P A L A C EH O U S E

3 CATHEDRAL STREET SOUTH BANK SE1

Prime long let freehold investment opportunity

INVESTMENT Summary 04 / 05

Location 06 / 13

Connectivity 14 / 15

Local Occupiers 16 / 19

Local DEVELOPMENT pIPELINE 20 / 21

Description 24 / 25

Specification 26

Accommodation 27

Floor Plans 28 / 29

Tenure and TENANCY 30 / 31

Covenant Information 32

Asset Management 33

SOUTH BANK MARKET 34 / 35

Contact & FURTHER INFORMATION 36 / 37

Contents

01-02

Freehold.

Located in the thriving South Bank district adjacent to Borough Market. London Bridge station is within a five minute walk from the property.

Currently under refurbishment by Kaplan, the property comprises 45,012 sq ft (4,182 sq m) of accommodation arranged over ground and five upper floors. The accommodation includes 43,083 sq ft (4,002 sq m) of office and ancillary accommodation and a retail unit at part-ground and part-first floor extending to 1,929 sq ft (179 sq m).

The office space is single let to Kaplan Estates Limited guaranteed by Kaplan UK Limited, a 5A1 rated company, for a term of 15 years expiring 31st August 2032, with a tenant option to determine on 31st August 2027. The overall passing rent of the office accommodation is £2,453,165.50 per annum (£57.76 per sq ft).

The retail unit is let to Nero Holdings Limited t/a Caffè Nero for a term of 15 years from 11th June 2007 expiring 10th June 2022. The rent payable is subject to a minimum base rent of £150,000 per annum and an additional turnover rent (if applicable).

Title includes St Mary Overie’s Dock and the surrounding walkways which are held leasehold from the Equitable Life Assurance Society (ELAS) for a term of 91.25 years at a peppercorn rent.

The total rent passing is £2,603,165.50 per annum (£58.63 per sq ft overall).

The weighted average unexpired lease term is 14.07 years to lease expiry and 9.36 to earliest break.

Headline rents on the South Bank in excess of £70.00 per sq ft with very limited supply of stock coming forward.

Asset management opportunities to better utilise the undercroft parking as retail or leisure use taking advantage of the heavy footfall from nearby Borough Market and longer term redevelopment potential.

Offers are sought in excess of £55,400,000, subject to contract and exclusive of VAT. A purchase price at this level reflects a net initial yield of 4.4% and a capital value of £1,231 per sq ft, assuming purchaser’s costs of 6.78%.

INVESTMENT SUMMARY

PALACE HOUSE 04–05

The South Bank is home to a number of London’s most popular attractions including the London Eye, London Bridge and Borough Market as well as amenities along the river which attract SIGNIFICANT footfall.

OVERVIEW Palace House is located on Cathedral Street in the thriving South Bank district of London adjacent to Borough Market and within a five minute walk of London Bridge which connects the South Bank to the City of London on the North Bank. Cathedral Street is an attractive cobbled pedestrianised street linking Montague Close and Clink Street. The property has a river frontage via St Mary Overie’s Dock, home to the Golden Hinde.

CONNECTIONS

The property benefits from excellent transport links. London Bridge station is within a five minute walk from Cathedral Street which provides access via the London Underground to Canary Wharf within six minutes, Bond Street in the West End within eight minutes and King's Cross within 11 minutes. The City and the Bank of England are a short walk across London Bridge. REGENERATION

There has been significant investment into regenerating the South Bank and the success of schemes such as Sea Containers House (pre-let to Oglivy and Mather), South Bank Central (pre-let to WeWork and DNV) and 240 Blackfriars Road (let to UBM and Boodle Hatfield amongst others) has helped cement the area as one of London’s fastest growing districts and most culturally diverse.

OCCUPIERS

The area continues to attract a mix of occupiers, ranging from multinational corporations to occupiers from sectors including media & tech, professional services, the public sector, serviced offices and banking. Large future developments such as Bankside Quarter (Temasek, Native Land and Amcorp Properties), Elizabeth House (HB Reavis) and eventually the redevelopment of Colechurch House near London Bridge station will further enhance the locality and its surrounds.

Strong occupational demand for South Bank has ensured it is one of London’s fastest growing sub-markets. The lack of prime Grade A space and continued shortage of supply ensures the South Bank now receives unprecedented interest from developers and occupiers alike as a consequence, particularly properties which are close to the river.

IMAGES CLOCKWISE FROM BELOW:– SOUTHBANK CENTRE– CARAVAN (GREAT GUILDFORD ST)– CITY HALL AND TOWER BRIDGE

LOCATION PALACE HOUSE 08–09

LOCATION PALACE HOUSE

With the earliest known records dating back to 1276, Borough Market is London’s Oldest Food Market.

It has been trading on the current site since 1756 and this extraordinary heritage makes it one of the most exciting attractions south of the river.

