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Updated report for Muse Developments on hotel development options at Basing View, Basingstoke.

August 2016

Contents Background

Market Context 2015

Interest in Plots K1/O 2015/2016

Interest in Plot W 2015/2016

Outcome

Appendices

Basing View Hotel Brochure

Basing View Hotel Brochure – V2

Contacts

Contents

03

04

05

06

07

08

09

20

25

Background

Basing View, Basingstoke

Christie & Co are retained advisors to Muse Developments in respect of a hotel development at Basing View, Basingstoke.

Muse are a joint venture development partner with BDBC for the regeneration of Basing View.

BDBC are submitting a report to Cabinet in September covering hotel options on Basing View and have asked Muse/Christie & Co to prepare a paper setting out the background to the marketing exercises carried out and a summary of the current position.

Christie & Co have been engaged in several operator search exercises to secure terms from operators and brands on various plots within Basing View. The aspiration for a business class hotel on Basing View has been set out in the draft Masterplan, the partnership’s Annual Business Plan and Policy SS8 of the new Local Plan.

Initial operator approaches back in 2011 were focused on the western end of the estate but these were put on hold when the focus became delivery of the John Lewis and Waitrose Stores in this area. Terms were secured from Accor for a 4 star Novotel under a Hotel Management Agreement (‘HMA’) and budget brand Etap under a turnover rent lease and Rezidor for a Park Inn by Radisson under a HMA. Further interest materialised over the next 18 months which was outlined in Christie’s report of 26 April 2013. Muse commissioned a Business Case report (effectively from an investor/operator perspective) from Christie & Co which was delivered in May 2013 and was supportive of hotel potential at Basing View.

Due to the flexibility of the Masterplan, other plots within Basing View have subsequently been identified as potentially suitable for hotel development, namely plots C, K1/O and latterly plot W. Plot C would accommodate hotel development only whilst plots K1/O in the 'midtown' area of Basing View would incorporate a hotel as part of a mixed use scheme with other commercial users, multi storey car parking and public realm. Plot W is substantial and hotel development would only take up part of the site.

Marketing collateral was produced in early 2015 for a hotel development opportunity as part of a mixed use development on Plots K1/O and the markets revisited in Q1 2015 but with the expectation that interested parties would seek to discuss other plots if they wished. The interest generated from operators/brands as a result of this marketing exercise is summarised below and in addition Christie & Co re-visited the investment market mid 2015 to generate interest in funding the hotel development options received that were based on operating agreements. The investment market response was negative.

This report outlines the outcomes of the Q1 2015 marketing exercise and summarises the current hotel operator interest.

We attach as appendices a copy of the marketing brochure for the opportunity at ‘midtown’ (Plots K1/O) and the investment brochure.

Market Context Recent Market Trends

−Provincial UK hotels, excluding London, are influenced by national, rather than global, economic variables, domestic investment growth and cuts in both private and public sector spending.

− In 2013, the improving economic conditions started to have a positive impact on provincial hotels, resulting in an encouraging RevPAR growth of 5.5%. − In 2014, the regional markets experienced an exceptional year which resulted in a 10.4% RevPAR uplift, although performance of individual markets and properties,

particularly assets that have been underinvested since the downturn, varied greatly. −A number of major cities, such as Manchester and Edinburgh, benefited from improving market conditions and consumer confidence combined with limited additions to

supply. − This positive trend continued through into 2015 with regional performance recording improvements on 2014, with RevPAR up 6.2% predominantly driven by average

room rates (+5.0%) as many markets stabilised in terms of occupancy (+0.8ppts). − The impact of the Rugby World Cup between 18 September and 31 October 2015 was extremely positive, boosting demand levels in host cities. Significant RevPAR

growth was recorded over the period. −Despite a slow start to the year during Q1, 2016 year-to-June results show that Provincial UK market performance has picked up, with RevPAR up by 2.6% compared to

the same period in 2015. −We note that whilst occupancy seems to have reached stabilisation, hoteliers’ primary focus remains on rates, which increased by c. 5% in 2015 and 3.3% at year to

June 2016. − The outlook for the remainder of 2016 is positive, although some uncertainties remain. The recent introduction of the National Living Wage and forthcoming business rate

revaluation are likely to have some impact on profitability levels. However, hoteliers may have scope to push rates further to mitigate the impact of inflating wage costs; as many destinations remain significantly below the 2007 and 2008 peak levels in real terms.

− Following the results of the EU referendum which took place on the 23rd June 2016, uncertainty remains around the impact of “Brexit” on the UK economy and tourism sector but at this stage, there is no evidence of a marked impact on performance. Trading figures to be released in coming months will provide further insight into future market trends.

