129-137 & 151-161 Kensington High Street

129-137 & 151-161 KENSINGTON

HIGH

S T R E E T,

LONDON,

PR I ME CENTR A L LON D O N R ETA IL & R ESIDENT IA L INV EST MEN T

W8

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

2

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

A rare opportunity to acquire the freehold interest in two prime Central London retail and residential buildings

Executive Summary • A rare opportunity to acquire the freehold interest in two prime Central London retail and residential buildings with potential for residential development.

• The property is located in the Royal Borough of Kensington & Chelsea, in close proximity to High Street Kensington Underground station.

• Two attractive period buildings comprising ten retail units, a dental practice and nineteen residential flats providing total accommodation of 35,981 sq ft (3,342.7 sq m).

• Freehold.

• Let to nationally recognised retail tenants including Russell & Bromley, East, Body Shop, Everything Everywhere and Oliver Bonas.

• Total Gross Current Rental Income of £2,366,704 per annum of which 92% is derived from the retail component, 7% from the residential flats and the remainder from the dental practice.

• An opportunity to redevelop the residential upper floors of 129-137 Kensington High Street and create further net saleable residential space by adding an additional floor to the property subject to planning.

• The residential element is let on a combination of Assured Shorthold Tenancies and Regulated Tenancies providing scope for a significant reversion.

• Additional short term value enhancement through taking direct management control of five flats currently let to Body Shop on an over-riding lease expiring in 2017.

• Further potential value enhancement opportunities within the retail component to extend lease terms, reconfigure units and improve the tenant mix.

• Offers are sought for our client’s freehold interest.

Consideration will be given to offers for the whole and for the individual blocks as two separate lots. The guide price for the entire property is £54,000,000 (Fifty Four Million Pounds) subject to contract and exclusive of VAT. • A purchase at this level reflects a Net Initial Yield of 4.54% on the retail component, assuming purchaser’s costs of 5.80%, with a capital value of £868 per sq ft attributable to the residential component.

CGI image to show 151-161 Kensington High Street

3

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

London London is the largest city in Europe with a population of 8.16 million and a global destination for business, retailing, investment, education and tourism.

The capital is the number one global financial centre and the driving force of the UK economy, accounting for 22% of the country’s GDP. It is also the centre of operations for two thirds of all Fortune 500 companies and ranks 1st in the Zen Global Financial Centre’s Index.

In addition to London’s strength as a global business centre the city boasts a unique heritage, an internationally renowned retail offer, world class universities and a diverse mix of cultures that together make it one of the global capitals of the world.

London’s ongoing ability to attract international tourists, which now total almost 17 million visitors annually, has led to an estimated spend of approaching £11 billion pounds per annum. International flights to London come via six major airports including London Heathrow, the world’s busiest international airport.

The Royal Borough of Kensington and Chelsea The Royal Borough of Kensington & Chelsea, located two miles west of Mayfair, is one of London’s most prestigious and affluent areas and home to some of London’s finest residential dwellings.

The Royal Borough occupies an area of approximately five square miles bordered by the River Thames to the south and Hyde Park to the east. It is home to an estimated 190,000 people making it one of the most densely populated districts in London.

Within a one mile radius of Kensington High Street 77.5% of the population is classified in the most affluent social groups of ABC1 and 48.5% of the resident population is employed within managerial or professional positions.

Kensington is primarily residential in character and yet is home to 12,000 businesses providing 120,000 jobs. The Royal Borough also has a number of world class tourist attractions including the Victoria & Albert Museum, the Natural History Museum, The Royal Albert Hall and the Science Museum. The area further benefits from its proximity to the public open spaces of Hyde Park and Kensington Palace Gardens.

Visitors are a significant driver of the local economy, with over £3 billion coming into the Borough from non-resident spending.

The Borough is home to prestigious events such as The Chelsea Flower Show, held in the grounds of The Royal Hospital, which attracts 150,000 visitors each year.

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PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

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7

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

8

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Communications Communication links are excellent with High Street Kensington London Underground Station being within 100 metres of the subject property. The Underground, via both the Circle and District Lines, provides access to all parts of Central London as well as direct access to the affluent south west London suburbs of Putney, Fulham, Wimbledon and Chiswick.

Ten bus routes serve Kensington High Street, linking the area with Hammersmith, Knightsbridge, Notting Hill and Mayfair. Kensington High Street in turn provides access to the A4, M4 and M25 motorways. The West End of London is also easily accessible via bike, using the numerous Barclays Bike Stations in the area.

Heathrow airport is situated approximately 16 miles to the west via the A4/M4 providing flights to and from a wide range of major international destinations.

Communication links are excellent with High Street Kensington London Underground Station within 100 metres of the property

9

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Retailing in Kensington Kensington High Street is one of Central London’s premier shopping destinations providing approximately 750,000 sq ft of prime retail accommodation in a compact and attractive shopping environment.

Kensington is popular with major national and international retailers with a critical mass of large flagship stores including Marks & Spencer, Whole Foods, Boots The Chemist, H&M, Gap, Next, Top Shop and Waitrose.