Borough Market is a source of British and International produce, and is London’s most renowned food and drink market. The market’s stalls, shops and restaurants reflect London’s status as a global city, with traditional British produce sitting alongside regional specialties from around the world.

It attracts significant numbers of locals and tourists, especially on weekends and remains one of London’s most visited attractions.

Borough Market

10-11

St Mary Overie Dock and the Golden Hinde

St Mary Overie Dock is home to The Golden Hinde an English galleon best known for her circumnavigation of the globe between 1577 and 1580, captained by Sir Francis Drake. This is the one full size replica still in existence in London, located within the tenure of Palace House.

The Golden Hinde replica dates from 1973 and since then she has travelled more than 140,000 miles (225,000 km). She has been in St Mary Overie Dock since 1996 where she is open to the public hosting a range of educational programmes.

Designed by the award-winning practice SPPARC Architecture, the 190,200 sq ft Borough Yards scheme is scheduled to open in early 2020. In addition to office accommodation, Borough Yards will provide more than 115,600 sq ft (10,740 sq m) of retail and leisure space.

The Office Group will occupy Thames House and an adjacent building, taking a total of 68,500 sq ft (6,364 sq m), while the new building will incorporate a 6,100 sq ft (567 sq m) Everyman cinema.

The project involves the redevelopment of former wine-tasting venue Vinopolis and neighbouring sites, which front onto the pedestrian path linking the Tate Modern to the west with Borough Market, London Bridge Station and The Shard, close by to its east.

As part of the redevelopment, a new pedestrian lane (Dirty Lane) will create access from Park Street to Bank End. Borough Yards will re-introduce some of the area’s original Elizabethan street names, such as Clink Yard and Soap Yard, celebrating the site’s heritage.

Over 100,000 sq ft of new retail on Clink Street to include 35 retail units and 10 restaurants

Winchester Palace

Winchester Palace was one of the largest and most important buildings in medieval London. Founded in the 12th century by Bishop Henry de Blois, brother of King Stephen, it was built to house the bishops in comfort when they visited London.

The remaining ruins which form part of the old Great Hall, some of which are incorporated into the fabric of the building of Palace House, were revealed in the 1980s and are protected by English Heritage.

Borough YARDS

PALACE HOUSE 12–13LOCATION

Infrastructure Improvements

London Bridge reopened in January 2018 marking the completion of the £1bn redevelopment after more than five years of work. Since work began in 2013, London Bridge has been transformed by Network Rail as part of the government-sponsored Thameslink Programme, while remaining open for the 50 million passengers that use London’s oldest station each year. The vast new concourse, larger than the pitch at Wembley, unites all fifteen platforms for the first time and modern facilities make the landmark station fully accessible for all with step free access to every platform. There are two new entrances on Tooley Street, which will connect the north and south sides of the station, while the completion of the five new platforms will allow Cannon Street services to once again stop at London Bridge. The tracks through and around the station have been entirely remodelled to modernise the infrastructure and to allow more trains to travel through London, reducing delays and bringing more reliable journeys to more destinations than ever before. Throughout 2018 new shops, cafés and leisure facilities will open, fuelling the reinvigoration of the area. Within 10 minutes of the property is London Waterloo Station. It is one of the busiest railway stations in Europe, providing more than half a million passenger journeys a day and 230 million a year. The station is currently being upgraded to enhance passenger capacity by 30%. This is to be done by rebuilding the former Waterloo International terminal, reconfiguring platforms and extending various platforms to house longer trains with more cars. Various supporting shops, restaurants and other facilities will be incorporated into the upgrade works which are scheduled to complete in December 2018.

Palace House benefits from the following excellent transport connectivity;

