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PRIME COUNCIL LET OPPORTUNITY PROVIDING 55 YEARS INCOME

The Civic CentreR I V E R S I D E / S T A F F O R D / S T 1 6 3 A Q

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Investment Summary

2 • Stafford is the County Town of Staffordshire and is the administrative capital

• The Civic Centre is prominently situated in the town centre, opposite Staffordshire County Council’s headquarters and adjacent to to the Riverside Retail and Waterfront Leisure Schemes

• The Civic Centre provides a total of 95,823 sq ft with A1-A3 retail on the ground floor and office space and medical facilities on the upper floors

• Entirely let to the undoubted covenant of Stafford Borough Council on an FRI lease that provides for 55.6 years to expiry

• 5 yearly open market reviews with the next review on 29th September 2023

• The rent is reviewed to 73.16% of Market Rent, meaning the Council pay a low rent of £731,600 per annum reflecting £7.63 psf

• The initial yield provides significant arbitrage over current equivalent term UK Gilt rates

Offers in excess of £19,600,000 (Nineteen Million Six Hundred Thousand Pounds) which reflects a Net Initial Yield of 3.50% assuming usual purchaser’s costs of 6.75%.

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Location

3 SHEFFIELD

NOTTINGHAM

DERBY

STOKE-ON-TRENT

COVENTRYNORTHAMPTON

OXFORD

BRIGHTONPORTSMOUTH

SOUTHAMPTON

EXETER

LEICESTER

WAKEFIELD

LEEDSHULL

YORKLANCASTER

CARLISLESUNDERLAND

NEWCASTLE UPON TYNE

BRADFORD

PETERBOROUGH

CAMBRIDGE

NORWICH

DUNDEE

ABERDEEN

EDINBURGHGLASGOW

LIVERPOOLLIVERPOOL

MANCHESTERMANCHESTER

BIRMINGHAMBIRMINGHAM

STAFFORDSTAFFORD

BRISTOLBRISTOLCARDIFFCARDIFF LONDONLONDON

Stafford lies in the heart of England and is the County Town of Staffordshire. It is located 24 miles north of Birmingham, 58 miles south of Manchester and 151 miles northwest of London.

Stafford is the administrative capital of Staffordshire with both Staffordshire County Council and Stafford Borough Council headquarters in the town. The town has a population of 68,472 (2011 census) with a wider population of 138,000 including surrounding satellite villages.

Stafford benefits from excellent road and train communications. The town centre is just 2 miles from junctions 13 and 14 of the M6 motorway. The M6 links with Manchester, 58 miles to the north and Birmingham 24 miles to the south. Stafford Station is on the mainline route between London and Liverpool, it provides direct services to London Euston with a journey time of 1 hour 17 minutes. It also provides regular direct services to Birmingham with a journey time of 32 minutes and Liverpool with a journey time of 59 minutes.

HS2 The development of HS2 will further improve Stafford’s connectivity, reducing the journey time to London to 53 minutes.

The Stafford Station Gateway Growth Area is a major growth area designed to take advantage of HS2 connectivity. New commercial, business and leisure facilities will support 6,500 new jobs and 800 new homes.

The Borough Council is determined to use HS2 to build on Stafford’s reputation as an attractive place to live, work and invest in and the commitment to the link between the HS2 line and the West Coast Main Line at Handsacre will also provide the opportunity to broaden the economic benefits of HS2.

The property occupies a central and prominent location in the town centre on the corner of Bridge Street and South Walls. It is located in the retail and administrative core of the town. Nearby buildings include Staffordshire County Council head office and Stafford Combined Court.

Riverside Shopping Centre is adjacent to the east of the property, developed in 2016 it provides 100,000 sq ft of prime retail accommodation across 17 units. Tenants include M&S, Primark, River Island, H&M and JD Sports. Opposite the property is the Waterfront Leisure Scheme which was developed in 2018 and provides an Odeon Luxe Cinema and restaurants. The scheme includes a 1,025 space multi-storey car park.

The property overlooks the River Sow, which runs through the town centre and along the southern boundary of the property.