The retail offer is set to improve further with the ongoing redevelopment of the 50,000 sq ft Barker’s Arcade where work is underway to create four units which we understand have already attracted strong interest from international retail brands.

In addition to being one of London’s principal retail locations the Borough is internationally recognised for some of the world’s finest five star hotels and Michelin star restaurants.

Situation The property provides two substantial retail and residential parades within the heart of Kensington High Street on the popular south side of the Street and a short walk from High Street Kensington London Underground station.

The property is situated opposite the new Zara Home store and in close proximity to Massimo Dutti, Marks & Spencer, Boots The Chemist, Tesco Metro and the popular Kensington Arcade.

Kensington Church Street is within a few minutes’ walk providing a boutique retail offer leading to the busy and fashionable Notting Hill area.

Copyright and confidentiality Experian, 2013. © Crown copyright and database rights 2013 Ordnance Survey 100017316

10

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

11

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Kensington Palace Gardens

Hyde Park

Royal Garden Hotel

Kensington Town Hall

Mayfair

One Kensington Gardens

Kensington Roof Gardens

One Hyde Park

Royal Albert Hall

High Street Kensington Underground Station

129-137 KENSINGTON HIGH STREET

151-161 KENSINGTON HIGH STREET

12

Kensington Square

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Victoria & Albert Museum

South Kensington

River Thames

Battersea Power Station

Chelsea

Royal Albert Hall

Harrods

Selfridges

Harvey Nichols

Natural History Museum

13

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Description The property comprises two substantial retail and residential parades, within an attractive Victorian terrace of brick built buildings that together provide approximately 183ft (55m) of prime retail frontage to Kensington High Street and 19 residential flats.

129-137 Kensington High Street & 2 Wright’s Lane 129-137 Kensington High Street & 2 Wright’s Lane comprises a prominent corner parade of five prime retail units arranged over basement, ground and part first floors. The first to fourth floors provide 19 residential flats providing approximately 12,080 sq ft (1,122.27 sq m) of residential accommodation and a dental practice. There is also a small component of first floor ancillary retail storage relating to 133 Kensington High Street.

14

The retail units within this parade have a frontage of 90ft (27m) on to Kensington High Street and benefit from a prominent return frontage to Wright’s Lane. Two of the five retail units trade over both ground and basement levels. The remaining three units trade from ground floor level only with ancillary space at either first floor or basement levels. All units have fully glazed frontages and are fitted out internally to individual tenant specifications.

The residential component of the property and the dental practice are accessed from self contained entrances on Wright’s Lane and Wright’s Lane passage. The residential accommodation includes a combination of studios, one and two beds selfcontained flats which are let on a mix of Assured Shorthold Tenancies and Regulated Tenancies. The flats which are let on Assured Shorthold Tenancies have generally been well maintained and are in good lettable condition.

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

CGI image to show 151-161 Kensington High Street

151-161 Kensington High Street 151-161 Kensington High Street comprises a parade of five retail units (including one double unit), arranged over ground and basement levels providing 12,215 sq ft (1,134.8 sq m) of prime retail accommodation. The retail units within this parade have a frontage of 93ft (28m) to Kensington High Street.

The five retail units trade from ground floor level with ancillary and sales space at basement level. All units have fully glazed frontages and are fitted out internally to individual tenant specifications.

The upper floors to 151-161 Kensington High Street provide residential accommodation. This has been sold off and is currently the subject of a comprehensive redevelopment by the long leaseholder.

15

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Schedule of Retail Accommodation 129-137 Kensington High Street Description

Tenant Name

Trading Name

Ground Floor NIA (sq m)

Ground Floor NIA (sq ft)

GF ITZA (sq ft units)

First Floor Ancillary (sq m)

129 & Bsmt 129/131 Kensington High Street

Oliver Bonas Limited

Oliver Bonas

78.4

844

677

-

131 & Bsmt 133 Kensington High Street

East Limited

East

79.2

852

673

-

133 & Part 1st Floor 131 Kensington High Street

Kurt Geiger Limited

Vince Camuto

85.0

915

708

71.8

135 Kensington High Street

Everything Everywhere Ltd

EE

74.9

806

655

-

137 Kensington High Street

The Body Shop International Plc

The Body Shop

88.7

955

731

-

Part 1st Floor, 129/131 Kensington High Street

Drs. M & F Zhand

Kensington Dental Practice

Sub Total

-

-

-

109.9

406.2

4,372

-

181.7

151-161 Kensington High Street 151/153 Kensington High Street

Russell & Bromley Limited

Russell & Bromley

160.6

1,728

1,382

-

155 Basement & Grd Kensington High Street

I.S.O.D Limited

Orogold

46.7

503

390

-

157 Kensington High Street

Ryohin Keikaku Europe Ltd

Muji

74.8

805

603

-

159-161 Kensington High Street

DSG Retail Limited

Vision Express/Vacant

187.1

2,014

1,570

-

Sub Total

469.2

5,050

-

-

Total

875.4

9,422

-

181.7

Retail Floor Plans

KENSINGTON HIGH STREET

137

129-137 Kensington High Street

135

133

131

129

Ramp

e

nc

tra

En

Ramp

EE

EAST

VINCE CAMUTO

OLIVER BONAS

NE

THE BODY SHOP

WRIGH

T’S LA

Stairs

ESG

Ground Floor

Duct

Blocked Window

Recess

No Access

DP

Blocked Window

Vent

Lift

DP

Hatch

DP

KENSINGTON HIGH STREET

129

OLIVER BONAS

EAST

NE

EE

131

Access Panel

T’S LA

THE BODY SHOP

133

Stairs

WRIGH

135

Escalator

137

Pipes

Lift

Indicative floorplans showing approximate demises.

