returns in the industrial sector were 21.7% in May, slightly down from the 22.3% last month. This is

on the back of a sharp decline in capital value growth, falling almost 3% since October 2014 to 14.3%. Within the

sub sectors, South East industrial recorded 23.9% total returns and Rest of UK recorded 20.7%.

TABLE: Current Economic Indicators

Source: BRC, ONS, GfK NOP, Thomson Datastream. Note: Arrows indicate movement on last month. FTSE indices are as at close of 29/6/2014. *Retail sales on total basis April 2014 are BRC, Consumer confidence May 2015, Inflation April 2015; Unemployment rate is the ILO figure from April 2015


TABLE: Forecasts for the UK Economy

Source: Consensus Forecasts (May 2014), *3 month interbank rate and 10Y gilt rate – end-May 2015

9.2 Retail & Leisure Market Overview

The following commentary provides an update on the relevant retail and leisure markets to the subject property.

9.2.1 Health & Fitness

Overview

The growth in the industry continues to be driven by strong performance from quickly expanding low cost

operators in the private sector. According to the State of the UK Fitness Industry Report, this market now

accounts for 9% of the total number of private clubs and 24% of membership within the private sector.

We have detected a clear willingness to be more aggressive in their rental bids for sites.

The total Health & Fitness market has increased in value, rising to £4.3 billion. This reflects a 5.4% rise in

value in the year up from 2014 (2015 State of the UK Fitness Industry Report).

A rise in the number of members is the strongest growth indicator, up 5.8% to 8.8 million twelve months from

June 2015 (The Leisure Database Company).

Number of UK Fitness members in London exceeds 1.5 million for the first time

Since 2009, the fitness industry has grown the member base by over 8.3% and 137% of the UK population

are now registered as members of a private health and fitness club or a publicly-owned fitness facility

contrasting with 13.2% in the 12 months leading to June 2014. (2015 State of the UK Fitness Industry Report).

Membership and joining fees account for over 80% of revenue, with the balance being catering, retail and

health & beauty treatments. We see the continued rise of the budget operator with the budget market share

equating for 25% in 2014.

Sector is continuing to expand. 191 new public and private fitness facilities opened in the 12 month period

ending 31st March 2015, up from 177 in 2014 (2015 State of the UK Fitness Industry Report).

There are now 6,312 fitness facilities in the UK, up from 6,112 in 2014 (2015 State of the UK Fitness Industry

Report).

Sector is forecast to continue to grow:


UK Health & Fitness Clubs Market Size 2007 – 2017 Fig 2.

Source: Mintel June 2013

Market Factors and Occupier Activity

The number of 25-34 year olds, a key group of health and fitness club users, are set to grow by more than

10% during the next five years, while above-average projected growth in the numbers of AB consumers,

traditionally the socio-economic group most likely to be members, bodes well for the industry.

According to research by Mintel, the cost is the main factor most likely to encourage potential users of a

health club to join, which helps to explain why the budget operators have been so successful over recent

years.

Overhead increases, ranging from rises in the National Minimum Wage to higher utility and rent bills, are

examples of other pressures currently being exerted on health and fitness club businesses.

The growth in super budget gyms continues. These clubs have business plans focused on offering super

flexible membership terms and payment, with simple but newer technology led equipment and low prices.

Among the new super budget chains this has led to an expansion race as new entrants and existing brands

struggle to gain market share. An example of this is Pure Gym, a chain who represent 450,000 members

paying between £9.99 and £25 a month, who currently operate 90 gyms and are looking to open 40 new

outlets over the course of 2015 after opening 30 in 2014, with a target of having 250 to 300 gyms by 2020.

In property terms, these operators are looking to negotiate low rents with plenty of incentives. With the

injection of a large number of new budget gyms into the market, the mid-market health and fitness offer is

most under threat with constant fears of bankruptcy or further consolidation highly possible for many chains.

This is demonstrated by Pure Gym’s acquisition of LA Fitness and its 43 clubs, ahead of rival interest from

Fitness First and Sports Direct, a sports clothing retailer looking to enter the market.

Outlook

There is still interest among the population in becoming users of a health club, both among former, lapsed

users and people who have never done so before, albeit that England has one of the highest ratio of gym

users in the whole of Europe.

With affordability being the main objection, the continued expansion of the budget health clubs sector will be

the main driver for increased numbers of members of health and fitness clubs in the UK in the next five years.


With the solid levels of lapsed users showing interest in re-joining and the number of people who have never

used a club who would also consider doing so, the market is poised to continue to growing steadily during the

next five years.

We expect that demand will come from the budget operators as the key operators expanding.

9.2.2 Bowling

Headlines

The traditional ten pin bowling sector, after significant expansion in the nineties and early 2000s has slowed

virtually to a standstill with the market seeing very few new openings over the last 5 years. Instead the sector has

been subject to consolidation, retraction and administrations.

Consumers with less discretionary spend since the credit crisis have been more selective with regard their leisure

activities and the recession has impacted the sector significantly.

Market Activity

Operators such as Ten Pin (formerly Megabowl), Bowlplex as well the smaller operators such as American

Amusements, Quattro Leisure and Newbury Leisure are all struggling, weighed down by debt. Some are in

administration with Essenden, the company owning the Ten Pin brand entering a CVA in January 2012

highlighting the problems within the sector.

One operator who is very active is Garland Leisure who trade under the 1st Bowl brand. Garland have bought up

many individual independent bowls as well as groups that have gone into administration. Garland now have 34

bowling centres. They are very much a value operation and target distressed sites rather than develop new build

sites. There is some scepticism in the market about how sustainable their business model is.

Historically, the above operators were occupying units extending between 25,000 - 30,000sq.ft depending on

location and competition and paying rents generally between £8-£10sq.ft. Ten Pin bowling was a use that

anchored leisure schemes and was complimentary to the cinema.

The one bright spot within this sector is the niche player, All Star Lanes, who currently have four outlets in central

London and one in Manchester. They are looking at a number of regional UK cities to expand the brand however

initial feedback suggests the Manchester site is performing poorly and are therefore approaching acquisitions with

extreme caution. They generally consider premises extending to between 10-20,000sq.ft. The ASL model is

aimed at a more style conscious younger crowd as well as the corporate market. The fit out is a lot more

expensive than a standard bowl but spend per head is a lot higher. ASL has a far more sophisticated food and

beverage offer and offers a far higher level of service to its customers.

Hollywood Bowl / Original Bowling Co was purchased by private equity group Electra Partners together with key

management.

General feedback is that trading outlook is positive and further sites are required. One would hope that this will

mean less capital is required by landlords to make deals work.

Corporate Activity

All Star Lanes are rumoured to be considering lining up a floatation of the business

Bowlplex remains in Administration, rent reductions with landlords remain.


Garland Leisure continue to expand, now over 30 units across UK.

Outlook

We anticipate, apart from the selective acquisitions of All Star Lanes, that the Ten Pin Bowling market will

continue to remain flat with the emphasis on disposal of units as opposed to new acquisitions as operators seek

to reduce their debt.

It is difficult to see this sector improving in the foreseeable future until operators get to a position of reducing their

debt significantly by refinancing or are purchased by well financed companies.

9.2.3 Bars & Restaurants

Overview

The industry has shown particular resilience by consistently adapting to the evolving needs of the consumer

and innovating new concepts.

The lines between bars and restaurants have been blurred as operators that were heavily “wet-led” such as

Inventive Leisure t/a Revolution & Revolucion de Cuba; and Eclectic Bars t/a Sakura, LoLa Lo and Dirty

Blonde, strengthen their food offer. The typical split in revenue for these type of operators between food and

drink is now 70:30.