CONNECTIVITY

P

KING’S CROSS ST PANCRAS

19 minutes

WATERLOO10 minutes

BANK15 minutes

BOROUGH8 minutes

CANNON STREET

10 minutes

LONDON BRIDGE3 minutes

MONUMENT7 minutes

SOUTHWARK9 minutes

BOND STREET16 minutes

CANARY WHARF12 minutes

CITY AIRPORT24 minutes

GATWICK AIRPORT41 minutes

KEY

Walk times

Journey times

Source: TfL

PALACE HOUSECONNECTIVITY 14–15

World class neighbours

BREM

ON

DSEY STR

EET

SNOWSFIELDS

REDC

ROSS

WAY

DRUID STREETWESTON

STREET

STONEY STREET

GREAT GU

ILDFORD STREET

BEA

R LA

NE

SUMNER STREET

GREA

T SU

FFOL

K ST

REET

COPPERFIELD STREET

UNION STREETUNION STREET

UPPER GROUND

HATFIELD

S

ROUPELL STREET

CORNW

ALL ROAD

BURRELL STREET

WIN

DMILL W

ALK

GREA

T M

AZE

PON

D

BARN

HAM

STR

EET

LAFO

NE S

TREE

T

LOMBARD STREET

BREA

D

NEW

UFFOR

D ST

REET

LOWER MARSH

ARUN

DEL STREET

SUMNER STREET

QUEE

N S

TREE

T

TUDOR STREET

TEMPLE A

VEN

UE

RS STR

EET

MID

DLE TEM

PLE LAN

E

PA

RK

STREET

WINCHESTER WALK

CLINK STREET

CARTER LANE

BLA

CKFR

IARS

LAN

E

LIME STR

EET

MAR

K L

AN

E

GREAT TOWER STREET

MIN

CIN

G L

AN

E CRUTCHED FRIARS

COOPER’S ROW

LAVINGTON STREET

EWER

STREET

ST THOMAS STREET

ST THOMAS STREET

UNION STREET

WES

TON

STR

EET

CROS

BY R

OW

NEWCOMEN STREET

SNOWSFIELDS

PARK STREET

GREAT SUFFOLK STREET SOUT

HWAR

K BR

IDGE

ROA

D

GREA

T SUFFO

LK STR

EETHOLLAND STREET

WEBBER STREET

UPPER GROUND

BELV

ERDE

RE R

OAD

COIN STREET

SURREY ROW

TREET

EASTCHEAP

MARK LANE

MIL

LEN

NIU

M B

RID

GE

BLA

CK

FRIA

RS

ROA

DBLA

CK

FRIA

RS R

OA

DBLA

CK

FRIA

RS

BRID

GE

WATERLOO ROAD

WATERLOO BRIDGE

SOUTHWARK STREET

THE CUT

YORK

ROA

D

MARSHALSEA ROAD

BORO

UGH

HIGH

STR

EET

UPPER THAMES STREET

FLEET

TOOLEY STREET

TOOLEY STREET

KING W

ILLIAM STREET

FENCHURCH STREET

TOW

ER B

RIDG

E RO

AD

MIN

ORIESS

STAMFORD STREET

SOUTHWARK STREET

GRACE

CHURC

H S

TREE

T

LON

DON

BRID

GE

BORO

UGH

HIGH

STR

EET

SOUT

HW

ARK

BRI

DGE

SOU

THW

ARK

BRID

GE

ROA

D

VICTORIA EMBANKMENT

VICTORIA EMBANKMENT UPPER THAMES STREET

TOW

ER B

RIDG

E

LOWER THAMES STREET

TOWER HILL

CANNON STREET

CANNON STREET

QUEEN VICTORIA STREET

QUEEN VICTORIA STREET

CANNON STREETSTATION

LONDON BRIDGESTATION

BOROUGHSTATION

SOUTHWARKSTATION

WATERLOOSTATION

BLACKFRIARSSTATION

TEMPLESTATION

BANKSTATION

BLACKFRIARSSTATION

MONUMENTSTATION

MANSION HOUSESTATION

TOWER HILLSTATION

FENCHURCH STREETSTATION

BOROUGHMARKET

BOROUGHYARDS

TATEMODERN

FLAT IRONSQUARE

Local Occupiers

1. PwC2. Time Inc3. ITV 4. Totaljobs5. Mozilla 6. News UK7. TfL8. Telstra 9. Omnicom 10. Ogilvy & Mather11. HSBC12. IBM13. TP Bennett14. WeWork15. Boodle Hatfield16. reForm Architects17. UBM18. Tiffany & Co.

Kraft Heinz Duff & Phelps

Bars & Restaurants

1. London Grind2. Padella3. Roast4. Fish!5. The Breakfast Club6. Honest Burger7. Aqua Shard8. Oblix9. Brindisa10. Elliot’s11. Bedale’s12. Wright’s13. Hutong14. Caravan15. Whiskey Ginger16. Lobos Meat & Tapas17. Hawksmoor18. Hixter

Hotels

1. Shangri-La hotel 2. Mondrian London 3. CitizenM4. London Bridge Hotel5. Novotel 6. Ibis7. Hilton8. Holiday Inn9. Hoxton Hotel (Q2 2018)10. Travelodge