16

DP DP

IC STORE

Basement

PLANT

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

First Floor Ancillary (sq ft)

Basement Ancillary (sq m)

Basement Ancillary (sq ft)

Basement Sales (sq m)

Basement Sales (sq ft)

Vaults (sq m)

Vaults (sq ft)

Total NIA (sq m)

Total NIA (sq ft)

-

20.4

220

139.2

1,498

25.3

272

263.3

2,834

Comments

Prominent corner unit

-

38.7

417

63.9

688

5.1

55

186.9

2,012

773

-

-

-

-

-

-

156.8

1,688

-

85.3

918

-

-

12.4

133

172.5

1,857

-

97.1

1,045

-

-

10.3

111

196.1

2,111

FRI lease includes upper floors.

Upper floors comprise five flats.

See Residential Accommodation Schedule Accessed via 2 Wright’s Lane entrance

1,183

-

-

-

-

-

-

109.9

1,183

1,956

241.5

2,600

203.1

2,186

53.1

571

1,085.5

11,685

-

142.0

1,528

53.4

575

19.3

208

375.2

4,039

-

52.1

561

52.9

569

-

-

151.7

1,633

-

30.5

328

72.3

778

9.6

103

187.1

2,014

-

228.7

2,462

-

-

4.9

53

420.8

4,529

-

453.3

4,879

178.6

1,922

33.8

364

1,134.8

12,215

1,956

694.8

7,479

381.7

4,108

86.9

935

2,220.3

23,900

Unit has been divided and part underlet

All retail and D1 (Dentist) measured on a Net Internal Area (NIA) basis *ITZAs stated prior to adjustments

Retail Floor Plans

KENSINGTON HIGH STREET

159/161

151-161 Kensington High Street

157

155

151/153 Ram p

Lift

Hatch

MUJI

DIXONS (SUBLET TO VISION EXPRESS)

OROGOLD

RUSSELL & BROMLEY

Cup

DIXONS (NOT IN OCCUPATION)

LIFT

Ground Floor

Pipes DP DP DP

DP

Blocked Windows

DP

Blocked Windows

DP

DP

KENSINGTON HIGH STREET

159/161

157

155

151/153

Lift

DIXONS (NOT IN OCCUPATION)

DIXONS (SUBLET TO VISION EXPRESS)

MUJI

OROGOLD

RUSSELL & BROMLEY

Basement 17

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Schedule of Residential Accommodation 129-133 Kensington High Street & 2 Wright’s Lane Unit Number

Floor

Tenancy

Kitchen

Reception

Bedrooms

Bath/Shower rooms

GIA (sq m)

GIA (sq ft)

C

2

Held Vacant

1

1

2

1

57.97

624

D

2

Regulated

1

1

83.98

904

E

2

AST

1

1

2

1

64.01

689

3

F

3

AST

1

1

1

1

56.95

613

G

3

AST

1

1

2

1

83.98

904

H

3

Regulated

1

2

1

65.96

710

K

4

Regulated

1

3

1

64.01

689

L

4

Regulated

1

2

1

68.01

732

M

4

Held Vacant

1

1

66.98

721

611.85

6,586

1

1

Sub Total

135a Kensington High Street 1

1

AST

1

1

Studio

1

26.20

282

2

1

AST

1

1

Studio

1

35.02

377

3

2

Regulated

1

1

64.01

689

4

3

AST

1

1

64.01

689

5

4

Regulated

1

3 1

2

65.96

710

Sub Total

3

1

255.20

2,747

Total Residential Area (Nos 129-135a Kensington High Street)

867.05

9,333

137a Kensington High Street (held on an over-riding lease to Body Shop) 1

1

Regulated

1

1

1

26.20

282

2

1

Regulated

1

1

1

35.02

377

3

2

AST

1

1

64.01

689

4

3

Regulated

1

2

1

64.01

689

5

4

Regulated

1

2

1

65.96

710

255.20

2,747

1,122.25

12,080

Sub Total Total Residential Area (includes 137 Kensington High Street)

