SOUTHAMPTONDebenhams, Queensway, Southampton, SO14 1NH

LONG INCOME DEPARTMENT STORE

FREEHOLD INVESTMENT FOR SALE

INVESTMENTSUMMARY

285,000 SQ FT DEPARTMENT STORE

FREEHOLD

17 YEARS UNEXPIRED

5A1 COVENANT

2.5% FIXED UPLIFTS

PROMINENT ISLAND SITE

PROSPEROUS SOUTH COAST CITY

£1,823,860 PER ANNUM

SIGNIFICANT ASSET MANAGEMENT & DEVELOPMENT OPPORTUNITIES

Southampton, SO14 1NH

OFFERS IN EXCESS OF

£31,250,000(Thirty One Million Two Hundred and Fifty Thousand Pounds)

exclusive of VAT, subject to contract.

Reflecting an attractive Net Initial Yield of 5.47% with a Nominal Equivalent Yield of 6.62% and a Reversionary Yield (2029) of 7.39% assuming full

purchaser’s costs of 6.77%

M3

A3(M)

M3

M3

M27

M27

M23

M25

M25

A34

A36

A303

A303

A36

A338

A35

A35

A37

A354A272

A272A303

A361

A39

A303

A27 A26

A272

A31

A331

A339

A33

A23

A3

A3

BOURNEMOUTH

LONDON

WINCHESTER

BASINGSTOKE

FARNBOROUGH

PORTSMOUTH

SOUTHAMPTON

PORTSMOUTH

WEYMOUTH

ISLE OF WIGHT

GLASTONBURY

SOUTHAMPTON

BASINGSTOKE

BOURNEMOUTH

LOCATION

It benefits from excellent communications by road, rail, air and sea. The city is situated at the junction of the M3 and M27 motorways. The M3 leads north to London, whilst the M27 is on the main east/west coastal route to Portsmouth, Bournemouth and beyond. Around 96 daily direct rail services run from the city’s mainline railway station (Southampton Central) to London Waterloo with a journey time from only 1 hr 15 mins.

Southampton International Airport is situated 7 miles north east of the city centre, adjacent to junction 5 of the M27. It provides flights to more than 40 European destinations and has a throughput of around 1.8 million passengers a year.

Southampton is one of the UK’s busiest passenger and freight ports. It has facilities to handle virtually all types of cargo and its deep-water port and unique double tide allow unrestricted access for the world’s largest freight and passenger vessels.

The port handles in excess of 42 million tonnes of cargo annually, accounting for around 7% of the UK’s annual seaborne trade and is the UK’s main gateway for Far East imports. It is a major car handling port and is home to the UK’s second largest container terminal. The port is also widely recognised as the capital of the UK’s expanding cruise liner industry and now has 4 cruise terminals.

Southampton is a prosperous south coast city located within the county of Hampshire, approximately 76 miles south west of London.

Southampton, SO14 1NH

SOUTHAMPTON BENEFITS FROM A PROSPEROUS,

YOUTHFUL POPULATION

1.8 MILLION TRAVEL THROUGH

THE AIRPORT EVERY YEAR

SOUTHAMPTON HAS A DIVERSE AND VIBRANT

LOCAL ECONOMY

Southampton is one of the largest cities in the South East and is among the UK’s top 25 towns and cities with a resident population of some 237,000. It is ranked 18th out of the PROMIS centres and has a primary catchment estimated at around 720,000 people and a shopping population of some 433,000.

Southampton benefits from a prosperous, youthful population. 10% of the city’s population is aged between 20 and 24 (UK aver/age 6.6%). This youthful profile is due to the city being home to two major universities. The University of Southampton and Southampton Solent University together have a student population of around 40,000. The former is one of the top 10 research-led universities in the UK.

Whereas once the city was heavily dependent upon its port and manufacturing industries, today it has a diverse and vibrant local economy. It is estimated that there are now some 7,700 businesses operating in the city, providing employment for around 117,000 people. The most significant sectors in terms of number of employees are distribution, tourism, banking and finance related industries.

Tourism also contributes significantly to Southampton’s economy with around 1 million passengers travelling through the port and 1.8 million through the airport annually. Southampton Football Club gained promotion to the Premier League in 2012 and their St Mary’s Stadium is located in the city centre.