Situation

SAT NAV: ST16 3AQ

M6

M6

A34

A34

A34

A34

A34A34

A34

A449

A449

A518

A518

A518

A518

A518

A5013

A513

A513

STAFFORD STAFFORDBASWICH

ACTON HILL

BECONSIDE

MOSS PIT

HYDE LEA

CASLTE BANK

DOXEY

13

14

S WALLS

N WALLS

TENTERBANKS

TENTERBANKS

CHELL RDGuildhall Shopping

Centre

Stafford College

StaffordshireCountyCouncil

Riverside Shopping

Centre

WaterfrontLeisureScheme

StaffordStation

Stafford Gateway

VICTORIA RDBRIDGE ST

THE CIVICCENTRE

THE CIVICCENTRE

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4The Property

The property comprises 2 interlinked blocks, one comprising 4 storeys of offices above ground floor retail accommodation and the second comprising 3 storeys of offices and health facilities above two levels of car parking. The two blocks are linked by a central service core, which provides access to both wings on each level. The central core benefits from 2 passenger lifts, male and female toilets on each level and a central staircase.

Block A, to the west of the site provides accommodation over ground and four upper floors. The ground floor was originally built for use in whole as a supermarket. It has now been divided to provide smaller self-contained units which benefit from open A1-A3 retail and B1 office uses.

Bock B, to the east of of the site provides office and medical accommodation across 3 storeys with car parking on the ground and mezzanine.

The main entrance to the offices fronts the River Sow and the principal pedestrian access to the offices is along the south elevation, adjacent to the River Sow.

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5Floor Areas Title Plan

The floor areas have been agreed with the Council as part of the rent review and a breakdown of these is detailed below:

LOCATION USER AREA SQ FT

Ground and part first floor Retail 27,300

Ground floor rear area 4,061

Upper floorsOffices & Medical Facilities

64,462

Total 95,823

RiversideSite Area

The site extends to 1.83 acres 0.74 hectares.

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6Tenancy

Tenure

Freehold.

Block / Floor Area sq ft Tenant Lease

StartLease Term Per Annum

Block A / Ground floor

7,212 Revolution Bars Limited 23/01/2017 25 years £70,000

Block A / Second floor

4,036 Staffordshire

County Council19/08/2016

12.62 years

£63,750

Block A / Third floor

1,328 Staffordshire and Stoke-on-Trent Partnership NHS Trust

26/11/2013 10 years £24,000

Block A / Fourth floor

12,432 Staffordshire

County Council06/10/2017 25 years £196,350

Block B / Second and Third floor

7,782 Staffordshire and Stoke-on-Trent Partnership NHS Trust

26/11/2013 25 years £100,726

Block B / Third floor

761 Support Staffordshire 01/04/2020 4 years £12,000

The whole property is let to Stafford Borough Council on an FRI lease expiring 22nd December 2046. The current passing rent is £731,600 per annum, which reflects an effective £7.63 psf overall.

The property was originally let on a 35 year lease from 23rd December 1976. That lease gave the Landlord the option to require the tenant to take a new 35 year lease on substantially the same terms. The option was exercised and the current lease commenced on 23rd December 2011.

The current lease also contains the option for either the landlord or the tenant to require the other to enter into a further new lease for a term of 29 years, thereby effectively giving 55.6 years term certain.

As the current lease was entered into following an exercise of the option in the 1976 lease and is on substantially the same terms, it is an “old” lease for the purpose of the Landlord and Tenant (Covenants) Act 1995. This ensures Privity of Contract which means that Stafford Borough Council, is responsible for the rent and covenants in the current lease throughout its remaining term.

Current Term

35 years commencing 23rd December 2011

Option to Renew

The landlord or the tenant can each require the other to enter into a new lease for a further term of 29 years to December 2075.

Rent Passing rent of £731,600 per annum / £7.63 psf

Rent Review

First rent review on 29th September 2013 and then 5 yearly thereafter.

The Reviewed Rent equals 73.16% of Market Rental Value.

Rental evidence regarding the value of the offices is to be taken within the 12 months before the rent review date from buildings of a similar size, quality and commercial position in the County of Warwickshire, County of Staffordshire and County of Derbyshire but excluding the City of Birmingham.

UseOffices, with showrooms, shops or offices on the basement ground and first floors. With car parking.

Repair Fully Repairing and Insuring

Alterations

The Tenant covenants not to carry out any structural works or other material changes or additions to the premises without the prior consent of the Landlord, subject to consent not to be unreasonably withheld.