The UK branded restaurant market is now worth £11.1bn and is set to grow by a further 22% in the next

3 years.

Market value growth of 5.7%, from 2011 sales of £10.5bn, has been driven by significant physical expansion

in 2012 together with sales growth from existing stores.

Today, there is one branded restaurant for every 93 households in the UK.

London

The London restaurant market is where it is really interesting at the moment and whilst this is always ahead of

the best regional cities, such as Manchester, it does tend to lead the way and serve as a good measure of

market outlook and direction.

The rents and premiums being paid for sites continue to rise. The much publicised American Burger chain

Five Guys, paid Novus leisure £2.25m at a rent of circa £500,000 for their lease on Long Acre, Covent

Garden. Byron paid £1m for the former Soho Pizzeria on Beak Street, at a rent of £300,000. The cost of fitting

out the basement was significant too. We understand there were other bids at a similar level.

There doesn’t appear to be any slowing down with huge demand for new restaurants, ranging from informal

noodle bars to high end dining. International restaurants are also seeking space and will pay to secure the

right location. Interestingly from a Landlords point of view, many of the owners of central London estates are

becoming less concerned with covenant and are more focussed on concepts, seeking the newest, trendiest

offer and even looking at top-up restaurants, which are extremely popular at the moment.

Fast Food

The fast food sector dominates the restaurant sector and has the highest growth value at 6.7% pa and

accounts for the largest share of the market at 45% of outlets and 41% of value.

This has been led predominantly by significant store expansion from Subway, KFC and Domino’s.


KFC, McDonalds, Burger King, Subway and Domino’s continue to expand and have set targets of up to

50 new stores each a year.

Yum Brands have retained the Pizza Hut delivery business and sold the UK Pizza Hut Restaurant portfolio to

Rutland Partners.

Typical drive through sites of c.0.4 acres are required for a building footprint of circa 3,000 sq ft, while rents

vary dramatically from £25 to 40 psf.

Casual Dining

Continued growth forecast in size of market - expected to be worth £48.2 bn by the end of 2014 and £52bn

by 2017 according to Allegra Foodservice

Trading performance continue to improve, operators focused on prime opportunities with high competition for

the prime sites.

The restaurant market, particularly in London is very dynamic with demand for sites outstripping supply. The

sector is diverse, offers ranging from street food / pop ups, fast food, casual dining, premium casual dining

and fine dining.

Branded chains continue to dominate High Streets at the expense of smaller independents

More examples of premiums being paid for existing leases in High Streets or Shopping Centres outside of

London, Bills and FiveGuys leading this.

Leading casual dining brands have active requirements for new sites; these typically range from a target of 15

to 20 new sites each year for each brand. Physically these range from circa 3,000 to 4,000 sq ft.

Pizza Express, Byron, Prezzo, Nandos, Wagamamas, TRG, Turtle Bay, FiveGuys, Cote, Bills Produce,

Wahaca remain the most active brands / groups.

Intense competition for sites on High Streets and Shopping Centres continues,

As a consequence more casual operators are acquiring, or considering, leisure schemes / parks and / or retail

fashion schemes. FiveGuys, Las Iguanas and Wagamama are such examples.

New build leisure schemes seeing strong demand – SWIP’s Banbury scheme has been well received,

competition for final units from pizza / pasta operators has pushed rents to £40 psf.

Main corporate news in last quarter has been the sale of Pizza Express to a Chinese conglomerate and the

approval of the Tragus CVA and the related sale / disposal of the Strada chain which is pending.

A number of the Tragus units that were made available before and as a result of the CVA have been keenly

sought by operators.

Clearly the weaker cinema admissions will have some impact, particularly on those chains that don’t

necessarily have a strong High Street platform but operators’ appetite for sites remains strong and

competition for strong cinema sites is robust.

Pub/Bar Operators

Innovative bar operators such as Eclectic Bars and Living Ventures continue to develop new brands –

Manchester House, Dirty Blonde, Botanist and Artesian etc.

The focus for new units is in City centres, where they can cluster with similar operators such as at

Spinningfields and Peter Street.


Trinity Shopping Centre, Leeds is an example of a new style of shopping centre where bars and restaurants

have opened and are trading strongly. The leisure component of this 1m scheme extends to 25% compared to

an average of 6% in the shopping centre sector.

The Pub occupier market is under threat, with a series of legislative, social and economic trends squeezing

industry revenue and margins forcing many, particularly independent, operators out of business. Annual

growth in the last five years (2010-2015) according to IBISWorld’s Annual report on pubs and bars has sat a

lethargic -0.1%. Operators are also being squeezed by increases in food and drink prices and increasing rent

and business rates.

Outlook

Operators are striving to give customers good value of money and a good experience. We expect to see

further use of voucher codes and targeted discounting by the multiples to drive business throughout the week.

For well anchor retail and leisure schemes we expect to see continued demand for prime sites. Rents for

these schemes will continue to grow as long as over supply or provision does not occur locally.

Clearly consumer confidence and the economy has a direct impact on sales. It is clear however that

throughout the recession the habit of eating out is now firmly established in consumers’ behaviour, and whilst

they may trade down or visit less frequently, they will not give up the experience easily.

According to Allegra Foodservice, the restaurant market is expected to be worth £52bn by 2017 up from

£48.2bn in 2014.

9.2.4 Other Large Format Leisure

Overview

The principal other large format operators are Children’s play, Major Visitor Attractions (such as Merlin

Entertainment who operate Lego Discovery, Dungeons, Madame Tussauds etc), indoor golf and indoor go-karting

The big box occupiers have different levels, cost and complexity of fit-out. As an example Teamsport can fit-out a

2 level, twin track karting circuit in 30,000 sq. ft. for £1,000,000. A Merlin fit out for a Lego Discovery Centre or

Dungeon will be in excess of £5 million.

The most common large format leisure offer are Children’s play centres:

The market is predominately made up of small independent operators who have single businesses. There are

very few multiple operators. Gambado, backed by the Wates construction family, are the largest and probably

only true national operator. Other brands or groups include Kidspace, 360 Play and Monkey Bizness.

The development and phase of the sector is very similar to the early days of the health & fitness market in the

early nineties, with lots of small operators all striving to find a successful format / concept or pricing model.

Property requirements are for 15,000 to 20,000 sq ft with an element of triple height space to accommodate a

climbing frame. Due to the limited amount of rent that can be afforded operators have to seek secondary or

tertiary locations. Requirements are presently very limited, operators are nervous to open new sites in the

current economic climate.

Rents outside of London range from £5 psf to £10 psf depending on size, competition and affluence. In

today’s market extended rent free periods of 12 months plus would be required as well as significant capital to

help pay for fit out £200,000 up to £500,000.


Outlook

We do not expect to see any change in the consumer or business outlook in this sub-sector in the short to

medium term.

Operators such as Gambado and 360 Play will continue to evolve and develop new pricing models and

concepts to make the business financially viable.

The future opening of the international Kidzania concept (40,000 sq ft plus) in London will be watched with

interest. Whether a true category killer concept can work and be profitable in the UK will be interesting.


9.3 Local Market Overview

Croydon is situated in South London, and benefits from good communication links and extensive retail provision which means that it attracts shoppers from a wide catchment area as demonstrated on the below map:

The northern part of the borough includes some of the most densely populated suburbs of inner London which

includes East Dulwich, Streatham, West and South Norwood. The subject property is located in the southern part

of the borough and this catchment area extends over Purley, Coulsden and Caterham.