Residential areas have been calculated on a GIA basis Indicative floor areas

18

1

2

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Residential Floor Plans

KENSINGTON HIGH STREET

137

135

133

131

129-137 Kensington High Street

129

Rad

Rad

LOUNGE

5

M

BEDROOM

LOUNGE

L

K

BEDROOM

BEDROOM

BEDROOM

Rad

LOUNGE

LOUNGE

5

E

Rad

Balcony

LIGHTWELL

Cup BEDROOM

Cup

BEDROOM

KITCHEN

KITCHEN Rad

Rad

BEDROOM

Slt

Cup Rad

Cup

Rad

LIGHTWELL

WRIGH

Slt

Slt

Rad

T’S LA N

Duct

Duct Duct

FOURTH FLOOR

Cup

Tank

Cup

Cup

Cup

KENSINGTON HIGH STREET

137

135

133

131

129

Balcony

Balcony

Rad

Rad

Cup

Rad

LOUNGE

4

H

LOUNGE

Cup

4

G

BEDROOM

KITCHEN

BEDROOM

Balcon

y

BEDROOM

Cup

NE

Rad

Rad

T’S LA

Rad

Rad

LIGHTWELL

WRIGH

LIGHTWELL

Rad

Duct

Cup

Duct

Rad

BEDROOM Duct

F

Balcon

y

KITCHEN

BEDROOM Rad

BEDROOM Rad

LOUNGE

THIRD FLOOR

Cup

Rad

Cup

Cup

Cup

Cup

KENSINGTON HIGH STREET

137

135

3

133

3

131

129

E

D

LOUNGE

BEDROOM

Rad

WRIGH

Rad

Vent LIGHTWELL

T’S LA

NE

KITCHEN

Duct

LIGHTWELL

C

BEDROOM

BEDROOM

Rad

Rad

Rad

BATHROOM

LOUNGE Duct

Cup

SECOND FLOOR

Cup

Cup

Cup

Cup

KENSINGTON HIGH STREET

137

135

133

131

129

Flat Roof

KENSINGTON DENTAL PRACTICE

OFFICE

G

FIRST FLOOR

1 Cup

OFFICE

1

NE Cup

DP

Cup

STAFFROOM

Lift Flat Roof

f

LIGHTWELL

Flat Roo

Switchgear

G

WRIGH T’S LA

Duct

VINCE CAMUTO STORAGE

tank

Cup

2

Cup

2

OFFICE

OFFICE

STOCKROOM

Lift

Lift Flat Roof

Indicative floorplans showing approximate demises.

19

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

20

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

A freehold interest in two stunning retail and residential parades with extensive frontage to Kensington High Street Tenure The property is held under a single freehold title.

The property occupies two sites totalling approximately 0.171 hectares (0.423 acres).

The Ordnance Survey plan outlines the approximate site boundaries.

The area highlighted in blue on the Ordnance Survey plan relates to the basement vaults only.

Wright’s Lane Passage is located to the rear of the property providing access by foot only to the rear of the retail units and providing secure access to the residential accommodation above Nos 135 and 137 Kensington High Street.

Planning We have made informal enquiries of the London Borough of Kensington and Chelsea Planning Department and understand that the property is not listed but lies within the Edwards Square, Scarsdale & Abingdon conservation area.

12

9

3

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1 15 to 3 15

14

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155

1 15 to 3 15

155

3 16

5 16

112

96 to

6

7

7

5

5

9

3

3

13

79 to 95

27

ENS ARD

E LAN

NA G IVER

T'S IGH WR

ENS ARD

7 16

3 16

5 16 9 16

7 16

3 17

5 17 7 17

9 16

3 17 9 17 1 18

5 17 7 17 3 18

9 17 1 18

3 18

9 18

© Crown Copyright 2014. All rightsScale reserved.

Licence number 100022432. Plotted Scale - 1:1250 Ordnance SurveyLicence rights reserved. number 100022432.

Plotted - 1:1250 Ordnance Survey © Crown Copyright 2014. All

Priory House 18 1 to 51

11a

AG

18 1 to 51

9a

N IVER

Priory House

6

17

1

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7

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112

2

13

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9

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9a

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96 to

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28

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13

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T'S IGH WR

7

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A RN IVE

Hire Station

15

78

5 to

3

4

N CL EDE

9

30m

to

Cycle

Hire Station

1

TCB

1

7

20m

Kensington High Street Station

Kensington High Street Station

15

62

3

10m

Como House

Cycle

28

4

1

0m

4

30m

N CL EDE

20m

TCB

1

10m

5

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LB

LB

12.4m

13

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13

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12.4m

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9

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12

or e illim Ph

Kensington Arcade

Kensington Arcade

Como House

12.7m

Bs TC

Station

8 15

7 12

to

5 12

Hire

7 12

0 15

Cycle

5 12

0 14

3 12

2 14 4 14 6 14 8 12.7m 14

1 12

a 12

Shelter

3 12

Shelter

1 12

to

2 13

8

3a 12

3 o3

13

13.1m

Shelter

6 13

3b 12

TCB

3d 12

6 13

4 12 6 12

6

8a

3c 12

6 14 8 14

to

13.1m 8 12

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1a

2 13

8

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13

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4

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8 10 to 0 11

2 11 to 4 11

TCBs

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8 10 to 0 11

2 11 to 4 11

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17

The retail accommodation arranged over lower ground to first floors has A1 use whilst the dentist accommodation on the first floor has D1 use. The residential accommodation over first to fourth floors has C3 use.

