Metrocentre brochure

METROC ENTRE LANDMARK FREEHOLD SHOPPING CENTRE INTEREST

CONTENTS 1.0 Metrocentre

03

2.0 Regional Shopping Centres in the UK

05

3.0 Overview 3.1 Introduction 3.2 Location & Communications 3.3 Catchment & Demographics 3.4 Spend 3.5 Planning

07 08 09 11 12 13

4.0 Metrocentre 4.1 The Centre 4.2 Tenure 4.3 Tenancy 4.4 Income 4.5 Rental Values 4.6 Retailer Demand & Tenant Mix 4.7 Management 4.8 Service Charge 4.9 Ongoing Asset Management & Proposed Development

15 17 29 30 31 34 35 36 37 40

5.0 Investment Proposal

41

6.0 Further Information

42

01 | METRO C E NTRE

THE CHURCH COMMISSIONERS ARE OFFERING A RARE OPPORTUNITY TO ACQUIRE A FREEHOLD INTEREST IN ONE OF THE UK’S LEADING SUPER REGIONAL SHOPPING CENTRES

1.0 METROCENTRE

The Church Commissioners are offering a rare opportunity to acquire a freehold interest in one of the UK’s leading super regional shopping centres.

Metrocentre is one of only eight Super Regional Malls in England. It is the largest of the Super Regional Malls and is currently ranked 4th in the UK Mall Score Rankings (CACI 2014).

The Centre is located in Gateshead, approximately 3 miles south of Newcastle city centre and adjacent to the A1 trunk road linking Newcastle to the north and Leeds and onwards to London in the south. Metrocentre benefits from a integrated public transport interchange, including a train station, bus station and coach park with accommodation for 350 coaches. In addition, Metrocentre benefits from over 9,000 free car parking spaces, arranged as surface and four multi-storey car parks.

In total, the Metrocentre site comprises 134 acres. A ring road circumnavigates the Centre and provides a direct link onto the A1 trunk road.

The Church Commissioners interest in the Centre is Freehold and provides the right to receive 10% of the net income (after allowance of permissible deductions) from the tenant and asset manager, intu.

03 | METRO C E NTRE

Metrocentre has the following distinctive features: •

The interest being sold is Freehold and comprises approximately 134 acres and over 9,000 free car parking spaces.

•

This unique and attractive freehold interest benefits from 10% of future net income. The freehold interest is protected from future building and development capital expenditure.

•

Rare opportunity to gain a 10% exposure to one of Europe’s premier retail destinations.

•

The Centre is ranked 4th nationally in the Super Regional Centres and is one of the largest covered shopping centres in Europe.

•

21,000,000 customers visit the Centre annually.

•

Integrated transport interchange (bus, train and coach).

•

Metrocentre’s retail offer includes Marks & Spencer, Debenhams, Primark, River Island, Next, Superdry, Apple, together with a 17 screen Odeon IMAX Cinema and over 50 restaurants / food outlets.

•

The Centre opened in 1986 and has continued to develop from the original mall and now accommodates 357 retail units over 1.8 million sq ft.

•

One of the ‘best in class’ asset managers currently operating the shopping centre on site, with the benefit of a long lease.

2.0 REGIONAL SHOPPING CENTRES IN THE UK METROCENTRE

METROCENTRE IS ONE OF ONLY EIGHT OUT OF TOWN SUPER REGIONAL SHOPPING CENTRES IN THE UK Metrocentre’s accessibility, free car parking, transport interchange and leading retail and leisure offer make it the premier retail destination for the North East and one of only eight out of town shopping centres in the UK.

TRAFFORD CENTRE MEADOWHALL

Metrocentre Trafford Centre Meadowhall Merryhill

MERRYHILL BRENT CROSS LAKESIDE

Brent Cross Cribbs Causeway Lakeside Bluewater

05 | METRO C E NTRE

CRIBBS CAUSEWAY

BLUEWATER

Current planning restrictions within the UK have significantly restricted the new development of out of town shopping centres. The eight existing super regional centres therefore have a unique characteristic.

The scale of these super regional centres is such that they provide a greater opportunity for asset management and tenant engineering to actively achieve rental growth in excess of market performance.

Metrocentre has strong bus, road and rail connections. In addition Newcastle City Airport is located 6 miles to the north of the Centre.