DEMOGRAPHICS Southampton, SO14 1NH

SOUTHAMPTON IS RANKED 18TH

OUT OF THE PROMIS CENTRES

SOUTHAMPTON UNIVERSITY IS ONE

OF THE TOP 10 RESEARCH-LED UNIVERSITIES

IN THE UK.

SOUTHAMPTON’S SHOPPING

Southampton, SO14 1NH

Southampton is classed by PMA as a ‘Regional Centre’ providing approximately 2.18 million sq ft of retail accommodation. This ranks it 12th in PROMIS regional centres by this measure.

West Quay, which opened in 2000, is the city’s dominant shopping centre. It comprises around 100 shops anchored by John Lewis and Marks & Spencer. Southampton’s prime shopping circuit centres on West Quay and the pedestrianised part of Above Bar Street along which the likes of Boots, Bhs, Primark, WH Smith, TopShop and TK Maxx are located.

A secondary shopping centre, (The Marlands) is located off the non pedestrianised section of Above Bar

Street and its tenants include include Poundland, Poundworld, Peackocks and Savers.

The city has two major department stores: John Lewis in West Quay and Debenhams in the subject property. There are over 40 car parks around the city centre providing around 10,000 car parking spaces.

THE CITY HAS TWO MAJOR DEPARTMENT STORES: JOHN LEWIS IN WEST QUAY AND DEBENHAMS IN THE SUBJECT PROPERTY

NORTH

Hoglands Park

Bargate Quarter Redevelopment

The East Street Precinct redevelopment

The property is located in the south eastern section of the city’s central shopping area and it sits between two substantial regeneration projects.

NEIGHBOURING REGENERATION PROJECTS

Southampton, SO14 1NH

It occupies a prominent, virtual island site bounded by East Street, Queensway and Houndwell Place, overlooking the southern edge of Hoglands Park. The property’s considerable size affords it ‘landmark’ status and it dominates this part of the city centre, being highly visible from its three long road frontages.

This is a secondary shopping location, a short walk down East Street from the prime shopping circuit. East Street is a busy secondary street where there are a good range of speciality shops such as Warhammer, Ponden Home, Met Rx, Holland & Barrett and sk:n located.

The now defunct Bargate Shopping Centre sits behind the East Street frontages, directly west of the subject property. The Bargate Centre was purchased last year by Tellon Capital. Tellon are proposing a comprehensive redevelopment of the site.

They conducted a public exhibition earlier this year and are anticipated to submit a full planning application by the end of the year.

They are envisaging a single level high end retail and leisure scheme that will open up the historic city wall (currently largely hidden from view). The subject property will effectively anchor the eastern end of this new thoroughfare.

Directly east of the subject property sits the site of the former East Street Shopping Precinct. This site is currently being redeveloped by Kier Property into a mixed use development comprising a food supermarket and 156 student flats. Kier will retain and refurbish the existing 12 storey tower that sits on the site.

Indicative site boundaries only

DESCRIPTION Southampton, SO14 1NH

The property was built in 1959 and comprises a substantial purpose built department store occupying a site of approximately 2.523 acres. The accommodation totals some 285,300sq ft which makes this the largest department store on the south coast.

The property has been measured on a GIA basis as follows:

Description Sq Ft Sq M

Basement Ancillary 46,424 4,312.9

Ground Floors Sales and Loading 108,045 10,037.6

First Floor Sales 50,960 4,734.3

First Floor Mezzanine 9,601 892.0

Second Floor Sales 50,850 4,724.1

Second Floor Mezzanine 9,735 904.4

Third Floor Mezzanine 9,689 900.1

TOTAL 285,303 26,505.4

TENANCY The property is let in its entirety to Debenhams Retail Plc for a term of 30 years expiring 24th March 2034 on full repairing and insuring terms (approximately 17.6 years unexpired). Upon expiry, the tenant has the right to renew for another 25 years. The current rent is £1,823,860 per annum exclusive, reflecting £6.39 psf GIA overall.

The rent is subject to annual fixed uplifts of 2.50% per annum from March 2017 until March 2019. There are then 5 yearly rent reviews which are upward only to the higher of Market Rent or 2.50% fixed uplifts.

The building is arranged over basement, lower ground, ground, first and second floors. First and second floors provide approximately half cover; the rear of the building being single storey. The lower ground, ground, first and second floors of the property are mainly used for the purposes of retail sales. The third floor is used for storage and staff purposes.