Basingstoke trends/supply • Unlike the Provincial UK market the Basingstoke market experienced only marginal rate growth (+0.5%) by mid 2104 only getting back to market 2008 peaks. Occupancy has shown good growth based on local corporate market demand on the back of the improving economic position. But RevPAR remained below the 2008 peak. • According to our research, the most recent hotel opening was a 81-room Premier Inn on Victoria Street which opened last year so supply has been stable. • Christie & Co’s updated Business Case report of June 2014 forecast trading projections for a stabilised business class mid market hotel with 150 keys to generate an Owner’s Return of £1.2m after Management Fees and FF&E Reserve and £1.45m pre- Fees which would have translated to an indicative capital value of approximately £14m - £14.5m. • Construction costs rose dramatically through 2015 thus negating any value uplift derived from improved trading. 4

Basing View, Basingstoke

Interest in Plots K1/O 2015/2016 Basing View, Basingstoke

Operating and brand options received as a result of the marketing exercise are outlined below;

Site sale; THAT Group for the development of a c125 key Hilton Hampton Inn. Price indication £900,000 to £1,000,000 Legacy Hotels – interest expressed; no formal offer received Village Urban Resorts. Offer of £2.16m for 1.44 acres (site K1) subject to deductions for site remediation and preparation. Their intention was to develop a 130+ key hotel with conference/banqueting facilities, coffee shop, pub/wine bar and restaurant/bistro plus a ‘full’ health and fitness offer with pool. They required parking facilities for 240+.

Developed ‘Turnkey’ Hotel: Ability Group for the purchase of a 130 key Hilton Hampton Inn at £11m Hotel Management Agreements;

Interstate – with multi brand franchise options. Preference for limited service hotel (Holiday Inn Express). Mid market options include Novotel, Courtyard by Marriott and Hilton Garden Inn Redefine BDL - with multi brand franchise options. Limited service brands Holiday Inn Express or Aloft. Mid market options Courtyard by Marriott and Hilton Garden Inn Rezidor – terms for a 150 key Park Inn by Radisson Marriott – terms for direct operation of a 150 key Courtyard by Marriott

Letting; Travelodge - 80 key development at a rent of £5,250 per key Jurys Inn - Expressed interest in a c150 key hotel. As demonstrated above there was considerable interest from brands and management companies to support and run a mid-market business class hotel at Basing View. Unfortunately, there has been no investor interest in the opportunity to forward commit to the purchase of a hotel operated under a management agreement. This is not totally unexpected given the potential capital values set against development costs, the focus on the limited service sector by owners/investors and the perception of the Basingstoke market weighed against opportunities in other provincial cities. The Hilton Hotel in Basingstoke has recently been sold for less than £50,000 per key and the hotel will see significant capital investment to be re-branded as a Crowne Plaza. Hilton are keen to see one of their brands remain in the town but are reliant upon one of their franchisees or an investment fund to realise this. To this end THAT Group (the hotel development/investment company of Ray Kelvin, founder of fashion chain Ted Baker) expressed interest in buying a site to develop a Hampton by Hilton hotel – 120/150 keys and have indicated they would be in the region of £1m for a serviced long leasehold site. Additionally, Ability Group (owners of hotel investments operated by Hilton (Hilton Liverpool, Syon Park, Doubletree Aberdeen, Cambridge and Dunblane and Hampton Inn Luton Airport and Edinburgh Airport), Rezidor (Park Inn Manchester and Peterborough and Travelodge) made a verbal offer to commit to the purchase of a 130 key Hampton by Hilton (to be operated by Hilton under a Management Agreement) for £11m (£85,000 per key). Given the indicative development costs involved none of these proved viable. Village Urban Resorts made an offer of £2.16m for 1.44 acres (site K1) subject to deductions for site remediation and preparation. Their intention was to develop a 130+ key hotel with conference/banqueting facilities, coffee shop, pub/wine bar and restaurant/bistro plus a ‘full’ health and fitness offer with pool. They required parking facilities for 240+. The guestroom sizes were planned at 16 m sq which is more in keeping with a budget hotel offering rather than a mid market hotel where rooms would usually be 22-24 m sq. However, after further design work their requirement couldn’t be accommodated due to the physical constraints of the site and they withdrew their offer. Jurys Inn revisited the opportunity to develop a hotel at Basing View but decided not to move forward having decided strategically to focus on larger city markets in the UK following the acquisition of the company by Lone Star.

