Prime RPI Linked South East Investment Opportunity

M&S Foodhall Ashtead, 53-57 The Street

FOR SALE

SATNAV - KT21 1AA

Opportunity to acquire a prime foodstorestore investment within the M25, in theaffluent Surrey village of Ashtead, locatedapproximately 20 miles south-west of central London.

The site is located in the heart of Ashtead,an affluent village within the M25, in theCounty of Surrey. Ashtead isapproximately 20 miles south-west ofcentral London and around 2 miles north-east of nearby Leatherhead. The sitefronts onto ‘The Street’ which generallyprovides a mix of independent shops,cafés, restaurants along with terraced andflatted residential housing.

Rail services into London Waterloooperate from Ashtead Railway Station,which is within easy walking distance tothe north of the site. Road connections aregood with the nearby M25 motorwayproviding access to Heathrow Airport tothe north and Gatwick Airport to the south.

M3

M4

M25

M25

M23

A3

A3

A322

A3A24

A3

A22

A22

A232

A23

A40

A205

A308

A217

A312

A31

Hounslow

Bracknell

Epsom

Greenford

Warlingham

London

Wimbledon

Mitcham

Bromley

Sutton

Working

AldershotGuilford

M&SFOODHALL

LOCATIONINVESTMENT CONSIDERATIONS

o Prominent new-build foodstore comprising 12,073 sq ft arranged over groundand first floors. The upper floors consist of 9 residential apartments which willbe sold off separately and not form part of the sale.

o Let to Marks and Spencer Plc t/a M&S Foodhall for a term of 20 years.

o Commencing rent of £305,000 per annum reflecting an overall rate of £25.26 psf.

o 5 yearly index linked rent reviews compounded annually, with a minimumuplift of 1.00% per annum and capped at 3.00% per annum.

o Offers are sought in excess of £6,750,000 (Six Million, Seven Hundred andSeventy-Five Thousand pounds). An acquisition at this level would reflect anet initial yield of 4.24% after graduated purchaser costs of 6.64%.

CATCHMENT, DEMOGRAPHICS & COMPETITION

SOCIO-ECONOMIC PROFILE

COMPETITION

There is very little competition within the 5 minute drivetime of the subject property (Ref Son plan) The principle competition is shown below:

0-5 mins DrivetimePopulation 18,473

0-10 mins DrivetimePopulation 48,452

0-15 mins DrivetimePopulation 147,364

40%35%30%25%20%15%10%5%0%

AB Higher & Intermediate management/admin/professionalC1 Supervisor, clerk, junior management/admin/professionalC2 Skilled manual workersD Semi-skilled and unskilled manual workersE On state benefit, unemployed, lowest grade workers

AREA

BASE

AB C1 C2 DE

Ashtead has a primary catchment population within a 5 minute drivetime ofapproximately 18,473 people and approximately 147,364 people live within a 15 minutedrivetime. The top 3 ‘mosaic groups’ within the 10 minute catchment according toExperian are as follows:

47.88% - B Prestige Positions -Established families in large detachedhomes living upmarket lifestyles.

17.12% - G Domestic SuccessThriving families who are busy bringing upchildren and following careers.

16.74% - O Rental HubsEducated young people privately rentingin urban neighbourhoods.

Within a 10 minute drivetime of the propertyis an affluent population significantly overthe base average with the AB social grouprepresenting 38.08% 39.59% of the overallpopulation distribution. The number ofhouseholds with 1 car or more represent84.08% (UK average 74.01%), and thenumber of home owners amount to 72.84%(UK average 64.21%).

The population age groups are generally in-line with the UK average. The largest groupis the over 65’s representing 20.49% of thepopulation with the smallest representationare the 20-24 year old’s representing 4.50%.

REF NO STORE NET SALES AREA SQ FT1 Sainsbury’s (Epsom) 96,800

2 Sainsbury’s (Leatherhead) 29,547

3 Tesco (Leatherhead) 31,518

4 Waitrose (Epsom) 14,113

5 M&S Food & Clothes (Epsom) 12,969

6 Lidl (Leatherhead) 10,000 (est)

7 Tesco Express (Ashtead) 2,067

8 Little Waitrose (Leatherhead) 5,871

Copyright Experian Ltd, HERE 2015 Ordnance Survey © Crown copyright 2015

The property occupies a highly visible positionon the northern side of The Street, Ashtead asillustrated on the goad plan >>>

DESCRIPTION

The site comprises approximately 0.18 ha(0.45 acres). The newly constructedfoodstore will provide retail accommodationat ground level and staff and ancillary atfirst floor level totaling 12,073 sq ft.

The property is of concrete frameconstruction with brick infill and claddingpanels under a zinc mansard roof. Thecommercial retail unit will be fitted outinternally to Marks and Spencer Foodhallcorporate specification and branding.There is no designated on-site parkingprovisions but there is a large surfacecouncil, pay and display, car park situatedat the rear of the property. A warranties pack can be made availableto the successful purchaser.

TENURE

The property will be sold with the benefit ofa 999 year long leasehold at a rent of apeppercorn, if demanded.

The property is let to Marks and SpencerPlc, trading as a Marks & SpencerFoodhall, on an FR&I lease for an unbrokenterm of 20 years. The commencing rent willbe £305,000 per annum which reflects£25.26 psf overall.

The rent is subject to an upwards onlyreview in line with RPI on every fifthanniversary of the term commencementdate, subject to a minimum increase of 1.00% and capped at 3.00%,compounded annually.

TENANCY

For Indicative purposed only. Copyright and confidentiality Experian, 2017.