Fitness

1. Fitness First2. Soho Gym 3. Nuffield Health4. Third Space5. No.1 Fitness6. Gymbox

1

1

1

1

1

19

9

5

5

5

5

9

10

5

5

1313

3

3

3

33

11

11

7

77

7

15

15

2

2

2

2

2

10

10

6

6

6

6

6

4

14

14

14

4

4

4

4

12

12

8

8

8

16

16

17 17

18

18

10

10

10

PALACE HOUSELOCAL OCCUPIERS 16–17

LIVERPOOL STREET MONUMENT TOWER HILL TOWER BRIDGE

THE NEWS BUILDING

HMS BELFAST

BOROUGHMARKET

BOROUGHYARDS

LONDONBRIDGE

SOUTHWARKCATHEDRAL

BANK CANNON STREET 30 ST MARY AXE

THE LEADENHALLBUILDING

20 FENCHURCHSTREET

LONDON BRIDGELONDON BRIDGE THE SHARD

THE CITY AT YOUR FEET

18–19PALACE HOUSELOCAL OCCUPIERS

Local Development pipeline

BREM

ON

DSEY STR

EET

SNOWSFIELDS

REDC

ROSS

WAY

WESTON

STREET

STONEY STREET

GREA

T GUILD

FIORM STREET

BEA

R LA

NE

SUMNER STREET

GREA

T SU

FFOL

K ST

REET

COPPERFIELD STREET

UNION STREETUNION STREET

UPPER GROUND

HATFIELD

S

ROUPELL STREET

CORNW

ALL ROAD

BURRELL STREET

WIN

DMILL W

ALK

GREA

T M

AZE

PON

D

UFFOR

D ST

REET

LOWER MARSH

SUMNER STREET

PA

RK

STR

EET

WINCHESTER WALK

CLINK STREET

LAVINGTON STREET

EWER

STREET

ST THOMAS STREET

ST THOMAS STREET

UNION STREET

WES

TON

STR

EET

CROS

BY R

OW

NEWCOMEN STREET

SNOWSFIELDS

PARK STREET

GREAT SUFFOLK STREET SOUT

HWAR

K BR

IDGE

ROA

D

GREA

T SUFFO

LK S

TREET

HOLLAND STREET

WEBBER STREET

UPPER GROUND

BELV

ERDE

RE R

OAD

COIN STREET

SURREY ROW

GREAT DOVERSTREET

BLACK

FRIA

RS R

OAD

BLACK

FRIA

RS R

OAD

WATERLOO ROAD

WATERLOO BRIDGE

SOUTHWARK STREET

THE CU

TYORK

ROA

D

MARSHALSEA ROAD

TOOLEY STREET

STAMFOR

D STRE

ET

SOUTHWARK STREET

LOND

ON B

RIDG

E

BORO

UGH

HIGH

STR

EET

SOUT

HW

ARK

BRID

GE R

OAD

LOWER THAMES STREET

LONDON ROAD

WESTMINSTER BRIDGE ROAD

BOROUGH ROAD

BORO

UGH

HIGH

STR

EET

LONG LANE

WESTMINSTER BRIDGE ROAD

LONDON BRIDGESTATION

LONDON BRIDGESTATION

BOROUGHSTATION

SOUTHWARKSTATION

WATERLOOSTATION

BLACKFRIARSSTATION

LAMBETH NORTHSTATION

WATERLOO EASTSTATION

BOROUGHMARKET

FLAT IRONSQUARE

6

4

1

2

3

5

15

7

8

9

10

11

12

13

14

The South Bank is one of London’s fastest growing sub-markets, fuelled by strong occupational demand has been subject to unprecedented development activity in recent years, with a pipeline to suggest this will continue.

53 GREAT SUFFOLK STREET, SE1

Morgan Capital Partners

Scheme: 30,097 sq ft of office accommodation. Let to George P Johnson & F B Ellmers

Completion: Q3 2017

100 UNION STREET, SE1

Lake Estates

Scheme: 20,419 sq ft of office and retail accommodation

Completion: Q3 2017

251 SOUTHWARK BRIDGE ROAD, SE1

Oakmayne and LonE Star Real Estate

Scheme: 33,368 sq ft of office and retail accommodation

Completion: Q4 2017

BOROUGH YARDS (DIRTY LANE), SE1

Meyer Bergman & Sherwood Thames Venture

Scheme: 68,500 sq ft of office accommodation and 115,600 sq ft of retail and cinema

Completion: Q4 2018

COOPER & SOUTHWARK, SE1

HB Reavis

Scheme: 78,000 sq ft of office accommodation, whole building pre-let to CBRE

Completion: Q1 2018

BANKSIDE QUARTER, SE1

Temasek/Native Land/Amcorp Properties

Scheme: 5.3 acre (mixed use)

Completion: Stage 1 delivery scheduled for 2019

ONE BLACKFRIARS, SE1

Berkeley Group

Scheme: 274 residential units and 121,000 sq ft hotel

Completion: 2018

20 BLACKFRIARS ROAD, SE1

Black Pearl

Scheme: 286 residential units and 277,000 sq ft office scheme

Completion: 2020+

WEDGE HOUSE, 40 BLACKFRIARS ROAD, SE1Ennismore

Scheme: 110,000 sq ft office and hotel scheme to be operated by Hoxton Hotel

Completion: Q2 2018

PARKSIDE, 185 PARK STREET, SE1Delancey

Scheme: 163 residential units with 22,500 sq ft of retail

Completion: 2021+

THE SHELL CENTRE, SE1

Almancantar

Scheme: 790 residential units, 800,000 sq ft of office (pre-let to WeWork) and 80,000 sq ft of retail

