PRIME OFFICE INVESTMENT OPPORTUNITY WITH POTENTIAL FOR A VALUABLE REVERSION

BRIGHTON 41-46 FREDERICK PLACE, BN1 4EA

BRIGHTON 41-46 FREDERICK PLACE, BN1 4EA

INVESTMENT CONSIDERATIONSn Brighton is a major commercial centre in

the south east, located 53 miles south of London

n Situated in the heart of the central business district approximately 100m from Brighton train station

n Office building comprising 1,528 sq m (16,449 sq ft) with car parking for 21 cars at the rear (1 space : 780 sq ft)

n Let to a leading legal practice with c. 21 years unexpired

n Several asset management opportunities including considering a lease surrender and adding further floors

n Low current passing rent of £176,358 pa (£10.72 psf) - 77.5% of open market rental value

n Freehold

n Offers are sought in the region of £4,000,000 (Four Million Pounds), subject to contract and exclusive of VAT. A purchase at this level reflects a net initial yield of 4.1% and a reversionary yield of 7% (based on a ERV of £18 psf) and a low capital value of £249 psf assuming purchaser’s costs of 6.54%.

BRIGHTON

BRIGHTONPIER

ROYALPAVILLON

PAVILLONGARDENS

STEINEGARDENS

VICTORIAGARDENS

ST. PETER’SCHURCH

CHURCHILLSQUARE

CLIFTONGARDENS

CLOCK TOWER

THE LANES

THE DOME

BRIGHTONCENTRE

THE GRAND

Que

en’s

Sq

Church Street

Por

tland

Str

eet

S

prin

g G

arde

ns

Bon

d S

tree

t

Kingswood St

Carlton Hill

Madeira Drive

Edward St

Edward St

East

St

Pool Valle

y

Mid

dle

Str

eet

Ship S

treet

Ship StPrince Albert St

East S

t

Bla

ck

Lion

St

Western Road

B2118 St Jame’s St

D

yke Road

North Street

Upper N St

Trafalgar St

Fred

rick

Pl

Fred

rick

St

Syd

ney

St

A23

Pav

illon

Par

ade

Gra

nd P

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A23

Glo

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Mar

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Old

Steine

Old Steine

Marine Parade

A259 King’s Rd

Term

irus Road

Wes

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Que

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Roa

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North Rd

A217A331

A264

A264

A272

A229

A259

A272

A272

A283

A259

A23

A24

A31

A22

A22

A22

A22

A26

A26

A26

A26

A25

A21

A21

A21

A27

A27

A27

A27A27

A27

A22

A22

A24

A24

A24

A24

A23

A23

A3

A3

M25

M23

M23

M25

LondonGatwick Airport

BRIGHTONWorthing

Hove

Crawley

RedhillReigate

LONDON

Guildford

Horsham

Tunbridge

RoyalTunbridge

Wells

HaywardsHeath

Burgess Hill

Hassocks

Lewes

Newhaven

EastbourneSeaford

Hailsham

Bexhill

Falmer

EastGrinstead

Crowborough

Littlehampton

BognorRegis

PRIME OFFICE INVESTMENT OPPORTUNITY

LOCATIONThe city of Brighton and Hove is one of the major commercial, cultural and tourist centres in the South east located 76 km (47 miles) south of London, 37 km (23 miles) south of Gatwick Airport and 67 km (42 miles) east of Portsmouth.

Brighton benefits from excellent transport links with the A27 providing rapid access east and west and the A23 linking the town with the M23 in the north and in turn, the M25.

The town is easily accessible by rail with a regular fast train service to both London Bridge and London Victoria, with a fastest journey time of 55 minutes. International air travel is provided by London Gatwick airport.

© Crown Copyright, ES 100004106. For identification purposes only.

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DESCRIPTIONThe building is of brick construction (built in 1977) arranged over lower ground, ground and three upper floors. Internally the building benefits from suspended ceilings with integral lighting, central heating with a single 8 person passenger lift to all floors.

The major subtenant, DC Storm, have fitted out their accommodation to a high, modern standard with kitchen/break out facilities on each floor.

To the rear of the property, there is a car park with capacity for 21 cars which is accessed from Gloucester Road.

SITUATION The property occupies a prominent corner position on Frederick Place at its junction with Gloucester Road. Frederick Place runs parallel to Queens Road in the heart of Brighton’s business district, within 100m of Brighton Railway Station.