© Crown copyright and database rights 2017. OS 100019885.

GROUND FLOOR

FIRST FLOORROOF

ACCOMMODATION INVESTMENT MARKET

In the wake of the EU referendum, the foodstoreinvestment market has been one of the most sought-after investment classes due to strong propertyfundamentals as they typically offer long leasestructures let to excellent covenants.

Furthermore, a general slowdown in large-scalestore expansions has led to foodstore operatorsaggressively expanding their smaller conveniencestore formats as they seek to address geographicgaps in their representation across the UK.Competition remains high to secure the bestlocations in affluent residential locations, which in turn has continued to drive rental growth inthe sector.

The proposed areas for the store development are as set out in thetable below:

DESCRIPTION AREA (SQ FT) AREA (SQ M)

Ground Floor 8,212 762.92

First Floor 3,861 358.69

Total 12,073 1121.61

M&S are trading a Net Retail Area of 6,722 sq ft (624.5 sq m). EVIDENCE SCHEDULE

PROPERTY TENANT LEASE PRICE NIY DATE(UNEXPIRED TERM)

Dalston, M&S Foodhall (20) 5 yearly RPI £8.78m 4.00% Q2 2017Kingsland Road, linked rent reviews London collar and capped

at 1%-4%

227/231 M&S Foodhall (20) M&S on 5 yearly £12.80m 4.20% Q1 2016Wimbledon The Gym Ltd RPI linked rent Park Road, reviews collar and Southfields, capped at 1%-4%London

Parsons CO-OP & Le Pain (17) CO-OP on 5 yearly £6.37m 3.75% Q4 2016Green Lane, Quotidien (7) RPI linked rent Fulham, reviews collar and London capped at 1%-4%

Heritage Lane, M&S Simply Food (15) M&S on 5 yearly £7.40m 4.12% Q4 2016Hampstead, & 3 other units (10) RPI linked rent London reviews collar and

capped at 2%-4%

INDICATIVE LAYOUT PLANS

COVENANT INFORMATION

Marks and Spencer Plc was established in 1894 and is a Public Limited Company listedon the London Stock Exchange and is a constituent of the FTSE 100 Index.

They have a D&B rating of 5A1.

Marks and Spencer employ over 81,000 people and operate, 798 stores in the UK rangingfrom full range out of town and in-town formats to standalone Simply Food stores.

In the year to April 2016 the retailer reported a total turnover in excess of £10.5 billion anda net profit before tax of £488 million.

The latest accounts are summarised as follows:

Planning consent has been obtained for theproposed development and the retailaccommodation will have the benefit of a ClassA1 planning consent with a comparison goodsrestriction of 10% of the net retail floor area.

Copies of the consent can be made available.

Delta-Simons have carried out a phase 1 & 2Environmental assessment of the site and haveconcluded that the site is low risk. A copy ofthe report is available on request.

An EPC will be made available on completionof the development.

We understand the property is elected for VAT.It is envisaged that any sale will be dealt withas a Transfer of a Going Concern (TOGC).

02/04/2016 28/03/2015 29/03/2014(000) (000) (000)

Turnover £10,555,400 £10,311,400 £10,309,700

Pre-tax profit £488,800 £600,000 £580,400

Net worth £5,222,000 £4,791,600 £4,383,400

PLANNING ENVIRONMENTAL EPC VAT

Offers are sought in excess of £6,750,000 (SixMillion, Seven Hundred and Seventy FiveThousand Pounds) which reflects a net initialyield of 4.24%, subject to contract andexclusive of VAT after the deduction ofgraduated purchaser costs at 6.64%.

MMX RETAILScott Mitchell MRICSD: +44 (0)203 130 4660M: +44 (0)7967 552995E: scottmitchell@mmxretail.co.uk

Nick Stewart MRICSD: +44 (0)203 130 4659M: +44 (0)7717 653937E: nickstewart@mmxretail.co.uk

GL HEARNDavid Slatter MRICSD: +44 (0)207 851 2594M: +44 (0)7778 149218E: david.slatter@glhearn.com

Ollie LaneD: +44 (0)20 3146 5976M: +44 (0)7753 221970E: ollie.lane@glhearn.com

FURTHER INFORMATIONPROPOSAL

The running yield profile would be as follows:

YEAR RENTAL GROWTH

1.00% 3.00%

October 2017 4.24% 4.24%

October 2022 4.46% 4.91%

October 2027 4.68% 5.70%

October 2032 4.92% 6.61%

MISREPRESENTATION ACT 1967:MMX Retail and GL Hearn as agents for the vendor, or as the case may be, Lessor (the “Vendor”) and for themselves, give notice that: (1) Theseparticulars are given merely as a general guide to the property. They are not and shall not hereafter become part of any offer or contract. (2) Thestatements here in are made in good faith but without any responsibility whatsoever on the part of the Vendor, MMX Retail, GL Hearn or their servants.It is for the purchaser or as the case may be Lessee (the “Purchaser”) to satisfy himself by inspection or otherwise as to their accuracy and fullness,he must not in entering into contract or otherwise rely upon these particulars as statements or representations of fact. (3) The Vendor does not make orgive and neither MMX Retail, GL Hearn nor their servants has any authority, express or implied, to make or give any representations or warranties inrespect of the property. (4) In the event of any inconsistency between these Particulars and the Conditions of Sale, the latter shall prevail.

* HM treasury Average of Independent forecasts September 2017.

RPI long term forecast is estimated at 3.10%* accordingly the yield profile on this purchasewould be on the basis of 3.00% pa rental growth.