20pp 104544.002 Strood AW 04

P r i m e O P e n A 1 r e t A i l P A r k i n v e s t m e n t

Strood Retail Park | Strood

strood retail ParkStrood

strood Retail Park

04 Investment Summary

06 Location

08 Socio-Ecomonic Profile

09 Situation

10 Surrounding Retail Warehouse Provision

12 Description

13 Tenure

14 Tenancies

15 Covenant Information

16 Planning

18 Asset Management Opportunities

19 Environmental Considerations

19 Estimated Rental Values

19 Proposal

Strood Retail Park provides a well secured income stream offering a low base for rental growth and asset management opportunities to drive value in the short and medium term.

Page 02


Page 03

investment Summary

n strood is an established commercial centre in the medway area of kent, situated just to the west of the river medway, close to rochester and Chatham.

n the area currently offers excellent infrastructure and in addition there is significant regeneration underway across the medway area, including the development of over 2,000 homes and around 15,000 sq m (161,500 sq ft) of commercial floorspace.

n the subject property provides the only purpose built retail warehouse offer in the town, complimented by the presence of it’s two main foodstores and the town centre in very close proximity.

n the park has an Open A1 (part food) retail consent and provides well configured, flexible retail space which undoubtedly offer asset management opportunities moving forward, in the form of downsizing and tenant re-orientation.

n the park was developed in 1990 and is currently let to 5 tenants, including B&Q, next, Argos and Brantano.

Initial Yield : 4.64% June 2008 : 5.05% December 2008 : 5.55% Equivalent Yield : 5.60% True Equivalent Yield : 5.80% Reversionary Yield : 5.63%


Page 04

n Agreements for lease have been signed with matalan and Carphone Warehouse for space in the new block, opposite the main terrace. the average unexpired lease term will stand in the order of 10.5 years, following the completion of these leases.

n Passing rents range between £15.25 psf and £22.50 psf offering a low base for good rental growth and we strongly believe that rental levels can be driven forward through the asset management initiatives.

n We are instructed to seek offers in the region of £40,000,000, subject to contract and exclusive of vAt, for the Freehold interest in this property. A purchase at this level would show the following yield profile, based on our estimate of rental value and costs of 5.7625%.


Page 05

The subject property provides the only purpose built retail warehouse offer in the town, complimented by the presence of it’s two main foodstores and the town centre in very close proximity.

A414

A1

A40

A4

A3

A23

A24

A21

A20

A406

A205

A217

A205

A13

A2

A2

A282

A309

A406 A13

A12

A130

A414

A249

A2

A127

A138

A12

A127

A10

A249

A21

A22

A25

A232

M25

M2

M25

M25

M25

M25

M10

M11

M25

M25

M26

M20

M2

M11

A414

A13

A13

M20

A229

CanveyIsland

Southend-on-sea

GillinghamRochester

Strood

Sittingbourne

Maidstone

RoyalTunbridge

Wells

Basildon

RedhillDorking

Watford

Potters Bar

Harlow

Dartford

Swanley

NewAddington

Sevenoaks

Tonbridge

London

location

strood is located in the medway area of kent approximately 48 km

(30 miles) south-east of Central london. Other nearby centres include

rochester and Chatham approximately 0.8 km (0.5 mile) across the

river medway to the east, maidstone 16 km (10 miles) to the south

and Dartford 22.5 km (14 miles) to the west.

The area has excellent infrastructure and further regeneration across the

Medway is well underway. The 140 hectares (354 acres) of Chatham

Maritime is now a well established residential and business location and

there are popular tourist attractions at Chatham Historic Dockyard, the newly

opened £60m Dickens World and Rochester Castle and Cathedral.

As part of the Thames Gateway initiative, Medway is in line to receive over £1bn

of investment over the next 20 years and the new developments which we have

referred to, should provide around 16,000 new homes and create 40,000 jobs,

on approximately 900 hectares (2,223 acres) of Brownfield Land.

Strood benefits from good road communications with Junction 1 of the M2,

and the A2, situated only 3 km (1.8 miles) to the west offering access to

Gravesend, Dartford and Central London. Furthermore Junction 2 of the M2

and the A228, situated only 3 km (1.8 miles) to the south connect with the

M20, Maidstone and Ashford in the south-east. The A2 also offers a direct

link east to Sittingbourne, Canterbury and Dover.

