P R I M E L O N D O N R E TA I L WA R E H O U S E I N V E S T M E N T

GALLOWS CORNERRETAIL PARKA 1 2 C O L C H E S T E R R O A DR O M F O R D R M 3 0 A D

A RARE INVESTMENTOPPORTUNITY TO ACQUIRE

AN OUTSTANDING LONDON RETAIL PARK

WITH EXCEPTIONAL TENANT DEMAND.

• Outstanding London retail park located within the M25 at the

junction of the A12 and A127. An average of 88,833 vehicles

pass the property each day.

• Romford is a sub-regional centre with a primary catchment

population of 626,000 and a shopping population of 341,000,

ranking the town 25th of the PROMIS centres. Romford’s

population is forecast to grow at over twice the national average.

• Gallows Corner Retail Park is a well laid out scheme of

92,538 sq ft with substantial frontage and access to both

the A12 and the A127.

• The park is let to Next, Argos, Magnet, Halfords, Furniture Village,

DFS and Harveys, producing a total rent of £3,098,514 per annum

(£30.85 – £38.60 psf).

• The property has a part open A1 / part wide bulky goods planning

permission. The local authority have supported recent applications

to widen the use.

• Since its development in 2000, the park has always enjoyed

exceptional tenant demand due to its very large and affluent

catchment and lack of good quality competing parks. Accordingly

strong rents have been agreed with minimal incentives.

• The park has enjoyed strong, ongoing, rental growth. In 2015 the

lease renewal of Halfords and the rent reviews of Furniture Village

and Magnet all showed significant rental uplifts.

• Asset management opportunities exist to effect further new lettings

upon the park and thus create a substantial reversion.

• Our clients are seeking offers in excess of £61.65 million for their

freehold interest in the property. A purchase at this level would

show a yield of 4.75%, after allowing for purchaser’s costs of

5.8%. Upon settlement of the outstanding DFS rent review, our

clients are seeking a top up payment equal to the additional rent

agreed, capitalised at the purchase yield.

I N V E S T M E N T S U M M A R Y

G A L L O W S C O R N E R R E T A I L P A R K

C I T Y O F L O N D O NC A N A R Y W H A R F

R O M F O R D

A127

A12

A12

L O C A T I O NRomford is a large town situated within Greater London and is the administrative centre of the London Borough of Havering. The town is one of London’s key commercial centres.

Romford is strategically located approximately 11 miles north east of the City of London, which by road can be directly accessed via the A12. The A12 Colchester Road is one of London’s major arterial routes leading north east from the city to the North Circular (and M11), Romford, Brentwood, Chelmsford, Colchester, Ipswich and the ports of Lowestoft / Great Yarmouth. The A127 runs east from Romford to Junction 29 of the M25 and then on to Basildon, Rayleigh and Southend on Sea.

By rail Romford is just 15 minutes from London Liverpool Street station and is located within Travel Zone 6. At peak times trains run every seven minutes into the city. The 2013 / 14 National Rail Annual Entry and Exit Survey counted 8.265 million individual journeys through Romford station.

From 2019, Romford will be fully served by Crossrail, which will directly link the town to London’s West End at Tottenham Court Road and Bond Street (34 minutes) and beyond to Heathrow Airport (62 minutes), Slough, Maidenhead and Reading. Crossrail services will run every 15 minutes.

Romford also has excellent transport connections to all of London’s airports. The closest airport is London City Airport, which is just eight miles south west of the town.

ROMFORD IS JUST 15 MINUTES FROM LONDON LIVERPOOL STREET BY RAIL AND WILL BE FULLY SERVED BY CROSSRAIL FROM 2019.