Interest in Plot W 2015/2016 Basing View, Basingstoke

Village Urban Resorts, having decided Plot K1 didn’t work for them turned their attention to other opportunities on Basing View with an interest in acquiring a serviced site. Subsequently they have entered into discussion with BDBC and made an offer conditional on planning and obtaining a premises licence of £2.75m plus VAT, for a serviced site representing a substantial proportion of Plot W (two thirds) extending to 2.81 acres (gross) to accommodate the development of a 153 key hotel as well as the facilities described earlier with 250 dedicated parking spaces. Village would acquire a long term leasehold interest. It is understood that Village are seeking a restrictive covenant on further hotel development, Health & Leisure Club and drive through Coffee Store within Basing View for a period of 5 years. Travelodge maintained negotiations for a presence within Basing View and we have terms from them in relation to Plot W which have Travelodge Investment Committee approval to take a 25 year occupational lease for an 80-86 key hotel with dedicated parking (1 space per key) at an initial rent of £5,825 pa per bedroom with 5 yearly CPI indexed rent reviews subject to a 4% cap pa subject to an initial 6 month rent free period. The developers are required to pay the tenant a Technical Services Fee of £2,800 plus VAT per key and reimburse the tenant for the FF&E which Travelodge procure in the sum of £3,314 plus VAT per key. Travelodge are happy to sit alongside other hotels developed within Basing View. The Travelodge development would be sited at the western side of Plot W. In our opinion, given current investment yields, the resultant investment would be worth around £7,850,000 to £8,150,000 (based on 86 keys) reflecting a 5.75% to 6% NIY allowing for purchaser’s costs based on a forward funding or forward commitment transaction. Travelodge are of the opinion that the investment could attract interest at a level reflecting a 5.5% NIY. Following an internal strategic review, Travelodge (on the 28 July 2016) offered revised terms for an occupational lease on a hotel to be developed with 125 keys with dedicated car parking of 1 space per key. Rent would be at £5,850 per key and other terms remain as above. Based on the above and our investment yield parameters we would see value at £11.9m to £11.4m. The larger scale development should drive efficiencies of scale and reduce build cost per key and the hotel can be accommodated on the same land.

Outcome Basing View, Basingstoke

Two robust proposals have emerged from the most recent marketing exercise – from Village Urban Resorts and Travelodge respectively. Village Urban Resorts is a multi faceted full service operation incorporating hotel accommodation, public bar lounge, restaurant, conference/event space plus significant wet leisure, gym, health and fitness and Spa facilities. The development of the Village Urban Resort would be a much closer match to the Council and Muse’s hotel product and market segment aspirations albeit Village is a domestic brand and concept rather than an international brand. The company was acquired in 2014 by US Private Equity firm KSL Capital Partners for c £485m. The company has used its owners’ cash resources to acquire and develop new generation Village hotels since acquisition most recently in Aberdeen, Edinburgh and Glasgow. A long leasehold site sale to Village is relatively straight forward and would facilitate a product that would be a significant driver in the regeneration of Basing View, although does require a much larger land take than the development of the Travelodge which would leave significant land for further development. Travelodge have significantly improved their inventory following a £100m investment across 30,000 bedrooms which has resulted in significant KPI uplift, dramatic EBITDA improved performance and marked improvements on Trip Advisor. The company has a focus on the commercial markets as well as the leisure sector. The investment sector has responded positively to the covenant and the yield profile has sharpened dramatically over the last 18 months. The Travelodge product, whilst much improved, does not provide conference or leisure facilities and the food and beverage offer is much less robust than that of Village. The development of the Travelodge would utilise Muse’s hotel development experience and expertise as development partners and the transaction structure can be forward funded or funded on PC of the development thus de-risking the development. With the current offers, the Travelodge does not deliver a product level or range of facilities that reflect a full business class offer. Given the wider Basingstoke area hotel market has a bias towards the upper scale segment, a Travelodge would however offer business and leisure visitors to Basingstoke a price point differential. In context, new hotel development still remains challenging outside of the budget/limited service sector ( where leases can be obtained ) and the key Provincial cities and markets with relatively high barriers to entry (Cambridge, Bath, Oxford etc.). We are of the opinion that the interest shown in Basing View is of a level we would certainly anticipate from management companies and brands. However, the appetite to fund these structures remains small and viability is challenging. The offers generated for the site sale set against this background are positive and in line with market trends. The rental offer from Travelodge is robust in the context of similar locations reinforcing the view that the Basingstoke central market has strong trading fundamentals. The development of both hotels would arguably be the best scenario for the market and the development partnership but this could potentially happen overtime with the likelihood that budget operators appetite will remain for the medium term. Therefore, securing Village now would seem the most sensible approach with a budget sector hotel being secured in the future. Recently we understand BDBC have been approached by a developer with regard to the Glasshouse site on the southern fringe of Basing View with the proposal for the development of a Premier Inn hotel which is to be considered at cabinet level in September along with the land sale to Village and the Travelodge development/investment sale option. We also understand a direct approach has been made to BDBC by Moxy but we do not have any details of that.

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Appendices

Basing View, Basingstoke

Hotel Development / Investment Opportunity

Why Hotel Investment at Basing View?