Completion: 2019

ELIZABETH HOUSE, SE1

HB Reavis

Scheme: 1.25 million sq ft mixed use scheme

Completion: 2021+

SHARD PLACE, SE1

Sellar Property Group

Scheme: 148 residential units and 19,500 sq ft of retail accommodation

Completion: Q2 2019

BEAR GARDENS APART-HOTEL, SE1

Macro Investments Limited

Scheme: 75 bedroom hotel

Completion: Q3 2018

105 SUMNER ROAD & 133 PARK STREET, SE1Land Sec

Scheme: 200,500 sq ft office scheme

Completion: 2022

1 2 3

4 5 6

7 8 9

10 11 12

13 14 15

PALACE HOUSE 20–21LOCAL DEVELOPMENT PIPELINE

24–25PALACE HOUSEDESCRIPTION

Palace House was completed in 1986 and provides office and retail accommodation totalling approximately 45,012 sq ft (4,182 sq m) arranged over ground and five upper floors.

Currently under refurbishment by Kaplan, the property comprises 45,012 sq ft (4,182 sq m) of accommodation arranged over ground and five upper floors.

The office accommodation comprises 43,083 sq ft (4,002 sq m) to include the reception area arranged over ground and five upper floors. There is also a retail unit at part-ground and part-first floor totalling 1,929 sq ft (179 sq m). The majority of the property provides well-specified part-open plan and part-cellular air-conditioned office accommodation. The second, fourth and fifth floors will be refurbished by Kaplan in line with the agreed Scope of Works. The property benefits from a double-height entrance hall accessed from Cathedral Street, and extensive roof terrace accessed via the stairwell from the fourth floor. Part of the roof is utilised by the Tenant as a terrace and benefits from views over the City to the north. The property also benefits from surface and undercover car-parking for approximately 13 vehicles. There is a public right of way that runs under the building, linking Cathedral Street to Clink Street.

SCHEDULE OF AREASThe property has been independently measured by Plan London in accordance with the RICS Code of Measuring Practice 6th Edition and the International Measuring Standards IPMS. The survey is assignable to a purchaser and a Duty of Care letter can be provided.

Floor Accommodation NIA sq ft NIA Sq m

5th Office 1,283 119

4th Office 9,705 902

3rd Office 11,480 1,067

2nd Office 11,293 1,049

1st East Office 3,696 343

1st West Office 2,423 225

Ground Office 2,590 241

Ground & First

Retail 1,929 179

Ground Reception 613 57

TOTAL 45,012 4,182

CURRENT Specification

The current specification of the office space can be summarised as follows:

— Substantial double height entrance hall.

— Slab to slab of 4.2 metres at ground floor level and over 3.5 metres at first floor and above.

— Male and female WCs.

— VAV Air conditioning.

— Suspended Ceilings.

— Raised Floors.

— Two 10 person lift providing access to the office space.

— One Goods lift refurbished in 2018.

— Access to terrace on the fifth floor with views over City of London and St Paul’s.

The Landlord has agreed to provide a capital contribution to the Tenant of £3,625,620 exclusive of VAT, in respect of the works to be carried out.

SPECIFICATION

PALACE HOUSESPECIFICATION & ACCOMMODATION 26–27

Floor Plans

For indicative purposes only. Not to scale.

Ground floorOffice

2,590 sq ft / 241 sq m

Retail

1,386 sq ft / 129 sq m

Reception

613 sq ft / 57 sq m

First floorEast

3,696 sq ft / 343 sq m

West

2,423 sq ft / 225 sq m

Retail (mezzanine)

543 sq ft / 50 sq m

Third floor11,480 sq ft / 1,067 sq m

Fifth floor1,283 sq ft / 119 sq m

N

Office

Retail

Core

Building Footprint

PALACE HOUSEFLOOR PLANS 28–29

Cath

edra

l STr

eet

PICKFORDS LANE

STON

EY S

TREE

T

WINCHESTER WALK

Winchester Walk

Cathedral Street

Winchester Square

Clink Street

Winchester Palace(Rems of)

St MaryOverie Dock

WinchesterStables

LittleWinchester

Wharf

New HiberniaHouse

HorseshoeWharf

Old Thameside Inn(PH)

Pickfords Wharf

PALACEHOUSE

St Mary Overie’s Dock and the surrounding walkways are held leasehold from the Equitable Life Assurance Society (ELAS) on a lease expiring 9th June 2109 at a fixed rent of a peppercorn. ELAS in turn hold their lease from the Port of London Authority, the Freeholder.

30–31PALACE HOUSETENANCY & TENURE

Tenure & Site

The Freehold boundary is shown edged red. The Long Leasehold is edged blue.