A40

A10

A1

A406

A205

A5

A3

A23

A20

A2

A13

A12

M11

M4

M25

M25

M20

M1

A4

L O N D O NA 1 2

A 1 1 8

A 1 1 8

A 1 2 5

A 1 2 7

A 1 2

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R O M F O R D

U P M I N S T E R

H O R N C H U R C H

G A L L O W S C O R N E RR E T A I L P A R K

C R O S S R A I L O P E N S 2 0 1 9

0.0%

Romford PROMIS retail average

2001 – 2015 2015 – 2020

0.8%

1.6%

% p

er a

nnum

Population Growth

D E M O G R A P H I C S

As a result of Romford’s proximity and excellent transport links to the City and Central London, the town has a large and affluent population.

PROMIS define Romford as a sub-regional centre, with a primary catchment population of 626,000, very significantly above the average, ranking it 24th of all PROMIS centres. PROMIS estimate the shopping population to be 341,000, ranking Romford 25th of all PROMIS centres. The high shopping population ranking reflects the strength of loyalty to Romford from its catchment.

Experian calculate that there are 164,373 people living within the key ten minute drive-time of Gallows Corner Retail Park.

Both the shopping population of Romford and the ten minute drive time catchment population are young and affluent. The C2 ‘skilled manual worker’ social grade category is significantly over represented in the ten minute drive time catchment and the E ‘state benefit / unemployed’ social grade is very significantly under represented. Furthermore, Romford’s population is forecast to see significantly above average growth over the period to 2020, with a 1.6% increase (compared to the UK average of just 0.75%), and then consistently above average growth to 2032.

S I T U A T I O N

Gallows Corner Retail Park is strategically situated on a site fronting the A12 Colchester Road, Gallows Corner roundabout and the A127. According to the Department for Transport, there was an average of 88,833 vehicles passing the property per day in 2014 on the A12 and A127.

Immediately to the north-east of Gallows Corner Retail Park is a 114,000 sq ft 24 hour Tesco Extra foodstore with a petrol filling station. To the north of the property, across the A12, is a 72,315 sq ft B&Q Warehouse and a newly constructed KFC drive-thru.

AN AVERAGE OF 88,833 VEHICLES PASS THE PROPERTY PER DAY ON THE A12 AND A127.

R O M F O R D

Department for Transport 2014

G A L L O W S C O R N E R R E T A I L P A R K

G A L L O W S C O R N E R

D E S C R I P T I O NThe property comprises a modern, purpose built, retail warehouse park of 92,538 sq ft, currently arranged as seven units. It was constructed in 2000 by Chartwell Land.

The park is laid out as a terrace of six retail warehouse units running along the southern side of the site, with a solus unit to the north adjoining the A12.

The scheme has three points of access; an entrance / exit from the A12, an entrance from the A127 and a further entrance / exit in the north east corner of the site from Bryant Avenue, the latter allowing easy access for shoppers visiting the Tesco Extra.

There is a large customer car park in the preferred arrangement to the front of the units. The site provides a total of 344 car parking spaces giving an excellent parking ratio of 1:269 sq ft.

The scheme is of steel portal frame construction under pitched clad roofs. With the exception of Unit 6a, all units have composite clad elevations. The new Next unit (6a) has a fully glazed elevation with brick detailing.

Units 2, 3, 4, 5 and 6a have the benefit of mezzanine floors with consent for retail use.

A secure service yard is located to the rear of the main terrace which has a separate access from Bryant Avenue.

S I T EThe site is level and broadly rectangular in shape. It extends to approximately 6.40 acres (2.44 hectares).

E N V I R O N M E N T A L Waterman Energy, Environmental and Design Ltd carried out a Phase 1 Environmental Assessment of the property in June 2012 and their report concluded that in its current use and form the property represents a Low Risk of contaminated land liabilities or costs.

P L A N N I N GPlanning consent for retail use on the site has been achieved through multiple consents dating back as far as 1983.

Units 1 – 5 have consent for the sale of DIY goods, furniture, carpets / floor coverings, motor accessories, cycles / accessories, gas / electrical goods, pets / pet products, office equipment, footwear and sports goods.

Units 6a / 6b originally had consent for DIY goods, furniture, carpets / floor coverings, motor accessories, garden products and electrical goods. However, in November 2008 a consent for Unit 6b was granted to widen this use to include ‘catalogue shop retailing’ to allow Argos to trade.

