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Long Income Office Opportunity with Indexed Rent Increases and Investment Grade Tenant

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Located in Edinburgh, Scotland’s capital city and one of the UK’s Big 6 regional office markets.

Situated within Edinburgh Waterfront which is undergoing significant regeneration.

Recent approval for tram extension to connect Leith and Newhaven.

Award winning, Foster & Partners’ designed Grade A office extending to 94,124 sq ft.

High quality specification and environmental credentials, having achieved BREEAM “Excellent” certification and EPC rating of “B”.

Strong office occupational market with vacancy rate at an all time low of 2.9%.

Fully let to GB Gas Holdings Ltd (5A2 Dun & Bradstreet rating) for 16 years on a full repairing and insuring lease expiring on 14 February 2035, subject to a tenant break option on 14 February 2030.

Guaranteed by Centrica Plc, a member of the FTSE 100 index with a market capitalisation of £6.095 billion and investment grade credit rating of BBB from Standard & Poors.

Current passing rent of £1,658,268 per annum (£17.70 per sq ft) with 5 yearly CPI linked compounded reviews with an annual collar and cap of 1% and 4% respectively.

Heritable tenure (Scottish equivalent of English Freehold).

The tenant has a long-standing history with the location from the 1970’s and recently extended this with a lease re-gear for a further 16 years.

I N V E S T M E N T S U M M A R Y

Offers are invited in excess of £24,000,000 (Twenty-Four Million Pounds Sterling) for the share capital in the Guernsey domiciled SPV which owns the asset.

A purchase at this level would represent a net initial yield of 6.79% and a low capital value per sq.ft of £255, based on purchaser’s costs of 1.80%. Offers for the asset will also be considered.

Landmark office investment, let in its entirety to GB Gas Holdings Ltd (British Gas) as their operational headquarters in Scotland.

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Edinburgh offers a high quality of life, a rich creative environment and prime investment opportunities which continue to attract visitors, graduates and businesses year after year.

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Technology is one of the fastest growing sectors and according to Oxford Economics, has a GVA of £1bn with projected growth of 22% by 2022. Edinburgh is home to key technology companies such as Computershare, Skyscanner, Rockstar North, Cirrus Logic, Fanduel, Craneware and FNZ and is home to the UK’s largest Tech Incubator. Demand from this sector continues as more

technology companies seek to locate to Edinburgh and take advantage of its highly educated workforce to source their talent.

Edinburgh benefits from a uniquely collaborative tech environment, from high tech manufacturing to start up innovations. It offers a broad range of technology arenas such as Fintech, MedTech and EdTech.

DY N A M I C A N D P R OS P E R O U S

Edinburgh was the fastest growing tech hub in 2017.

Edinburgh, the capital city of Scotland, is consistently recognised as one of the most prosperous cities in the UK, having the strongest economy of any city outside of London. It is a globally recognised financial centre and is home to the Scottish Government. The population of the city is estimated at 513,200, increasing to 1.36m within the ‘Edinburgh City Region’ area.

The population is projected to grow by 20% by 2039, making it one of the UK’s fastest growing cities.

72.8% of the working age population is in employment, making it one of the UK’s most economically active populations.

35,000 new overseas workers were registered in the last 3 years, adding to a diverse and highly qualified workforce.

The University of Edinburgh has committed to training 100,000 data scientists over the next 10 years.

Edinburgh was named ‘Europe’s most attractive destination for technology businesses to locate’ by European Business Magazine.

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The city is a major centre of education in the UK boasting 8 universities and further education colleges, providing an educational hub for over 80,000 students, including more than 16,000 international students.

Many students opt to stay after their studies and the constant stream of emerging talent is highly attractive for businesses.

Heriot-Watt University, is currently building a £19 million Discovery and Innovation Centre, which will be focused on computer science and technology.

Edinburgh is rated 1st in the FDI Strategies “Global Cities of the Future” and best “Mid-Sized European City of the Future” by the Financial Times fDi Magazine.

University of Edinburgh was ranked 6th in the UK and 27th in the World University Rankings in 2018.

Edinburgh’s workforce is one of the most highly educated in the UK with 55% holding a degree or professional level qualification.

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S I T U A T I O N

The property is situated within Granton, 3.3 miles north of Edinburgh city centre, at the shore of the Firth of Forth. The subject property is located on the former site of Scotland’s largest gasworks and now forms part of the award winning Edinburgh Waterfront regeneration.

Edinburgh benefits from excellent connectivity locally, nationally and internationally thanks to a world class transport infrastructure.

