VVV COVENT GARDEN OFFICE INVESTMENT / DEVELOPMENT OPPORTUNITY.

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1 E S A V I A N H O U S E L O N D O N W C 1 COVENT GARDEN OFFICE INVESTMENT / DEVELOPMENT OPPORTUNITY

2 investment summary Freehold Covent Garden mixed-use investment/development opportunity Prominent location on the corner of High Holborn and Drury Lane, with an extensive frontage to the former High Holborn will benefit from transformational change through Crossrail and major development schemes close by within the next two years Covent Garden is one of the most vibrant commercial, retail and residential locations in Central London Two connected buildings providing 48,363 sq ft of Net Internal Area on a site extending to acres Income secured against the undoubted covenant of Royal Mail Group (D&B 5A1) and Thames & Hudson Limited (D&B 3A1) Income expected to increase from 397,000 per annum to circa 1,015,000 per annum at rent review in 2018 Significant asset management potential, including the potential to restructure existing leases, secure vacant possession and either refurbish or develop Offers are sought in excess of 29,000,000 subject to contract and exclusive of VAT. Pricing at this level reflects a low capital value of 600 per sq ft 2

3 3

4 Bloomsbury Square New Oxford Street Southampton Row Holborn Station 10 Bloomsbury Way Lincoln s Inn Fields The City Canary Wharf 4

5 Tower Bridge Blackfriars Bridge The Shard LSE High Holborn Prince Of Wales Theatre Drury Lane New London Theatre Royal Opera House 5

6 location Covent Garden is a vibrant and popular commercial, retail and residential district in London s West End. Bordered by Soho to the west, New Oxford Street to the north, the City to the east and the River Thames to the south, Covent Garden offers a central location to a range of occupiers with excellent transport communications and accessibility to central London. The area retains its iconic status as a former fruit and vegetable market, and the location is synonymous with its diverse selection of food and leisure choices. Covent Garden is also internationally renowned for its culture and entertainment offer, with over 40 theatres including the Royal Opera House. Over recent years, the area surrounding the central Piazza has been transformed under the ownership of larger estate owners such as Shaftesbury and Capital & Counties, attracting major retail occupiers such as Apple, Burberry and Dior. The area has a broad appeal to the office occupier market, with media and advertising companies, government departments, financial institutions and professional firms being well represented. 6

7 TOTTENHAM COURT RD BEDFORD AVE BLOOMSBURY ST The British Museum BLOOMSBURY WAY SOUT HAMPTON PL GREAT RUSSELL ST TOTTENHAM COURT ROAD DYOT T ST NEW OXFORD ST NEWTON ST HOLBORN 6 GAT E ST 12 OXFORD ST Centre Point BUCKNALL ST GRAPE ST 19 MUSEUM ST Travelodge HIGH HOLBORN SMARTS PL STUKELEY ST MACKLIN ST 20 PARKER ST GREAT QUEEN ST 10 KINGSWAY FRITH ST GREEK ST LISLE ST CHARING CROSS RD Palace Theatre LEICESTER SQUARE STACEY ST WEST ST NEW COMPTON ST SHAFTESBURY AVE EARLHAM ST UPPER ST. MART IN S LN ENDELL ST MERCER ST GARRICK ST NEAL ST 14 SHELTON ST COVENT GARDEN FLORAL ST KING ST 23 JAMES ST LONG ACRE 18 Covent Garden Piazza BOW ST DRURY LANE TAVISTOCK ST RUSSELL ST KEMBLE ST 8 9 KEAN ST ALDWYCH D Office Occupiers: Hotels: Eating and drinking: Culture: Shopping: 1. Burson Marsteller 2. Google 3. NBC Universal 4. Mindshare 5. Criteo 6. Mischon De Reya 7. The Hoxton Hotel 8. One Aldwych 9. The Waldorf Hilton 10. Kingsway Hall Hotel 11. Hubbard & Bell 12. Shanghai Blues 13. Benugo 14. Hawksmoor 15. Radio Rooftop Bar 16. Somerset House 17. Peacock Theatre 18. Royal Opera House 19. Shaftesbury Theatre 20. New London Theatre 21. Apple 22. Aspinal of London 23. Hackett 24. Mulberry 7