Metrocentre has been managed by intu since 1995. With over 20 years management experience and being one of the UK’s premier mall operators, intu are best placed to maximise the Centre’s future potential.

Metrocentre has been extended and substantially refurbished since its initial opening in 1986 and provides a covered scheme arranged over two levels, divided principally into five retailing malls.

3.0 OVERVIEW

Metrocentre is owned Freehold and occupies a site of 134 acres.

07 | METRO C E NTRE

3.1 INTRODUCTION

Metrocentre opened in 1986 and is located 3 miles south of Newcastle city centre, some 280 miles north of central London. The Centre is located close to Gateshead town centre.

The Centre has been modified and extended since its original construction and provides over 1.8 million sq ft of enclosed retail accommodation over two levels, arranged as five distinct malls.

Metrocentre provides over 9,000 free car parking spaces, arranged in four multistorey car parks, together with surface car parking. A ring road circumnavigates the entire Centre and provides direct access towards the A1 trunk road.

The Centre is currently divided into approximately 357 retail units, which are anchored by six department / variety stores. Currently under construction is an extension to the Food Court, providing a further 13 new food outlets. Metrocentre benefits from a 17 screen Odeon IMAX cinema, together with a Namco Entertainment Centre and over 50 restaurant / food outlets.

In addition, the ownership includes MetrOasis, a modern retail development located to the west side of the Centre and housing units for Starbucks, Krispy Kreme, Toby Carvery and Harvester. This development was completed in 2012.

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 08

3.2 LOCATION & COMMUNICATIONS

Newcastle Upon Tyne is the principal focus of economic activity within the north east of England. Newcastle is situated approximately 280 miles north of central London and 120 miles south of Edinburgh. The city benefits from a strong transport infrastructure. Metrocentre is situated to the south of the city centre close to Gateshead, a suburb of Newcastle.

Motorway The A1 runs from London to Edinburgh, providing one of Britain’s main arterial routes and is easily accessible, and offers direct access to Metrocentre.

Trunk Roads The A19 links to Sunderland to the south. The A69 extends west to Hexham and Carlisle.

Rail Newcastle also benefits from an extensive rail network.

There are direct train services to Newcastle from Edinburgh, London and York. London Kings Cross can be reached in under 3 hours.

Metrocentre has its own rail station, with a direct link to Newcastle city centre in only 7 minutes.

09 | METRO C E NTRE

Metro Newcastle benefits from its own Metro system, linking the surrounding towns on a common transport platform.

Buses Metrocentre has its own bus interchange with 26 bus routes serving the Metrocentre. Over 100 buses per hour can arrive at the interchange. In addition, there is a coach park adjacent to the Centre which can accommodate 350 coaches.

Air Newcastle Airport is situated 6 miles to the north of the city centre and provides domestic and international flights to a number of European destinations.

Kirkcaldy A92 Cowdenbeath

e

North Berwick Inverkeithing Dunbar

South Queensferry A1

EDINBURGH

EDINBURGH

Haddington

Musselburgh

vingston

Dalkeith Bonnyrigg

Penicuik

Eyemouth

A6

02 A7

8

A7

A703

Berwick-upon-Tweed A697

Peebles

Coldstream A72

A1

Galashiels

Kelso

Selkirk

Jedburgh 7 A69

8

A106 A1

offat

A7

Amble

Otterburn

Ashington

Morpeth

Langholm

A69

A

1 Bedlington

6

Blyth

8

Cramlington NEWCASTLE

A19

Ponteland A7 5

Gretna

Longtown

Hexham A689

Gosforth

A69

A69

Annan

Whitley Bay Tynemouth

NEWCASTLE UPON TYNE

Corbridge

Gateshead

Brampton

METROCENTRE A68

Carlisle

Consett

Wigton

92 A6

A1 A963

Stanley

Houghton le Spring

Chester-le1 Street

A69

Alston

Durham Brandon Crook

Spennymoor Penrith Keswick

Bishop Auckland

Peterlee

A167

M6 A66

SUNDERLAND

Washington

A19

6 A59

Newbiggin-by-the-Sea

Hartlepool

A1(M)