Alienation

Assignment of the whole is permitted to a respectable and responsible assignee to be to the satisfaction of the Landlord at the expense of the Tenant.

Under letting permitted subject to conditions.

A summary of the key lease terms is set out below:

Subleases and Licenses

Covenant

Stafford Borough Council sublet the ground floor retail and leisure units as well as some of the office space. These provide a current income of £466,826 per annum which subsidises the Council’s property costs.

Subleases detailed below:

Stafford Borough Council is a local government district with borough status in Staffordshire. The Borough includes Stafford, the smaller town of Stone and numerous villages. It has a population 135,880 (mid-2018 estimate).

Local Authorities are regarded as very low credit risk counterparties. As public sector organisations, they are significantly less affected by the type of market forces that can cause insolvencies in the private sector. They are long-term, stable organisations, historically experiencing little change.

Local Authorities are also legally obliged to set a balanced budget - it is illegal to set a deficit budget.

Local Authority credit strength is high due to the legislative framework, robust financial management processes followed by Councils and support of Central Government

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7Investment Rationale

• Key strategic site in Stafford town centre

• 55 years of income secured against the undoubted covenant of Stafford Borough Council

• The rent is reviewed to 73.16% of Market Rent, meaning the Council benefit from a lower geared rent

• Underlettings provide £466,826 per annum towards the Council’s outgoings

• In conjunction with the Council there is the potential to redevelop both the building and the site to improve the Council’s accommodation and to provide for higher value uses

• Initial yield provides significant arbitrage over current UK Gilt rates, the equivalent 50 year UK Gilt is currently yielding 0.4%

A518

A518

A34

A518

WATERFRONTCAR PARK

WATERFRONTLEISURE SCHEME

STAFFORDSTATION

RIVERSIDESHOPPING CENTRE

STAFFORDCOUNTY COUNCIL

THE CIVICCENTRE

U.K. 50 Year Gilt

0.4%

Source: Marketwatch.com

Mar 20 Apr 20 May 20 Jun 20

1.00%

1.25%

0.5%

0.75%

0.0%

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8Anti Money Laundering

A successful bidder will be required to provide AML information in accordance with HMRC regulations when Heads of Terms are agreed.

Data Room

Access to a secure online data room is available upon request.

More Information

Shaun Roy

+44(0) 20 7861 1222 • +44(0) 7957 342 285

shaun.roy@knightfrank.com

Huw Holman

+44(0) 20 3909 6808 • +44(0) 7583 041 688

huw.holman@knightfrank.com

Ben Wisher

+44(0) 121 233 6456 • +44(0) 7436 099 850

ben.wisher@knightfrank.com

Matt Jenns

+44(0) 121 634 8447 • +44(0) 796 855 0351

mjenns@savills.com

Simon Hope

+44 (0) 20 7409 8725 • +44(0) 7740 404 003

shope@savills.com

Important Notice: 1. Particulars: These particulars are not an offer or contract, nor part of one. You should not rely on statements by Knight Frank LLP in the particulars or by word of mouth or in writing (“information”) as being factually accurate about the property, its condition or its value. Neither Knight Frank LLP nor any joint agent has any authority to make any representations about the property, and accordingly any information given is entirely without responsibility on the part of the agents, seller(s) or lessor(s). 2. Photos etc: The photographs show only certain parts of the property as they appeared at the time they were taken. Areas, measurements and distances given are approximate only. 3. Regulations etc: Any reference to alterations to, or use of, any part of the property does not mean that any necessary planning, building regulations or other consent has been obtained. A buyer or lessee must find out by inspection or in other ways that these matt ers have been properly dealt with and that all information is correct. 4. VAT: The VAT position relating to the property may change without notice. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London W1U 8AN, where you may look at a list of members’ names. Subject to Contract: June 2020. carve-design.co.uk 14709/10

EPC

Available on request.

VAT

The property is elected for VAT and as such it is envisaged that the transaction will be treated as a TOGC.

Pricing

We are instructed to seek offers in excess of £19,600,000 (Nineteen Million Six Hundred Thousand Pounds) which reflects a Net Initial Yield of 3.50% assuming usual purchaser’s costs of 6.75%.