No 3 Investment Brochure

No 3 Capital Quarter

Investment Opportunity

Prime, Secure, City Centre Office Investment

1

No 3 Capital Quarter Cardiff 02 02

03

The Opportunity

Opportunity to acquire a brand new, freehold office investment in the heart of Cardiff city centre.

Cardiff is Wales’ capital city, the closest European capital city to London and one of the top tier regional centres in the UK. Located within close proximity to Cardiff Central Station, the prime retail core of St David’s 2 Shopping Centre and the flagship John Lewis store.

Capital Quarter is a mixed use development and forms a prestigious business location that is an integral part of the Central Business District.

It is within close proximity to Central Square and Callaghan Square, which collectively, with Capital Quarter, form Cardiff's prime office core.

No 3 Capital Quarter is a trophy building and has been speculatively built to a high specification and BREEAM Excellent standard.

76,994 sq ft of Grade A office accommodation over seven storeys with open plan, flexible floor plates.

Current rent of £1,732,339 per annum, which equates to a low average rent of £22.50 per sq ft with strong evidence already emerging for growth. No 4 Capital Quarter has achieved over £23.00 per sq ft.

Long-term, secure income with 10.51 years to lease expiry (9.74 years to break options).

Subject to Contract & Exclusive of VAT.

Which? is a new occupier to Cardiff, along with Sky and Monzo, evidencing its growing profile as a major UK city and its ability to attract new, innovative, inward occupiers.

A chronic lack of supply will catalyse rental growth with no new vacant Grade A space set to be delivered in 2019 or 2020.

Cardiff is ranked 3rd in the UK, after Bristol and Manchester, for total returns over the next 2 years.

Investment Opportunity

Seeking offers in excess of £26,800,000 (Twenty Six Million, Eight Hundred Thousand Pounds) reflecting an attractive Net Initial Yield of 6%, after deducting standard purchaser’s costs of 7.72% and a low Capital Value of £348 per sq ft.

Multi let with two high-calibre tenants, Admiral Insurance (5A1) and Which? Consumer services (4A1). Admiral Insurance is a FTSE 100 Company headquartered in Wales and attributable to 84.5% of the income.

04

10

5

9 6

7 13

4

1

8

12

11

3

2

No 3 Capital Quarter Cardiff

No

Central Location

1

Central Quay

2

Cardiff & Vale College

3

Lloyds Bank Group

4

Cardiff Central Rail Station

5

Principality Stadium

1

6

Central Square

1

7

BBC Cymru

1

1

22

05

To M4 Junction 29

24 15

16

17

To Cardiff Bay & M4 Motorway 19

20

18

14

23 26

21 25

22

To Cardiff Bay

Centrica

15

St. David’s 2

22

Ibis Hotel

9

Government Property Unit

16

Admiral HQ

23

New Smart Bridge

10

Cardiff Castle

17

Motorpoint Arena

24

Queen Street Rail Station

11

1 Callaghan Square

18

No 4 Capital Quarter

25

Novotel Hotel & Gym

12

2 Callaghan Square

19

Capital Quarter Car Park

26

Driscoll Buildings

13

John Lewis

20

No 1 Capital Quarter

Parking

14

John Street Site

21

No 2 Capital Quarter

No 3 Capital Quarter

CF10 5PE Investment Opportunity

8

BIG SLEEP

06

A LT O L U S O

SMART BRIDGE

M U LT I S T O R E Y C A R PA R K N

O

2 9 6 S PA C E S R

T

H

VIRIDIS STUDENTS

JOHN STREET

NUMBER ONE 80,000 SQ FT OFFICE E A S T E R N C O U R T YA R D

NUMBER FIVE RESIDENTIAL

W E S T E R N C O U R T YA R D

A PA R T M E N T S

EAST WEST PEDESTRIAN ROUTE

NUMBER TWO

NUMBER FOUR

S M A R T WAY

CANAL

ACCESS RO AD

VIRIDIS STUDENTS

82,000 SQ FT

96,870 SQ FT

OFFICE

O F F I C E + R E TA I L S PA C E NUMBER THREE

FUSION STUDENTS

AT L A N T I C H

(Completion June 2019)

HERBERT STREET

TYNDALL STR EET

E DWA R D

E TA P H O T E L

ENGLAND

No 3 Capital Quarter Cardiff

WHARF

AT L A N T I C W H A R F

NOVO

Capital Quarter Masterplan Capital Quarter is situated on Tyndall Street in the heart of Cardiff city centre and forms part of the Cardiff CBD. It comprises an exciting 8 acre mixed use development including over 370,000 sq ft of Grade A offices, over 1,200 student beds and a 296 space private multi storey car park. In addition, construction is due to commence in late 2019 on a 307 unit build-to-rent residential tower.

