SOUTH WEST LONDON FOODSTORE FORWARD FUNDING OPPORTUNITY

NEW 20 YEAR LEASE TO ASDA STORES LTD

Sat Nav Ref: SM3 9HB

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INVESTMENT CONSIDERATIONS

• South West London Foodstore Opportunity equidistant between Wimbledon and Sutton, and very close to Morden and North Cheam.

• Prominent new build development comprising a total gross internal area of 10,700 sq ft (994 sq m), with 59 car parking spaces.

• Large site of 1.09 acres.

• Freehold

• Pre-let to one of the largest UK retailers: Asda Stores Ltd on an FRI lease expiring 2035.

• Commencing rental of £350,000 per annum from practical completion of the building works.

• 5 yearly rent reviews linked to RPI, subject to 1%-3%, collar and caps.

• Open A1 consent.

• Offers are sought of £7,800,000 (Seven Million, Eight Hundred Thousand Pounds), subject to contract and exclusive of VAT.

• An acquisition at this level would reflect a Net Initial Yield of 4.25%, after purchaser’s costs of 5.8%.

• Based upon the 5 year RPI being 3%, the uplifts would reflect the following yield profile:

• Year 5 £405,745 4.92%• Year 10 £470,370 5.70%• Year 15 £545,288 6.60%

• Equivalent yield 5.61%Computer Generated Image

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LOCATION

The property is situated in a very busy and prominent location equidistant between Wimbledon and Sutton and very close to Morden and North Cheam.

Morden is a prosperous district in the London Borough of Merton, located approximately 8 miles south west of central London. The area is popular with commuters as it is located on the northern line underground network, offering direct travel into Central London (25 minutes). Morden also offers overground rail connections throughout Central London, leading to St Pancras to the north and Sutton central to the south.

This part of south west London is a popular and affluent residential location with Wimbledon 3 miles to the north, North Cheam 1 mile to the south west, Clapham 6 miles to the north east and Sutton 2.5 miles to the south.

The national motorway network is accessed via the A217 connecting to the M25 at Junction 8, just 9.6 miles to the south. Stonecote Hill leads into one of the main arterial routes into Central London, 8.5 miles to the north.

Despite London’s suburban expansion, parts of Morden’s rural nature has survived in the districts parks. The most famous of these being the 125 acre Morden Hall Park, which is run by the National Trust. Other open spaces include Morden Park Sports Ground, Mitcham Golf Club, Royal Wimbledon Golf Club, Wimbledon Common and Nonsuch Park.

The town centre retail provision of Morden is centered around London Road close to the entrance to the London underground station. Retailers with representation include Lidl, Iceland, Sainsbury’s, Holland & Barrett, Greggs and Specsavers amongst others.

M11M11

M25M25

M25M25

M25M25

M23M23

M26M26

M20M20

M20M20

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M25M25

Harlow

Southend-on-Sea

Brentwood

Basildon

Gravesend

Dover

Folkestone

Maidstone

RochesterGillingham

Crawley

Guildford

LONDON

Harlow

Southend-on-Sea

Brentwood

Basildon

Gravesend

Dover

Folkestone

Maidstone

RochesterGillingham

Crawley

Guildford

LONDON

Sutton

SubjectProperty

Royal WimbledonGolf Club

IKEA

Wimbledon

Mitcham

Morden

Sutton

North Cheam

MitchamGolf Course

Morden Park Sports Ground

Wimbledon

South West London Foodstore Opportunity close to Wimbledon, Sutton, and North Cheam

Richmond ClaphamHeathrow

Subject Property

Retail property expertiseFawcett Mead 1 Stonecot Hill, Morden

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SITUATION

The immediate area is a popular retail and residential area. The property is situated at the extremely busy junction of Stonecot Hill and Sutton Common Road. Stonecot Hill leads into London Road to the south and North Cheam and Epson Road to the north leading to Wimbledon.

The junction has approximately 20,000 vehicles passing per day. There are also six bus stops in the immediate vicinity of the property providing direct links to Sutton, Putney Bridge, Morden, North Cheam, Wimbledon and Epsom.

Situated just 1 mile south of Morden Underground Station, 2.5 miles north west of Sutton town centre and 3 miles south of Wimbledon, the property will benefit from its highly accessible location fronting a main arterial route into London. The supporting retailers in the immediate area include The Co-op, Barclays Bank, Coral, Ladbrokes and a number of local occupiers.

SOCIO-ECONOMIC PROFILE The socio-economic profile within the resident population is affluent, being above the GB average, as summarised below:

10 minute drive time GB Average Population as % Population as %Managers & Senior Officials 18.21% 14.74%In employment 40.76% 37.68%Education: Higher Degree/Degree 18.97% 14.32%Households with a car 79.00% 72.56%

Pre-let to one of the largest UK retailers: Asda Stores Ltd on an FRI lease expiring 2035

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DESCRIPTION & DESIGN SPECIFICATION

The building will be of steel portal frame construction with brick, render, steel and metal elevations and eight panels of glazing to the primary frontages, with a reinforced concrete floor beneath a steel cantilevered roof.