Croydon boasts a primary catchment area of 848,000 people which is significantly above the Sub Regional

Centre average, and ranks the town 14 out of the PROMIS centres. The estimated shopping population of

Croydon is 450,000, again ranking the town 14th out of the 200 PROMIS centres, also above the Sub Regional

Centre average. With Croydon expected to see above average growth in population over the period 2014 – 2018

this position is likely to become stronger.

Croydon’s town centre retail floor space is estimated at 2.10 million sq ft, whilst this is above the Sub Regional

Centre average, there are predominantly low to middle quality end fashion retailers with high end occupiers being

in short supply, as demonstrated on the figure below:


Croydon’s retail offer is made up of predominately mainstream high street retailers and whilst the town has a

large representation of national multiples, there are relatively few quality retailers in contrast to its main

competitors, Bromley and Kingston-Upon-Thames. The prime retail pitch in Croydon is within the town centre’s

Whitgift Centre, retailers include Wallis, River Island and Accessorize. The Whitgift Centre is due to be re-

developed through a joint venture between Westfield and Hammerson. Planning permission was granted for a 1.5

million sq ft shopping centre which will comprise retail, leisure, a multiplex, bowling alley and approximately 600

new homes.

Approximately 18% of the total retail warehousing floor-space in the Croydon area is on retail parks. This figure is

significantly lower than the Retail PROMIS average, and the reason for this is the loss of the Fiveways Retail

Park which was redeveloped into a Morrisons superstore in 2012.

There are a number of competing schemes in Croydon to the subject property and are located in a similar

location, along the A23.

The largest retail park in Croydon is Valley Park and it benefits from a reasonable mix of retailers and leisure

facilities in the adjacent Valley Leisure Park. The park is located approximately 2.5 miles north of the subject

property close to a large IKEA and a B&Q. Access to the park is generally good via a link road off Purley Way, but

the development is not visible from the A23 itself. Purley Way Retail Park is positioned further south of Valley

Park and fronts the main road. Occupiers include Harveys, Carpetright, Paul Simon and Snow & Rock. The

Purley Way Centre is situated opposite the Purley Way Retail Park, and benefits from a Sainsbury, Argos,

Hobbycraft, Mamas & Papas and TK Maxx.

There are three leisure parks in Croydon, with the subject property being the largest (circa 162,000 sq ft). Valley

Leisure Park (circa 137,000 sq ft) which is adjacent to the Valley Retail Park comprises a Cosmo, Gym 4 All, a

Vue cinema, bowling alley and a Dreams store. Grants ( circa 148,000 sq ft) is the third leisure scheme in the

locality and benefits from a large Vue cinema, several restaurants and bars and a Virgin Active gym.


Rental Evidence

The following evidence and commentary provides a detailed overview into our considerations into the market

rents which we have applied on the subject property.

Retail deals

Address Tenant Date Rent Size Commentary Retail Evidence Solus Unit - Purley Way Furniture

Village May 2013 £40 psf 36,000 Headline Rent

Purley Way Retail Park Snow & Rock Q3 2011 £40 psf 7,500 Assignment of lease. Retailer reportedly paid premium to the administrator

Purley Way Retail Park ScS September 2014 £40psf 7,492 Assignment of lease Purley Way Retail Park Harveys April 2013 £34.50 psf 14,640 June 2011 rent review A3 Retail 25-29 South End, Croydon, CR0 1BE

Undisclosed Q1 2014 £26.19 psf Letting

Croydon Valley Leisure Park

McDonald’s Q3 2011 £39.65 psf Rent review

Airport House Imperial Restaurant and lounge

June 2015 £11.67psf 6,000 Letting

Royal Oak Centre, The Royal Oak, Brighton Road, Purley

Undiclosed January 2014 £5.65 psf Letting

Colonnades Leisure Park

Costa Coffee June 2015 £41.66 psf 1,800> Agreement for Lease signed. Drive through unit currently in construction paid for by landlord with a small tenant contribution.

D2 Leisure Unit 6, Croydon Leisure Park

Q4 2013 £8.45 psf 32,397

Analysis of Rental Comparables

The table below details our estimated rental comparables in relation to the current passing rents:

Unit Tenant Name Area (sq ft)

Current Rent (pa)

Rent Rate per sq ft`

Rental Value (pa)

ERV Rate per sq ft

Unit 1 Nuffield Health Limited 40,942 £530,948 £12.97 £409,420 £10.00 Unit 2 McDonalds Limited 2,920 £60,377 £20.68 £52,560 £18.00 Unit 3 Kidsspace Croydon Limited 24,350 £215,378 £8.85 £182,625 £7.50 Unit 3 – Turnover element

Kidsspace Croydon Limited Turnover

N/A

£865 N/A

£865 N/A

Unit 4 Food Court Limited 4,991 £71,500 £14.33 £62,387 £12.50 Unit 5 (Not Trading)

Spirit Group - City Limits (Not Trading)

49,795 £ 410,983 £8.25 £298,770 £6.00

Unit 6, Budget Hotel

Premier Travel Inn Limited 27,474 £282,222 £10.27 £247,266 £9.00

Unit 7 (Gypsy Moth)

Orchid Pubs & Restaurants t/a Gypsy Moth (In administration)

9,226 £149,984 £16.26 £129,164 £14.00

Unit 8 Pizza Hut UK Limited 3,528 £87,500 £24.80 £88,200 £25.00 Total 187,576 £1,818,957 £1,471,257

The above rental evidence suggests that the A3 rental values in Croydon range between £25.00 per sq ft to £40

per sq ft, however we are of the opinion that the subject property would let at a significant discount to these

values.


Our reasoning is based on the fact that the property is located a considerable distance from Croydon’s town

centre and is not subjected to as wide a catchment area of consumers and there are a high amount of competing

schemes in the locality which are better located with better anchor tenants. Another key factor is that restaurant

demand in the local area appears to be minimal, and this is evidenced by the lack of new restaurant take up in

the area.

The majority of leases in place at the subject property were last reviewed in 2009 for nil increases on 2004 rents,

which were largely at the same rents as when the leases were signed. Given the increased retailer competition in

the area and expected competition in the near future, the remoteness of the leisure park from Croydon town

centre and the lack of a significant entertainment anchor (a cinema, bowling complex etc) or any national retailer

to attract footfall we believe that the current rents are generally set at levels above which could be achieved

should new operators negotiate to situate units at the park.

Consequently, we have taken existing rents and discounted them as appropriate to achieve our ERV per sq ft. In

conclusion, we would expect rents ranging from £6.00 per sq ft exclusive to £10.00 per sq ft for the pure leisure

units (the ex-City Limits unit and the Kids space unit), which are too large for restaurant operators.

The restaurant/ food and pub units we consider would let at a rent range between £12.50 per sq ft (for the food

court unit) to £25.00 per sq ft (for the stand alone Pizza Hut unit), but we feel these types of operators will

continue to struggle without a strong leisure draw on site and this would be reflected in the lower rents we have

anticipated and applied.

The lack of comparable evidence for D2 Assembly & Leisure indicates the poor demand in the South London

area for the space. Tenpin’s lease re-gear rental value appears to represent a similar rent to the D2 Leisure units

which are located at the subject property, albeit slightly higher than what we have valued the D2 Leisure units at.

The current leases restrict multiplex cinema and casino operators from occupying the units at the subject property

which limits the pool of prospective tenants, and this further weakens the leasing position of the units at the

subject property. Through discussions with our in-house leisure agents, we have been informed that prospective

tenants are unlikely to be willing to occupy units which are larger than 20,000 sq ft, and therefore we have

reflected that in our overall opinion when we came to our own conclusion of market rent.

In terms of the D2 Health & Fitness centre, there has been no rental evidence in the local area for some time.