The city’s retail heart is within a short walk, with The Lanes, Brighton’s famous shopping streets approximately 500m to the south east and Churchill Square the same distance to the south west.

Local amenities on Queens Road include supermarkets, cafés, restaurants and hotels which provide for the large office community in the area.

BRIGHTON 41-46 FREDERICK PLACE, BN1 4EA

COVENANT INFORMATIONThe property is let directly to the partners of the law firm DMH Stallard LLP.

DMH Stallard LLP produced the following headline accounts over the last 3 years:

30 June 2013 30 June 2014 30 June 2015

Turnover £18,726,182 £19,195,793 £21,063,371

Pre-Tax Profit £5,257,405 £5,614,219 £6,299,591

Total Net Worth £3,885,134 £5,188,154 £6,150,219

TENANCYThe entire property is let to TC Whitney, Quintin Barry, Paul S Bennett and Roger J Hartwell t/a DMH Stallard LLP for a term of 25 years from 24 June 2012 (expiring 23 June 2037) on a full repairing lease at a current rent of £176,358 pa (£10.72 psf). The rent is reviewed every 5 years and is restricted to 77.5% of the Market Rent by review clause. The 2015 rent review is currently outstanding.

SUB-TENANCY SCHEDULEThe property has been sub-let by the tenant - details of the sub-lettings are below:

PRIME OFFICE INVESTMENT OPPORTUNITY

ACCOMMODATIONThe properties provide the following approximate net internal areas:

Sq m Sq ft

Lower Ground Floor Stores 227.6 2,450

Ground Floor South Office 72.2 777

Ground Floor North Office 265.2 2,855

First Floor South Office 72.2 777

First Floor North Office 269.1 2,897

Second Floor South Office 72.2 777

Second Floor North Office 265.2 2,855

Third Floor Office 284.4 3,061

Totals 1,528.1 16,449

TENUREFreehold.

Accommodation Tenant Area (Sq M)

Area (Sq Ft)

Lease Start Lease Expiry(Break)

Rent pa

Rent (psf) Comments

Basement Store Watts & Lowe Ltd 151.99 1,636 17/07/16 30/11/20 £9,348 £5.70 Annual service charge £10,906

Basement Offices DMH Stallard (not in occupation) 65.03 700 23/06/37 £0 Available to sublet

Ground Floor South SJD Accounting 70.61 760 14/08/12 14/08/17 £11,400 £15 Annual service charge £4,710, maximum service charge £6.20 psf

Ground Floor North Southdown Housing Association 262.73 2,828 23/09/14 23/09/2019(23/03/2017)

£38,178 £13.50 Annual service charge is £19,796, maximum service charge £7 psf

1st (South)

DC Storm

70.61 760

01/12/15 30/11/2020(30/11/2018) £130,620 £13.08

Rental uplift to £149,820 pa from 28/11/2018Service charge is £6psf for 2nd and 3rd floors and £7psf for 1st flooruntil 28/11/2018 when all floors are £7

1st (North) 262.73 2,828

2nd (South) 69.12 744

2nd (North) 262.73 2,828

3rd (North) 262.73 2,828

3rd (South) DMH Stallard (not in occupation) 15.79 170 23/06/37 £0

Totals 1,494.05 16,082 £189,546 rising to £208,746 in Nov 2018

BRIGHTON 41-46 FREDERICK PLACE, BN1 4EA

BRIGHTON OFFICE MARKETBrighton and Hove is an established office market with a good mix of financial institutions as well as media and technology companies attracted to the city by the culturally diverse lifestyle. Major tenants include American Express, Legal & General, LBG, Epic Multi-Media Group, Domestic and General and Iris Connect.

Despite the emergence of the media and technology markets Brighton’s office stock has hardly changed since the mid 1980’s with an estimated 85% of Brighton’s 4 million sq ft of stock built before 1987. The only major schemes within the city centre in the past 25 years have been Trafalgar Place (250,000 sq ft) and Amex’s 220,000 sq ft new HQ building at 1 John Street which replaced its previous HQ comprising 300,000 sq ft.

It is estimated that circa 750,000 sq ft of city centre offices have been removed from Brighton’s office stock in the past decade as demand for housing and student housing made change of use away from offices profitable for owners of ‘tired’ office buildings. This has served to enhance further the supply shortage in the city.