There is a limited supply of centrally located modern corporate focussed hotels in Basingstoke and a Hotel Solutions Report commissioned in 2008 supported the demand for a new upper end hotel and highlighted the lack of existing quality supply. There is a higher level of 4 star hotel provisions outside of the town centre and a relatively limited stock of budget hotels. Despite this, a large proportion of the 4-star hotel stock is positioned for large conferences, events and weddings and new business class focused service hotel would meet an unfulfilled requirement.

There are several primary generators of business and leisure hotel demand in Basingstoke, generating both weekday and weekend trade. It is likely that the local corporate demand has strengthened as a result of the recovering economic environment. In terms of current supply, Basingstoke has 12 hotels and five serviced apartment accommodations, both with a total of 937 rooms. Basingstoke is set to see significant expansion of its population and employment base as is set to be a Regional Hub and with Growth Point status and resource.

Basing View is identified as the strongest location for the development of new hotel/hotels. This is also the priority location where the Borough Council would like to see new hotels to support its development as a key business district in the town. Furthermore, in 2010, DTZ surveyed 150 Basingstoke office occupiers to understand their requirements and views on the existing market. A summary of the results are as follows:

• 90% of respondents require hotel accommodation on a regular basis.

• Average budget for accommodation is £97 including VAT and breakfast.

• Location and value for money were the main drivers.

• Over 70% of the respondents responded that they couldn’t find accommodation when required.

• All respondents reported positively on the proposed hotel at Basing View.

Key companies located in Basing View include Sun Life Financial, the AA, Clydesdale Bank, Baker Tily, Thales and Snamprogetti Limited. The new Network Rail training academy to the north of Basing View will generate significant additional room demand into the market. Other key companies in Basingstoke town centre include De La Rue, ST Ericsson, Huawei Technologies, GAME, Motorola, Barracuda Networks, BNP PARIBAS Lease Group UK, the leasing arm of BNP Paribas in the UK, and Sony Professional Solutions (Europe).

The town is also home to a number of leisure attractions such as Anvil Arts which stages major national concerts and shows, Basingstoke Leisure Park, Festival Place, which offers a wide range of shops, restaurants, bars and cafes, a ten screen cinema, night club and sports centre and two museums. The biennial summer Farnborough Air Show generates business for Basingstoke’s hotels. In addition, the M3 is a good generator of transient demand.

introduction

Location Partnership Opportunity

In December 2012, Muse Developments entered into a 15 year partnership with Basingstoke and Deane Borough Council (BDBC) to regenerate the Basing View Business Park, in Basingstoke. This involves redeveloping over 15 acres of the estate as well as delivering a revitalised public realm with an on-going management regime.

The planned vision for Basing View includes a mix of new office space, a business class hotel, retail and other supporting facilities to ensure Basing View is rejuvinated. It is envisaged that the project has the potential to double the current number of jobs currently available at the business park to around 10,000.

The scheme has the full support of the local LEP ‘Enterprise M3’ and Hampshire County Council (HCC).

Basing View forms part of BDBC’s broader strategy for the town centre. Over recent years, considerable investment has been made in upgrading the retail and town centre environment in Basingstoke.

Festival Place has been extended to provide a 10 screen Vue cinema and a choice of business and family friendly restaurants such as Wagamama, Ask, Giraffe, Gourmet Burger Kitchen and Pizza Express.

The Council undertook the recent refurbishment of The Malls Shopping Centre, completed towards the end of 2011, alongside Network Rail’s improvements to the train station. The combination of the Anvil theatre and concert hall (1,400 capacity) and Haymarket and Forge Theatres (all run by Anvil Arts) has established itself as Hampshire’s premier cultural destination.

With these excellent town centre amenities in place, BDBC is now focused on improving its employment zones, of which Basing View is the major priority, alongside housing expansion to support economic growth.

This brochure presents the Hotel as being located in the preferred position of the midtown area of Basing View (described in more detail in the masterplan section). However, other plots are available and potentially suitable for Hotel development within the estate.

Muse believes that the delivery of a Hotel at Basing View will provide a new dynamic to the area, as well as fulfilling a much needed requirement amongst Basing View’s existing and future business community. Muse have an excellent track record of delivering such a product and with the support of Basingstoke and Deane Borough Council, would look to deliver this by early 2017.