Through our enquiries we understand that budget gym operators are the main occupiers who have requirements

at present and their preference is for a maximum sized building of 20,000 sq ft and a gym without a swimming

pool, because they do not want to pay the running costs for this. We have therefore applied a discount on the

current passing rent for the gym from £13 per sq ft to £10 per sq ft to reflect this.

Leisure Park Investment Comparable Evidence

Property Date Description / Tenancy Summary Price

Grants, 14-32 High Street, Croydon

May 15 Leisure focused town centre scheme with a demise of 160,840 sq ft. anchored by a 10 screen Vue Cinema and a Virgin Active Gym. Also contains a number of A3 and A4 units. Purchased by Hermes

£33m/8.20%

Royal Baths/Harrogate House, Harrogate

March 15 M&G purchased the adjoining schemes. Tenants include Jamie’s Italian, Nando’s, JD Wetherspoon along with a number of local independent operators. WAULT of 15 years.

£18.3m/5.00%


Property Date Description / Tenancy Summary Price

Derry’s Cross, Plymouth

Dec 14 Travelodge anchored town centre scheme, with The Gym group on 1st floor, and four A3 units on ground floor let to Revolution Bars, Varsity, Bella Italia and the fourth is under offer to Wildwood. Interest from a number of investors, particularly institutional funds.

£14m/ 6.00%

The Ebbisham Centre, 6-7 The Derby Square, Epsom

Early 2014

Leisure led south London commuter town scheme with Virgin Active, Nandos, Blacks Burgers, Il Ponte Italian Restaurant , Slug & Lettuce. WAULT 17.5 years. Unsold as gym operator vacated scheme

£15m / 9.00%

Sunniside Leisure, Sunderland

Mar 2014 Lumina Real Estate Capital purchased the town centre leisure scheme from Schroders for £13m reflecting 7.20%. The scheme is anchored by Empire Cinemas (guaranteed by Cine UK), Grosvenor Casinos, Frankie and Benny’s and Nando’s with a WAULT of 14.4 years.

£13m / 7.20%

Middlesbrough Leisure Park

Mar 2014 L&G Property Leisure Fund purchased the park in March 2014 for £21.25m reflecting 6.90% from Highpoint Estates. The scheme is anchored by DW Sports, Nando’s Pizza Hut, McDonalds, American Golf, and Subway with a WAULT of 12 years.

£21.25m / 6.90%

Investment Considerations

JLL’s Prime Equivalent Yield Tracker for June 2015 shows no change in the Equivalent Yields attributed to

Leisure properties (Retail Parks) from February 2015 at 5.25% for city centre prime, 5.50% for out of town and

6.00% for car showrooms.

At present, investment sentiment for in town and out of town leisure or leisure led parks remains stable at 5.50%

with Cinemas remaining the most important anchor tenant in the leisure sector and a strengthening restaurant

sector in terms of trading and requirements. As a result we’re still seeing strong rental growth with rents above

£50 psf in city centres and £30psf + on leisure parks. With the right rental levels and strong food & beverage and

cinema anchors the comparables above show interest at around 6% for opportunities outside the South East. The

comparables above demonstrate recent market evidence of Leisure Park sales of similar lot sizes (under £50

million) to Colonnades Retail Park and show a range of yields as low as 5.00% for longer WAULTs in more

affluent and populated towns to 9.00% for more secondary assets in weaker locations or with asset management

opportunities/issues.

In terms of leisure focused schemes, the purchase of the adjoining assets at Royal Baths and Harrogate House in

Harrogate is a good indication of the lowest leisure yields achievable regionally. The scheme contains a number

of national multiple tenants representing strong covenants with a WAULT of 15 years. At the time of the

transaction, 3 additional units were under offer within Harrogate House which will increase the WAULT to 18

years. The two schemes are site in Harrogate town centre which attracts an estimated 1.5 million tourists a year

and is widely considered to be one of the most affluent towns in the country. The close proximity of the two assets

also presents good asset management opportunities to an investor. The fact that the scheme was originally

quoting £17.7m and 5.30% NIY is evident of the investor appetite for such an asset as this.


The subject property currently provides a WAULT to expiry of 9.5 years and 0% vacancy. Prima facie this implies

that approximately 87.70% of the annual income is secured against low risk occupiers, however considering the

fact that Spirit Group Retail Limited are not trading from Unit 5, this figure is considerably lower at 65.11% if this

unit were to be considered as vacant, coupled with the news that the Gypsy Moth Orchid Group unit has not been

included in Mitchell & Butlers acquisition of some of the Orchid Group’s pubs and is hence one of the units placed

into administration, the reality of sustainability and security of income at the leisure park would, we believe seem

rather tenuous to the majority of potential investment purchasers.

In addition to this insecure income position at the scheme, the subject property faces significant competition in the

local area from Croydon Valley Retail & Leisure Park and Purley Way Leisure Park. Both schemes hold larger

anchor tenants, and benefit from better locations.

The most significant investment risk to the Leisure Park market in the South London region is the Westfield and

Hammerson development of Croydon’s Whitgift Centre. Over the next few years, the Croydon Partnership will

transform Croydon’s two main shopping centres Whitgift and Centrale into a retail and leisure destination which

will reposition Croydon as the best place to shop, work and live in South London. Land acquisition is ongoing with

a compulsory purchase order enquiry expected to complete over the summer with works likely to commence in

around 18 months’ time. Negotiations with prospective anchor tenants have already commenced with John Lewis

widely expected to anchor the scheme.

The London Borough of Croydon has resolved to grant planning permission to the Croydon Partnership’s outline

planning application for the redevelopment of the Whitgift Centre, marking a significant step forward in Westfield

and Hammerson’s plans to regenerate Croydon’s retail town centre. It is likely to attract high quality retail and

leisure tenants and it is likely to become the main consumer destination in the local area, therefore reducing

footfall considerably from weaker, poorly located leisure parks in the locality.

When comparing the subject property to the local competition, it is apparent that it lacks an anchor leisure tenant,

such as a strong cinema, which will add significant consumer pull. The most relevant investment comparable

schemes appear to occupy better town centre locations than the subject property and have superior anchor

tenants which are likely to mean that they command stronger yields.

There were a number of rent reviews which were tabled for December 2014, the majority of which remain

outstanding, demonstrating that the leisure park is over-rented, which reduces its attractiveness to potential

investment purchasers. The exception to this is unit 2 occupied by McDonald’s, where an increase in rent was

agreed from £60,377pa to £72,500pa.

Given the rationale above, we are of the opinion that an initial yield of 7.53% and an equivalent yield of 6.94% is

appropriate level for the subject property.

(This compares with an initial yield of 7.69% and an equivalent yield of 7.00% resulting from the previous

valuation of this property in January 2015.)

(Market rent as at the previous valuation in January 2015 was £1,472,000)

(Market value as at the previous valuation in January 2015 was £22,330,000)


10 Valuation Commentary

10.1 Valuation Approach

We valued the subject property based on the traditional investment method, assuming an appropriate market rent

and capitalising it by an appropriate yield. This is the most appropriate method of valuation for an income

producing asset such as this.

10.2 Value and Commentary

General Vacancy Rate: 0% at present;

Purchaser’s Costs: 5.80% (the percentage obtained is divided as follows: property transfer

costs of 4% and professional cost inclusive of agent’s fees and legal costs

of 1.5% and is inclusive of VAT of 20.0%)

Equivalent Yield 6.94%;

Reversionary Yield: 6.44%;

Net Initial Yield: 7.53%;

Commentary

The subject property is a reasonable quality leisure park, with a mix of tenants. It benefits from being prominently

located on the A23, and has ample car parking spaces. There is a bus route which goes into the site itself,

however the A23 can suffer from traffic congestion.