RO

SE

MA

TREET RY S

VIRIDIS STUDENTS

EQUINITI

VIRIDIS

BUUK

STUDENTS

INFRASTRUCTURE

L AW

ELLEN STREET

OTEL HOTEL

C A P I TA L

It is strategically located within easy walking distance of Cardiff Central Railway Station, the main inter-city transport hub in Cardiff and Queen Street station (the main local / regional commuter hub). The prime retail core including the flagship John Lewis department store, and other city centre amenities are just a few minutes’ walk away, accessed via the new £2.5m Smart Bridge.

Capital Quarter has rapidly established itself as one of the premier office addresses in the city which is reflective of the high calibre occupiers it has attracted. Capital Quarter forms an integral part of the prime office core with both Callaghan Square and Central Square. Following practical completion of No 4, there will be over 3,000 employees on site at Capital Quarter alone. This will swell to 5,000 people located in the development once the residential tower and adjoining student accommodation practically completes.

Capital Quarter also has a growing amenity offer. The Kin & Ilk cafe/restaurant offer has proved very popular and will soon be complemented by a Co-Op (in legals) at No 2 and further retail following practical completion of No 4. In addition, the Novotel opposite provides a members gym.

The amenity offer at Capital Quarter will be completed by the Western Courtyard landscaped area which will be located in the heart of Capital Quarter.

Following the success of No 1, 2 and 3 Capital Quarter and Driscoll Buildings, JR Smart began speculatively developing No 4 which comprises 97,000 sq ft of Grade A accommodation with practical completion forecast for Q2 2019. The building is entirely pre-let to Geldards LLP, Sky and Optimum Credit, thereby adding further richness to the prestigious occupier pool at Capital Quarter.

The level of demand by occupiers for space at Capital Quarter can be clearly demonstrated by both offices being speculatively developed with no pre-lets, but having all space let by Practical Completion. This fully underwrites the quality of the location, specification of the offices and potential for rental growth.

Investment Opportunity

A D A M S T R E E T C A R PA R K

HOUSE

07

08

The UK city of choice CENTRAL HUB

THIRD

STUDENTS

90,000

of Wales

75,000 In full or part time education

FASTEST GROWING UK CITY

No 3 Capital Quarter Cardiff

Cardiff is forecasted to grow faster than any other UK city in population terms (26%) over the next 20 years – including London

HIGHEST EARNINGS GROWTH OF THE UK

Core Cities over the past year

IN THE UK

FOR TOTAL RETURNS Cardiff is ranked 3rd in the UK, after Bristol and Manchester, for total returns over the next 2 years

DAILY COMMUTERS To Cardiff City Centre

21.3m

Visitors in 2017 - 5% increase on 2016

45% 12% Of students plan to stay in Cardiff after their studies

5G

Growth in the population over the last 10 years

One of few cities selected to trial 5G networks

Live Work Play

09

rapid tra nsport Electrification of the main railway line completes in 2019 and will improve Cardiff’s connectivity with significantly faster journey times to London. The South Wales Metro Project is a £5 billion rail infrastructure project including replacement of the entire fleet, electrification of the existing valley lines and extended services which will greatly improve the accessibility of Cardiff from both a leisure and commuter perspective.

digital connectiv ity The city is exceptionally well connected with a unique contiguous free Wi-Fi network in the city centre, across the public transport network and is one of the cities selected for the first rollout of a new 5G network.

Cardiff is home to 3 universities with 75,000 full or part time higher education students in Cardiff with over 100,000 within a 45 minute drive. A recent joint Knight Frank / UCAS survey reports that at least 45% plan to remain in Cardiff post-studies providing the city with a captive, skilled workforce. Cardiff University is a Russell Group university and ranked 6th in the recent Research Excellence Framework.

Investment Opportunity

l arge student popul ation

010

Live Work Play c a rdiff cap ital reg io nal c i ty deal Cardiff is one of a conglomerate of ten Local Authorities to sign the Cardiff Capital Regional Deal which is a £1.2bn regional investment vehicle tasked with powering forward major infrastructure projects, create a new innovation hub with 25,000 new skilled jobs and leverage an additional £4bn of private sector investment.

c a rdiff cent ral ent erprise zone Centred on Cardiff Central Railway Station, it is the only Enterprise Zone in the UK dedicated to attracting and growing the financial and professional services sector.

j o b creat io n The private sector has generated over 15,000 highly skilled jobs in the previous 2 years. The fastest growth rate compared to any other UK Core City. The Cardiff Capital Regional Deal is tasked to build on this success.

m agnet fo r talent

No 3 Capital Quarter Cardiff

Cardiff was the second highest UK city in the global rankings in 2018 for attracting and retaining talent, after London and ahead of Birmingham. The city is ranked 36th globally (INSEAD).

h i g hest earning growth Cardiff has benefitted from the highest earnings growth of the UK Core Cities over the past year (ONS Annual Survey of Hours and Earnings).

c o m m ut er belt 90,000 daily commuters.