A19

Lockerbie

A6

A689

9 A68

Redcar

Newton Aycliffe

Appleby-in-Westmorland

MIDDLESBROUGH

88

A6

A6

TEESSIDE

A591

6

85

A6

Scotch Corner

Whitby

Stokesley A19

Ambleside

Guisborough

Darlington

Brough

Richmond

A1 72

th

Alnwick

Windermere

M6 Millom

Ulverston

90 A5

Northallerton

Sedbergh

Hawes

Leyburn

Scalby

A1

Kendal

Scarborough

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 10

Thirsk

A170

Pickering

70 A1

Filey

Ladybank

Inveraray

Callander Strachur

Falkland Dunblane Bridge of Allan

Tarbet

Kinross

Glenrothes

Alloa

Stirling

hgilphead

3.3 CATCHMENT & DEMOGRAPHICS

Tighnabruaich

Tarbert

Greenock

Falkirk

Largs

Dunbar

South Queensferry

EDINBURGH

Haddington

Musselburgh

Livingston

Dalkeith Bonnyrigg

Airdrie

Paisley

Eyemouth

Penicuik

Shotts

Motherwell

Hamilton East Kilbride

Kilbirnie

Bathgate

Armadale

GLASGOW

Inverkeithing

Linlithgow

Cumbernauld

Clydebank

Johnstone

Millport

Kilsyth

Kirkintilloch

Port Glasgow

Rothesay

Kennacraig

Kirkcaldy Cowdenbeath

Dunfermline Grangemouth Bo'ness

Denny

Alexandria Dumbarton

Gourock

Elie

North Berwick

Helensburgh

Dunoon

Buckhaven

Larkhall

Berwick-upon-Tweed

Carluke

Strathaven

Kilwinning

Ardrossan Metrocentre has a population within a 30 minute drive time of inLanark excess of 1.3 million and Peebles Lesmahagow Kilmarnock Biggar Irvine benefits from one of the strongest catchment populations of all the super regional shopping Brodick malls. The catchment area extends to the south to include Sunderland and Durham, to the north TroonWhitley Bay, and to include Morpeth and to the west to include Hexham. The total shopper Mauchline catchment extendsPrestwick to approximately 1,950,000.

Ayr

Coldstream

Galashiels

Abington

Cumnock

Jedburgh

The total population within the Metrocentre catchment area is 1,947,210. The age profile of the New Cumnock Metrocentre primary catchment population includes a relatively high proportion of young adults aged 15 - 24.

Maybole Straiton

Girvan

Market Share

Primary

368,190

47.0%

Secondary

378,212

22.6%

411,947 788,861

Langholm

Lockerbie

Bedlington

Gretna

Longtown

Market (Core):

Brampton

ÂŁ643.9m 34.4%

Kirkcudbright

Market Share (Total):

NEWCASTLE UPON TYNE

Corbridge

Gateshead

METROCENTRE

Carlisle

Consett

Wigton Alston

17.6%

SUNDERLAND

Washington

Stanley

Houghton le Spring

Chester-leStreet

Durham Brandon

Whithorn

Maryport

Workington

Whitley Bay Tynemouth

Gosforth Hexham

ÂŁ3,645.02m

Dalbeattie

Blyth

Ponteland

17.6% Castle Douglas

Newbiggin-by-the-Sea

Cramlington

Annan

Market Potential(Resident based):

Drummore

Morpeth

4.4%

Dumfries

1,947,210

Total Residential Expenditure: Stranraer

Source: CACI 2014

Ashington

12.1%

Newton Stewart

Portpatrick

Otterburn

Lochmaben

New Galloway

TotalCairnryan

Alnwick

Amble

Total Population

Quaternary

Hawick

Moffat

Dalmellington

Tertiary

Kelso

Peterlee

Crook

Spennymoor

Cockermouth

Penrith Keswick

Bishop Auckland Appleby-in-Westmorland

Whitehaven

Redcar

Newton Aycliffe

MIDDLESBROUGH Darlington

Brough

M6

Egremont

Hartlepool

A1(M)

Guisborough

Whitby

Stokesley Scotch Corner

Ambleside

Richmond

Windermere

Kendal

Hawes

M6

11 | METRO C E NTRE

Northallerton

Sedbergh

Thirsk Millom

Ulverston Grange-

Kirkby Lonsdale

Scalby

Leyburn

Pickering

3.4 SPEND

Retail Centre

Minor Class

Region

Comparison Goods Expenditure Rank

Catchment Comparison Goods Spend (£m)

