UK Property Market Review 2009

Rob Howarth - JLLJames Welch – Cortex Partners

9th February 2010

Leisure

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Agenda

• Occupier Market 2009

• Investment Market 2009

• Discussion

• Drinks & Crisps

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Occupier Market - Health & Fitness

• The rise of the super budget gym

• Super flexible, technology led, simple, low price

• Expansion race

• Local Authority offers / competition

• JJB Health Clubs sold to Dave Whelan

• Mid market pressure

• Esporta outlook

Photo of two women enjoying a free weights keep-fit session

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Occupier Market - Health & Fitness

• The Gym

• Pure Gym

• NuYuu Fitness

• Fitspace

• Gym4All

• Fitness 4 Less

• MiFit

Photo of modern looking gym

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Ten Pin Bowling

1960s style photo of a women about to play ten-pin bowls

Photo of Woody Harrelson as bowler Roy Munson from the movie ‘Kingpin’ about to play ten-pin.

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Ten Pin Bowling

• AMF

• Ten Pin

• Bowlplex

• Namco Bandai

• Hollywood Bowl (M&B)

• Lakeside Superbowl

• American Amusements

• Bloomsbury

• All Star Lanes

• Strike Bowling Bars

Photo of Woody Harrelson as bowler Roy Munson from the movie ‘Kingpin’ about to play ten-pin.

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Ten Pin Bowling

• Trading conditions challenging, smoking ban, economy etc

• Limited openings – Namco MetroCentre, AMF Eastleigh

• Market continues to be flat in terms of rental growth

• Weather has impacted performance, limited cash to invest

• Remains a strong family activity and an important part of any leisure pitch or scheme

1960s style photo of a women about to play ten-pin bowls

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Cinema

Image of two blue characters from the movie Avatar

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Occupier Market - Cinema

• Record admissions in 2009

• Slum Dog, Up, Twilight, Potter, Avatar, Ice Age

• Gross Box Office Sales increase 11% on 08

• Screen Advertising Down

• Popcorn Up

• Digital, 3D and IMAX making an impact

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Occupier Market - Cinema

• National Amusements deal or no deal

• HMV Curzon Wimbledon

• Hoyts departs UK…finally

• Vue step into Westfield deal

• O2 Greenwich cinema being marketed

• New overseas players ?

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Photo of auditorium in an HMV Curzon cinema

Photo of high street entrance to an HMV Curzon cinema

Photo of lobby area in an HMV Curzon cinema

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Cinema - Operators

• Odeon ( 823 screens 22.5%)

• Cine UK ( 791 screens 21%)

• VUE ( 634 screens 17%)

• Showcase ( 274 screens 7.5%)

• Empire (145 screens 4%)

• City Screen ( 58 screens 1.5%)

• REEL ( 47 screens <1.5%)

• Apollo ( 79 screens 2%)

• Everyman ( 9 screens <0.5%)

• Independents ( 700+ screens 22.5%)

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Cinema

• Operators still want to expand, availability of funds and development slowdown issue

• Challenge of making deals work

• Rental growth remains static

• Supermarket / planning gain opportunities

• Still the footfall driver for any location

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Image from Odeon Metro Centre marketing montage photo

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Cinemas – 2009 Openings

Operator Location Screens/Seats Estimated Opening

Vue Eastleigh 9 / 1650 Feb-09

Newbury 7 / 1007 Dec-09

Cineworld Aberdeen

Witney

10 / 1900

5 / 900

Nov-09

Nov-09

Odeon Wrexham 8 / 1600 April-09

Gateshead (Metro) 12 / 2900 Dec-09

Reel York 3 / 1025 Jun-09

Curzon/HMV Wimbledon 3 / 263 Oct-09

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Cinemas – 2010 Openings

Operator Location Screens/Seats Estimated Opening

Apollo

Vue

Carmarthen

Westfield, London

5 / 1000

14 / 3000

2010

Feb-10

Bury 12 / 2000 July-10

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Cinema

• Cinema remains the leisure anchor

• Landlords / Developers want leading edge design, offer, events to differentiate

• Vibrancy, excitement, an experience to drag people out of home

• Sporting telecasts, Opera, 3D digital keeping offer relevant

• BIG blockbusters still driver

• Healthy operationally, challenge property side

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Restaurants

- Casual Dining operators weathered the economic storm- Upper end in London strong- Fast Food operators flourished- Independents suffering Image of Café Rouge advert or

poster showing an external shot of one of their café’s

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Restaurants

- There were failures however- Active operators; Nandos, Gondola, Tragus, TRG, Fast Food, Buffet Ops- Schemes offered incentives 2-3 years- Development slowdown impacted- Requirements for 2010 remain strong

Image of self service counter of an unidentified restaurant

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Licensed Trade

- The number of pubs closing its doors has fallen from 52 a week in the first half of 2009 to 39 in the latter half of the yearThe British Beer & Pub Association.

- 2,365 pubs closed in 2009- Total pubs today 52,500 compared to 58,600 in 2005 (10.4%)

- Pub beer sales were down 5.2% in 2009– an improvement on the 9.3 per cent slump in 2008 and 6.5 per cent fall in 2007.Mixed trading results

- Food led approach is profitable

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Photo of boarded-up pub with lots of different agency signs up

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Licensed Trade

- Corporate activity – Punch freehold sell off

- Requirements for High Street and Destination locations

- Offering good quality and varied food offers, off-setting the falling beer sales

- Operators need to be relevant, offer good value for money, or add value

23

Casinos

• Trading conditions remain challenging for operators

• London however performed well

• Stabilised in the regions

• Operators disposing of properties / amalgamating clubs

• Fifty St James, Blue Chip Casinos, Isle of Capri

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Casino

• Circa 140 trading casinos in UK

• 16 new 2005 Act casino licences still not issued

• Only Newham have started their selection process

• Who will actively pursue the new licences?

• MK, Newham, Luton, Leeds, Southampton

• Genting Stanley

• Gala

• Grosvenor (Rank)

• London Clubs (Harrahs)

• A & S Leisure

• Aspinalls

• Independents

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Occupier Market - Bingo

• Is the worst over for Bingo?

• Smoking ban seriously affected the sector

• Attendances down but spend per head up

• Treasury to reduce bingo duty

• Growing unemployment figures will impact

• Virtually no activity from any operators

Leisure Investment Market Review of 2009

James WelchCortex Partners