£1.2bn INV ES TMENT

1 ONE OF ONLY

Live Work Play

011

qua l i ty o f l i f e

sport and events

Cardiff is consistently ranked the UK’s number one City for quality of life. It is the closest European capital city to London and the work/ life balance across the region is exceptional.

The Principality Stadium is an iconic venue renowned globally and is the second largest roofed stadium in the world. Besides being home of the Welsh Rugby Union, it forms the corner stone of the city and held worldwide attention when it hosted the UEFA 2018 Champions League Final. It has also hosted two world title boxing matches and a raft of top music acts in 2018. Cardiff was the only UK stop on the Volvo 2018 Oceanic Race – Covering 45,000 nautical miles.

Cardiff boasts unrivalled retail, sport and cultural facilities, drawing in millions of visitors per year. St. David’s 2 Shopping Centre generates annual footfall of circa 40 million and is anchored by the second largest John Lewis store outside of London.

v i s i to r ’ s c h o ice Cardiff has one of the fastest growth rates of domestic and international visitors coming to the city. In 2017, 21.3 million visitors came to Cardiff, a 5% increase on the previous year.

culture Cardiff is the hub of Wales with major cultural attractions such as Cardiff Castle and the Wales Millennium Centre. Cardiff recently hosted the National Eisteddfod, an annual Welsh festival and the largest cultural event of its kind in Europe.

Investment Opportunity

r e ta i l , to u r i sm & leisure

012

A City on the Move The confidence exuberating from Cardiff can be attributed to this extremely positive growth story with its city centre boasting a raft of new developments.

central square The BBC have occupied a 170,000 sq ft iconic, Foster & Partners designed new HQ at Central Square, relocating 1,200 staff members into the city centre. In a similar fashion, the UK Government has pre-let 266,000 sq ft to create a Government Hub at Six Central Square and relocate a further 4,000 jobs in to the city centre.

Notable occupiers across One and Two Central Square include First Rand Bank, Blake Morgan, Hodge Bank, Amber Energy, Hugh James and Cardiff University, amongst others.

The Interchange will comprise a mixed-use development of 300+ Build-to-Rent units, 85,000 sq ft of Grade A offices and a multi-storey car park. All above a new integrated bus station on the ground floor offering continuity between rail and bus services.

No 3 Capital Quarter Cardiff

These projects are part of the wider Central Square development, forward funded entirely by Legal & General for ÂŁ450 million.

central quay Masterplan for the former Brains Brewery site on the south side of Central Square comprises more than 2.5 million square feet of development. This includes 1,000 residential apartments, Grade A offices, hotel, bars/restaurants and a 600-space MSCP. The scheme will also incorporate a rapidtransport metro link.

013

ca pita l q uart er

john street

Achieving a true equilibrium of mixed-use, the scheme totals over 370,000 sq ft of Grade A office accommodation and over 1,200-student beds across two schemes.

In addition is an on-site 296 space MSCP offering occupiers a core city centre location with immediate access to additional car parking. Shortly the scheme is due to be complemented with the construction of a 307-unit build-to-rent tower with ancillary retail space. No 3 Capital Quarter was the third phase of this successful development.

All four phases are fully let together with the original Driscoll Buildings, having completed a succession of landmark lettings to both new and indigenous occupiers to Cardiff.

A 2.5 acre site located between Capital Quarter and Callaghan Square will bring forward a mixed-use scheme comprising of approximately 300,000 sq ft. The first phase will comprise a 100,000 sq ft Grade A office building providing further opportunity for headline rents to be set, with future phases providing hotel and retail amenities.

cal l aghan square Consisting of five buildings totalling 300,000 sq ft, this district is adjacent to Capital Quarter and Cardiff Central Railway Station and home to major occupiers including Eversheds, HSBC, AECOM, AON, Centrica, Brewin Dolphin and Deloitte. The south side comprises a 4.5 acre development site purchased by the Welsh Government and will come forward to provide further mixeduse development and place-making.

Investment Opportunity

Occupiers include both domestic and international organisations such as WSP, Alert Logic, Opus Energy, Development Bank of Wales, Which? Consumer Services, Admiral Insurance, Geldards LLP, Sky, Optimum Credit, Home Office, Equiniti, Public Health Wales, BUUK Infrastructure, Atkins and Lambert Smith Hampton.