Basingstoke and Deane Borough Council, in partnership with

Muse Developments are delighted to present a

Hotel development / investment opportunity on Basing View

LocAtion

Rail travel times

Reading17 mins

Southampton Central35 mins

Clapham Junction39 mins

London Waterloo47 mins

London Paddington56 mins

Oxford46 mins

Bristol1 hr 35 mins

Birmingham New Street2 hrs

Source: South West Trains

Distances by road

London (Chiswick)44 miles

Southampton31 miles

Bristol83 miles

Oxford44 miles

Birmingham120 milesSource: Google Maps

Nearest Airports

London Heathrow40 miles

London Gatwick60 miles

Southampton Airport29 miles

Farnborough Airport18 miles

Source: Google Maps

With its close proximity to London and the M3 motorway, Basingstoke offers fantastic major transport links. Less than 40 minutes drive from the nearest international airport, Basingstoke is extremely well positioned as a centre for employment and leisure. As well as being well connected in terms of road, Basing View is also a short walking distance from Basingstoke Railway Station, and immediately adjacent to a local park and the town centre.

BriStoL London

SoutHAMPton

oXFord

BirMinGHAM

BASinGStoKE

rEAdinG

town cEntrE

(dEBEnHAMS,M&S, cAFES, BArS, rEStAurAntS, cinEMA, SPortS

cEntrE, niGHtcLuB)

BASinGStoKE rAiLwAy StAtion

AMEnitySPAcE

EAStroP PArKFEStivAL PLAcE

SHoPPinG cEntrE

JoHn LEwiS

uPPEr BASinG viEw

LowEr BASinG viEw

A3010

M3 M3

London

cAr PArK

to nortH BASinGStoKE

tHE AnviL tHEAtrE

A3010

wincHEStEr/SoutHAMPton

wincHEStEr/SoutHAMPton

London

rEAdinG

The Site - at the heart of Basing View

Basing View offers excellent connectivity to the air, road and rail networks

and to the town centre.

Basing View’s location offers a unique mix of city, town and country life.

BASinG viEw: MAStEr PLAn

The new Waitrose & John Lewis at Home, located in the Downtown area of the Basing View masterplan.

Due for completion December 2015.

Muse have been progressing a masterplan for Basing View in partnership with BDBC to demonstrate our vision for the estate. This includes a number of mixed-use elements, such as hotel and retail use which are explored in more detail below, but the core of the scheme is the provision of modern office accommodation with supporting amenity uses. The ‘dumbbell’ principle of the masterplan creates three distinct character areas; Downtown, Midtown and Uptown.

These locate mixed-use elements in the Downtown area of the estate, closest to the station and town centre, with a gradual progression through Midtown for smaller business occupiers, potentially in multi-let buildings, up to an Uptown corporate area.

The proposed site, forms an integral part of Mid Town area, at the heart of Basing View.

trAin StAtion

town cEntrE

wAitroSE & JoHn LEwiS

cHurcHiLL

PArK

uPtown

tHE SitEnEtworK

rAiL cAMPuS

CORPORATE HUB

RETAIL & LEISURE

HUB

OFFICEQUARTER downtown Midtown uPtown

BASinG viEw: MAStEr PLAn

Approximately 5 minutes walking time to Basingstoke Train Station and Town Centre

Artists impression of the new midtown area proposed for Basing View.

BASinG viEw: MAStEr PLAn

Midtown PLAZA

PotEntiAL MiXEd uSE BuiLdinG

oFFicE ‘HuB’ / cAtErinG FAciLity

outLinE ScHEME dESiGn The site is located in the ‘mid town’ area of Basing View. This will become the vibrant heart of the development, with activity focussed on this area.

The site is approximatley 0.38 hectares and initial studies have shown a development potential of approximatley 160 rooms, with up to 110 car parking spaces contained to the rear of the building.

The hotel will provide the backdrop to the new midtown square, engaging with and animating this important new public space for Basing View and the wider town.

Midtown LowEr BASinG viEw

dEdicAtEd cAr PArK:dEcK ArrAnGEMEnt SHown,

AccoMModAtinG uP to 110 cAr PArKinG SPAcES, contAinEd on

Four LEvELS.

indicAtivE ScHEME ProPoSAL,

iLLuStrAtinG MASSinG uP to SEvEn StorEyS,

incLudinG 160 rooMS, Ground FLoor rEcEPtion &

AMEnity ArEA & PotEntiAL rooF toP rEStAurAnt

outLinE ScHEME dESiGn

This indicative layout illustrates a 160 bed hotel, with a 110 space deck car park located to the rear. Allowance has been made for ease of pedestrian and vehicular access, a generous reception and restaurant area and rooms of 26 sqm.

The main entrance is accessed directly from Lower Basing View and faces onto the midtown plaza space.

Ram

p U

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Ram

p D

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N

Revisions

Scale Date Drawn Checked

Project

Title

Drawing No.

West End House,

London, W1F 7SEt : +44 (0)207 297 5600f : +44 (0)207 297 5601w : http://www.3dreid.com

Client

3DReid

Do not scale from this drawing.

All dimensions are to be checked prior toconstruction and any discrepancies are tobe identified to the Architect.

Copyright reserved.

N

Architecture ConservationInteriors MasterplanningPartnerships Sustainability

Notes

Rev.