The leisure units on the site are very large, and there is little demand at present for units of that size, which has

resulted in a significant discount in the rental values. For example, unit 5 (the vacant bowling alley), has been

vacant for approximately 3.5 years and it is unlikely to be let within the next 6 months.

There is a significant amount of competition in the area, and the Westfield & Hammersmith scheme is likely to

attract much higher demand when it is completed in approximately 3 to 4 years. Whilst the current unexpired term

of the subject property is 10 years we don’t believe that its location and current configuration lends itself well to

prospective tenants and investors. We have therefore reflected this through our valuation.

10.3 Discounted Cash Flow 5 Year Analysis

We have undertaken a Discounted Cash Flow (DCF) analysis over a 5 year investment horizon, to derive a return

profile based on the Market Value derived from the traditional rent and yield approach. We stress that the

estimating of future rentals and exit values are projections based on the valuer’s opinion and knowledge at the

time of valuation and as such should be used as indicative and no reliance given. The process of making forward

projections of key elements includes assumptions regarding a considerable number of variables which are

acutely sensitive to changing conditions, variation in any of which may significantly affect value. However, we

consider that the assumptions adopted here are conservative assumptions, in particular our rental growth and exit

yield assumptions. All assumptions related to expiry voids, rent free incentives, capital expenditure and

transaction costs are reflected within the Present Value (PV). Assumptions adopted for the purpose of the DCF

analysis are stated as follows:

- The cash-flow analysis start date is 30/06/2015 and runs for a period of 5 years until 30/06/2020


- The Market Value derived from the traditional rent and yield approach at £23,000,000 has been adopted as

the PV of the asset for the purposes of this analysis.

- Our rental growth forecasts are necessarily indicative, and the actual results will inevitability fluctuate by

virtue of lease renewals, market rent reviews, tenant re-gears, upgrade works and market changes to a

greater or lesser degree. The growth rate we have adopted is 1%..

- Our DCF analysis assumes a sale of the asset at the end of the 5 year holding period.

- We have adopted an Exit Equivalent Yield of 7%.

This produces an Internal Rate of Return (IRR) of 6.5%.We set out below how we consider the composition of

this figure:

IRR Composition %

“Risk free” yield (e.g 10-years bond) 2.10%

Real Estate risk 0.85%

Obsolescence risk 0.8%

Letting risk 0.45%

Location risk 1.1.10%

Category risk 0.95%

Financing risk 0.25%

Total 6.50%


11 Valuation

11.1 Market Rent

Having regard to the foregoing, we are of the opinion that the Market Rent of subject property as at the date

hereof (including the rent payable for the Unit 9 upon completion) is:

£1,567,000 p.a

(One Million, Five Hundred and Sixty Seven Thousand Pounds)

11.2 Market Value

Having regard to the foregoing, we are of the opinion that the Market Value of the Freehold interest in the subject

property, subject to the existing tenancy as described herein, as at the date hereof is:

£23,000,000

(Twenty Three Million Pounds)

Yours faithfully,

Cara Reynoldson MRICS

Director

For and on behalf of

Jones Lang LaSalle Limited

LB

TCB

PU

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AY

EL Sub Sta

Ramp

Hotel

Gipsy Moth

702

EL Sub Sta

TheColonnades

Club

(PH)

704

1 to

4

619

7

Shelter

Pavilion

ChildrensNursery

0m 25m 50m 75m

This plan is published for the convenience of identification only and although believed to be correct is not guaranteed and it does not form any part of any contract. © Crown Copyright. All rights reserved. Licence Number LIG0074.

Colonnades Leisure Park, Purley Way

Ordnance Survey © Crown Copyright 2015. All rights reserved. Licence number 100022432. Plotted Scale - 1:1578

Appendices


Appendix 2

Photographs

Appendices


Appendix 3

Valuation Calculations

REPORT Valuation Summary Jones Lang Lasalle

Report Date 21 July 2015Valuation Date 30 June 2015

Property

Address Colonnades Lesiure Park,619 ,Purley Way,Croydon,London,CR0 4RQFile/Ref No

Gross Valuation £24,987,423Capital Costs -£679,308Net Value Before Fees £24,308,115

Less Stamp Duty @4.00% of Net Value -£920,000 Agents Fee @1.00% of Net Value -£276,000 Legal Fee @0.50% of Net Value -£138,000

Fees include non recoverable VAT @ 20.00 %Net Valuation £22,974,115

Say £23,000,000

Equivalent Yield 6.9423% True Equivalent Yield 7.2780%Initial Yield (Deemed) 7.5333% Initial Yield (Contracted) 7.5333%Reversion Yield 6.4383%

Total Contracted Rent £1,833,159 Total Current Rent £1,833,159Total Rental Value £1,566,697 No. Tenants 10Capital value per ft² £121.51

Running Yields

Date Gross Rent Net Rent Annual Quarterly30-Jun-2015 £1,833,159 £1,833,159 7.5333 % 7.9018 %30-Dec-2015 £1,908,159 £1,908,159 7.8415 % 8.2414 %24-Jun-2016 £1,912,553 £1,912,553 7.8596 % 8.2614 %24-Jun-2017 £1,917,035 £1,917,035 7.8780 % 8.2817 %24-Jun-2018 £1,921,606 £1,921,606 7.8968 % 8.3025 %24-Jun-2019 £1,926,269 £1,926,269 7.9160 % 8.3237 %06-Dec-2019 £1,926,769 £1,926,769 7.9180 % 8.3259 %24-Jun-2020 £1,931,525 £1,931,525 7.9376 % 8.3475 %30-Sep-2020 £1,939,331 £1,939,331 7.9696 % 8.3830 %24-Jun-2021 £1,944,182 £1,944,182 7.9896 % 8.4050 %24-Jun-2022 £1,949,130 £1,949,130 8.0099 % 8.4275 %24-Jun-2023 £1,954,177 £1,954,177 8.0306 % 8.4505 %24-Jun-2024 £1,959,325 £1,959,325 8.0518 % 8.4739 %06-Dec-2024 £1,583,616 £1,583,616 6.5078 % 6.7814 %07-Dec-2024 £1,574,503 £1,574,503 6.4704 % 6.7408 %

Portfolio: Colonnades Leisure Park Dec 2014 UpdateCIRCLE VISUAL INVESTOR 2.50.028Portfolio: Colonnades Leisure Park Dec 2014 UpdateCIRCLE VISUAL INVESTOR 2.50.028





30-Sep-2025 £1,583,121 £1,583,121 6.5058 % 6.7792 %30-Sep-2030 £1,566,697 £1,566,697 6.4383 % 6.7060 %

Yields based on £24,334,000

Portfolio: Colonnades Leisure Park Dec 2014 UpdateCIRCLE VISUAL INVESTOR 2.50.028 Page 2Portfolio: Colonnades Leisure Park Dec 2014 UpdateCIRCLE VISUAL INVESTOR 2.50.028 Page 2