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R O A D Edinburgh has excellent road communications with direct access to the national motorway network. The city is served by the M8 from the west (Glasgow and Livingston), the M90/A9 from the north (Aberdeen and Inverness) and the A1 and A7 from the south/south east (the Borders, East Lothian and Newcastle).

Centrica is situated next to West Granton bus terminus and can be easily accessed via public transport. Lothian 24, 38, 47, 113, X37 and X47 all stop outside the building while Lothian 8, 14, 16, X29, N16 and Skylink 200 all stop on West Granton Road which is only a 6 minute walk from the building.

A I REdinburgh Airport is located 8 miles west of the city centre and is easily accessed via the motorway network or directly from the city centre by bus or tram. The airport is Scotland’s busiest airport and it is the sixth largest international airport in the UK. This year, passenger numbers hit a record high with close to 1.5 million passengers in the month of July 2018, up 6.3% on the same month in 2017.

Edinburgh Airport was sold to Global Infrastructure Partners for £800m in April 2012. The new owners secured deals with airlines, including EasyJet, Virgin Atlantic and Qatar Airways, to increase the number of destinations

served from Edinburgh and increase the number of flights to existing destinations. Since their ownership, £25 million has been spent on a new landside terminal extension, security hall and £19 million south east pier extension. Over the next few years, there is to be additional retail, improved check in and immigration facilities included as part of a £125 million investment programme.

With over 37 airlines operating from Edinburgh, the terminal offers both business and leisure travellers a choice of some 153 destinations across the globe.

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R A I LEdinburgh also benefits from exceptional railway services and facilities following recent multi-million-pound refurbishments, line extensions and upgrades. The stations provide direct train services to and from London on the east coast rail network and are easily reached from other main English towns and cities, as well as providing Scottish services to all major centres.

T R A MThe existing tram currently runs from Edinburgh Airport to York Place. Approval has now been granted to proceed with completion of phase 1A, extending the tram line to connect Leith and Newhaven. The project is due for commencement at the end of March 2019 with a target opening in early 2023. Phase 1B will further extend the line from Newhaven, through Granton Waterfront and linking to Roseburn and the existing line. The extension will connect the airport, city centre, Leith and Newhaven adding to the already excellent communication links to the property.

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E D I N B U R G H W A T E R F R O N T

Centrica lies within the Edinburgh Waterfront, a length of coastline running from Granton Harbour to the Leith Docks which will be significantly regenerated. In 2018, the Council purchased Forthquarter, increasing their holdings in the area to over 120 acres providing the opportunity for coordinated re-generation.

The City of Edinburgh Council along with its partners; National Galleries of Scotland, National Museums of Scotland, Edinburgh College, Scottish Government and Scottish Futures Trust, will work together to engage the community to shape plans to revamp the site which has over the last two decades been subject to slow and piecemeal development.

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3 . P L A C E S F O R P E O P L E

‘55 Degrees North’ is a development of new houses and apartments on the waterfront by Places for People. The first phase includes 101 new homes and is due for completion in summer 2019 and the second phase includes 89 new homes and 38 MMR homes is due for completion in May 2020.

For more information, please visit: http://www.55dn.co.uk/

7. P O R T O F L E I T H H O U S I N G A S S O C I A T I O NThe site at Plot 3, Granton Harbour was acquired by Port of Leith Housing Association in 2008, there is planning consent for 46 new social homes and 58 new MMR homes with a target completion date of August 2020.

For more information, please visit: http://www.polha.co.uk/new-homes/development-prog./current-developments/plot-3-granton-harbour

The site at Plot S, Granton Harbour was acquired by Port of Leith Housing Association in 2014. There is consent for 200 social homes and 102 MMR homes and the target date for completion is April 2022.

For more information, please visit: http://www.polha.co.uk/new-homes/development-prog./current-developments/plot-s

1 . C O U N C I L O W N E R S H I P

A Development Framework which focuses on delivery is being produced and will be presented to the Planning Committee in late spring / summer 2019 for approval as non-statutory planning guidance. The vision for the area is to include up to 4,000 new homes, services, retail and high quality public realm to be built over the next 10-15 years.

5 . N A T I O N A L M U S E U M S S C O T L A N D

A new state-of-the art collections research, access and storage facility was opened in 2015. The new three storey building, which houses nearly ten million objects was funded by the Scottish Government and stands at nearly 15 metres in height and has a floor area of approximately 6,000 square metres.