Size

A1

11 Hills Place,

1 : 200 12/18/14 Author Checker

110633-A103(2)

BASING VIEW

Owner

Typical Floor Plan 1/200

1 : 200Typical Floor Layout1

Indicative Ground Floor Plan

Lower Basing View

Mid Town Plaza

1

3

5

7

9

10

4

6

4

1. Main Pedestrian Entrance

2. Reception Area

3. Dining Area

4. Meeeting Room

5. Gym

6. Offices

7. Back of house

8. Service Yard

9. Ground Floor Car Parking (approximatley 35 spaces)

10. Vehicular entrance from Lower Basing View

11. Landscaped pavement, linking directly to Basingstoke Train Station and the Town Centre

Indicative Typical Upper Floor

2

8

11

1 2

1. Typical floor, illustrating 32 rooms per level, shown at 26 sqm per room

2. Deck Car Parking (approximatley 25 spaces per level)

MArKEt ovErviEw

Provincial UK hotels, excluding London, are influenced by national, rather than global, economic variables, low domestic investment growth and cuts to both the private and public sector spending.

The impact of the economic downturn on the provincial UK market resulted in continued deterioration in RevPAR between May 2008 and April 2010. By year end 2009 RevPAR had dropped by 11% due to shrinking demand and reduced rates.

May 2010 showed the first YoY RevPAR growth (5.3% versus May 2009) since the downturn. Since that month, provincial UK hotels have experienced mainly positive, albeit erratic, RevPAR growth.

The challenging economic environment has led to a notable slowdown in the business event market - an important market segment for many provincial hotels – driven by a tightening of corporate expenditure. Further cuts in government spending have also impacted UK hotels particularly pronounced outside regional centres and core markets where the local economy and hotel performance are more dependent on government business.

During 2010 and 2011, many provincial hotels shifted their market mix towards leisure demand, which positively impacted occupancy levels but led to further ARR deterioration.

2012 was a mixed year for regional hotels with some cities benefitting from Olympic events (e.g. Birmingham, Cardiff and Manchester), whilst other cities suffered as the Olympic effect put some visitors off travelling to/around the UK. Furthermore, the uncertainty around the domestic and Eurozone economies continued to impact hotel trading, resulting in a negative RevPAR of 0.5%.

In 2013, the improving economic conditions started to have a positive impact on provincial hotels, resulting in an encouraging RevPAR growth of 5.5%.

2014 results show sustained growth in both occupancy and rates leading to a 10.4% RevPAR uplift versus 2013. However, the recovery pace varies greatly across markets and properties, particularly for those which have received limited investment in recent years. We anticipate a similar trend to continue during the last two months of 2014.

Future Outlook

Following a robust 2014 performance, we expect further RevPAR growth, albeit slower, during 2015, supported by the continued strength of the UK economy and the slow recovery of the business event market. With occupancy levels now ahead of historical levels, hoteliers are better placed to focus on rate growth going forward. Furthermore, several cities across the UK will also benefit from demand generated by Rugby World Cup matches in September and October 2015.

However, whilst trading recovery is likely to continue apace until the UK general election in May 2015, there is some uncertainty about the impact of the election on the UK economy and further cuts in government spending, which could impact hotel trading going forward.

Underpinned by limited supply additions, PWC’s latest forecast anticipates a RevPAR growth of 6.0% for the Provincial UK market during 2015, which we consider to be possibly a bit optimistic due to the uncertainty post the UK election. We anticipate further stabilisation from 2016 but this will be influenced by new supply additions in some markets.

Milestone

Work up and submit planning

Planning consent granted

Complete main contract agreement

Commence development

PC of building

Month

1 - 4

10

13

14

28

Indicative programme

3DReidArchitects

3DReid is a team of award winning architects and designers with a reputation for innovative design and intelligent delivery solutions across various sectors. They are specialists in the residential sector, and have recently been appinted on a number of PRS residential schemes.

NexusPlanning

Nexus Planning have extensive experience in all sectors of development: brownfield, greenfield, high density urban regeneration sites and Conservation Areas. They are currently working within the BDBC area to promote other sites through the LDF process and recently acted on Skyline Plaza for Berkeley Homes.

Muse Developments

Muse Developments is one of the country’s leading names in commercial development and urban regeneration. We deliver complex mixed-use schemes - with the accent on quality and sustainability - and create vibrant new places within our towns and cities. Founded on the extensive experience of our management and delivery teams, and backed by the financial strength of our parent company Morgan Sindall Group plc, we’re driven by a desire to bring a fresh and innovative approach to property development.

Muse has over 30 years of experience and has delivered in excess of 16m sq. ft. of commercial and residential floor space. Alongside Basing View, Muse’s London office has schemes in locations including Plymouth, Bristol, Reading, Brixton, Lewisham, Swindon and Canning Town.