For identification only, on the Ordnance Survey plan.

Tenancy

Tenant Floor Use Area Lease

Start

Lease

Expiry

Next

Review

Tenant

Option

Rent Comments

Sq Ft Sq M £PAX £PSF

Kaplan Estates Limited

5th Office 1,283 119 01.09.2018 31.08.203231.08.2231.08.27

31.08.2027 £74,414 £58.00

Rent commencement 1st March 2020. Outside the security provisions of the L&T 1954 Act.

Kaplan Estates Limited

4th Office 9,705 902 01.09.2018 31.08.203231.08.2231.08.27

31.08.2027 £562,890 £58.00

Rent commencement 1st March 2020. Outside the security provisions of the L&T 1954 Act.

Kaplan Estates Limited

3rd Office 11,480 1,067 04.06.2017 31.08.203231.08.2231.08.27

31.08.2027 £660,100 £57.50

Rent commencement 4th September 2018. Outside the security provisions of the L&T 1954 Act.

Kaplan Estates Limited

2nd Office 11,293 1,049 01.09.2018 31.08.203231.08.2231.08.27

31.08.2027 £654,994 £58.00

Rent commencement 1st March 2020. Outside the security provisions of the L&T 1954 Act.

Kaplan Estates Limited

1st East Office 3,696 343

04.06.2017 31.08.203231.08.2231.08.27

31.08.2027 £351,842.50 £57.50

Rent commencement 4th September 2018. Outside the security provisions of the L&T 1954 Act.1st West Office 2,423 225

Kaplan Estates Limited

Ground Office 2,590 241 04.06.2017 31.08.203231.08.2231.08.27

31.08.2027 £148,925 £57.50

Rent commencement 4th September 2018. Outside the security provisions of the L&T 1954 Act.

Caffè Nero Part Ground & Part First

Retail 1,929 179 11.06.2007 10.06.2022 — — £150,000 £77.76The rent payable is subject to a minimum base rent and a turnover rent (if applicable).

TOTAL 44,399 4,125 £2,603,165.50 £58.63

Notes:Kaplan Estates Limited benefits from 18 months’ rent free from 1st September 2018. The vendor will top up any outstanding rent free period upon completion.

Kaplan Estates Limited will occupy the whole of the office accommodation in Palace House on a floor by floor basis, guaranteed by Kaplan UK Limited, a 5A1 rated company with a parent guarantee from Kaplan Inc. The office accommodation is to be occupied on the ground, first and third floors on a new 15 year term from 4th June 2017, with a 10th year tenant option to determine. The total rent agreed over these three floors is £1,160,867.50 per annum, equating to £57.50 psf.

Kaplan Estates Limited have agreed to a lease over the second, fourth and fifth floors. The tenant will begin works on-site from March 2018, and will have 6 month’s to undertake a refurbishment of the accommodation in line with the agreed Scope of Works. The lease start date for these floors will be 1st September 2018 and will be co-terminus with the other Kaplan leases, with a tenant’s option to determine on 31st August 2027. The total rent passing for these floors will be £1,292,298 per annum, equating to £58.00 psf. The tenant will be granted an 18 month rent free period from Lease Commencement.

The retail unit is let to Nero Holdings Limited t/a Caffè Nero for a term of 15 years from 11th June 2007 expiring 10th June 2022. The rent payable is subject to a minimum base rent of £150,000 per annum and, by way of additional rent, the Turnover Rent.

The Turnover Rent is the sum equal to the amount, if any, by which the Turnover Percentage (12%) of the Gross Turnover exceeds the Base Rent of £150,000.

The office space will be single let to Kaplan, guaranteed by Kaplan UK Limited and Kaplan Inc for a term of 15 years, expiring 31st August 2032 with a tenant only break option on 31st August 2027.

PALACE HOUSE IS held FREEHOLD.

PALACE HOUSECOVENANT INFORMATION & ASSET MANAGEMENT 32–33

Asset Management

Consideration has also been given to a comprehensive redevelopment of the site creating a new building comprising approximately 80,834 sq ft (7,509 sq m) of net internal area as set out below:

Floor NIA sq ft NIA sq m

5th 4,037 375

4th 11,002 1,022

3rd 13,090 1,216

2nd 13,090 1,216

1st 6,717 624

Ground 6,717 624

Basement 13,090 1,216

Lower Basement 13,090 1,216

Total 80,833 7,509

The feasibility study for the new build scheme can be accessed on the data room.

In the short term additional value can be created by converting the undercroft parking at ground floor level into retail or leisure use. SODA architects have produced a scheme which illustrates that between 1,356 sq ft (126 sq m) and 2,077 sq ft (193 sq m) of additional retail space could be created. The total amount of additional area created will depend on the repositioning of the sub-station. SODA have also explored a number of longer term options to add massing through the rationalisation and extension of the 5th floor. An indicative CGI has been produced by Silver Shadow Studio to illustrate these options.