For more information, please visit: https://www.nms.ac.uk/about-us/press-office/2015-nmcc-june-open-day/

6 . N A T I O N A L G A L L E R I E S S C O T L A N D

Within the boundaries of the Edinburgh Waterfront, the National Galleries for Scotland are redeveloping the B Listed Madelvic car factory as the location of its new facility. The redevelopment will be a substantial high-profile project for the area and will contribute to regeneration by expanding social amenities, encouraging employment, enhancing cultural activity, and providing an economic stimulus. The facility offers an additional 14,000 square metres of quality space on the area currently available, making the collection more accessible to the public than ever before.

For more information, please visit: https://www.nationalgalleries.org/art-and-artists/features/national-collections-facility

2 . E D I N B U R G H M A R I N A

Edinburgh Marina is a new waterside development. This world class development will contain new homes around the 373-berth marina and Spa Hotel. Hyatt Regency has been confirmed as the operator for the hotel.

For more information, please visit: https://edinburgh-marina.com

8 . E D I N B U R G H C O L L E G E

Edinburgh College is one of Scotland’s biggest Colleges with around 19,000 students across 4 campuses in Edinburgh and the Lothians.

The campus at Granton is a modern, state of the art building, including fully equipped sports halls.

For more information, please visit: http://www.edinburghcollege.ac.uk/

4 . L I N K G R O U P Funded in partnership with the Link

Group, The Scottish Government and Edinburgh City Council, the development includes 132 MMR homes which are due for completion in December 2019.

For more information, please visit: https://linkhousing.org.uk/what-we-do/development/where-we-are-building/granton-harbour-edinburgh/

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Places for People

Port of Leith Housing Association

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Edinburgh College

Other Ownership

Sketch map showing indicative ownership boundaries

Places for People101 New Homes

Completion - July 2019

Places for People89 New Homes

33 New MMR HomesCompletion - May 2020

Link132 New MMR HomesCompletion - Aug 2021 Port of Leith

200 New Social Homes102 New MMR HomesCompletion - Aug 2021

Port of Leith46 New Social Homes58 New MMR Homes

Completion - Aug 2021

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Full height atrium with open balconies at each floor and staggered walkways.

Fully accessible raised access floors with minimum clear void of 350mm.

Large, open plan, u-shaped floorplates.

Finished floor to ceiling height of 2.8m.

Highly efficient cooling system via a combination of displacement ventilation with passive chilled beams.

High occupational density of 1 person per 6 sq m.

Exposed mass concrete coffered soffit with ceiling rafts carrying chilled beams and LG3 compliant lighting.

BREEAM ‘Excellent’ certification.

3 x KONE 17-person passenger lifts serving all floors and 1 x 17 person goods lift.

Male, female and disabled toilets on each floor.

High quality catering and wellbeing facilities on ground floor.

Shower facilities on ground floor.

Electric charging points in car park.

Cafe operated by Starbucks.

D E S C R I P T I O N

The property was completed in 2003 as the flagship HQ office for Scottish Gas. The award winning building provides Grade A accommodation over ground and 3 upper floors.

The property provides flexible, open plan office accommodation arranged around an impressive full height atrium.

The building set a new standard for office accommodation and has received several design awards including the Scottish Design Award for Commercial Interior and the British Council for Offices National and Regional Awards for Commercial Workplace.

Each elevation of the building is fully glazed, providing spectacular views across the Firth of Forth at the rear. A silver anodised “Brise-soleil” surrounds the building, delivering a striking external appearance, and combined with high performance glazing helps achieve an ideal balance between natural light penetration and solar protection.

The building exploits the natural slope of the land it sits on, creating a concealed external car park, which together with a secure undercroft car park provides 198 spaces (1:475 sq ft) and provision for bicycle and motorcycle storage.

Internally, the building benefits from the following features:

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Floor Description NIA Sq M NIA Sq Ft

Third Office 2,152.8 23,173

Second Office 2,154.5 23,191

First Office 2,153.8 23,183

Ground Office 2,088 22,475

Ground Atrium 111.9 1,204

Ground Reception 83.4 898

Total 8,744.4 94,124

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T E N A N C Y

The property is let in its entirety to GB Gas Holdings Ltd, with a guarantee from Centrica Plc, who have been in occupation since 2003. The property is let on a Full Repairing and Insuring lease expiring 14 February 2035, following a recent 16-year extension. There is a tenant only break option on 14 February 2030 subject to 6 months’ notice.

A 15-month rent free period was provided to the tenant as part of the

lease extension which will be ‘topped up’ by the vendor.