Two new office schemes are addressing the supply shortage with McAleer & Rushe’s speculative CityView, located north of the train station, adding 32,000 sq ft of office accommodation having been completed in March 2016.

The second development is Cathedral Group’s Circus Street scheme where a 30,000 sq ft building is likely as part of a £100 million mixed use development with the office space targeting smaller and fast growing tech companies - this is situated a short distance to the south east of the subject property.

Brighton offers attractive headline rents for Grade A space for occupiers in comparison to other regional centres in the South East. Woking prime rents currently sit at £26 psf in comparison to £34 psf in Reading Town Centre, £35 psf in Maidenhead, £31 psf in Guildford and £32 psf in Uxbridge.

Given the constrained nature of supply, the arrival of new space at Sovereign House, led to a step increase in rents. Over 2013 this good quality stock begun to be taken up, with deals to Groundsure and OSTC recorded. This demand continued over 2014 and 2015 as Pegasus, Zurich and Iris Connect took space. Groundsure was the highest rented deal of this period achieving a rent of £23.50 psf. The slight premium on the Groundsure deal reflected the desirability of the south facing, sea view office in question.

Into 2016 the latest 16,000 sq ft deal to Unity Technology at the CityView development which was completed in March 2016. The rent achieved was £27.50 psf, indicating considerable pressure at the prime end of the market, where supply is particularly constrained. With an additional letting to RocketMill at the building going through at £25.50 psf (the space is at garden level) only 12,000 sq ft remains available to let. Quoting rents at the site have subsequently been pushed up to £29.50 psf.

A lack of supply is helping to drive rental growth with top headline rents currently at £26 psf as evidenced by the recent letting in CityView. The letting to Dyn in Queensberry House, Queens Road also provided a headline rent of circa £26 psf. With a limited supply of good quality office space it is envisaged that rents will continue to rise throughout 2016.

We believe that following a light refurbishment of the property, a rent in the region of £18-£20 psf can be achieved - (£300,000 p.a.).

ASSET MANAGEMENT OPPORTUNITIESThere is an opportunity to agree a lease surrender with the tenant which would enable:

a) Direct control of the current subtenants resulting in an increased income to be collected. In the short to medium term an office refurbishment programme could potentially lead to higher rents being achieved within the property.

b) Potential to redevelop the property and extend onto the rear car park to residential (subject to planning).

c) Add further floors to the building :- the roof lends itself to increased development.

EPCSThe property has been rated grade D (85). The EPC is available on request.

VATThe property will be subject to VAT although we anticipate the sale will be treated as a Transfer of a Going Concern.

Misrepresentation Act: 1. Allsop LLP on its own behalf and on behalf of the vendor/lessor of this property whose agent Allsop LLP is, gives notice that: (a) these particulars do not constitute in whole or in part an offer or contract for sale or lease; (b) none of the statements contained in these particulars as to the property are to be relied on as statements or representations of fact; and (c) the vendor/lessor does not make or give, and neither Allsop LLP nor any of its members or any person in its employment has any authority to make or give, any representation or warranty whatsoever in relation to the property. The only representations, warranties, undertakings and contractual obligations to be given or undertaken by the vendor/lessor are those contained and expressly referred to in the written contract for sale or agreement for lease between the vendor/lessor and a purchaser or tenant. 2. Prospective purchasers or tenants are strongly advised to: (a) satisfy themselves as to the correctness of each statement contained in these particulars; (b) inspect

the property and the neighbouring area; (c) ensure that any items expressed to be included are available and in working order; (d) arrange a full structural (and where appropriate environmental) survey of the property; and (e) carry out all necessary searches and enquiries. Allsop is the trading name of Allsop LLP. Design: CommandD www.commandHQ.co.uk 10.16

Jonathan Butcher020 7543 6755

jonathan.butcher@allsop.co.uk

For further information or to make arrangements for viewing please contact:

Alex Butler020 7543 6722

alex.butler@allsop.co.uk

PROPOSALOffers are sought in the region of £4,000,000 (Four Million Pounds),

subject to contract and exclusive of VAT. A purchase at this level reflects a net initial yield of 4.1% and a reversionary yield of 7% (based on a ERV of £18 psf)

and a low capital value of £249 psf assuming purchaser’s costs of 6.54%

BRIGHTON 41-46 FREDERICK PLACE, BN1 4EA

www.allsop.co.uk