014

BRECON M5

CHELTENHAM

ROSS-ON-WYE A4 0

A47

GLOUCESTER

0

MONMOUTH

A465

ABERGAVENNY

A40

A4

17

M

5

MERTHYR TYDFIL

65

0 A47

A4

CIRENCESTER CHEPSTOW

42 26

M4

0

30 36

35

34

M4

BRIDGEND

32

33

28

A48

19

M

24

48

23

NEWPORT

SWINDON

M4

M4

M4 BRISTOL CHANNEL

A350

32

M

A48

CARDIFF AIRPORT

A4232

5

M

CARDIFF

BARRY

A4

BRISTOL

WESTON-SUPER -MARE

CHIPPENHAM

A4

0

37

29

8

A4

A3 7

PORT TALBOT

27

7 A4

41 41 40 39 38

A4050

SWANSEA

M4

A4

29

A4

BRISTOL AIRPORT

A36

BATH

A39

M

5

A36

22

MINEHEAD

A39

BRIDGWATER TAUNTON

The Connectivity

No 3 Capital Quarter Cardiff

Cardiff is a capital city thriving on its rapid connectivity both domestically and internationally by road, rail and air.

It is linked to major national road infrastructure via Junctions 29-33 of the M4 Motorway. Mainline rail connectivity is via Cardiff Central Railway Stations with journey times of 2 hours to London and Birmingham New Street. Journey times will compress to just 1 hour 40 minutes following completion of electrification works by the end of 2019.

Cardiff International Airport is located 11 miles SouthWest of the city centre and provides direct flights to an ever-expanding array of global destinations.

GLASTONBURY

A36

SALISBURY

MANCHESTER

015

M1

M6

A5

A1

BIRMINGHAM A49

M6

M1

0

M5 M4

M4

0

NEWPORT

SWINDON

CARDIFF

M25

M5

SWANSEA

M11

A40

M4

LONDON

BRISTOL READING M3

M5 A39

A30

8

A3

c on n ec ted to

Newport • Swansea • Bristol • Birmingham Reading • London • Manchester

by rail

Newport

15 miles

Bristol*

50 mins

Swansea

41 miles

Swindon*

60 mins

Bristol*

43 miles

Reading*

96 mins

Birmingham

113 miles

London*

127 mins

Reading

114 miles

Manchester

190 mins

London

147 miles

*Severn Bridge tolls now abolished

*Journey times to London will compress by circa 20 minutes following electrification.

Investment Opportunity

Key Travel

by road

016

The Description

No 3 Capital Quarter Cardiff

No 3 Capital Quarter comprises 76,994 sq ft of Grade A accommodation over seven floors completed in August 2018. It boasts a specification truly justifiable of ‘trophy’ asset status and worthy of the blue-chip covenants secured, set within the attractively landscaped Western Courtyard. The generously sized reception area provides a warm welcome to the building with a relaxed, high-quality coffee outlet with premium furnishings ideal for informal meetings, an impressive full height atrium flooding the area with natural light, an electronic tenant board and high-speed security gates.

Investment Opportunity

017

No 3 Capital Quarter Cardiff 018

s pec ification

| BREEAM Excellent

| Comfort cooling and heating

| EPC Rating A(21). One of only four prime buildings in Cardiff to achieve ‘A’ status

| Generous typical finished floor to ceiling heights of 2.70 metres

| Fully DDA compliant

| Full height floor to ceiling glazing

| Flexible floor plates of 11,900 sq ft

| Automatic smart occupancy controlled lighting

| Four x 16 person passenger lifts

| 12 secure undercroft car parking and new 296 space MSCP adjacent

| Central atrium providing exceptional natural light | Electronic Tenant board and high speed security gates | Integral coffee shop amenity | Large roof terrace | Metal tiled suspended ceilings with LED lighting | Full access raised floors with flexible power busbars

| 36 secure undercroft bicycle spaces | Occupational density of up to 1:6.5 sq m | Landlord shower and locker facilities | Roof mounted photovoltaic system | Green, open space at the Western Courtyard

Investment Opportunity

| Secure reception and breakout area

019

020

The Accomodation The IMPS 3 areas are as follows: SQ FT

SQ M

Floor 6 Offices

10,222

949.65

Floor 5 Offices

11,897

1,105.26

Floor 4 Offices

11,897

1,105.26

Floor 3 Offices

11,897

1,105.26

Floor 2 Offices

11,902

1,105.72

Floor 1 Offices

11,064

1,027.87

8,115

753.90

76,994

7,152.92

Ground Floor Offices

No 3 Capital Quarter Cardiff

Total

Investment Opportunity

021

022

covenant p ro file

Admiral Insurance Admiral Insurance is a major FTSE 100 company and headquartered in Wales. Since its inception in 1993, Admiral Group has become one of the UK’s most profitable and rapidly growing financial services company boasting 10,000 people across its UK network. Admiral’s headquarters are based within a 5 minute walk of Capital Quarter, in Ty Admiral, totalling 207,000 sq ft.