The building is of a concrete encased steel frame construction. The main roof is flat with an asphalt finish. The roof over the rear single storey section is of a northern light construction with profile sheeting.

Floors are mainly insitu concrete with the exception of the upper floors on the Queensway frontage which are of suspended timber.

The main customer entrance to the store is off the Houndwell Place roundabout with additional entrances provided off Queensway and Houndwell Place. Servicing is provided via a loading bay accessed off East Street on the southern side of the building. A concrete canopy projects over the pavement line on the main 3 elevations affording protection from the elements for customers.

Assuming the minimum 2.50% uplifts at the 2024 and 2029 reviews, the rent will increase as follows:

Date Rent (£ per annum)

Current 1,823,860

March 2017 1,869,457

March 2018 1,916,193

March 2019 1,964,097

March 2024 2,179,360

March 2029 2,465,746

COVENANT Southampton, SO14 1NH

Debenhams is the United Kingdom’s second largest department store brand and a leading international, multichannel retailer with a proud heritage that dates back to the 18th century.

The company currently trade from 240 stores in 27 countries and online in 67 countries. Since the last recession, they have paid off around 2/3rds of their corporate debt.

Debenhams Retail Plc has a Dun & Bradstreet rating of 5A1, reflecting the lowest risk of business failure with a financial strength based the company’s net assets of £1.07 billion. For the year ending August 2015 Debenhams’ sales turnover was £2,099 million. Their operating profit over the same period was £140.2 million. For the last three years available, Debenhams Retail Plc have reported the following financial results:

5A1RATING

Experian Rating:“Low Risk”D&B: 5A1

Year Ending29 August 2015£000’s

Year Ending30 August 2014£000’s

Year Ending31 August 2013£000’s

Turnover 2,099,300 2,085,900 2,075,600

Profit Before Tax 140,200 165,000 228,100

Tangible Net Worth 922,800 1,015,900 895,800

Net Current Assets 537,100 424,000 339,400

ASSET MANAGEMENT & REDEVELOPMENT POTENTIAL

Debenhams are understood to trade well from the property following their extensive re-fit in 2011.

At 285,000 sq ft, however, the store is one of their largest in the UK and they have a surfeit of space.

Debenhams have contacted the vendors and preliminary discussions have taken place as to the potential opportunity for downsizing Debenhams on the site, freeing up a significant part of the site for development.

Schematic architects’ plans have been drawn up indicating how the rear, single storey, part of the site (0.93 acres) might be redeveloped to provide between 130,000sq ft and 220,000sq ft of new residential / student

housing / hotel accommodation overlooking Hoglands Park. Further details upon request.

Misrepresentation Act:CWM & Partners LLP for themselves and for the vendors/lessors of the property whose agents they are, give notice that:1. These particulars are set out as a general outline for the guidance of the intended purchasers or lessees, and do not constitute part of, an offer or contract; 2. All descriptions, dimensions, reference to, tenure, tenancies, condition and necessary permissions for the use and occupation, and other details are given without responsibility and any intending purchaser or tenant should not rely on them as statements or representations of fact but must satisfy themselves by inspection or otherwise as to the correctness of each of them; 3. No person in the employment of CWM & Partners LLP has any authority to make or give any representations or warranty in relation to this property.

OFFERS IN EXCESS OF

£31,250,000(Thirty One Million Two Hundred and Fifty Thousand Pounds)

exclusive of VAT, subject to contract.

Reflecting an attractive Net Initial Yield of 5.47% with a Nominal

Equivalent Yield of 6.62% and a Reversionary Yield (2029) of 7.39% assuming full purchaser’s costs of 6.77%

VAT The sale will be treated as a Transfer of a Going Concern (TOGC)

ASSIGNABLE SURVEYS Assignable building and measured surveys will be made available to the purchaser.

EPCAn EPC is available on request.

PLANNING We understand that the property is neither listed nor sits within a conservation area.

Inspections are to be arranged strictly by arrangement with the vendor’s sole selling agents.

JOHN MILESDDL: 020 7494 6922Mob: 07789 243 998jhm@cwm.co.uk

JULIAN NORBURYDDL: 020 7494 6924Mob: 07758 578 664jpn@cwm.co.uk

Assuming the minimum 2.50% annual fixed uplifts, a purchase at this level would reflect the following running yields for the

duration of the lease:

20175.60%

20185.74%

20195.89%

20246.53%

20297.39%