In 2013 consent was granted for the sale of fashion and footwear items in Unit 6a, together with the installation of a full cover trading mezzanine and the provision of a café.

The scheme therefore has a very flexible, part open A1, part broad bulky goods, planning consent.

Importantly, the local authority have supported the various applications to change the retail use of the scheme which has ensured its ongoing success.

T E N U R EThe property is held freehold.

Boro Const & Ward Bdy

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33.2m

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GILLIAN CRESCENT

OXLEY CLOSE

FARNES DRIVE

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ApartmentsPemberley

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32.9mPumpingStation

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CHADWICK

ORMOND CLOSE

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LISTER AVENUE

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WHITMORE AVENUE

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(site of)Gallows

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Gallows Corner, Romford - Site plan

Ordnance Survey © Crown Copyright 2016. All rights reserved. Licence number 100022432. Plotted Scale - 1:2607

N E X T

A R G O SM A G N E T

H A L F O R D S

F U R N I T U R EV I L L A G E

D F S

K F C

A12

A12

A127

B & Q WA R E H O U S E

H A R V E Y S

T E S C O E X T R A

3 4 4 C A R PA R K I N G S PA C E S

B A L G O R E SM O T O R S

Plan for identification purposes only

T E N A N C I E SGallows Corner Retail Park is exceptionally well let to seven leading retailers, all of whom are household names. The property produces a total income of £3,098,514 per annum, in accordance with the schedule below.

UNIT TENANT AREA (sq ft) LEASE START REVIEW DATE LEASE EXPIRY RENT (£ psf) RENT (£ PA) COMMENT

6a Next 22,181 24-Jun-13 24-Jun-18 23-Jun-23 £30.85 £684,225 Open market letting in June 2013 following Comet insolvency.

6b Argos 10,103 03-Sep-09 03-Sep-19 03-Sep-24 £38.60 £390,000

1 Magnet 7,530 24-Jun-00 24-Jun-20 23-Jun-25 £36.94 £278,140 2015 rent review settled by an Expert award. £37.50 psf awarded less 1.5% for assumed 15 year term.

2 Halfords 10,100 TBC TBC 2026 £36.29 £366,529 Lease renewal agreed in November 2015. Rent agreed at £37.50 psf with 1.25% allowance per 1,000 ft for quantum. Completion due imminently.

3 Furniture Village 15,214 29-Sep-00 29-Sep-20 28-Sep-25 £33.46 £509,000 2015 rent review settled by negotiation. £37.50 psf agreed less 1.5% for assumed 15 year term and 1.25% allowance per 1,000 ft for quantum.

4 DFS 19,928 25-Dec-00 25-Dec-15 24-Dec-25 £30.11 £600,000 2015 rent review outstanding.

5 Harveys 7,482 02-Mar-13 02-Mar-18 01-Mar-23 £35.00 £261,870 New lease granted in March 2013 with just two months’ rent free.

Van The Lunch Box Burger Van 23-Apr-15 – 22-Apr-16 – £8,750 Let on an annual licence.

TOTAL 92,538 £3,098,514

I N C O M E S E C U R I T YAll of the retail units at Gallows Corner Retail Park have been let to national multiple retailers and as such the income is very well secured. Indeed some 83% of the income is from tenants whom Dun & Bradstreet rate as having a ‘minimum’ risk of business failure.

In addition, the property has a weighted average unexpired lease term (WAULT) of 8.66 years.

The schedule below sets out a summary of the most recent financial information upon the tenants.

VA TThe property has been elected for VAT purposes and it is expected that the sale will be treated as a Transfer of a Going Concern (TOGC).

E P CCopies of the Energy Performance Certificates (EPC) are available upon request.