Tenants

Tenant name File / Ref No Next Review Expiry Date Current Rent ERV Method ERV Cap.Group Val.Meth. Yield 1 Yield 2 Gross ValueFreeholdTo be Costa NA 29-Sep-2030 £0 Rounded £75,000 Category 1 Hardcore 6.950 6.950 £1,099,867Nuffield Health Limited 06-Dec-2019 05-Dec-2024 £530,948 Unrounded £409,420 Category 1 Hardcore 6.950 6.950 £6,711,629McDonalds Limited 06-Dec-2019 05-Dec-2024 £72,500 Unrounded £73,000 Category 1 Hardcore 6.950 6.950 £1,048,507Kidsspace Croydon Limited NA 09-Dec-2025 £219,686 Unrounded £182,625 Category 1 Hardcore 6.950 6.950 £2,994,793Kidsspace Croydon Limited Turnover E 24-Jun-2016 09-Dec-2025 £865 Manual £865 Category 1 Hardcore 6.950 6.950 £12,446Food Court Limited 17-Jul-2019 06-Dec-2024 £71,500 Unrounded £62,387 Category 1 Hardcore 6.950 6.950 £959,209Spirit Group - City Limits (Not Trading) 06-Dec-2019 05-Dec-2024 £410,983 Unrounded £298,770 Category 1 Hardcore 6.950 6.950 £5,056,638Premier Travel Inn Limited 06-Dec-2019 05-Dec-2024 £288,477 Unrounded £247,266 Category 1 Hardcore 6.950 6.950 £3,836,087Corina Segaru t/a Gypsy Moth 06-Dec-2019 05-Dec-2024 £150,000 Unrounded £129,164 Category 1 Hardcore 6.950 6.950 £1,999,183Pizza Hut UK Limited 06-Dec-2019 05-Dec-2024 £88,200 Unrounded £88,200 Category 1 Hardcore 6.950 6.950 £1,269,065Total £1,833,159 £1,566,697 £24,987,423

Portfolio: Colonnades Leisure Park Dec 2014 UpdateCIRCLE VISUAL INVESTOR 2.50.028 Page 3

Appendices


Appendix 4

General Terms and Conditions of Business

1 General Terms and Conditions of Business – Version 1.3 COPYRIGHT © JONES LANG LASALLE IP, INC. 2014. All Rights Reserved

General Terms and Conditions of Business 1. AGREEMENT 1.1. These terms together with any Letter of Engagement and any Special Terms, set out the terms on which JLL will provide the

Services to the Client. Each of the provisions provided in the Agreement are severable and distinct from the others. 1.2. The Letter of Engagement shall prevail to the extent of any conflict between the Terms, any Special Terms and the Letter of

Engagement and the Special Terms shall prevail over these Terms. The Agreement supersedes any previous arrangement concerning its subject matter. Unless the Parties agree otherwise, these Terms shall apply to any future instructions from the Client although such instructions may be subject to additional Special Terms and a specific Letter of Engagement may be issued.

2. INTERPRETATION

The following definitions and rules of interpretation apply in these Terms. 2.1. Definitions

“Affiliates” includes in relation to either Party each and any subsidiary or holding company of that Party and each and any subsidiary of a holding company of that Party and any business entity from time to time controlling, controlled by, or under common control with, either Party;

“Agreement” any Letter of Engagement, any Special Terms and these Terms;

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for business in London;

“Claims” means all third party actions, claims, proceedings, loss, damages, costs and expenses (including claims by any insurer of the Client);

“Client” means the Party who enters into the Agreement with JLL;

“Force Majeure” means an event beyond the reasonable control of JLL including strikes, lock-outs or other industrial disputes (whether involving the workforce of JLL or any other party), failure of a utility service or transport network, act of God, war, riot, civil commotion, malicious damage, compliance with any law or governmental order, rule, regulation or direction, accident, breakdown of plant or machinery, fire, flood, storm or default of suppliers or subcontractors;

“Insolvent” means in relation to:

(a) a company (including any body corporate), that it:

(i) is unable to pay its debts as they fall due; (ii) becomes or is deemed insolvent; (iii) has a notice of intention to appoint an administrator filed at Court in respect of it, has an administrator

appointed over, or has an administration order in relation to it, or has appointed a receiver or an administrative receiver over, or an encumbrancer takes possession of or sells the whole or part of its undertaking, assets, rights or revenue;

(iv) passes a resolution for its winding up or a court of competent jurisdiction makes an order for it to be wound up or dissolved or it is otherwise dissolved (other than a voluntary winding up solely for the purpose of a solvent amalgamation or reconstruction); or

(v) enters into an arrangement, compromise or composition in satisfaction of its debts with its creditors or any class of them or takes steps to obtain a moratorium or making an application to a court of competent jurisdiction for protection of its creditors;

(b) a partnership, that it is dissolved by reason of the bankruptcy of one or more of its partners;

(c) an individual, that he is bankrupt; and

(d) a Party based outside England and Wales, that it is considered insolvent by the laws applicable to that Party;


“Intellectual Property Rights” means patents, utility models, rights to inventions, copyright and related rights, trade marks and service marks, trade names and domain names, rights in get-up, goodwill and the right to sue for passing off or unfair competition, rights in designs, rights in computer software, database rights, rights to preserve the confidentiality of information (including know-how and trade secrets) and any other intellectual property rights, including all applications for (and rights to apply for and be granted), renewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist, now or in the future, in any part of the world;

“JLL” means Jones Lang LaSalle Limited of 30 Warwick Street London W1B 5NH registered in England and Wales with company number 01188567 and/or any Affiliate that provides the Services to the Client;

“Letter of Engagement” means the letter or email and any schedules/appendices sent to the Client by JLL which sets out details of the Services to be provided to the Client pursuant to the Agreement;

“Materials” means all materials, equipment, documents and other property of JLL;

“Party” means either the Client or JLL (as the context requires) and “Parties” shall mean both of them;

“RICS” means the Royal Institution of Chartered Surveyors;

“Services” means the Services set out in the Letter of Engagement or as otherwise agreed in writing between the Parties;

“Special Terms” means, save for the terms set out in the Letter of Engagement, any terms and conditions agreed in writing between the Parties to be additional to and/or take precedence over these Terms;

“Terms” means these terms and conditions.

2.2. References in the Agreement and these Terms to a “holding company” means a holding company as defined in section 1159

of the Companies Act 2006 or a parent undertaking as defined in section 1162 and schedule 7 of the Companies Act 2006. References to a “subsidiary” means a subsidiary as defined in section 1159 of the Companies Act 2006 or a subsidiary undertaking as defined in section 1162 and schedule 7 of the Companies Act 2006.

2.3. Unless the context otherwise requires, words in the singular shall include the plural and in the plural shall include the singular. 2.4. A reference to a statute or statutory provision is a reference to it as it is in force as at the date of the Agreement and shall

include all subordinate legislation made as at the date of the Agreement under that statute or statutory provision. 2.5. A reference to writing or written unless otherwise specified herein includes e-mail. 2.6. Any words following the terms including, include, in particular or any similar expression shall be construed as illustrative and

shall not limit the sense of the words preceding those terms; 2.7. Headings are for convenience only and do not affect the interpretation of this Agreement. 3. SERVICES

3.1. JLL shall provide the Services using reasonable care and skill and shall carry out the Services in accordance with the client’s

reasonable instructions as long as they do not conflict with the Agreement or applicable law, regulation and professional rules.

3.2. JLL has no obligation to provide Services beyond the scope of what is agreed in writing between the Parties. In particular, JLL has no obligation to provide nor any liability for the following:

a) an opinion on the price of a property unless specifically instructed to carry out a formal valuation; b) any advice regarding the condition of a property unless specifically instructed to carry out a formal survey of the

condition;

c) the security or management of a property unless specifically instructed to arrange it;

d) the safety of any third party entering any premises; or

e) the management or payment of any third party suppliers.

3.3. Where the Parties have agreed that JLL shall carry out estate agency business, JLL shall:

a) report in writing all offers it receives regarding the relevant property;


b) comply with its obligations under the Estate Agents Act 1979 and regulations made under that Act together with any

other similar laws and regulations. 3.4. JLL shall use reasonable endeavours to meet any performance dates specified by the Client but shall not have any obligation

to do so unless specifically agreed in writing. JLL shall not be responsible for any failure to meet performance dates due to causes outside its reasonable control and time shall not be of the essence for performance of the Services.