Strood railway station offers a direct service to London Charing Cross and

London Cannon Street with an approximate journey time of 1 hour 5 minutes

and rail services from nearby Rochester provide regular connections to

Central London with a fastest journey time of 42 minutes.


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strOODretail Park


Further key developments in the area include:

Strood Riverside

A mixed-use waterfront development to

provide around 500 – 600 new homes.

Temple Waterfront

A 70 hectare (172 acre) site with

development brief for around 600 new

homes and 15,000 sq m (161,500 sq ft)

of commercial floor space.

rochester riverside

A 28.3 hectare (70 acre) site for a new mixed

use development including approximately

2,000 homes. These initiatives should create

in the region of 900 hundred jobs.

Page 07

WATLING STREET LONDON ROAD

GR

AVESEND

ROAD

CUXTO

N ROAD

C

UXTO

N ROAD

GUN LA

NE

STAT

ION

ROAD

PRI

ORY

RO

AD

HIGH STREET CORPORATION STREET

MAID

STO

NE R

OA

D

M2

A2

A2A228

A228

A228

2000 ft

500 m

temPleWaterfront

strOODriverside

rOChesterriverside

strOODretail Park

Upper Stoke

St Mary Hoo

Luddersdown

Wouldham

Cobham

Hoddsoll Street

Stockbury

M26

M2

M2

M20M20

Gillingham

Chatham

Rochester

Gravesend

Ditton

Tilbury


socio-economic Profile

According to CACi approximately 140,295 people live within a

10 minute drive time of the subject property and this catchment

increases to around 324,625 people within a 15 minute drive time.

The 2001 Census indicates that the area boasts above average figures in

relation to car and property ownership. We have set out these statistics in

the table below:

Cars or vans in household strood Uk

1 car or van 46.4 43.8

2 cars or vans 24.6 23.1

Owner occupied property 76.7 68.3

10 minute drive time

15 minute drive time

The area currently offers an excellent infrastructure whilst there is further regeneration underway, and proposed, across the Medway area.

Page 08

strOODretail Park

HIGH STREET CORPORATION STREET

STATIO

N RO

AD

CO

M

MERCIAL ROAD

PRI

ORY

ROAD

CUXTON R

OAD

CUXT

ON R

OAD

G

UN LANE

GRAVESEND

ROAD

WATLING STREET LONDON ROAD

A2

A2A228

A228

M2

A228

situation

strood retail Park is positioned just to the south of Commercial

road (A2) which forms part of the main town centre ring road, and

in close proximity to the in-town retail offer which comprises such

occupiers as Woolworths, Boots and sports World as well a variety

of local traders. the scheme benefits from excellent frontage to

Commercial road (A2), which provides direct links both east and

west from the town centre. there is also additional frontage to

knight road, which forms the site’s western boundary and links

with the A228, which runs south to the m2.

Immediately to the south of the park is a new 7,060 sq m (76,000 sq ft)

Morrisons foodstore, which opened in October 2006, whilst there is a

3,995 sq m (43,000 sq ft) Tesco foodstore situated around 500 metres

(0.3 miles) to the west on Cuxton Road. We understand that Morrisons

reported the best ever opening week sales performance, of any of their

stores, when this opened in 2006. These two stores combine to provide

the dominant food offers in Strood and the combination of these,

the subject property and the town centre, means the location has a

well-rounded retail offer and significant critical mass.


Page 09

2000 ft

500 m

strOODretail Park

NELSON ROAD

DOCK

ROA

D

MEDWAY ROAD

PIER ROAD

YOKO

SUKA W

AY

CUXT

ON R

OAD

HIGH STREET

MAI

DS

TON

E R

OA

D

RAINHAM ROAD WATLING STREET

HO

ATH W

AY

CIT

Y W

AY

M2

Gillingham

Chatham

Strood

Surrounding retail Warehouse Provision

strood retail Park provides the only out of town retail offer in strood.

the town has the 14,306 sq m (154,000 sq ft) medway valley leisure Park,

which is owned by PrUPim and incorporates tenants including Cineworld,

esporta, Frankie & Bennys, Gala Bingo and mcDonalds.

We consider that Gillingham, situated approximately 7 km (4.3 miles) to the east,

and Chatham, situated approximately 0.8 km (0.5 miles) to the south, provide the

only competing out of town retail offer to the subject property.

The map adjacent identifies the locations of the respective schemes

and we have provided brief details of the size, tenants etc.

• Gillingham – Watling street

Circa 9,290 sq m (100,000 sq ft) B&Q Warehouse.