UNIT TENANT D&B RATING RISK OF BUSINESS FAILURE

YEAR ENDING SALES TURNOVER (£’000S)

PRE TAX PROFIT / LOSS (£’000S)

NET WORTH (£’000S)

6a Next Group PLC 5A 1 Minimum 24/01/201525/01/201426/01/2013

202,200197,700212,300

139,40053,000

322,500

772,7001,267,6001,747,900

6b Argos Ltd 5A 1 Minimum 28/02/201501/03/201402/03/2013

3,919,1763,872,4463,752,634

97,14643,99284,662

1,202,5541,172,0541,249,775

1 Magnet Ltd 4A 1 Minimum 31/12/201431/12/201331/12/2012

–39,714

298,674

600750

(5,106)

33,67332,96116,270

2 Halfords Ltd 5A 1 Minimum 03/04/201528/03/201429/03/2013

872,700803,100745,500

92,60086,20075,500

622,300548,000481,400

3 Furniture Village Plc 4A 2 Lower than average 29/03/201530/03/201431/03/2013

196,979185,699181,765

4,3671,909(182)

16,89214,59113,451

4 DFS Furniture Company Plc 5A 1 Minimum 02/08/201427/07/201328/07/2012

690,000670,800624,700

64,20070,60070,200

66,00049,10063,300

5 Steinhoff UK Group Properties Limited 4A 1 Minimum 28/06/201429/06/201330/06/2012

76,66971,21169,803

2,9244,6583,231

15,93713,247

8,627

ALL UNITS ARE WELL LET TO NATIONAL MULTIPLE RETAILERS.

A127

A12

A12

TESCO EXTRA

KFC

B&Q WAREHOUSE

A 1 2

A 1 1 8

A 1 1 8

A 1 2 5

A 1 2 7

A 1 2

A 1 2 4

M 2 5

R O M F O R D

U P M I N S T E R

C R O S S R A I L O P E N S 2 0 1 9

H O R N C H U R C H

G A L L O W S C O R N E RR E T A I L P A R K

THE BREWERY

HOMEBASE

DUNELM

ROM VALLEY RETAIL PARK

B&Q WAREHOUSE

B&Q WAREHOUSE

EASTERN AVENUERETAIL PARK

R E T A I L W A R E H O U S I N G I N R O M F O R D

Gallows Corner is the focus of Romford’s prime out of town retail provision, comprising the subject premises, the adjoining Tesco Extra foodstore and the B&Q Warehouse. Accordingly, Gallows Corner Retail Park commands the highest retail warehouse rents in the town.

The other main retail warehouse schemes in Romford are as follows:

B&Q WAREHOUSE, GALLOWS CORNERThe B&Q Warehouse opposite the subject property was developed in 1996 and totals 72,315 sq ft. The property is let at a rent of £18.50 psf.

EASTERN AVENUE RETAIL PARKAlso fronting the A12, Eastern Avenue Retail Park is located three miles west of Gallows Corner. The 71,043 sq ft park is let to Currys, PC World, Poundstretcher, Carphone Warehouse and Burger King, with an adjoining stand alone Dunelm. The property was developed in 2002 and is let at rents of £13.48 – £23.00 psf.

THE BREWERYThe Brewery is a 530,000 sq ft hybrid, multi-level, retail and leisure park immediately to the west of the town centre. The leisure element of the scheme includes a 16 screen Vue Cinema, a 24 lane bowling alley, a Virgin Active health and fitness club, Kidspace children’s entertainment centre and a number of restaurants.

The retail element of The Brewery includes a Sainsbury’s foodstore and units let to TK Maxx, Thomas Cook, The Entertainer, JD Sports, Hobbycraft, Gap, Boots, 99p Stores, Homesense and The Range. Rental levels upon the retail units are currently in the region of £25.00 psf.

ROM VALLEY WAY RETAIL PARKRom Valley Way Retail Park opened in 1988 and now totals some 67,884 sq ft, let to Mothercare, Carpetright, B&M, Pets at Home and Pizza Hut. The park has a bulky goods planning permission and the rents range from £17.29 – £23.38 psf. There is a 40,000 sq ft Homebase immediately to the north of Rom Valley Way Retail Park.