There will be ancillary staff and plant areas to the rear of the property, along with a purpose built dedicated service yard.

The external areas of the property will be upgraded in accordance with a detailed hard and soft landscaping scheme, which includes the addition of a significant amount of new paving and seven new trees fronting Sutton Common Road and Stonecot Hill.

The development is designed to achieve a ‘very good’ BREEAM rating with a build period of c.22 weeks.

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RENTAL EVIDENCE SCHEDULE

Location Tenant Transaction Date GIA (sq ft) £/ft2

Queen’s Park Marks & Spencer OML June 2014 5,580 £30.82

Aldgate East Tesco OML April 2013 3,356 £33.56

Ferndown, Dorset Marks & Spencer AGL April 2013 11,000 £32.50

Reading Marks & Spencer OML March 2013 15,000 £30.00

Richmond Whole Foods OML March 2013 20,150 £34.00

Other rental evidence is available on request.

PLANNING

Open A1 consent was granted at committee on 21st January 2015. Further information is available on request.

ACCOMMODATION

The subject property will be a prominent new build development comprising a total gross internal area of 10,700 sq ft (994 sq m) with 59 car parking spaces on a site of 1.09 acres. The customer access to the foodstore is via both Stonecot Hill and Sutton Common Road. All of the accommodation is at ground floor level and there is a dedicated, enclosed service yard to the rear of the property.

TENURE

Freehold

TENANCY

The property is let to ASDA Stores Ltd in its entirety on an FRI lease for a period of 20 years from practical completion of the building works, with an initial rent passing of £350,000 per annum. The rent is reviewed every 5 years in line with RPI with 1%-3% collar and cap. Based on an RPI increase of 3%, the rental uplifts would show:

Year 5 £405,745 per annumYear 10 £470,370 per annumYear 15 £545,288 per annum

Prominent new build development, open A1 consent

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COVENANT INFORMATION

ASDA Stores Limited (Company Number 00464777) was originally formed in the 1920’s by a group of Yorkshire farmers, with the Asda name being introduced in 1965. Asda is now a subsidiary of the US ‘Walmart Group’ since the purchase in July 1999 for £6.7 billion.

Walmart is one of the world’s biggest companies. It currently has over 11,000 stores in 27 countries, under 71 different brands, with 245 million weekly customers and approximate sales of £311billion in 2014.

Asda was the second largest food retailer in the UK in 2014 in terms of market share, with c.17.20%, behind only Tesco. They currently employ over 175,000 people in the UK and have over 520 stores, of which 31 are inside the M25.

We summarise the last three years reported accounts below:

31/12/2013 31/12/2012 31/12/2011

Turnover £23,299,400,000 £22,813,900,000 £21,661,000,000

Pre-Tax Profit £605,100,000 £483,500,000 £506,900,000

Net Worth £5,349,000,000 £5,090,400,000 £4,601,800,000

DEVELOPER

Lateral Property Group is a highly experienced London and Harrogate based property development business specialising in foodstore, retail and leisure development across the UK.

Lateral is the leading convenience and convenient foodstore development business in the UK. In the last five years they have completed thirty foodstore developments with a significant forward development pipeline. Major food operators they have worked with include Asda, Tesco, Sainsbury’s, M&S, Morrisons, Waitrose, Aldi and Co-op.

Further information is available:

www.lateralproperty.co.uk

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INVESTMENT EVIDENCE SCHEDULE

Location Tenant Price Transaction Tenure Unexpired Term Net Initial Yield Date

Queen’s Park, London M&S Simply Food £4,095,000 Forward funding LLH 15 years 4.50% Under offer

Berkhamstead M&S Simply Food / Costa £12,300,000 Investment sale FH20 years10 years 3.88% April 14

New Maldon Waitrose £24,600,000 Investment sale FH 24 years 3.84% March 14

Putney Sainsbury’s £23,180,000 Investment sale FH 20 years 3.70% February 14

Sevenoaks M&S Simply Food £11,600,000 Investment Sale FH 20 years 3.80% December 12

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Fawcett Mead 1 Stonecot Hill, Morden

Misrepresentation Act: The particulars in this brochure are believed to be correct, but accuracy cannot be guaranteed and they are expressly excluded from any contract. Designed by Graphic Outlines Ltd February 2015

VAT All sums expressed are exclusive of VAT and the appropriate amount of VAT shall be paid in addition.

TRANSACTION STRUCTURE

Offers are sought of £7,800,000 (Seven Million, Eight Hundred Thousand Pounds) for the forward funding of this opportunity. A purchase at this level would show the following yield profile after purchaser’s costs of 5.80%:

Net Initial Yield 4.25%Year 5 4.92%Year 10 5.70%Year 15 6.60%

Equivalent yield 5.61%

SUBJECT TO CONTRACT

FURTHER INFORMATION

Graham Fawcett +44 (0)20 7182 7482graham@fawcettmead.co.uk

15-17 Great Portland StreetLondon W1W 8QA fawcettmead.co.uk

Thomas Heptonstall +44 (0)20 7182 7484thomas@fawcettmead.co.uk