Admiral floated on the London Stock Exchange in 2004 and in doing so set the record for the biggest capital raise ever for a Welsh company. Admiral Group was accelerated into pole position of the highest valued public company in Wales. After continued growth, Admiral joined the FTSE Top 100 Companies list in 2007 and became only the second Welsh company to ever do so.

No 3 Capital Quarter Cardiff

The services offered include car, home and travel insurance, extending to personal and car finance within the U.K. The Group has operations in France, Italy, Spain, USA, Canada, India and Mexico.

"Choosing No 3 Capital Quarter was a natural choice through its central location providing our staff with convenient public transport links with excellent accessibility to our head office. The office design lends itself to creating an exciting, collaborative working environment and underpins our longterm commitment to Cardiff and South Wales."

Huw Llewellyn, Estate Director, Admiral

Set the record for the biggest capital raise ever for a Welsh company 10,000 people across it’s UK network

6.51m customers in 2018 Major FTSE 100 company

84.5%

of income

5A1

023

covenant

Admiral Group Plc – 5A1 covenant 31st December 2017 GBP (000’s)

31st December 2016 GBP (000’s)

31st December 2015 GBP (000’s)

£619,100

£548,800

£467,000

Pre-tax Profit

£403,500

£278,400

£368,700

Tangible Net Worth

£486,700

£408,600

£473,400

Turnover

EUI Limited (Tenant) - 5A1 covenant and 84.5% of income.

EUI Limited is the largest subsidiary of Admiral Group Plc and provides the group’s core functions including direct motor insurance brokerage and other shared group functions.

Turnover Pre-tax Profit Tangible Net Worth

31st December 2017 GBP (000’s)

31st December 2016 GBP (000’s)

31st December 2015 GBP (000’s)

£170,854

£167,415

£162,235

£266,626

£236,124

£315,529

£116,480

£104,415

£57,864

Further information available: www.admiral.com

Admiral Customers by Year 6.51m 13% 5.73m 11%

5.73m

c o m pa n y perfo rm ance

2018

2017

2016

Latest figures in the 2018 results post further growth to 6.51 million customers (13% increase).

Investment Opportunity

Admiral Group has reported ‘record profits’ in 24 out of 26 years since launch with 2018 breaking records on turnover, profit and dividend. Admiral has consistently grown its customer base year-onyear since its launch in 1993. This broke through the 5 million ceiling for the first time in 2016. The latest 2017 figures reported 5.73 million customers which was an 11% increase on the previous year.

024

covenant p ro file

Which?

Consumer Services Which? Consumer Services has entered Cardiff as a new occupier and selected the location over other major UK cities. This demonstrates the flourishing reputation of the city that is bolstering its ability to attract new inward occupiers. They follow Aon, Alert Logic, Opus Energy, Sky and Monzo who have also selected Cardiff over other locations in recent years, with most also selecting Capital Quarter as their destination within Cardiff.

No 3 Capital Quarter Cardiff

Which? was founded in 1957 and has since been campaigning to protect rights and raise standards for consumers, through testing goods, services and publishing results. It has since grown to over 1.5 million members, making Which? the largest independent consumer body in the UK. It is a notfor-profit charitable organisation with the entirety of its profits used to support the Which? Group.

Largest independant consumer body in the UK Not-for-profit organisation

1.5 million members

Founded in 1957 Raising standards

025

The tenant, Which? Limited provides all of the Group’s commercial operations including its magazines and books publications, digital products, legal, mortgage, comparison and will services.

Which Ltd 4A1 covenant

30th June 2017 GBP (000’s)

30th June 2016 GBP (000’s)

30th June 2015 GBP (000’s)

Turnover

£95,210

£96,341

£95,893

Pre-tax Profit

£12,001

£14,596

£18,316

Tangible Net Worth

£14,403

£22,072

£23,565

Further information available: www.which.co.uk

15.5% of income

Investment Opportunity

4A1 covenant

026

Income Split t e n an cy s c

15.5% WHICH? ( 4A1 D&B R ATI NG )

84.5% EU I LT D (5A1 D &B R ATING)

The property is le occupational leas Term (WAULT) of 1 FLOOR

TENANT

6th

EUI Ltd t/ Admiral Insurance

5th

EUI Ltd t/ Admiral Insurance

4th

EUI Ltd t/ Admiral Insurance

3rd

EUI Ltd t/ Admiral Insurance

2nd

Which?