Palace House offers immediate opportunities to add value as well as longer term potential to increase the massing to almost double the existing net area.

Covenant Information

Kaplan is one of the world’s largest and most diverse education providers. Throughout their 75-year history, Kaplan has been a beacon for expanding educational access and a leader in instructional innovation. Kaplan has over 1 million students worldwide in over 30 countries, employing over 19,000 people and partners with over 2,600 business clients and 1,000+ educational partners.

Kaplan Estates Limited is guaranteed by Kaplan UK Limited who have a D&B rating of 5A1, the highest financial strength rating available. In addition, the lease is also guaranteed by Kaplan Inc.

The Dun & Bradstreet ratings for Kaplan Estates Limited and its first guarantor are as follows:

Company D&B Rating

Kaplan Estates Limited

O 2 - O – indicates a financial strength which is undisclosed and 2 indicates a lower than average risk of business failure.

Kaplan UK Limited 5A1 – based on a tangible net worth of £78,033,000 and a minimum risk of business failure.

Nero Holdings Limited t/a CafFè Nero

Nero Holdings Limited was founded in 1997 and now operates more than 800 coffee houses across Europe. Nero Holdings Limited have a D&B rating of 5A1.

Company D&B Rating

Nero Holdings Limited t/a Caffè Nero

5A1 – based on a tangible net worth of £191,791,000 and a minimum risk of business failure.

Kaplan is owned by the Graham Holdings Company, a publicly listed American conglomerate listed on the New York Stock Exchange. Graham Holdings Company also owns the online magazine Slate, Graham Media Group, (formerly Post-Newsweek Stations), a group of five large-market television stations and the now closed Trove (formerly WaPo Labs)—the developers of a news reader app. Graham Holdings Company also owned cable television and internet service provider Cable One until it was spun off in 2015.

Moody’s rates the company Ba1 as at May 2017. More information can be found at www.ghco.com

PRIME RENTS IN EXCESS OF £70.00 PER SQ FT

VACANCY RATE OF c.2.8%

2017 INVESTMENT VOLUMES UP 350% ON 2016

£2.2BN OF INVESTMENT INTO THE SOUTH BANK IN 2017

PALACE HOUSESOUTH BANK MARKET 34–35

South Bank Market

The South Bank office market remains one of Central London’s strongest performing sub-markets. Take-up in 2017 surpassed the long term average with approximately 1.3m sq ft leased across the year. Availability is amongst the lowest across any sub-market in Central London with only 725,000 sq ft of stock available and a vacancy rate of c.2.8%.

The professional sectors remain the dominant type of occupier however the South Bank has also seen a growth in the TMT sector particularly in the areas around Union Street and Great Suffolk Street. With schemes like Borough Yards expected to enhance the retail and amenity offering closer to the River we also expect rents in this immediate location to increase.

Excluding the Shard which has achieved lettings in excess of £100.00psf, prime office rents south of the river are now consistently in excess of £70.00psf, as exemplified by recent lettings within the Blue Fin Building, 240 Blackfriars and the breakdown in rents for the upper floors at HB Reavis' Cooper & Southwark Building.

The following tables shows occupational comparables for both retail and office lettings on the South Bank;

Office Occupational Comparables

Property Tenant Floor Size Psf Term Break Incentives Comments Date

61 Southwark Street CBRE Whole 75,000 £64.00 15 years 12th year 26 months rent free £70.00 on top floor Jan-18

240 Blackfriars Road Peninsular Business Services

17th 11,387 £72.50 - - Undisclosed Sublease Dec-17

240 Blackfriars Road SAP 8th 11,964 £65.00 - - Undisclosed Sublease Dec-17

The Blue Fin Building Undisclosed Part 9th 11,513 £71.00 7 years - 16 months rent free - Dec-17

100 Union Street Kimble G 3,574 £65.00 5 years - Undisclosed - Dec-17

Clink Street The Clearing Consultancy Limited

5th 2,747 £65.00 5 years - 3 months rent free Private roof terrace Nov-17

Union House Ren Ltd 5th and Mezz

6,351 £66.50 10 years 5th year Undisclosed - Nov-17

16 Winchester Walk Howden M&A 1st 3,575 £64.00 10 years 5th year 6 months - Aug-17

90 Union Street Planning-INC 2nd 3,969 £62.50 5 years - 9 months rent free - Jul-17

The Blue Fin Building The Crown Agency Part 7th 14,931 £67.50 8 years - 15 months - May-17

The Blue Fin Building Savio Limited 12th 6,442 £74.00 10 years 5th year Undisclosed - May-17