21

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Tenancies - Retail The property is let in accordance with the tenancy schedule below.

The property provides a total gross rental income of £2,366,704 per annum of which the net retail income is £2,181,400 per annum and the gross rental income from the residential component is £160,462 per annum. The dental practice is let at a low rent of £24,842 per annum with a fixed rental increase in 2016 to £27,427 per annum.

The retail accommodation and dental practice (D1 use) are let with leases drawn on effective Full Repairing & Insuring terms with recovery of landlord’s costs through a comprehensive service charge.

129-137 Kensington High Street & 2 Wright’s Lane Description

Tenant Name

Trading Name

Lease Start

Expiry Date

Breaks

Next Review

129 Grd floor & Bsmt 129/131 Kensington High Street

Oliver Bonas Limited

Oliver Bonas

22/08/2011

21/08/2021

22/08/2016 (T)

22/08/2016

131 Grd floor & Bsmt 133 Kensington High Street

East Limited

East

15/09/2011

14/09/2021

15/09/2016 (T)

15/09/2016

133 Grd & part 1st Floor 131 Kensington High Street

Kurt Geiger Limited

Vince Camuto

25/03/2003

25/03/2018

-

25/03/2013

135 Grd & Bsmt Kensington High Street

Everything Everywhere Ltd

EE

12/11/2001

11/11/2016

-

-

137 Kensington High Street

The Body Shop International Plc

The Body Shop

28/09/2007

28/09/2017

-

28/09/2012

Part 1st Floor, 129/131 Kensington High Street

Drs. M & F Zhand

Kensington Dental Practice

24/04/2006

23/07/2021

-

24/04/2021

Tenant Name

Trading Name

Lease Start

Expiry Date

Breaks

Next Review

151/153 Grd & Bsmt Kensington High Street

Russell & Bromley Limited

Russell & Bromley

28/11/2003

30/11/2018

-

01/12/2013

155 Basement & Grd Kensington High Street

I.S.O.D Limited

Orogold

07/05/2013

06/05/2023

06/05/2018 (Mutual)

07/05/2018

157 Grd & Bsmt Kensington High Street

Ryohin Keikaku Europe Ltd

Muji

25/03/2013

24/03/2018

-

-

159-161 Grd & Bsmt Kensington High Street

DSG Retail Limited

Vision Express/ Vacant

03/07/2001

03/07/2016

-

-

English Rose Estates (High Street Kensington) Ltd

-

16/03/2012

15/03/3011

-

-

Sub Total

151-161 Kensington High Street Description

Part Basement and Ground Floor 155 & 1st-4th Floors 151-161 Kensington High Street Sub Total Total

22

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Current Rent (£ per annum)

Current Rent (Zone A)

EPC Rating

Comments

£203,000

£234

D83

Tenant option to break 12m notice, £100,000 penalty. Rent Reviews to OMRV + £3,000.

2.5% premium for return frontage.

£170,000

£223

D83

Tenant option to break 12m notice, £127,500 penalty. Rent Reviews to OMRV less £5,000.

Excluded from 1954 Act.

£202,400

£266

G160

£245,000

£348

C74

£234,000

£218

F138

Lease includes upper floors. Upper floors comprise five flats of which four are let on Regulated Tenancies and one is let on an AST. Further information available upon request.

Outstanding Rent Review from 2012 in negotiation.

£24,842

£21 per sq ft

F131

Rent increases on 24/04/16 to £27,427.37.

Rent review outstanding.

£1,079,242

Current Rent (£ per annum)

Current Rent (Zone A)

EPC Rating

Comments

£401,000

£264

C68

£110,000

£230

G224

£175,000

£250

D77

£441,000

£260

F131/ F128

Tenant has split and sublet the unit to Vision Express.

The other part of the unit is unoccupied.

Peppercorn

-

-

Demise includes residential entrances at ground floor.

Rent review outstanding.

Excluded from 1954 Act provisions.

Mutual break option on six months notice on 6th May 2018.

Reversionary lease. Excluded from 1954 Act.

£1,127,000 £2,206,242

23

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Tenancies - Residential The residential accommodation is let as follows: • 129-133 Kensington High Street - nine self-contained apartments arranged over second to fourth floors. Of these, three are let on Assured Shorthold Tenancies, two are being held vacant for access and four are subject to Regulated Tenancies.

• 135 Kensington High Street - the residential accommodation is accessed via a secure entrance on Wright’s Lane Passage. This provides access to the five self-contained apartments which are situated above. Of these, three are let on Assured Shorthold Tenancies, and two are subject to Regulated Tenancies.

• The five flats above No. 137 are also accessed via Wright’s Lane Passage and are let to Body Shop International Plc on an overriding lease with the retail accommodation below. Body Shop International Plc is responsible for the management and leasing of the residential accommodation until lease expiry in 2017. At present four of the five flats are subject to Regulated Tenancies with one let on an Assured Shorthold Tenancy.