Limited

1st

EUI Ltd t/ Admiral Insurance

GF

EUI Ltd t/ Admiral Insurance

No 3 Capital Quarter Cardiff

Total

027

h edu l e

et to two occupational tenants by way of seven ses with a Weighted Average Unexpired Lease 10.51 to lease expiries (9.74 to break options).

e

/a

e

/a

e

/a

e

/a

e

/a

e

LEASE START

LEASE EXPIRY

TERM (YEARS)

BREAK OPTIONS

10,222 (949.65)

1st March 2019

28th February 2029

10

11,897 (1,105.26)

1st March 2019

28th February 2029

11,897 (1,105.26)

1st March 2019

11,897 (1,105.26)

1st March 2019

11,902 (1,105.72)

10th July 2018

MARKETING RENT (£ PA)

RENT (£ PER SQ FT)

-

£229,989

£22.50

Terms reflective of GF.

10

-

£267,671

£22.50

Terms reflective of GF.

28th February 2029

10

-

£267,671

£22.50

Terms reflective of GF.

28th February 2029

10

-

£267,671

£22.50

Terms reflective of GF.

9th July 2033

15

1st July 2028

£267,795

£22.50

COMMENTS

18 months rent free from lease commencement topped up by the Vendor. A further 4 months rent free afforded if break option is not exercised in year 10 (not topped up).

5 yearly upward only rent reviews.

11,064 (1,027.87)

1st March 2019

28th February 2029

10

-

£248,946

£22.50

Terms reflective of GF.

8,115 (753.90)

1st March 2019

28th February 2029

10

-

£182,596

£22.50

Half rent until 28th February 2023.

Vendor will top up to market rent.

5 yearly upward only rent review.

76,994 (7,152.92)

£1,732,339 Investment Opportunity

/a

AREA -IPMS SQ FT (SQ M)

028

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Services & Parking

No 3 Capital Quarter Cardiff

Office

Office

Office

No 3

Central Atrium

Reception & Coffee Shop

029

o ccup ier

EUI Ltd t/a Admiral Insurance

EUI Ltd t/a Admiral Insurance

EUI Ltd t/a Admiral Insurance

EUI Ltd t/a Admiral Insurance

Which? Limited

EUI Ltd t/a Admiral Insurance

t enure Freehold.

service charge There is a full service charge budget being administered by the Landlord. Full details are available upon request.

Investment Opportunity

EUI Ltd t/a Admiral Insurance

030

The Market d e mand o ut st rip s supply

take up

Cardiff is the principal office market within Wales, and one of the major regional centres in the UK with its occupier and investment statistics cementing its position in the top 7 UK regional cities. Cardiff has a growing, estimated office stock of approximately 12.8 million sq ft.

Cardiff continues to boast exceptional occupational statistics with 2016 and 2017 representing two record years of take up in the city, at 685,600 and 703,900 sq ft respectively.

Capital Quarter forms a strategic location within the core of the Central Business District, around which forms the city centre core office market including Central Square and Callaghan Square. The CBD doublesup as the Central Cardiff Enterprise Zone, the only UK enterprise zone dedicated to supporting professional and financial companies, with the backing of a supportive, devolved Government.

With constrained Grade A and B supply in 2018, take up expectedly tapered back to 499,215 sq ft. This is equal to the ten year average of leasing volumes and further evidences pent up demand outstripping limited supply which is fuelling continued rental growth.

availabilit y and sup p ly

The only new space being delivered in 2019 is the completion of No 4 Capital Quarter, comprising 87,860 sq ft, and will be fully pre-let to Geldards, Sky and Optimum Credit prior to practical completion. With no other Grade A buildings, offering available space, reaching PC throughout 2019 and 2020.

Landlord’s are turning to refurbishing existing stock and using the constrained supply to drive rents with limited incentives required.

tak e - up an d avail ab il it y (s q f t)

No 3 Capital Quarter Cardiff

Grade A availability at the end of 2018 stood at just 103,478 sq ft, 33% below the 10 year average and only 2.5 months’ worth of takeup based on the previous year. At Q1 2019, availability stands at 100,792 sq ft.