90 Union Street Sonnedix 3rd/4th 4,805 £66.00 10 years 5th year 8 months rent free up front. Further RF post break

Private roof terrace Apr-17

Investment Comparables

Address Tenure Area (sq

ft)

Tenant Wault to Lease

Expiry (Breaks)

Rent

£ / sq

ft

Price Capital Value

£ / sq ft

Iy Purchaser Completion

Date

38 Chancery - Cursitor, WC2

FH 73,793 70% to WeWork 17.80 (16.90) £58.64 £90,000,000 £1,216 4.50% Sinar Mas Land Under offer

Porters Wharf, 8-14 Crinan Street, N1

FH 44,107 Single let to Macmillan Publishers Limited

11.25 (16.25) £52.40 £48,000,000 £1,088 4.51% KIRKBI Exchanged

99 Gresham Street, EC2

FH 95,717 Multi-let 7.00 (6.30) £61.88 £136,200,000 £1,423 4.07% Million Cities Dec-17

240 Blackfriars, SE1 FH 226,271 Multi-let 8.40 £49.50 £266,500,000 £1,176 3.94% Al Gurg Family Dec-17

Cspace, 37-45 City Road, EC1

FH 63,536 Multi-let to 2 tenants 75% of the space let to creative agency, MullenLowe and 25% to NeuLion

12.00 (9.00) £57.42 £74,000,000 £1,165 4.60% Meadow Partners Nov-17

8 Bouverie Street, EC4 FH 47,183 Single let to Tipall Ltd with a surety from Euromoney Institutional Investor Plc

11.90 £44.79 £48,003,000 £1,017 4.12% Harbor Group International

Aug-17

9-13 St Andrew Street, EC4

FH 16,772 Single let to Rosenblatt 9.80 £50.86 £20,780,000 £1,252 3.80% Get Nice London (Hong Kong Investor)

Aug-17

67 Lombard Street, EC3

FH 93,640 Multi-let to 6 tenants and over 50% let by income to Arthur J. Gallagher

10.20 £56.54 £129,300,000 £1,381 4.10% Ho Bee Land Jun-17

Rose Court, Southwark Bridge Road, SE1

FH 157,144 Single let to WPP 15.00+ £50.91 £190,000,000 £1,209 4.14% M&G Real Estate Feb-17

The table below sets out investment transactions across Central London with a similar leasing profile to the subject property;

OCCUPATIONAL INVESTMENT

According to Union Street Partners total investment volumes on the South Bank totaled around £2.2bn in 2017, approximately 350% up on 2016. Institutional investor interest has been driven by a strengthening occupational market and lack of good quality supply.

As the sub-market matures and the impact of the improvement to infrastructure to London Bridge and Waterloo stations starts to be felt by local occupiers, it is anticipated that demand will increase throughout 2018, particularly from overseas buyers.

In-fact overseas investors accounted for c.63% of investments into the South Bank in Q4 2017, a total of £266m (up c.20% from the previous three years), reinforcing the increasing attractiveness of the location as a core London sub-market.

Retail Occupational Comparables

Property Tenant Floor Size Rent Psf

81 Southwark Street Black Sheep Coffee G+LG 1,229 £75,000 £61.03

Unit 15, Bankside Joe & The Juice G 957 £85,000 £88.82

Winchester Walk Hawksmoor G+LG 4,668 £400,000 £89.69

PALACE HOUSECONTACT & FURTHER INFORMATION 36–37

Planning The property is located in The London Borough of Southwark. It is not listed, but is situated within the Borough High Street conservation area.

Capital AllowancesCapital Allowances can be made available to the purchaser.

VAT The property is elected for VAT. It is anticipated that the transaction will be treated as a Transfer of a Going Concern.

EPCThe property has an EPC rating of C. A copy of the certificate is available upon request.

ProposalOffers are sought in excess of £55,400,000, subject to contract and exclusive of VAT. A purchase price at this level reflects a net initial yield of 4.4% and a capital value of £1,231 per sq ft, assuming purchaser’s costs of 6.78%.

Data Room Further information can be found on the online data room. Please contact the vendor’s agents to request access.

Contacts

For further information, access to the data room or to arrange a viewing please contact:

James Abrahams 020 7588 4433james.abrahams@allsop.co.uk

Chris Room020 7588 4433christopher.room@allsop.co.uk

Marsha Rabinovich020 7588 4433marsha.rabinovich@allsop.co.uk

DISCLAIMER: Allsop LLP on its behalf and for the Vendors or Lessors of this property, whose Agents they are, give notice that: These particulars are set out as a general outline only for guidance to intending Purchasers or Lessees, and do not constitute any part of an offer or contract. Details are given without any responsibility and any intending Purchasers, Lessees or Third Parties 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. No person in the employment of Allsop LLP has any authority to make any representation or warranty whatsoever in relation to this property. Unless otherwise stated, all prices and rents are quoted exclusive of VAT. March 2018.

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