Commercial Advisors

Christie + Co have been providing market-leading, innovative advice to clients for 80 years. Our team of sector specialist advisers, chartered surveyors, brokers and consultants support owners, operators, investors and backers to make informed decisions with confidence. Christie + Co is home to the largest and most active hotel team in the UK as well as having hotel experienced teams throughout 13 offices in Europe. Our experienced team advised and helped to transact over £1 billion of hotel assets in 2014 alone.

tHE tEAM

www.basingview.co.uk

rEquirEMEntSExpressions of Interest Basingstoke and Deane Borough Council may consider financial support to parties to enable the delivery of a suitable hotel. Partners Muse Developments and Basingstoke and Deane Borough Council are inviting parties to submit expressions of interest in the development of a new hotel located at Basing View. Expressions of interest should be submitted via email to Jonathan Parrish, Director – Head of Investment, Christie + Co, contact details below. We are seeking to establish the brand, size, facilities and routes for the delivery of the hotel.

Operator Proposals Interested parties are requested to provide the following:

Rental Offers should contain:• The identity and profile of the Tenant showing their experience as a hotel operator• The identity of any Guarantor • Details of the proposed brand • Latest Accounts of the Tenant • Rental offer • Lease Term • Proposed rent review period and mechanism • Estimated Development and FF&E Cost Management Proposals should contain:• Profile of the Management Company• Latest Accounts of the Management Company• Details of proposed Brand • Details of the nearest hotel operated by the Management Company • Management Contract terms and Fees• Details of Guarantees or Subordination structure (if any)• Technical Services Fee (if appropriate)• Proposed hotel facilities/configuration• Five - year Forecast detailed Profit & Loss Accounts (Uniform System)• Estimated Development and FF&E Cost Offers for the Long Leasehold InterestWe are seeking offers for a 150 year lease interest. The offer can be for a shell and core or hotel fitted to the required brand specification. In the case of the latter please detail the proposed brand.

Enquiries For further information in respect of the hotel development opportunity at Basing View please contact: Jonathan Parrish, Director – Head of Investment

Christie + Co, Whitefriars House 6 Carmelite Street, London EC4Y OBS

E: jonathan.parrish@christie.comT: 020 7227 0762

Deadline Friday 20th March

EXCITING HOTEL INVESTMENT OPPORTUNITYBasingView, Basingstoke, Hampshire

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Artists impression of the new midtown area proposed for Basing View.

A great opportunity to forward commit to the purchase of a new branded business class hotel. With c. 160 guestrooms and supporting facilities to be constructed in a prime position within Basing View business park adjacent to new public realm and a multi storey car park.

Christie + Co Sales Memorandom July 2015

WHY HOTEL INVESTMENT aT BaSING VIEW?

There is a limited supply of centrally located modern corporate focussed hotels in Basingstoke and a Hotel Solutions Report commissioned in 2008 supported the demand for a new upper end hotel and highlighted the lack of existing quality supply. There is a higher level of 4 star hotel provisions outside of the town centre and a relatively limited stock of budget hotels. Despite this, a large proportion of the 4-star hotel stock is positioned for large conferences, events and weddings and new business class focused service hotel would meet an unfulfilled requirement.

There are several primary generators of business and leisure hotel demand in Basingstoke, generating both weekday and weekend trade. It is likely that the local corporate demand has strengthened as a result of the recovering economic environment. In terms of current supply, Basingstoke has 12 hotels and five serviced apartment accommodations, both with a total of 937 rooms. Basingstoke is set to see significant expansion of its population and employment base as is set to be a Regional Hub and with Growth Point status and resource.

Basing View is identified as the strongest location for the development of new hotel/hotels. This is also the priority location where the Borough Council would like to see new hotels to support its development as a key business district in the town. Furthermore, in 2010, DTZ surveyed 150 Basingstoke office occupiers to understand their requirements and views on the existing market. a summary of the results are as follows:

• 90% of respondents require hotel accommodation on a regular basis.

• average budget for accommodation is £97 including VaT and breakfast.

• Location and value for money were the main drivers.

• Over 70% of the respondents responded that they couldn’t find accommodation when required.

• all respondents reported positively on the proposed hotel at Basing View.

Key companies located in Basing View include Sun Life Financial, the aa, Clydesdale Bank, Baker Tily, Thales and Snamprogetti Limited. The new Network Rail training academy to the north of Basing View will generate significant additional room demand into the market. Other key companies in Basingstoke town centre include De La Rue, ST Ericsson, Huawei Technologies, GaME, Motorola, Barracuda Networks, BNP PaRIBaS Lease Group UK, the leasing arm of BNP Paribas in the UK, and Sony Professional Solutions (Europe).