800,000

600,000

400,000

200,000

2009

2010

2011

2012

City centre

take-up by sec tor 2018

9% Finance, Banking, Insurance

20%

Phanmeaceutical, Medical, Healthcare

17%

Professional Services

12%

Construction & Engineering Technology, Media & Telecomm

4%

Charities

9%

Other

2%

Public Sector & Not-for-profit

2%

Manufacturing & FMCGs

0%

Retail, DIstribution & Transport

25%

2%

4%

25%

9%

2%

031

9%

12%

20% 17%

2013

2014

e take up (sq ft)

2015

2016

2017

Availability

2018

Q1 2019

Demand in Cardiff continues to be generated from a diverse range of business sectors, with no overreliance on any one sector of the economy. Finance, Banking and Insurance led the take up, accounting for 25% of deals, with the Public Sector representing just 2% of total take up. Cardiff is well positioned to capture new inward investment and occupiers, as evidenced by Which?, Monzo, Sky, Aon, Alert Logic and Opus Energy, through its arsenal of compelling draws to win the ‘war on talent’. Such factors include competitive living costs, high quality work life balance, as well as a talented, skilled workforce, competitive overhead costs, a supportive, devolved Government and shortening journey times to the next nearest capital city, London.

Investment Opportunity

dema nd

032

12.8m sq ft

r en ts a nd fut ure g row t h Prime office rents in Cardiff currently stand at £25.00 per sq ft and are forecast to reach £27.00 per sq ft with the next phase of development.

This is extremely competitive in comparison to Cardiff’s neighbour, Bristol, currently at £35.00 per sq ft. The lack of new Grade A supply has put a ceiling on headline rents in Cardiff but the pent up demand, coupled with low levels of supply has continued to support rental growth below headline rent levels: •

Cardiff has a growing, estimated office stock size of approximately 12.8 million sq ft.

£27.00 per sq ft

St Patricks House: £21.00 to £23.00 per sq ft between 2017 and 2018.

8.7% growth over 1 year.

•

Capital Quarter: £20.00 to £23.00 per sq ft between 2017 and 2018.

13% growth over 1 year.

•

Central Square: £21.00 to £25.00 per sq ft between 2016 and 2017.

16% growth over 1 year.

Cardiff's prime office rents are forecast to reach £27.00 per sq ft by 2020 / 2021.

13% growth CQ office rents have increased from £20.00 to £23.00 per sqft over 1 years.

r eg i o n a l prim e rent s - p er sq ft - q2 2019

£36.00

No 3 Capital Quarter Cardiff

£27.00

£18.00

£9.00

£0.00

Newcastle

Cardiff

Sheffield

Leeds

Glasgow

Aberdeen

Birmingham Manchester

Edinburgh

Bristol

k ey l et t ing t ransact io ns

033

DATE

BUILDING

OCCUPIER

SIZE (SQ FT)

RENT (PSF)

Q1 2019

3 Callaghan Square

Grant Thornton

6,500

£23.00

Q1 2019

No 4 Capital Quarter

Sky

38,910

£23.00

Q1 2019

No 4 Capital Quarter

Optimum Credit

18,567

£23.00

Q1 2019

2 Kingsway

St James Place Wealth Management

7,035

£21.75

Q1 2019

2 Kingsway

Monzo Bank

14,156

£22.00

Q1 2018

No 4 Capital Quarter

Geldards LLP

30,453

£23.00

Q1 2018

No 3 Capital Quarter

Admiral

65,091

£22.50

Q3 2018

3 Assembly Square

Knight Frank

3,395

£23.00

Q1 2018

St Patrick’s House

Keolis Amey

11,194

£23.00

Q1 2018

No 3 Capital Quarter

Which? Limited

11,550

£22.50

i n v e stm ent act ivit y The UK commercial investment market represented £62.1bn of investment volumes during 2018, slightly lower than the record levels of £65.6bn 2017 but 28% ahead of 2016 at £44.66bn.

Cardiff is rapidly becoming a leading regional office market capitalising on its exceptional value compared to Central London and South East Markets, with the

attention of global investors consistently targeting the city. Through its depth of buyers both UK and globally it offers outstanding liquidity which is underpinned by a mature, growing occupational market.