B&Q WAREHOUSE, RONEO CORNERAt Roneo Corner, to the south of the town centre, there is a B&Q Warehouse of 102,252 sq ft, also adjoining a Tesco foodstore. The B&Q opened in 2002 and is let at a rent of £18.25 psf.

MISREPRESENTATION ACT 1967 AND DECLARATION Messrs Staunton Whiteman LLP, for themselves and for the vendors of this property whose agents they are, give notice that: i) the particulars are set out as a general outline only for the guidance of intending purchasers, and do not constitute, nor constitute part of, an offer or contract: ii) all descriptions, dimensions, references to condition and necessary permission for use and occupation and other details are given in good faith and are believed to be correct, but any intending purchasers should not rely on them as statements or representations of fact and must satisfy themselves by inspection or otherwise as to the correctness of each of them: iii) no person in the employment of Staunton Whiteman LLP has any authority to make or give any representation or warranty in relation to this property. February 2016. Designed by Sutton Young (SYO51623)

A S S E T M A N A G E M E N TGallows Corner Retail Park offers a purchaser the opportunity to enhance returns by actively managing the scheme to unlock the reversionary value. In particular, these opportunities include;

• Negotiating a surrender of Magnet’s lease of Unit 1. The June 2015 rent review of this unit was recently settled at a rent of £36.94 psf, a 33% uplift, and this is the highest rent paid by Magnet on any store in their portfolio. At 7,530 sq ft, this unit is the ideal size to relet and set a new rental level for the park.

• Buy in the freehold of the Balgores Motors site and redevelop it for retail warehouse use to complete this corner of the retail park, subject to achieving all necessary planning consents.

T E N A N T D E M A N D A N D R E N TA L VA L U EDue to the quality of Gallows Corner Retail Park, its location and the fact that it dominates a very large and affluent catchment, it has always sustained strong tenant demand. This was true throughout the credit crunch and continues to be the case today. When Unit 6a became vacant in 2012 a number of offers were received from retailers seeking units of 12,000 sq ft at a rental of £38.00 psf with just 3 months’ rent free, an unprecedented level at that time. It was decided, however, that a letting of the whole of Unit 6a to Next was better for the tenant mix and the long term vitality of the park.

Tenant demand has increased since that time, particularly in respect of the best schemes in highly accessible M25 locations such as Gallows Corner. Were a unit to become vacant on the park today, we are confident that a rent of at least £42.50 psf would be achieved.

Accordingly, we believe that a significant reversion could be achieved upon a new letting at the park.

P U R C H A S E P R I C EOur clients are seeking offers in excess of £61,650,000 (SIXTY ONE MILLION SIX HUNDRED AND FIFTY THOUSAND POUNDS), subject to contract and exclusive of VAT, for the freehold interest in the property.

A purchase at this level would show a yield of 4.75%, net of purchaser’s costs of 5.8%.

Upon settlement of the outstanding DFS rent review of Unit 4, our clients are seeking a top up payment equal to the additional rent agreed capitalised at the purchase yield.

F U R T H E R I N F O R M A T I O NShould you require any further information on the property or wish to arrange an inspection, please do not hesitate to contact:

STA U N TO N W H I T E M A N

Staunton Whiteman LLP9-10 Savile RowLondon W1S 3PF

0 2 0 7 2 8 7 2 2 2 8Hamish Whitemanhamish@stauntonwhiteman.co.uk

Nick Stauntonnick@stauntonwhiteman.co.uk

GALLOWS CORNER RETAIL PARK HAS SHOWN CONSISTENT RENTAL GROWTH, WITH THE 2015 LEASE RENEWAL AND RENT REVIEWS ALL SHOWING SIGNIFICANT UPLIFTS. ASSET MANAGEMENT OPPORTUNITIES EXIST TO EFFECT FURTHER LETTINGS AND CREATE A SUBSTANTIAL REVERSION.

STA U N TO N W H I T E M A N