2014 Resident Population

2014 Shopper Population

Bluewater

Premium Outer London Regional Malls

South East

9

£1,152.0

6,568,737

543,425

Trafford Centre

Large Premium Regional Malls

North West

12

£1,050.9

5,375,940

542,407

Meadowhall

Large Regional Malls

Yorkshire and The Humber

15

£974.0

2,863,894

499,657

Gateshead - intu Metrocentre

Large Regional Malls

North East

25

£652.4

1,947,210

342,484

Dudley - Merry Hill

Large Regional Malls

West Midlands

34

£569.9

3,158,812

314,868

Brent Cross

London Regional Malls

London

35

£548.4

5,168,223

266,749

Cribbs Causeway

Large Premium Regional Malls

South West

37

£527.1

2,072,534

246,605

intu Lakeside

Outer London Regional Malls

East of England

41

£504.1

4,840,448

233,176

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 12

CURRENT UK PLANNING LEGISLATION RESTRICTS THE DEVELOPMENT OF SUPER REGIONAL MALLS. AS SUCH METROCENTRE IS PROTECTED FROM FURTHER OUT OF TOWN SHOPPING CENTRE DEVELOPMENT

3.5 PLANNING Current UK planning legislation restricts the development of super regional malls. As such Metrocentre is protected from further out of town shopping centre development.

Metrocentre lies adjacent to Gateshead which is a town with a resident population of 23,000. The land surrounding the Metrocentre is currently zoned in the local plan for future development.

Policy A0C2 (Metrogreen) in the Core Strategy and Urban Core Plan details how a mixed-use sustainable community will be delivered through a co-ordinated phased approach, providing new residential neighbourhoods, commercial, leisure and community facilities, a network of green spaces and routes for pedestrians and cyclists and sustainable improvements to public transport.

Between now and 2023, The Metrogreen area will deliver:

Areas Of Change – Metrogreen The Metrogreen Area of Change is outlined in the council’s Core Strategy and Urban Core Plan for Gateshead and Newcastle upon Tyne 2010-2030.

•

850 new homes at an overall average of 40 dwellings per hectare.

•

Complementary mixed-use development located close to sustainable transport links, including 15,000 sq m (160,000 sq ft) of office accommodation.

The area is located between the River Tyne and the A1 encompassing the Metrocentre, retail, office and industrial development and areas of vacant underused land. The area is rich with regeneration opportunities and potential to regenerate a large area of brownfield land with good access to public transport and the strategic road network.

•

Community facilities to support those people living and/or working in the area.

The Metrocentre is located in the centre of the Metrogreen area and there is the potential for the Centre to further evolve from not just a premier out of town shopping destination but also a focal point for a new residential community.

The new development will be supported by: •

Improved pedestrian and cycling accessibility to the Transport Interchange and improvements to public transport infrastructure.

•

Improvements to the highway network to enable increased traffic densities.

•

New recreational areas and public space.

The Metrogreen area totals 213 hectares (including the Metrocentre). The area identified for development is 106 hectares, which in addition to the provision outlined in the above policy, also has the potential to deliver 1,300+ new homes in the post plan period.

13 | METRO C E NTRE

Existing Buildings Potential Development Plot Potential Pedestrian Route Existing Green Space Future Development Area (Post 2030) Metrogreen Area of Change

© Crown Copyright and database right [2015]. Ordnance Survey [100019569]. © Crown copyright and database rights 2015 Ordnance Survey Gateshead Council [100019132].

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 14

4.0 METROCENTRE

15 | METRO C E NTRE

METROCENTRE COMPRISES APPROXIMATELY 1.8 MILLION SQ FT OF RETAIL AND LEISURE ACCOMMODATION LET TO SOME OF THE MOST ESTABLISHED NATIONAL AND INTERNATIONAL RETAILERS

4.1 THE CENTRE Metrocentre, one of only eight out of town super regional shopping centres in the UK, is one of the leading retail and leisure venues in Europe. The Centre comprises approximately 1.8 million sq ft of retail and leisure accommodation let to some of the most established national and international retailers.

Metrocentre is arranged over two levels and is divided into five coloured malls; Red, Green, Blue, Yellow and Platinum. The Centre has remained a “must have” location for retailers since opening and has evolved over a number of years with extensions and refurbishments tailored to the changing shopping habits of the modern consumer.

17 | METRO C E NTRE

Metrocentre Timeline 1986

Red Mall and Green Mall opened.

1987

Blue and Yellow Malls opened together with bus and rail stations and the Blue multi-storey car park.