3.5. JLL shall have the right to make any changes to the Services which are necessary to comply with any applicable law,

regulation, safety requirement, or which do not materially affect the nature or quality of the Services and JLL shall notify the Client in any such event.

3.6. JLL may use electronic communication and systems to provide the Services and shall make available to the Client any

software required in order to access the Services by such means that is not publicly available. The Client agrees to comply with any licence terms applicable to such software as are notified to it and acknowledges that if it does not agree to do so, it may not be able to access the Services by electronic means.

3.7. Without prejudice to clause 9.2(b), if JLL becomes aware of a conflict of interest, it shall advise the Client and take reasonable

steps to recommend a course of action. 4. CLIENT OBLIGATIONS 4.1. The Client shall:

a) notify JLL promptly if it considers that any details or requirements set out in the Letter of Engagement and any Special Terms are incomplete or inaccurate;

b) co-operate with JLL in all matters relating to the Services;

c) provide JLL, its employees, agents, consultants and subcontractors, with access to the Client’s premises, office

accommodation and other facilities as reasonably required by JLL;

d) promptly provide JLL with such information and materials as it may reasonably require in order to supply the Services, and warrants that such information is complete and accurate; and

e) obtain and maintain all necessary licences, permissions and consents which may be required before the date on

which the Services are to start. 4.2. In the event of any act or omission by the Client in breach of the Agreement or failure by the Client to perform any relevant

obligation (Client Default):

a) JLL shall without limiting its other rights or remedies have the right to suspend performance of the Services until the Client remedies the Client Default, and to rely on the Client to relieve it from the performance of any of its obligations to the extent the Client Default prevents or delays JLL’s performance of any of its obligations; and

b) JLL shall not be liable for any costs or losses sustained or incurred by the Client arising directly or indirectly from the

Client Default.

4.3. The Client is responsible for effecting and maintaining adequate property and public liability insurance and such insurance will either include JLL as a joint insured or a waiver of the insurer’s subrogation rights against JLL, its employees or derogates. The Client’s attention is drawn to clause 12.12.

5. PAYMENTS 5.1. Whenever possible, the fees and expenses (if known) for the Services shall be as set out in the Letter of Engagement. Where

fees and expenses for the Services are not specified in writing, JLL shall be entitled to:

a) the fee specified by the RICS or if there is none specified, by any other applicable professional body chosen by JLL (acting reasonably) or, if none is specified, a fair and reasonable fee by reference to time spent undertaking the Services; and


b) reimbursement of any expenses properly incurred by JLL on the Client’s behalf.

5.2. All amounts payable by the Client under the Agreement are exclusive of value added tax (VAT) or similar taxes which the

Client shall pay at the applicable rate. 5.3. In consideration of the provision of the Services, the Client shall pay each invoice submitted by JLL in accordance with the

Letter of Engagement within 28 days from the date of invoice.

5.4. If the Client fails to make any payment due to JLL under the Agreement by the due date for payment, then JLL reserves the right to charge late payment interest after the due date on the overdue amount at the rate of 4% per cent per annum above the Bank of England's base rate from time to time. Such interest shall accrue on a daily basis from the due date until actual payment of the overdue amount, whether before or after judgment. The Client shall pay the interest together with the overdue amount.

5.5. If termination of the Agreement takes place prior to the Services being completed, JLL shall without limitation to its other rights

and remedies under this Agreement or at law be entitled to receive from the Client a reasonable fee proportionate to the part of the Services performed to the date of termination.

6. INTELLECTUAL PROPERTY RIGHTS 6.1. All Intellectual Property Rights in or arising out of or in connection with the Services including the Intellectual Property Rights in

Materials shall be owned by JLL unless otherwise expressly agreed in writing. 6.2. Subject to clause 3.6 each party, its employees, agents and subcontractors has a non-exclusive right to use any material

provided by the other party for the purposes for which it is supplied or prepared. No third party has any right to use any such materials without the specific consent of the owner. The licence granted by JLL shall be perpetual but is subject to JLL having received all fees in full.

7. CONFIDENTIALITY

A Party (receiving party) shall keep in strict confidence all technical or commercial know-how, processes or initiatives which are of a confidential nature and have been disclosed to the receiving party by the other Party (disclosing party), its employees, agents or subcontractors, and any other confidential information concerning the disclosing party's business, its products and services which the receiving party may obtain. The receiving party shall only disclose such confidential information to those of its employees, agents and subcontractors who need to know it for the purpose of discharging the receiving party's obligations under the Agreement, and shall ensure that such employees, agents and subcontractors comply with the obligations set out in this clause as though they were a party to the Agreement. The receiving party may also disclose such of the disclosing party's confidential information as is required to be disclosed by law, any governmental or regulatory authority or by a court of competent jurisdiction, or with the consent of the disclosing party. This clause 7 shall survive termination of the Agreement.

8. LIABILITY 8.1. Save in respect of JLL’s liability for death or personal injury caused by its negligence, or the negligence of its employees,

agents or subcontractors or for fraud or fraudulent misrepresentation (which is not excluded or limited in any way):

a) JLL shall under no circumstances whatsoever be liable, whether in contract, tort (including negligence), breach of statutory duty, or otherwise, for any loss of profit, loss of revenue or loss of anticipated savings, or for any indirect, special or consequential loss arising out of or in connection with the Agreement and/or the Services; and

b) JLL’s total liability in respect of all losses arising out of or in connection with the Agreement and/or the Services,

whether in contract, tort (including negligence), breach of statutory duty, or otherwise, shall not exceed £5 million. 8.2. JLL shall have no liability for the consequences, including delay in or failure to provide the Services:

a) due to any failure by the Client or any representative or agent of the Client to provide information or other material that JLL reasonably requires promptly, or where that information or material provided is inaccurate or incomplete;


b) to the extent that the Client or someone on the Client’s behalf for whom JLL is not responsible is responsible, and where JLL is one of the parties liable in conjunction with others, JLL’s liability shall be limited to the share of loss reasonably attributable to JLL on the assumption that all other parties pay the share of loss attributable to them (whether or not they do); or

c) due to any failure by the Client or any representative or agent of the Client to follow JLL’s advice or

recommendations. 8.3. JLL owes no duty of care and has no liability to anyone but the Client unless specifically agreed in writing by JLL. 8.4. The Client agrees to indemnify and keep indemnified JLL against all Claims:

a) relating to matters which the Client is responsible for insuring under the Agreement; b) arising from a breach of the Agreement by the Client; or c) relating to the safety of any third party entering any premises,

other than any Claim that a court of competent jurisdiction decides or JLL acknowledges (whether or not it admits liability) was caused by the fraud, wilful default, breach of contract or negligence of JLL or of an employee, agent or subcontractor for whom JLL is responsible under the Agreement.

8.5. This clause 8 shall survive termination of the Agreement. 9. TERMINATION 9.1. Without limiting its other rights or remedies, either Party may terminate the Agreement by giving the other Party 28 day’s

written notice. 9.2. Without limiting its other rights or remedies, either Party may terminate the Agreement with immediate effect by giving written

notice to the other Party if:

a) the other Party commits a material breach of the Agreement and (if such a breach is remediable) fails to remedy that breach within 14 days of that Party being notified in writing to do so;

b) a conflict of interest arises which pursuant to any relevant professional code of conduct prevents JLL continuing to

act for the Client; or c) the other Party becomes Insolvent.