Office investment volumes totalled £286 million in 2018, almost equalling the record level of £289 million in 2017. With 2018 office volumes maintaining pace on the previous year and more than double the 10-year average, this demonstrates the unrelenting investor demand for opportunities in Cardiff.

c a r d i ff o ffice invest m ent vol umes £m

£300 £225

Investment Opportunity

£150 £75 £0

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

No 3 Capital Quarter Cardiff 034

k e y i n v est m ent t ransact ions

035

INCOME LENGTH (YEARS)

TENANT

PRICE

NET INITIAL YIELD

CAPITAL VALUE (PSF)

8

Bevan Brittan LLP

c.£34.1m

c.5.25%

c.£383

10

Multi-let

£37m

4.75%

£567

21.25

Admiral Insurance

£86.85m

4.00%

£420

121,737

11.8

Multi-let

£54.74m

5.00%

£450

Bristol

95,771

9.1

Multi-let

£62.13m

4.75%

£649

Greenside

Edinburgh

37,828

8

Multi-let

£17.57m

5.27%

£464

March 2018

2 Callaghan Square

Cardiff

45,208

4.50

Multi-let (37% vacancy)

£14.875m

5.97%

£329

July 2017

One Central Square

Cardiff

135,333

9.25

Multi-let

£51m

5.49%

£377

BUILDING

CITY

Under Offer

Kings Orchard

Bristol

February 2019

The Brinell Building

Brighton

November 2018

Ty Admiral

Cardiff

November 2018

Atlantic Quay 1

Glasgow

September 2018

Aurora

July 2018

SIZE (SQ FT)

89,010 65,253 206,833

c a p i ta l allowances

epc

Information to be provided upon request.

The building has an EPC rating of A(21). A copy of the report is available upon request.

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

No 3 is one of only four buildings in Cardiff city centre with an A rating.

Investment Opportunity

DATE

No 3 Capital Quarter Cardiff 036

Investment Considerations

Freehold.

BREEAM Excellent.

Cardiff is the Capital City of Wales and one of the major regional centres in the UK. Located at the core of the Central Business District, within close proximity to Cardiff Central Station and the heart of retail and leisure district with its flagship John Lewis store.

Completed in June 2018, the building is constructed to a high specification, benefitting from open plan, flexible floor plates.

An asset truly worthy of ‘trophy’ status with an impressive full height atrium, spacious reception with collaborative space, communal coffee shop amenity and roof top terraces.

10.51 years secure income (9.74 years to breaks) to Admiral Insurance (5A1 D&B and 84.5% of income) and Which? Consumer Services (4A1 D&B and 15.5% of income).

No 3 Capital Quarter was 100% let or under offer at Practical Completion.

Current rent of £1,732,339 per annum reflects an average rent of £22.50 per sq ft which is low compared to prime rents for Cardiff offices at £25.00 per sq ft.

No 4 Capital Quarter is nearing practical completion and is already fully prelet, achieving rents of £23.00 per sq ft, evidencing the pace of rental growth within Capital Quarter itself.

Cardiff prime rents expected to hit £27.00 per sq ft with next cycle of development which still offers exceptional value compared to £35.00 per sq ft now being achieved in Bristol.

The city is ranked 3rd out of the UK for total returns over the next 2 years, after Bristol and Manchester.

Cardiff is ranked 3rd in the UK for the highest rental growth over 2019 and is consistently forecast to outperform a number of the other major regional UK cities over the next 5 years.

Cardiff is set to reap the benefits from boosted connectivity through the electrification of the main railway line to London, cutting journey times by 20 minutes and the wider £1.2bn South Wales Metro infrastructure project.

Cardiff is a vibrant, innovative city with strong occupational dynamics attracting inward occupiers and investment which has translated into the city being within the top 3 regional cities in terms of total returns over the next 2 years.

In a market characterised by a shortage of prime office investments this represents an exceptional opportunity to acquire a modern, fully-let, Grade A office building in a top tier UK city, offering opportunities for rental growth whilst benefitting from secure income to blue-chip covenants.

Investment Opportunity

s

037

38

p r o po sa l Seeking offers in excess of £26,800,000 (Twenty Six Million, Eight Hundred Thousand Pounds) reflecting an attractive Net Initial Yield of 6.00%, after deducting standard purchaser’s costs of 7.72% and a low Capital Value of £348 per sq ft.

Subject to Contract & Exclusive of VAT.

For further information or to arrange an inspection please contact:

gareth lloyd 029 2044 0141 gareth.lloyd@knightfrank.com

simon ricka rds 020 7861 1158 simon.rickards@knightfrank.com

el l iot evans 029 2044 0952 elliot.evans@knightfrank.com

rob jones

No 3 Capital Quarter Cardiff

029 2044 0128 rob.jones@knightfrank.com

No 3 Capital Quarter

Prime, Secure, City Centre Office Investment

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 or its value. 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.

Images etc: The images shown are computer generated from architects initial drawings and only show certain parts of the property. Areas, measurements and distances given are approximate only.

3.

Regulations etc: 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: The VAT position relating to the property may change without notice.

5.

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.

Brand and brochure design by Martin Hopkins 029 2046 1233 | info@martinhopkins.co.uk martinthopkins.co.uk

Brochure - May 2019 Photography - April 2019