8 situation Esavian House occupies a prominent position on the corner of Drury Lane and High Holborn, which acts as a major conduit linking Shaftesbury Avenue to the south with the City of London to the east. The area enjoys exceptional connectivity to the rest of central London with Holborn (Central and Piccadilly Lines), Tottenham Court Road (Central and Northern Lines) and Covent Garden (Piccadilly Line) Underground Stations all within ½ mile of the subject property. Crossrail Esavian House is well placed to directly benefit from Crossrail in Crossrail is due to increase London s overall transport capacity by 10% by providing a regional, high frequency train service into London. It will bring an extra 1.5 million people to within 45 minutes of central London, and will provide direct access to Heathrow airport in under 30 minutes, with access via one interchange to London s four other airports. Crossrail is predicted to have a huge impact upon the London property market: 10% uplift in commercial office capital values above current base line projections is predicted over the next decade 25% increase in residential values in central London is expected immediately Crossrail journey times from Tottenham Court Road Station Current Journey Journey time Time (mins) following opening of Crossrail (mins) Bond Street 3 2 Farringdon 9 3 Paddington 16 5 Liverpool Street 7 5 Canary Wharf Heathrow

9 Central District Circle Hammersmith & City Bakerloo District Northern Central Circle Metropolitan Hammersmith & City Northern Central Central Jubilee DLR Overground STRATFORD FOREST GATE SHENFIELD HAYES & HARLINGTON HANWELL EALING BROADWAY TOTTENHAM PADDINGTON COURT ROAD LIVERPOOL STREET MARYLAND MANOR PARK MAIDENHEAD DLR HEATHROW AIRPORT Piccadilly Heathrow SOUTHALL WEST EALING ACTON MAIN LINE BOND STREET FARRINGDONWHITECHAPEL Central Jubilee Circle Metropolitan Hammersmith & City Hammersmith & City District Overground CANARY WHARF Jubilee Canary Wharf 200m CUSTOM HOUSE DLR West India Quay 100m WOOLWICH ABBEY WOOD 9

10 the property Esavian House comprises two interlinked properties known as 181/181a High Holborn and 7-11 Stukeley Street, which were constructed in the early 1930s and originally occupied as warehouse premises by the Educational Supply Association Limited (ESA) as furniture manufacturers. In its current configuration, 181 High Holborn provides retail accommodation to the ground floor, and is currently used as a Post Office counter. 181a High Holborn offers open-plan office accommodation arranged over lower ground, ground and three upper floors. The office accommodation has been refurbished by the present occupier to provide raised floors, comfort cooling, perimeter trunking, LG7 lighting and secondary glazing. Each floor has male and female toilet facilities and is served by two passenger lifts. The office benefits from a dedicated reception with stairs leading to the basement area with toilet facilities/ showers and an outside area for bicycle storage Stukeley Street is accessed to the rear either via Smarts Place or Drury Lane. The property offers refurbished office accommodation over ground, mezzanine and two upper floors. The upper floors are currently configured as a separate unit of occupation. 10

11 tenure planning The freehold interest in the properties is held by Esavian House Limited under two titles numbered (181/181a High Holborn) and (7-11 Stukeley Street). The property is located within the London Borough of Camden. It is not listed and is located outside of the Seven Dials Conservation Area. The majority of the property enjoys a B1 office use although we understand that the 2nd and 3rd floors of 7-11 Stukeley Street currently have an authorised use for warehouse, workrooms and showroom purposes. Visit to see a summary note on the planning history of the building within the data room. 11