9.3. Without limiting its other rights or remedies, JLL may suspend provision of the Services under the Agreement or any other contract between the Client and JLL if the Client becomes Insolvent , or JLL reasonably believes that the Client is about to become Insolvent, or if the Client fails to pay any amount due under the Agreement on the due date for payment.

9.4. On termination of the Agreement for any reason:

a) the Client shall immediately pay to JLL all of JLL's outstanding unpaid invoices and interest and, in respect of Services supplied but for which no invoice has been submitted and associated expenses, JLL shall submit an invoice, which shall be payable by the Client immediately on receipt;

b) the Client shall return any Materials which have not been fully paid for. Until they have been returned, the Client shall

be solely responsible for their safe keeping and will not use them for any purpose not connected with the Agreement. Where all fees have been paid the Client shall be entitled to retain such Materials and they shall be licensed in accordance with clause 6.2;

c) JLL may, to comply with legal, regulatory or professional requirements, keep one copy of all material it then has that was supplied by or on behalf of the Client in relation to the Services;


d) the accrued rights, remedies, obligations and liabilities of the Parties as at expiry or termination shall be unaffected, including the right to claim damages in respect of any breach of the Agreement which existed at or before the date of termination or expiry; and

e) clauses which expressly or by implication survive termination shall continue in full force and effect.

9.5. JLL may destroy any papers it has after six years from the earlier of completion of the Services or termination of the Agreement.

10. DATA PROTECTION 10.1. In order for JLL to provide the Services, JLL may need to record and maintain in hard copy and/or in electronic form,

information regarding the Client, its officers and any other individuals connected with the Client (collectively “Data Subjects”). It may also verify the identity of Data Subjects including carrying out checks with third parties such as credit reference agencies.

10.2. JLL may use all information that it holds regarding Data Subjects for the purposes of providing the Services in accordance with the Agreement and may also use and share it with third parties for the other purposes as described in our Privacy Statement available at www.joneslanglasalle.co.uk.

10.3. If any Data Subject wishes to exercise its rights under applicable local law to access personal data held about it by JLL, it should contact the data protection compliance officer in writing stating what personal information it wishes to access.

11. FORCE MAJEURE 11.1. JLL shall not be liable to the Client as a result of any delay or failure to perform its obligations under the Agreement as a result

of a Force Majeure Event.

11.2. If the Force Majeure Event prevents JLL from providing any of the Services for more than four weeks, JLL shall, without limiting its other rights or remedies, have the right to terminate the Agreement immediately by giving written notice to the Client.

12. GENERAL 12.1. Assignment and Other Dealings.

a) JLL may at any time assign, transfer, mortgage, charge, subcontract or deal in any other manner with all or any of its rights under the Agreement and may subcontract or delegate in any manner any or all of its obligations under the Agreement to any third party or agent provided that:

(i) where JLL subcontracts or delegates its obligations at the specific request of the Client, JLL shall have no

liability for the acts or omissions of the third party or agent; and

(ii) otherwise, JLL shall remain liable for the acts or omissions of the third party or agent, unless the Client agrees to rely only on the third party or agent, such agreement not to be unreasonably withheld.

b) The Client shall not, without the prior written consent of JLL, assign, transfer, mortgage, charge, subcontract, declare

a trust over or deal in any other manner with any or all of its rights or obligations under the Agreement. 12.2. Notices.

a) Any notice or other communication, including the service of any proceedings or other documents in any legal action given to a Party under or in connection with the Agreement shall be in writing, addressed to that Party at its registered office (if it is a company) or its principal place of business (in any other case) or such other address as that Party may have specified to the other Party in writing in accordance with this clause, and shall be delivered personally, sent by pre-paid first class post or commercial courier. Any notice or other communication sent to a Party located in a different country to the sending Party must be sent by commercial courier.

b) A notice or other communication shall be deemed to have been received: if delivered personally, when left at the

address referred to in clause 12.2.a); if sent by pre-paid first class post at 9.00 am on the second Business Day after posting; or if sent by commercial courier, on the date and at the time that the courier's delivery receipt is signed.

12.3. Severance.


a) If any provision or part-provision of the Agreement is or becomes invalid, illegal or unenforceable, it shall be deemed modified to the minimum extent necessary to make it valid, legal and enforceable. If such modification is not possible, the relevant provision or part-provision shall be deemed deleted. Any modification to or deletion of a provision or part-provision under this clause shall not affect the validity and enforceability of the rest of the Agreement.

b) If any provision or part-provision of the Agreement is invalid, illegal or unenforceable, the Parties shall negotiate in

good faith to amend such provision so that, as amended, it is legal, valid and enforceable, and, to the greatest extent possible, achieves the intended commercial result of the original provision.

12.4. Waiver. A waiver of any right under the Agreement or law is only effective if it is in writing and shall not be deemed to be a

waiver of any subsequent breach or default. No failure or delay by a Party in exercising any right or remedy provided under the Agreement or by law shall constitute a waiver of that or any other right or remedy, nor shall it prevent or restrict its further exercise of that or any other right or remedy. No single or partial exercise of such right or remedy shall prevent or restrict the further exercise of that or any other right or remedy.

12.5. No Partnership or Agency. Nothing in the Agreement is intended to, or shall be deemed to, establish any partnership or joint

venture between the Parties, nor constitute either Party the agent of the other for any purpose. Neither Party shall have authority to act as agent for, or to bind, the other Party in any way.

12.6. Third parties. A person who is not a Party to the Agreement shall not have any rights to enforce its terms unless specifically

agreed in writing. 12.7. Variation. Except as set out in these Terms, no variation of the Agreement, including the introduction of any additional terms

and conditions, shall be effective unless it is agreed in writing and signed by both parties. 12.8. Protection of Employees. Save in respect of fraud or criminal conduct no employee of JLL or any Affiliate has any personal

liability to the Client nor to anyone representing the Client. Neither the Client nor anyone representing the Client may make a claim or bring proceedings against an employee or former employee personally.

12.9. Complaints. Before taking any other action against JLL the Client agrees to use JLL’s complaints procedure, which is

available on request. 12.10. Publicity. Neither Party may publicise or issue any specific information to the media about the Services or the Agreement’s

subject matter without the consent of the other. 12.11. Criminal Activity. The Client acknowledges that to comply with law and professional rules on suspected criminal activity

JLL is required to check the identity of Clients. JLL is also required by law to report to the appropriate authorities any knowledge or suspicion that a Client’s funds (or any funds provided for or on behalf of a client) derive from the proceeds of crime and may be unable to tell the Client that it has done this.

12.12. Regulated Activity. JLL is not permitted to carry out any activity regulated by the Financial Services and Markets Act 2000

including the insurance of property, except through an authorised person and in accordance with a separate agreement. Unless JLL specifically agrees otherwise in writing, no communication by JLL is intended to be, or should be construed as, an invitation or inducement to any person to engage in investment activity for the purposes of the Financial Services and Markets Act 2000, or as the approval of any communication of any such invitation or inducement.

12.13. Anti-bribery. Both parties shall comply with all applicable laws, statutes, regulations, relating to anti-bribery and anti-

corruption including but not limited to the Bribery Act 2010.

12.14. Governing Law. The Agreement and any disputes arising from it (including non-contractual claims and disputes) are

governed by English Law. 12.15. Jurisdiction. Each party irrevocably agrees, for the sole benefit of JLL that, subject as provided below, the courts of

England and Wales shall have exclusive jurisdiction over any dispute or claim arising out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims). Nothing in this clause shall limit the right of JLL to take proceedings against the Client in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted by the law of such other jurisdiction.

12.16. Language. These Terms are provided in English and JLL will communicate with the Client in English.

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