• The residential component of 151-161 Kensington High Street has been sold on a long lease of 999 years at a peppercorn ground rent.

129-133 Kensington High Street & 2 Wright’s Lane Unit Number

Floor

Tenancy

GIA (sq m)

GIA (sq ft)

Lease Start

Lease Expiry

Rent (£pcm)

Rent (£pa)

C

2

Held Vacant

57.97

624

n/a

n/a

£0

£0

D

2

Regulated

83.98

904

n/a

n/a

£793

£9,516

E

2

AST

64.01

689

23/08/2014

22/08/2015

£2,209

£26,508

F

3

AST

56.95

613

08/09/2012

07/09/2013

£1,523

£18,276

G

3

AST

83.98

904

01/10/2014

30/09/2015

£2,383

£28,600

H

3

Regulated

65.96

710

n/a

n/a

£933

£11,200

K

4

Regulated

64.01

689

n/a

n/a

£642

£7,704

L

4

Regulated

68.01

732

n/a

n/a

£585

£7,020

M

4

Held Vacant

66.98

721

n/a

n/a

£0

£0

611.85

6,586

£9,068

£108,824

Sub Total

135a Kensington High Street Unit Number

Floor

Tenancy

GIA (sq m)

GIA (sq ft)

Lease Start

Lease Expiry

Rent (£pcm)

Rent (£pa)

1

1

AST

26.20

282

19/09/2013

18/09/2014

£1,148

£13,780

2

1

AST

35.02

377

19/09/2014

18/09/2015

£1,343

£16,116

3

2

Regulated

64.01

689

n/a

n/a

£871

£10,446

4

3

AST

64.01

689

18/10/2010

17/10/2019

£569

£6,826

5

4

Regulated

65.96

710

n/a

n/a

£373

£4,470

Sub Total

255.20

2,747

£4,304

£51,638

Total

867.05

9,333

£13,372

£160,462

137 Kensington High Street The five residential flats above 137 Kensington High Street are currently let on an over-riding lease to Body Shop until 2017.

24

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Blue Yellow Grey/Blue Pink

Dental Practice 1,183 sq ft 135a Kensington High Street 137a Kensington High Street 129-137 Kensington High Street

25

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Income Profile The property provides an attractive blend of short and medium term income. The Weighted Average Unexpired Lease Term is 3.92 years to expiry and 3.07 years to break providing immediate asset management opportunities to re-gear leases and extend lease terms. It also provides an opportunity to improve the tenant mix and capitalise on improving rental levels.

The property provides an attractive blend of retail, residential and D1 (dental practice) uses. The retail element accounts for approximately 92% of the total income, the residential element for 7% and the dentist for the remaining 1%. The entirety of the retail income is let to recognised national and international retailers most of whom have been established within the UK for many years.

Income Split

Residential 7%

Retail Income Expiry Profile £700,000

Other 1%

27.71% £600,000

Retail 92%

Income

£500,000

19.99%

18.18%

£400,000 £300,000

11.10%

10.33% 7.71%

£200,000

4.99% £100,000 0.00%

0.00%

£0 2015

2016

2017

2018

2018 Year

26

2020

2021

2022

2023

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Retail Covenants

DSG Retail Ltd is a subsidiary of Dixons Carphone which was founded in 2014 following the merger of the Dixons and Carphone Warehouse, Dixons Carphone provides electrical and telecommunications services. Dun & Bradstreet give DSG Retail Ltd a credit rating of 5A1 which they classify as a minimum risk of business failure. DSG Retail Ltd employs over 20,000 people internationally and reported an impressive turnover of £3,997,900,000 and net worth of £301,800,000 in 2013.

Founded in Brighton in 1976, The Body Shop is a natural and ethical beauty brand offering a range of beauty products. Dun & Bradstreet give the company a credit rating of 5A1 which they classify as a minimum risk of business failure. The Body Shop International Plc has over 3,000 employees and reported a turnover of £435,700,000 in 2013 and tangible net worth of £281,300,000

Founded in 1873, Russell & Bromley is a shoe retailer offering a luxury range of footwear and handbags for men and women.

Dun & Bradstreet give the company a credit rating of 5A1 which they classify as a minimum risk of business failure.

Russell and Bromley employ over 1000 people across 40 UK stores and reported a turnover of £107,383,634 in 2012 and a tangible net worth of £58,595,183.

Founded in 1993, Oliver Bonas produces a range of women’s clothing, accessories, jewellery, home and furniture. Dun & Bradstreet give the company a credit rating of 2A2 which they classify as a lower than average of risk business failure. Oliver Bonas employs over 300 people and has a strong presence in London with over 40 stores, and are now spreading across the rest of the UK with stores in Bristol, Cambridge, Glasgow and Edinburgh. In 2013 Oliver Bonas Ltd reported a turnover of £23,263,392 and a tangible net worth of £2,750,092.

Founded in 2010 by the merger of network providers Orange and T-Mobile, EE is a digital communications company providing mobile network and internet services. With over 11,000 employees EE serves over 27 million customers in over 580 stores across the UK. Everything Everywhere Limited was incorporated into the parent company EE Limited which reported an impressive turnover of £6,482,000,000 in 2013.