12 tenancies The freehold interest is held by Esavian House Limited and is subject to the benefit of two long leases granted to Royal Mail Group on 181/181a High Holborn and 7/11 Stukeley Street, expiring in June 2034 and June 2027 respectively, and producing 17,000 per annum in total. Esavian House Limited has, in turn, been granted an intermediary sublease of 181a High Holborn which has been sub-underlet to Thames & Hudson Limited for a term of 25 years expiring 25th February 2023 at a passing rent of 380,000 per annum, subject to tenant break and rent review on 26th February The total income received by the vendor, Esavian House Limited, is therefore 397,000 per annum, which is due to increase significantly on the Thames & Hudson rent review in February Esavian House Limited (F/H) 181 High Holborn 7-11 Stukeley Street Long lease to Royal Mail Group Ltd (whole) Expiry date 16/6/2034 Annual Rent 14,000 pa Fixed uplift to 17,000 pa on 15/6/2027 Long lease to Royal Mail Group Ltd Expiry date 14/6/2027 3,000 pa Fixed rent Sublet to Esavian House Ltd (Pt Bsmt, Pt Gd, 1st-3rd floors) Expiry date 3/6/2034 Nil rent Sub-underlease to Thames & Hudson Ltd Expiry date 25/2/ ,000 pa Tenant break and rent review 26/2/

13 Property Demise Landlord Tenant Net Lease Rent Rent Comments Internal Expiry pa Review Area sq ft (Break) 181/181a Whole Esavian Royal Mail 26,262 14/06/ ,000 14/06/2027 Fixed uplift to 17,000 High Building House Group wef June 2027 Holborn Limited Limited 181a Pt Basement, Royal Mail Esavian 21,891 03/06/ Leaseback to Esavian High Gd, 1st - 3rd Group House House Limited. No rent Holborn Limited Limited payable following a (Sublease) deed of variation dated a Pt Basement, Esavian Thames & 21,891 25/02/ ,000 26/02/2018 High Gd, 1st - 3rd House Hudson (T: 26/02/2018) Holborn Limited Limited Sub-Underlease 7-11 Whole Esavian Royal Mail 22,101 14/06/2027 3,000 Stukeley Building House Group Street Limited Limited Total 48, ,000 Total rent received by Esavian House Ltd accommodation The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and IPMS by Pure Real Estate Services. These measured areas can be warranted to the purchaser. Full floor plans are available in the data room but the areas are summarised below:- Floor Use Net Internal Area Gross Internal Area Sq M Sq Ft Sq M Sq Ft BASEMENT storage ,407 staff room / offices ,203 offices ,769 Sub Total ,379 1, ,278 GROUND offices ,585 reception ,419 stores ,143 retail ,650 Sub Total 1, ,797 1, ,773 MEZZANINE offices , ,668 FIRST offices 1, ,285 1, ,200 SECOND offices 1, ,782 1, ,922 THIRD offices ,574 stores Sub Total , ,058 ROOF plant room ,851 TOTAL (excl roof) 4, ,363 6, ,750 13