The town is also home to a number of leisure attractions such as anvil arts which stages major national concerts and shows, Basingstoke Leisure Park, Festival Place, which offers a wide range of shops, restaurants, bars and cafes, a ten screen cinema, night club and sports centre and two museums. The biennial summer Farnborough air Show generates business for Basingstoke’s hotels. In addition, the M3 is a good generator of transient demand.

Christie + Co Sales Memorandom July 2015

LOCaTIONRail travel times

Reading 17 mins

Southampton Central 35 mins

Clapham Junction 39 mins

London Waterloo 47 mins

London Paddington 56 mins

Oxford 46 mins Bristol 1 hr 35 mins

Birmingham New Street 2 hrsSource: South West Trains

Distances by road

London (Chiswick) 44 miles

Southampton 31 miles

Bristol 83 miles

Oxford 44 miles

Birmingham 120 milesSource: Google Maps

Nearest Airports

London Heathrow 40 miles

London Gatwick 60 miles

Southampton airport 29 miles

Farnborough airport 18 milesSource: Google Maps

Basingstoke is 55 miles west of London adjacent to the M3 and has direct road and rail connections to the capital. BasingView is one of the largest urban business parks in the M3/M4 corridor covering 65 acres and offering c 1.3m sq ft of office space. BasingView is home to some 70 companies and 4,500 employees currently.

BRISTOL LONDON

SOUTHaMPTON

OXFORD

BIRMINGHaM

BaSINGSTOKE

REaDINGMaRKET TRaDING PERFORMaNCEThe hotels envisaged competitor set of centrally located full service hotels comprising The Holiday Inn, The Hilton, The apollo Hotel, The Hampshire Centre Court Hotel and the Premier Inn Basingstoke Central with 541 keys showed RevPaR of £53.11 in 2014 (Occupancy 73.3%, aDR £72.43). RevPaR for three months to the end of March 2015 was £50.69 up from £49.78 in the same period in 2014.

(Source STR Global)

Christie + Co Sales Memorandom July 2015

THE OPPORTUNITYFollowing an operator search process Christie + Co acting on behalf of Muse Developments, development partner of Basingstoke and Deane Borough Council, are instructed to take to market this exciting investment opportunity. The hotel can be acquired turnkey or with the benefit of an operating agreement with independent management companies or various brands details of which together with financial forecasts can be provided on signature of an NDa. The property will be offered on 150 year leasehold interest at a peppercorn rent.

The proposal is to develop a mid market business class hotel although Muse and the Council would consider proposals from investors requiring a branded limited service hotel.

For Further information and NDa please contact

Jonathan ParrishDirector – Head of InvestmentChristie + CoWhitefriars House6 Carmelite StreetLondon EC4Y 0BST: +44 (0)207 227 0762E: jonathan.parrish@christie.com

CONTaCTS

christie.com Christie + Co Sales Memorandom July 2015

CONDITIONS OF CHRISTIE + CO’S INFORMaTIONThese sales particulars are prepared as a general guide to the property (which expression includes business and trade content, if any, included in the sale) for the convenience of a prospective purchaser (an “Acquirer”) and are intended for business people familiar with commercial transactions. If you are not sure that you fit this description you should take relevant independent advice before proceeding further. Christie + Co for themselves and for the Client, give notice that: (a) these particulars are made without responsibility on the part of Christie + Co or the Client; they do not obviate the need to make appropriate searches, enquiries and inspections, nor do they constitute any part of an offer or contract, and statements herein are not to be relied upon as statements or representations of fact; any Acquirer must satisfy himself, by inspection or otherwise, as to their correctness and any error, omission or mis-description therein shall not affect or annul the sale or be grounds for rescission or compensation; (b) the Client does not make or give, and neither Christie + Co nor any of their employees has any authority to make or give, any representation or warranty whatsoever in relation to the properties; (c) Christie + Co has not carried out a detailed survey, nor tested the services, appliances and specific fittings; (d) dimensions (where given) are approximate and should be verified by an Acquirer; and (e) any accounts or financial statements or registration information provided to an Acquirer are provided on behalf of the Client by Christie + Co, who cannot therefore offer any guarantee of their completeness or accuracy, and accordingly shall not be liable for any loss, damage, cost, expenses or other claims for compensation arising from inaccuracies or omissions therein. These details were believed to be correct at the date of publication but their accuracy is not guaranteed. Subject to contract. Copyright Reserved Christie + Co. July 2015.

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Christie & Co Whitefriars House 6 Carmelite Street London EC4Y 0BS T: +44 (0) 20 7227 0700 F: +44 (0) 20 7227 0701

Contacts Jonathan Parrish – Head of Investment - Hotels T: +44 (0) 20 7227 0762 M: +44 (0) 7708 208 886 E: jonathan.parrish@christie.com