The retail element accounts for approximately 92% of the total income

27

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Kensington Retail Market The London retail market has experienced robust and strengthening retailer demand throughout the last decade with the Capital attracting new and emerging retail brands from around the world.

Kensington High Street is one of London’s core retail destinations alongside Bond Street, Oxford Street, Regent Street and Covent Garden. The pitch is underpinned by a large number of flagship retail stores including Marks & Spencer, Whole Foods, H&M, Gap, Zara Home, Boots The Chemist, Top Shop and Waitrose. In addition there are a number of higher-end fashion retailers including Jigsaw, Diesel, Kurt Geiger, Cos and Massimo Dutti.

Along with all major Central London retail locations rents on Kensington High Street are calculated using 30ft Zones. Prime rental levels currently stand at £285 Zone A, a substantial discount to both Oxford Street (£800 Zone A) and Bond Street (£1,300 Zone A) offering significant growth potential.

Recent rental transactions include: Address

Tenant

Transaction

Date

Rent Psf Zone A

Units 2&3 Barkers Arcade

Under Offer

UO

Current

£244

123 Kensington High Street

Wasabi

OML

Apr 2013

£285

155 Kensington High Street

Orogold

OML

May 2013

£230

131 Kensington High Street

East

OML

Sept 2011

£223

147 Kensington High Street

The Kooples

OML

Aug 2011

£225

129 Kensington High Street

Oliver Bonas

OML

Aug 2011

£234

Kensington Investment Market Investor demand for Central London retail remains strong with demand significantly outweighing supply. Overseas investors are attracted by the political stability of the UK and the liquidity of the Central London market whilst domestic investors are attracted by the excellent growth prospects, asset management potential and scope for further capital growth.

This strong demand and limited availability of stock has seen significant capital growth with yields on key streets such as Bond Street and Oxford Street hardening by approximately 75 basis points in the last 9 months, to between 2.00%-2.50% NIY. A selection of recent investment transactions on Kensington High Street include:

28

Address

Tenants

Price

NIY

Date

Comments

145 & 147 Kensington High Street

O2 and Kooples

£8m

4.14%

Aug-2014

7-9 Kensington High Street

Giraffe Restaurant, Spaghetti House, Seraphire Hotels

£11.3m

3.83%

Jun-2014

Old Court House, 2-60 Kensington High Street

Zara, Uniqlo, Topshop, Miss Sixty

£40.9m

4.23%

Dec-2013

Uppers sold off.

160 Kensington High Street

Metro Bank, Argos

£26.3m

4.49%

Aug-2013

Included 7,500 sq ft of offices.

165-183 Kensington High Street

RBS, Holland & Barrett, Hawes & Curtis, Optical Express

£30.5m

4.98%

Dec-2012

Offices and 3 apartments above.

1.5 years WAULT.

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Kensington Residential Market Central London’s prime residential market is one of the strongest real estate markets in the world. The prime London market has seen a cumulative price growth of 66% since Q2 2009. Current economic and demographic conditions provide a solid platform for continued growth and performance, particularly within the most prime locations. There is continued demand from both domestic and overseas investors competing for highly limited supply.

Kensington High Street is a desirable residential location due to its good local amenities which, combined with the historic

significance of the area, means that Kensington and Chelsea has commanded some of the highest residential prices in London. The Royal Borough of Kensington and Chelsea is also home to one of the most exclusive streets in the world, namely Kensington Palace Gardens, which hosts some of the most expensive homes in the world.

Kensington rental value growth increased 2.6% in the 3 months to September 2014, which is above the prime Central London average.

29

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

30

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Residential Development Opportunity 129-137 Kensington High Street presents an exciting opportunity to reconfigure and refurbish the existing building and extend the residential upper floors, subject to obtaining vacant possession and the usual consents.

The owner has drawn up indicative plans for a comprehensive remodelling of the first to fourth floors, which will improve the layout and density of the accommodation. The plans, which would be subject to planning consent and vacant possession, include: • Alteration of the current roof line (see photo and plan below) to create a new 5th floor of approximately 2,484 sq ft (230.8 sq m) of net saleable area. This approach has successfully been achieved on the adjoining properties which are of a similar design and age.

• Conversion of the dental practice (currently let at only £24,842 per annum) to residential use and redeveloped into a prime first floor apartment of approximately 92.90 sq m (1,000 sq ft).

• New lift and stair core to all floors allowing for the conversion of the entrance stairwell and lobby to 2 Wright’s Lane to residential accommodation.

• Removal of the self-contained stair cores at 135 and 137 Kensington High Street and redevelopment of this space to create further net saleable area.

The proposed scheme would extend to approximately 19,563 sq ft (1,718 sq m) net saleable area of residential accommodation. Indicative plans of this scheme are available on the marketing dataroom.

A very similar scheme was consented at 151-161 Kensington High Street in 2012, which included change of use of D1 (non-residential institutions) at 1st floor level, reconfiguring the existing accommodation, remodelling the access to include a new lift and stair core and the addition of a new floor at 5th floor level. Please refer to planning consents PP/12/04968, PP/12/03067 and PP/13/01064 for further information.