14 BASEMENT FLOOR STUKELEY STREET SMART S PLACE DRURY LANE HIGH HOLBORN GROUND FLOOR 14

15 W Esavia 181 High Holbo MEZZANINE FLOOR FIRST FLOOR STUKELEY STREET First Floo DIMENSI ANY SHO LIMITED ISSUED RETAINE WHOLLY REAL ES Notes 1. DO NOT 2. ALL DIM 3. THE CON 4. THIS DR SMART'S PLACE DRURY LANE SECOND FLOOR STUKELEY STREET Esavian House 181 High Holborn, London, WC1V 7QX THIRD FLOOR Second Floor The information provided within this drawing is to be used for illustrative purposes only. Notes 1. DO NOT SCALE FROM THIS DRAWING. USE FIGURED DIMENSIONS ONLY. 2. ALL DIMENSIONS ARE IN MILLIMETERS UNLESS STATED OTHERWISE. 3. THE CONTRACTOR IS TO CHECK DRAWINGS AND TO VERIFY ALL DIMENSIONS ON SITE BEFORE COMMENCING ANY WORK OR MAKING ANY SHOP DRAWINGS. 4. THIS DRAWING IS THE PROPERTY OF PURE REAL ESTATE SERVICES LIMITED. COPYRIGHT IS RESERVED BY THEM AND THE DRAWING IS ISSUED ON THE CONDITION THAT IT IS NOT COPIED, REPRODUCED, RETAINED OR DISCLOSED TO ANY UNAUTHORISED PERSON, EITHER WHOLLY OR IN PART, WITHOUT THE CONSENT IN WRITING OF PURE REAL ESTATE SERVICES LIMITED. HIGH HOLBORN STUKELEY STREET Esavian 181 High Holbo Third Floo DIMENSIO ANY SHO LIMITED. ISSUED O RETAINE WHOLLY REAL EST Notes 1. DO NOT S 2. ALL DIME 3. THE CON 4. THIS DRA SMART'S PLACE SMART'S PLACE DRURY LANE E S DRURY LANE 0m Scale A3 N 12.50m Esav 181 High H KEY The information provided within this drawing is to be used for illustrative purposes only. HIGH HOLBORN ROOF PROJECT DRAWING TITLE SCALE DRAWN BY PJ_09/03/16 DRAWING NO. Esavian House 181 High Holborn London WC1V 7QX Second Floor Plan A3 Indicative floor plan DATE OF INSPECTION 04/02/ _A30 The information provided within this drawing is to be used for illustrative purposes only. CONTACT E: surveys@pureres.co.uk T: +44 (0) W: HIGH HOLBORN STUKELEY STREET DIME ANY LIMIT ISSU RETA WHO REA Roof Notes 1. DO N 2. ALL 3. THE 4. THIS ROYAL MAIL POST OFFICE THAMES AND HUDSON SMART'S PLACE DRURY LANE 15 HIGH HOLBORN

16 the market Office West End Occupational Midtown continues to be viewed as an attractive location by office occupiers squeezed out by the chronic shortage of supply in the West End. In particular, the Covent Garden submarket has changed considerably over the last five years, as many occupiers from the media and creative industries have been displaced by businesses from the financial and professional service and energy sectors that have migrated from Mayfair and St James s. This influx of new occupiers with larger rental budgets has resulted in rents for prime located, refurbished, mid-rise Grade A space increasing to per sq ft. Esavian House stands to benefit from significant rental growth. Property Tenant Size Term Headline Rent Date (sq ft) (per sq ft) 90 High Holborn, WC1V 6LJ Uniqlo Europe Ltd 5, yrs Q Holborn, EC1 Trainline plc 37, yrs Q High Holborn, WC1V 7PB Flight Centre (UK) Ltd 7, yrs Q High Holborn, WC1V 7PP Gant UK Ltd 16, yrs Q Aldwych House, WC2B 4HN Wasserman Experience Ltd 20, yrs Q High Holborn, WC1V 6JS AVG Technologies UK Ltd 9, yrs Q