The current passing rent is £1,658,268 per annum which reflects £17.70 per sq ft (assuming the reception is taken at half-rate).

There are 5 yearly rent reviews linked to CPI with a 1% and 4% per annum compound collar and cap. The next review is due on 15 February 2024.

A C C O M M O D A T I O N

The property has been measured in accordance with the RICS Code of Measuring Practice (Sixth Edition) and provides the following approximate areas:

Areas stated are for guidance only. An assignable area referencing report has been produced by Plowman Craven and is included in the data room. All proposals from interested parties should be made on the basis of the area report.

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T E N U R EHeritable interest (Scottish equivalent of English Freehold).

S I T E P L A NThe site extends to approximately 2.9 acres (1.17 Ha), estimated from Promap.

C O V E N A N T

G B G A S H O L D I N G S L T D ( T E N A N T )GB Gas Holdings Ltd is a subsidiary of Centrica Plc. GB Gas Holdings Ltd provides energy and services to home and business customers across the UK through its British Gas subsidiaries.

The company has a Dun & Bradstreet rating of 5A2 and headline financials as follows:

31/12/2017 31/12/2016 31/12/2015

Turnover £1,948,082,000 £1,557,289,000 £767,000,000

Net Profit (Loss) £1,175,014,000 £1,557,289,000 (£80,034,000)

Net Worth £3,550,639,000 £2,792,625,000 £2,903,143,000

C E N T R I C A P L C ( G U A R A N T O R )Centrica is an international energy and services company that supplies energy and services to over 25 million customer accounts mainly in the UK, Ireland and North America through brands such as British Gas, supported by around 15,000 engineers and technicians.

Centrica Plc is a FTSE 100 company with an investment grade covenant, rated BBB by Standard and Poors, and a market capitalisation of £6.095 billion.

For further information please refer to www.centrica.com

T E N A N T C O M M I T M E N TThe tenant has a long-standing history of commitment to the location. The gas works at Granton were operational from the early 1900’s and the functions carried out within the property itself have been in Granton since the 1980’s.

The property was purpose-built for the tenant, completing in 2003. They have recently continued this long-standing commitment to the location with the lease re-gear for a further 16 years. Approximately 1,200 staff are employed within the building, working on a 24/7 basis.

The tenant has and continues to invest substantial capex in the property in order to maintain and improve the modern workplace for its employees.

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WATERFRONT AVENUE

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This plan is published for the convenience of identification only and although believed to be correct is not guaranteed and it does not form any part of any contract. © Crown Copyright. All rights reserved. Licence Number LIG0074.

Centrica1 Waterfront Avenue

EdinburghEH5 1SG

Ordnance Survey © Crown Copyright 2017. All rights reserved. Licence number 100022432. Plotted Scale - 1:1250

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E D I N B U R G H O F F I C E M A R K E T

Edinburgh’s occupier market is currently experiencing historically high levels of demand with critically low supply. Increased leasing has driven vacancy rates down with overall office vacancy in Edinburgh currently at 2.9%, the lowest on record. Grade A vacancy is even more severe, with rates of just 0.23%.

Edinburgh’s office market recorded a solid year of activity in 2018 with nearly 1 million sq ft of space let, but a lack of new Grade A space is set to leave the market severely short of accommodation in 2019. A total of 970,000 sq ft was transacted in 2018, well above the five-year average, and just behind 2017’s record breaking year of 1,100,000 sq ft.

Speculative development has been very limited and any developments which have commenced have experienced strong interest on a pre-let basis. There are only two speculative schemes under construction in Edinburgh – Capital Square, due to complete in 2020, which has 60% pre-let already to Brodies and Pinsent Masons, and The Mint Building, due to complete in 2019, and fully pre-let to Baillie Gifford. This highlights a key trend – as space becomes increasingly tight, many occupiers are addressing upcoming requirements earlier, driving up pre-leasing.

This increasing demand and critical supply imbalance is putting pressure on rental levels.

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Completed Spec Completed pre-let U/C Spec Pre-let Definite Spec Start Likely Spec Start 50/50 Spec Start

New build schemes as at Q1 2019, by year of completion.

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E D I N B U R G H I N V E S T M E N T M A R K E T

The city attracts investment on a truly global basis, with over 50% of volumes annually accounted for by overseas investors. Despite transaction volumes being a record high for Scotland in the first half of 2018, the level of openly available stock in Edinburgh has been limited, with a number of key transactions taking place off-market. For prime office buildings, there are high levels of demand from a range of investors and a lack of stock to satisfy their requirements. Prime yields in the city are currently 4.75%.