The nineteen flats provide an exciting opportunity for a comprehensive redevelopment and extension of the residential component subject to vacant possession and planning consent

Potential New Roof Line (STPP)

4th Floor

3rd Floor

Indicative plan showing potential new roof line, subject to planning permission.

31

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

Asset Management

Asset Management

In addition to the wider potential for redevelopment of the residential upper floors (subject to planning permission) there are a number of other short and medium term opportunities to enhance value:

• Negotiate out tenant break options on units 129 and 131 Kensington High Street to improve the Weighted Average Unexpired Lease Term.

• Negotiate a surrender of the lease at 159-161 Kensington High Street (DSG Retail) to facilitate a regear with the subtenant, Vision Express, at 159 Kensington High Street and a new letting of 161 Kensington High Street.

• Open discussions with Russell & Bromley to regear their lease and extend the lease term.

• Take a surrender of the Body Shop lease to obtain direct management control of the five residential flats above number 137 Kensington High Street thus potentially creating an opportunity for a larger residential development whilst also securing a new longer lease of the retail premises.

32

• Improve short term residential income by leasing flats C and M, 129-133 Kensington High Street on new Assured Shorthold Tenancies.

• Significant reversionary potential within the Regulated Tenancies as and when vacant possession can be obtained with new lettings on market terms.

• Take a surrender of the lease of the 1,183 sq ft dental practice, currently let at a low passing rent of only £21 per sq ft and obtain change of use to residential, subject to planning.

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Energy Performance Certificates

Value Added Tax

Individual EPC Ratings are included within the tenancy schedule.

The property is opted for VAT and it is anticipated that the sale will be treated partly as a TOGC (Transfer of a Going Concern) and partly as a VAT exempt supply.

Full EPCs are available to download from the marketing dataroom details of which are outlined below.

33

129-137 & 151-161 KENSINGTON HIGH STREET, LONDON, W8

34

PRIME CENTRAL LONDON RETAIL & RESIDENTIAL INVESTMENT

Proposal Offers are sought for our client’s freehold interest. Consideration will be given to offers for the whole and for the two individual blocks as separate lots. The guide price for the entire property is £54,000,000 (Fifty Four Million Pounds) subject to contract and exclusive of VAT. An offer at this level will reflect Net Initial Yield of 4.54% on the retail component (after deduction of purchase costs at 5.8%) and £868 per sq ft capital value on the directly let residential component.

Further Information

Contacts

For further information please contact:

Retail Capital Markets Geoff Ford +44 (0)20 7861 1233 geoff.ford@knightfrank.com

Knight Frank LLP 55 Baker Street London W1U 8AN Switchboard: + 44 (0)20 7629 8171 www.knightfrank.com All supplementary information is available on the password protected marketing dataroom: www.kensington-high-street.co.uk

Alastair Bird +44 (0)20 7861 1232 alastair.bird@knightfrank.com James McCluskey +44 (0)20 7861 1522 james.mccluskey@knightfrank.com

Residential Capital Markets Nick Pleydell-Bouverie +44 (0)20 7861 5256 nick.pleydell-bouverie@knightfrank.com Residential Development Alexander Lewis +44 (0)20 7861 5480 alexander.lewis@knightfrank.com

Important Notice 1. Particulars: These particulars are not an offer or contract, nor part of one. You should not rely on statements by Knight Frank LLP in the particulars or by word of mouth or in writing (“information”) as being factually accurate about the property, its condition, its value or its ownership structure. Neither Knight Frank LLP nor any joint agent has any authority to make any representations about the property, and accordingly any information given is entirely without responsibility on the part of the agents, seller(s) or lessor(s). 2. The photographs show only certain parts of the property as they appeared at the time they were taken. Areas, measurements and distances given are approximate only. 3. Any reference to alterations to, or use of, any part of the property does not mean that any necessary planning, building regulations or other consent has been obtained. A buyer or lessee must find out by inspection or in other ways that these matters have been properly dealt with and that all information is correct. 4. VAT: Any guide prices quoted or discussed are exclusive of VAT. The VAT position relating to the property may change without notice. 5. Knight Frank LLP is not authorised by the Financial Conduct Authority to undertake Regulated Activities, other than insurance mediation, and generally acts as agent in respect of real estate property interests only. This communication is exempt from the restriction in Section 21 of the Financial Services and Markets Act 2000, on the communication of invitations or inducements to engage in investment activity by unauthorised persons, on the basis that it meets the conditions for exemption relating to such activities carried on in connection with the sale of a body corporate as set out in Article 62 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and the similar exemption relating to all Regulated Activities in Article 70 of The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. In all instances you should seek your own independent advice in relation to the sale or purchase of shares and on any corporate structure. Knight Frank LLP is not responsible for any information or opinions provided in respect of any such sale or purchase.

Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London W1U 8AN, where you may look at a list of members’ names. October 2014 Designed and produced by Creativeworld Tel: 01282 858200

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