• Gillingham – Gillingham retail Park, Ambley road

Circa 3,251 sq m (35,000 sq ft) of bulky space

comprising MFI, Allied Carpets and Magnet.

• Chatham – maidstone road

Circa 12,910 sq m (137,000 sq ft) park incorporating

such tenants as Currys, PC World, Carpetright, Toys R Us and Homebase.

• Chatham – new Cut

Circa 2,471 sq m (26,630 sq ft) Wickes DIY store.


2000 ft

1 km

Page 10

mAiDstOne rOADChatham

GillinGhAm retAil PArkGillingham

WAtlinG streetGillingham

neW CUtChatham

strOODretail Park


Page 11

UNIT 1A

the property currently comprises five units in a linear terrace

positioned to the eastern side of the site. the smaller western

terrace is now being redeveloped to provide three units.

At present there are approximately 312 car parking spaces, arranged

in a forecourt car parking area between the existing and proposed

new terrace, giving a ratio in the order of 1:21.9 sq m (235 sq ft).

Customer access to the park is via a slip road from the A2, with a

second principal access/egress from Knight Road, off Commercial Road,

shared with the nearby Civic Centre. Segregated rear servicing is also

accessed from Knight Road, with this servicing route and the adjacent

railway line effectively forming the southern and eastern boundaries of

the site respectively.

The existing units comprise steel portal frame construction, with part

brick/profiled metal clad elevations and profiled metal sheet roofs.

Description


The park was developed in 1990 and is currently let to 5 tenants, including B&Q, Next, Argos and Brantano with agreements signed with Matalan and Carphone Warehouse.

Page 12

Elevation caption here

COMMERCIAL ROAD

KNIG

HT

ROAD


Page 13

tenurethe property is held Freehold.

Freehold demise

UNIT 1A

This plan is published for convenience of identification only and although believed to be correct, its accuracy is not gauranteed and does not form part of any contract.

tenancies

Unit tenant term lease lease next GiA Current Current erv erv Comments start expiry review sq ft rent rent £ pa £ psf £ pa £ psf

A B&Q Plc 25 22/12/88 21/12/13 22/12/08 36,861 £562,130 £15.25 £663,498 £18.00 t /a B&Q

B1 Next Group Plc 15 28/02/05 27/02/20 28/02/10 7,693 £173,093 £22.50 £207,711 £27.00 t /a Next

B2 Argos Ltd 15 10/11/03 09/11/18 10/11/08 10,286 £168,300 £16.36 £277,722 £27.00 t /a Argos

B3 Brantano (UK) Ltd 15 24/06/03 23/06/18 24/06/08 6,169 £102,000 £16.53 £171,190 £27.75 t /a Brantano

D Carpetright Plc 15 24/06/03 23/06/18 24/06/08 9,514 £156,200 £16.42 £256,878 £27.00 t /a Carpetright

2A To be let – TBC TBC TBC 8,730** £235,710 £27.00 £235,710 £27.00 Vendor will provide a two year rental gaurantee.

2B Matalan Retail Ltd* 15 TBC TBC TBC 21,500** £473,000* £22.00 £473,000 £22.00 Income will be confirmed t /a Matalan following PC

2C The Carphone Warehouse Ltd 10 TBC TBC TBC 3,050** £88,450* £29.00 £88,450 £29.00 Income will be confirmed t /a Carphone Warehouse following PC

Van Mr JW Smith 3 22/04/05 21/04/08 n/a n/a £7,500 n/a £7,500 n/a

totals 73,573 £1,966,383 £2,381,659

* The vendor will top-up this income until the unit becomes income producing ** To be confirmed following development of space

The property is currently let to 6 tenants, with two further Agreements for Lease in place, in accordance with the Tenancy Schedule adjacent.


Page 14

We have set out adjacent Dun & Bradstreet ratings for the primary tenants, which account for the majority of the income:


Page 15

tenant D&B rating % of income

B&Q 5A1 32.5%

Next 5A1 10.0%

Argos 5A1 9.7%

Brantano 5A1 5.9%

Carpetright 4A1 9.0%

Matalan 5A1 27.3%

Carphone Warehouse 5A1 5.1%

99.5%

These figures are based on income following completion of the new lease – virtually all income is 5A1 rated.

The average unexpired term of the primary income will stand in the order of 10.5 years, following completion of these leases.