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A D D R E S S P R I C E Y I E L D C V/ S Q . F T W A U L T D A T E

Interpoint, Haymarket Yards £18,850,000 6.47% £393 5 years Feb 2019

1 Tanfield, Edinburgh £65,500,000 6.00% £343 6.20 years Oct 2018

40 Torphichen Street, Edinburgh £22,150,000 5.97% £397 5.19 years Aug 2018

Greenside, 12 Blenheim Place, Edinburgh £16,725,000 5.50% £442 c. 4 years Jul 2018

Princes Exchange, New Uberior House, Edinburgh £70,500,000 5.61% £397 8.00 years May 2018

K E Y E D I N B U R G H T R A N S A C T I O N S

A D D R E S S P R I C E Y I E L D C V/ S Q . F T W A U L T D A T E

The Mint Building, Edinburgh £53,200,000 4.50% £735 15 years June 2018

Atlantic Quay 3, Glasgow £50,100,000 3.60% £623 25 years Dec 2017

122 Waterloo Street, Glasgow £65,600,000 5.60% £427 15 years (10 years to break) Nov 2017

St Vincent Plaza, Glasgow £76,200,000 5.75% £441 10 years Nov 2017

10 Canons Way, Bristol £95,500,000 5.19% £541 15 years Nov 2017

GPU New Waverley, Edinburgh £105,705,000 5.30% £558 10 years (offices) 35 years (car park) Jul 2017

L O N G I N C O M E C O M P A R A B L E S

P A G E 2 0

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P A G E 2 1

T H E U K R E A L E S T A T E L E N D I N G M A R K E TA broad lender audience, stable lender competition and continued historically low interest rates ensure accretive financing solutions are available.

The UK lending market remains robust. UK banks are well capitalised.

The pool of lenders active in the UK remains diverse and alternative lenders are becoming more competitive as UK banks seek opportunities lower down the risk curve.

Secure income from a property such as this will be attractive to a number of lenders and competition between them will ensure low margin pricing.

The JLL Debt Advisory team have discussed in principle terms with lenders and have been provided with the following outline terms:

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Remaining Capital Allowances are available by separate negotiation, further information is available in the dataroom.

E P CThe property has an EPC rating of “B”. A copy of the Energy Performance Certificate is available in the data room.

VA TThe property has been elected for VAT and therefore VAT will be payable on the purchase price. However, it is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

D A T A R O O MA data room has been set up and details can be provided by the selling agents to interested parties.

P R O P O S A LOffers are invited in excess of £24,000,000 (Twenty-Four Million Pounds Sterling) for the share capital in the Guernsey domiciled SPV which owns the asset.

A purchase at this level would represent a net initial yield of 6.79% and a low capital value per sq.ft of £255, based on purchaser’s costs of 1.80%. Offers for the asset will also be considered.

A D D I T I O N A L I N F O R M A T I O N

UK Clearing Bank UK Insurance Company

Quantum £14,880,000 £14,440,000

Loan term 5 years 7 years

LTV 62.00% 60.00%

Margin 1.90% 2.05%

Benchmark 5 Year Swap 7 Year Gilt

Cost of funds 3.14% 3.02%

Repayment Interest only Amortising to 58.00% LTV

Average c-o-c returns 12.12% 11.27%

The JLL Debt Advisory team would be delighted to talk to interested parties about these, and other, potential financing solutions.

David BarryT +44 (0)207 087 5626E david.barry@eu.jll.com

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C O N T A C T I N F O R M A T I O N

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Colin Finlayson+44 (0)131 301 6721colin.finlayson@eu.jll.com

Janey Douglas+44 (0)131 301 6718janey.douglas@eu.jll.com

Cathal Keane+44 (0)131 300 0296cathal@sheridanproperty.co.uk

Noel Tiffney+44 (0)207 112 8046noel@sheridanproperty.co.uk

For further information or to arrange an accompanied inspection, please contact the joint selling agents:

All images and CGI’s used within this document are for illustrative purposes. The Agents for themselves and for the vendors or lessors of this property whose agents they are give notice that: (i) the particulars are set out as a general outline only for the guidance of the intended purchasers or lessees and do not constitute, nor constitute part of, an offer or contract; (ii) all descriptions, dimensions, reference to condition and necessary permissions for use and occupation, and other details are given without responsibility and any intending purchasers or tenants 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; (iii) no person in the employment of the Agents has any authority to make or give any representations or warranty whatever in relation to this property. May 2019.