17 Investment West End Interest in the central London office market remains strong, with a number of recent transactions demonstrating the continued weight of money being invested in well let stock with added value potential. London continues to be viewed as a safe haven for foreign investment due to its secure returns and scarcity of well let stock offering longer term development opportunity. Property Size Price Capital NIY Date Comments (sq ft) Value (per sq ft) 124 Theobalds Road, 80,000 65,000, % available Single let to Media Com until WC2 (quoting) psf with rent review in July ERC circa 50 psf Thavies Inn House 50,486 38,000, % available Long leashold interest with 3-4 Holborn Circus, (quoting) 119 years unexpired, reviewed EC1N 2HA to 2% of ERV 150 Holborn, 93,223 80,000, % Q Vacant offices with retail let EC1 to six tenants Arab Press House, 29,822 29,000, N/A Q Short term lease for 12 months High Holborn at nil rent but with rates and WC1 service charge covered The Telephone Exchange, 67,803 42,700, % Q Let to BT Plc until November High Holborn 2031 with rollling TOB on/after WC1 January Annual RPI uplifts High Holborn Estate 143, ,500, % Q Island site comprising nine WC1 buildings. WAULT 4.8 years to breaks. Sold as SPV Residential Covent Garden has witnessed significant increases in residential values over the last five years, and we expect it to outperform the more traditional Prime Central London districts due to an emergence of more contemporary stock and the vibrancy of the retail, food and beverage offer. Prime residential values for centrally located stock within Covent Garden stand at between 2,250 and 2,500 per sq ft. Property Size Price Capital Value Date Beds Plot (sq ft) (per sq ft) Number Aldwych Chambers, WC2R 3AT 1,163 2,275,000 1,956 Q Aldwych Chambers, WC2R 3AT 1,168 2,350,000 2,012 Q Strand, WC2R 1DX 668 1,380,000 2,066 Q Strand, WC2R 1DX 1,033 2,200,000 2,130 Q Strand, WC2R 1DX 1,600 3,600,000 2,250 Q

18 development potential Due to the low massing and building height relative to nearby schemes, Esavian House offers an excellent opportunity to secure vacant possession and carry out a comprehensive redevelopment. Such development would take full advantage of the wider regeneration being seen through Crossrail. Schemes taking place in the immediate vicinity include: /31 New Oxford Street 390,000 sq ft office and retail scheme being developed by Oxford Properties and Brockton Capital. Completion due New Oxford Street 107,700 sq ft of offices and retail being developed by BA Pension Fund and TH Real Estate. Completion due Bloomsbury Way 165,000 sq ft of office and retail being developed by London & Regional. Completed Q The location could support a variety of uses, including office, hotel, apart-hotel and residential. 3 18

19 asset management initiatives vat The Property is not currently elected for VAT, which will not be payable on the sale. Esavian House offers a number of significant opportunities to create added value: The passing rent on the Thames & Hudson accommodation equates to an exceptionally low per sq ft overall. In our opinion, a purchaser could expect to see this rent increase to per sq ft on best space at rent review in 2018 Secure vacant possession of the Thames & Hudson accommodation, refurbish and relet at an even higher rent. In our opinion, a fully refurbished office in this location could command a rent of 65 per sq ft Restructure the existing head leases to take control of accommodation not being occupied by Royal Mail Negotiate with Royal Mail and the Post Office to secure an early surrender of their interest in Esavian House, enabling a comprehensive redevelopment Investigate adjoining ownerships which could allow for the unlocking of an island site to permit a transformational scheme capital allowances We are advised that there are no capital allowances available. data room A data room is available which contains title and legal documentation relating to the property. Interested parties can request access via the agents. proposal Our client is seeking offers in excess of 29,000,000 subject to contract and exclusive of VAT, assuming standard purchaser s costs at 6.76%. This reflects a low capital value of 600 per sq ft. A purchase at this level would show the following attractive yield profile (assuming that Thames & Hudson do not operate their break clause in 2018): Initial Yield 1.28% Equivalent Yield 5.00% Reversionary Yield 7.66% 19

20 For further information please contact: Mike Prosser +44 (0) Jeremy Gidman +44 (0) Jonny Scriven +44 (0) Important information Our property particulars do not represent an offer or contract, or part of one. The information given is without responsibility on the part of the agents, seller(s) or lessor(s) and should not rely on the information as being factually accurate about this property, its condition or its value. Neither Carter Jonas LLP nor anyone in its employment or acting on its behalf has the authority to make any representation or warranty in relation to this property. We have not carried out a detailed survey, nor tested the services, appliances or fittings at the property. The images shown may represent only part of the property and are as they appeared at the time of being photographed. The areas, measurements and distances are approximate only. Any reference to alterations or use does not mean that any necessary planning permission, building regulation, or other consent has been obtained. The VAT position relating to the property may change without notice. April 2016