1988

The Forum opened.

1989

The Mediterranean Quarter (now known as The Qube) opened.

1990

The A1 Western Bypass trunk road opened.

1992

North perimeter link to the A1 opened.

2002-04

Red Mall is extended and refurbished including building Debenhams department store, 27 new retail units and multi-storey car park. New Public Transport Interchange is developed. Metrocentre becomes the largest shopping and leisure centre in Europe.

2009

Newly redeveloped mall and restaurants in “The Qube” (part of the Yellow Mall) opened. The new NAMCO Funscape area is launched including 18 ten-pin bowling lanes, dodgem track and children’s soft play area. The new Odeon cinema with 3D screens opened, the only IMAX theatre in the region.

2012

MetrOasis opens welcoming new operators; Harvester and Toby Carvery, Starbucks and Krispy Kreme.

2014

Work completed on transformation of central “link” mall to the Platinum Mall creating a luxury retailing quarter.

2016

Opening of The Qube 2 food quarter.

4.1 THE CENTRE

Metrocentre benefits from six anchor stores which combined provide 66,892 sq m (720,024 sq ft): Anchor store

Sq M

Sq Ft

Marks & Spencer

17,221

185,367

Debenhams

16,743

180,222

House of Fraser

12,847

138,284

Bhs

7,887

84,900

TK Maxx

5,226

56,251

Primark

6,968

75,000

66,892

720,024

Total

The Metrocentre’s five coloured malls are configured over ground and first floor levels and provide a rich retail mix ranging from premium fashion brands to independent retailers designed to cater for all shopper types.

The Metrocentre includes themed shopping areas known as the Village and the Forum, accommodating primarily independent retailers.

The Centre also benefits from a large dining and leisure quarter known as The Qube which houses over 23 restaurants, bars and café’s anchored by an Odeon IMAX 17 screen cinema.

The MetrOasis is a standalone development situated to the west of the main centre providing catering accommodation arranged in 4 double height units.

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 20

GROUND FLOOR PLAN

21 | METRO C E NTRE

FIRST FLOOR PLAN

| 22

4.1 THE CENTRE

23 | METRO C E NTRE

Red Mall The Red Mall was extended and refurbished (opening in 2004) and is anchored by a Debenhams department store. The Red Mall features a wide selection of high street fashion and footwear retailers combined with a popular Apple store, jewellery operators, music/game retailers, coffee shops, accessory stores and travel and banking facilities. The Mall benefits from large well configured stores housed under a glazed roof which provides natural light contributing to a pleasant shopping environment. On the upper level, the Red Mall links to the Yellow Mall and the new Qube development.

Green Mall Incorporates the Town Square atrium and links to the Red Mall.

Green Mall is anchored by three department stores; M&S, House of Fraser and Bhs. Shop units are generally smaller than those in the Red Mall and tenants include high street fashion retailers, cosmetic, pharmaceutical and beauty brands, and a selection of jewellery and phone stores.

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 24

Platinum Mall This is the central area of the Centre which has been refurbished and renamed the Platinum Mall. This area focuses on a premium retail offer. Platinum Mall is the only mall to have direct connection to all other malls and the tenant mix has been transformed from mass market to a premium offer including a new Champagne Bar.

25 | METRO C E NTRE

Yellow Mall The Yellow Mall incorporates the newly refurbished Qube restaurant and catering development and IMAX Odeon Cinema. The eastern section of the mall houses Primark and also includes an Argos store and a small selection of fashion retailers and kiosks. The Primark store at the eastern end of Yellow Mall marks the start of Blue Mall.

LAND MARK S HOPPING C ENTRE INVESTM ENT | 26

4.1 THE CENTRE

27 | METRO C E NTRE

Blue Mall Provides the Centre’s value retailing and on the lower level is anchored by a large TK Maxx store. The Blue Mall benefits from strong footfall from the railway and bus transport interchange which can be accessed from the northern end of the mall. At first floor level the Blue Mall extends into the Forum, a dedicated independent retailer hub.

Car Parking Metrocentre benefits from over 9,000 free parking spaces in four colour-coded car parking areas (Blue, Green, Yellow and Red car parks) which link to the colour-coded malls. Additional parking is available at The MetrOasis with a maximum stay of four hours.

Metrocentre car parks have been awarded the Park Mark certificate which is given by Northumbria Police to car parks which have achieved the standards of the Safer Parking Scheme.