Covenant Information

Planning

Planning Permission was granted on the 6th December 1989

by rochester Upon medway City Council, for the ‘demolition of

existing buildings and erection of non-food retail warehouse and

ancillary works, including parking area for customer’s use.

Conditions included, stated that:

‘The building shall be used as a non-food retail warehouse and for no

other purpose (including any other purposes in Class A1 of the Schedule

to the Town and Country Planning (Use Classes) Order 1987.’

Following significant Fire damage to the stand-alone Matalan unit (A),

Planning Permission was granted by Medway Council for the

‘Construction of a block of three retail units with associated parking spaces.’

Copies of these documents are available on request.


The park has an open A1 non food planning consent offering excellent flexibility moving forwards.

Page 16


Page 17

Asset management Opportunities


We consider that there are a number of asset management opportunities

available to drive future performance:

• The letting of the 811 sq m (8,730 sq ft) to set an improved tone of rents across the scheme.

• Pursue a surrender of Carpetright and re-let to another ‘open’ retailer such as

New Look, Sportsworld, Boots, Mothercare etc.

• In the short to medium term a downsize and carve up of the B&Q unit (lease expiry

21.12.2013). B&Q have another warehouse format in Gillingham and would most

likely consider reducing their exposure in the area. The creation of smaller units would

offer the opportunity to lift rental levels and improve tenant mix further, exploiting the

open A1 consent. There is also the potential of developing residential space above.

• Exploit the existing food consent to introduce a food offer into the scheme.

This would unquestionably improve the tenant mix and offer on the park.

• Given the close proximity of the scheme to the town centre, there may well be

an opportunity to introduce car parking charges and therefore benefit from

another income stream.

• Advertising signage on Priory Road and Commercial Road to be investigated.

environmental Considerations

WsP environmental undertook a review of various documents relating to the environmental condition of

the subject property, and concluded as follows:

It is our opinion, subject to further recommendations below, that the site represents a low risk of environmental liability

for the freehold owner.

A full copy of the report, together with the recommendations referred to above, is available on request.

now that the new terrace is being reconstructed, negotiations can be pursued seriously in respect of the

remaining 811 sq m (8,730 sq ft) of ‘new space’ (the rest being let to matalan & Carphone Warehouse).

Based on the indications of interest received to date, we consider an achievable level of rent on this space

stands in the order of £27.00 psf. Further information is available on request.

We have based our views of estaimated rental value on £27.00 psf for a unit of 7,500 – 10,000 sq ft,

and have set these out in the Tenancy Schedule on page 14.

estimated Rental Values

Page 18

Asset management Opportunities Proposal


Page 19

We are instructed to seek offers in the region of £40,000,000, subject to contract and exclusive of vAt, for the Freehold interest in this property. A purchase at this level would show the following yield profile, based on our estimate of rental value and costs of 5.7625%.

Initial Yield : 4.64% June 2008 : 5.05% December 2008 : 5.55% Equivalent Yield : 5.60% True Equivalent Yield : 5.80% Reversionary Yield : 5.63%

We strongly believe that rental values can be driven forward through asset management initiatives.

UNIT 1A

UnDer OFFer

Patrick knapmanT: 020 7152 5019F: 020 7152 5381E: [email protected]

Justin houlihanT: 020 7152 5670F: 020 7152 5381E: [email protected]

ContactsFor more information please contact:

www.cushmanwakefield.com

Strood | Strood Retail Park | January 08 | Ref: 104544

misrepresentation Act 1967 and Property misdesrciptions Act Cushman & Wakefield for themselves and for vendors or lessors of this property whose agents they are, give notice that :

1 The particulars are produced in good faith, are set out as a general guide only and do not constitute any part of a contract.

2 No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatever in relation to this property.

3 This property is offered subject to contract and, Floor areas, measurements or distances given are approximate and unless otherwise stated, all rents are quoted exclusive of VAT.

4 Nothing in these particulars should be deemed to be a statement that the property is in good condition or that any services or facilities are in working order.

5 Unless otherwise stated, no investigations have been made regarding pollution or potential land, air or water contamination. Interested parties are advised to carry out their own investigations if required.

6 Any plans are published for convenience of identification. Any site boundaries shown are indicative only and should be checked against Title Deeds. The plans are based upon Ordnance Survey Map with the permission of the Controller of H. M. Stationery Office Crown Copyright, Cushman & Wakefield Licence No. ES753998.

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Documents

20pp 104544.002 Strood AW 04