Electric car charging points are located in the Yellow and Green car parks, including UK’s first publicly available quick charger which can charge cars to 80% capacity in around 20 - 30 minutes.

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 28

4.2 TENURE The property is held freehold by the Church Commissioners and is let to intu for a term of 200 years expiring 27th September 2195 (approximately 180 years unexpired). Under the terms of the head lease, the Church Commissioners as freeholders are entitled to receive a ground rent reflecting 10% of total net rents received (after permitted deductions). Upon head lease expiry, the right to receive 100% of income derived from the shopping centre will revert to the freeholder.

The headrent collected in 2014 was £4,561,890.

The shopping centre asset management is undertaken by intu, more details are available under “Asset Management”.

29 | METRO C E NTRE

4.3 TENANCY The Metrocentre is sublet on approximately 450 leases and licences.

A number of the retail leases provide for the rent to be paid on a base and turnover basis. In addition, many of the retailers lease remote storage units from the landlord. Commercialisation activities generate a further ÂŁ1.4 million per annum.

Several of the anchor stores are let on long leases thereby providing significant income security. intu is therefore able to manage the Centre with the use of a selection of leases that are contracted outside the security provisions of the 1954 Act thereby retaining the ability to adjust the tenant mix to suit customer aspirations and tenant demand.

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 30

THE CENTRE CURRENTLY PRODUCES A GROSS RENT OF APPROXIMATELY £50 MILLION PER ANNUM

INCOME EXPIRY PROFILE

4.4 INCOME

0-2 years 8.6%

10+ years 25.5% 2-5 years 26.9%

The Centre currently produces a gross rent of approximately £50 million per annum. This is scheduled to rise throughout 2015 and again in 2016 when completion of the Qube 2 Food Court takes place. The table below summarises the gross and net income in the Centre for the last four years.

Year to March

Gross Rent

Net Rent

Rent payable to CC

2011

£54,561,194

£46,156,192

£4,615,619

2012

£52,240,581

£47,452,370

£4,745,237

2013

£50,541,378

£44,987,517

£4,498,751

2014

£49,982,953

£45,618,909

£4,561,890

5-10 years 39%

INCOME BY OCCUPIER TYPE Local 9.36%

51% of the contracted rent is derived from the top 25 tenants. The top 8% of tenants by income pay 27% of the contracted rent.

Miscellaneous 1.9%

Anchor 23%

National Multiple 30.8%

International Multiple 34.94%

31 | METRO C E NTRE

4.5 RENTAL VALUES Prime rental levels in the Metrocentre reached £325ZA in 2007. At present the highest rental levels have been achieved in the Red Mall where rents have stabilised at £250ZA. In the Green Mall rental levels have been established at £215ZA. The Blue Mall provides the value offer within the Centre and the rental tone is £100ZA.

£75

£50* £65

£100 £200

£80

£250

£105

£215

GROUND FLOOR

* Overall rate

£100

FIRST FLOOR LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 34

METROCENTRE IS ONE OF THE MOST SOUGHT AFTER RETAIL DESTINATIONS IN THE UK

4.6 RETAILER DEMAND & TENANT MIX Metrocentre is one of the most sought after retail destinations in the UK. Vacancy rates are currently low in keeping with the historic trend of the Centre. Retailer demand exists for all five malls which offer a range of unit sizes and configuration. New units in the Centre include River Island, Superdry, H&M Kids and Footlocker.

The scale and diverse nature of the Centre allows tenant engineering initiatives and improvements to constantly evolve. Current negotiations are ongoing with a number of tenants.

35 | METRO C E NTRE

METROCENTRE IS MANAGED BY intu, RENOWNED UK SHOPPING CENTRE OWNERS AND MANAGERS WHO SPECIALISE IN CREATING QUALITY ENVIRONMENTS WITHIN WHICH RETAILERS AND BRANDS CAN EXCEL

4.7 MANAGEMENT Metrocentre is managed by intu, renowned UK shopping centre owners and managers who specialise in creating quality environments within which retailers and brands can excel. At Metrocentre, through meticulous management and consistent improvements, intu have created and maintained an exciting retail and leisure destination which customers want to visit time and time again. High footfall generated by the assembly of a world class retail mix matching consumer requirements has created value for retailers and customers alike. intu are at the forefront of UK shopping centre management and are breaking new ground in creating a multichannel shopping environment that provides free wifi within the Metrocentre as well as a seamlessly integrated online shopping platform.

intu’s approach to shopping centre management is focused upon: •

Making intu locations the most desirable for shopping and socialising

•

Astutely managing the assets to take advantage of new trends and occupiers

•

Building long-term partnerships with local authorities and communities

•

Delivering the required planning approvals for all projects and generating the required level of demand to commence a project

•

Offering a distinctive customer signature experience at all intu centres

•

Having a best-in-class digital offering to retailers and customers

•

Delivering a consistent national brand partnership, experiential and advertising opportunity on and offline

intu constantly review and measure success through ongoing monitoring of footfall, occupancy and income performance.

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 36

4.8 SERVICE CHARGE Metrocentre is operated by a comprehensive service charge which covers the entire running of the Centre. Up to 300 staff are employed and the Centre management suite is located at the junction of the Yellow and Green Malls at first floor level. The onsite management team run the Centre on a daily basis, the costs of which are recoverable through the audited service charge.

The 2015 budget is circa £13.4 million and is apportioned between the tenants on a weighted floor area basis. The service charge at Metrocentre also includes insurance which differentiates it from competing schemes. The table below sets out a breakdown of the previous three years’ service charge figures.

37 | METRO C E NTRE

Year

Total

2015

£13,453,804

2014

£13,134,107

2013

£12,779,930

4.9 ONGOING ASSET MANAGEMENT & PROPOSED DEVELOPMENT Qube 2 development is currently on site and is completely redesigning the food quarter linking into the Red Mall. It is anticipated practical completion will occur in February 2016 with tenants opening for trade from summer 2016. This development will greatly enhance the leisure offer within the Centre and improve both dwell time and customer experience.

Further initiatives are being considered and the intu team are in discussions with a number of existing and new retailers with a view to enhancing the vitality of the Centre.

LAND MARK FREEHOLD S HOPPING C ENTRE INTEREST | 40

5.0 INVESTMENT PROPOSAL For the benefit of our client’s unique freehold 10% interest in this super regional shopping centre we are inviting expressions of interest from selected investors with a view to providing more detailed information (subject to non-disclosure agreement) in a second stage marketing process. Interested parties will need to have the capacity to acquire this interest and the ability to partner the tenant in its ownership.

In order for investors to consider the proposition further we have summarised below the projected income from the Centre for the next 5 years based up on the current income and both the ongoing and future initiatives being undertaken at the Metrocentre.

Year to March

Gross Rent

Allowable Deductions

Freehold Interest Net Rent

Comments

2015

£50,475,578

£4,190,164

£4,628,541

Provisionally Reconciled

2016

£48,820,000

£3,750,000

£4,507,000

Estimated Figures

2017

£51,490,000

£3,500,000

£4,799,000

Estimated Figures

2018

£55,240,000

£3,500,000

£5,174,000

Estimated Figures

2019

£55,290,000

£3,500,000

£5,179,000

Estimated Figures

41 | METRO C E NTRE

6.0 FURTHER INFORMATION Further information and supporting documents are available in the data room which can be found at the following link: www.metrocentre-investment.co.uk For further information please contact: Richard Brown Tel: +44 (0)20 7318 7818 Email: richard.brown@eu.jll.com

James Waldock Tel: +44 (0)20 7852 4830 Email: james.waldock@eu.jll.com

Joshua Vernon Tel: +44 (0)20 7087 5346 Email: joshua.vernon@eu.jll.com

MISREPRESENTATION ACT 1967 | DISCLAIMER COPYRIGHT Š JONES LANG LASALLE IP, INC. 2015. All rights reserved.

Jones Lang LaSalle Limited for themselves and for the vendor of this property whose agents they are give notice that: a) The particulars are set out as general outline only for the guidance of intending purchasers and do not constitute, nor constitute part of, an offer or contract. b) All descriptions, dimensions, references to condition and necessary permissions for use and occupation, and other details are given in good faith and are believed to be correct, but any intending purchasers should not rely on them as statements or representations of fact but satisfy themselves by inspection or otherwise as to the correctness of each of them. c) No person in the employment of Jones Lang LaSalle Limited has any authority to make or give any representation or warranty whatever in relation to these properties. d) All plans, maps and photographs provided are for indicative purposes only. June 2015.

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