fusion 1 2 3

STRATEGICALLY LOCATED BUSINESS PARK INVESTMENT

FUSION 1 2 3 SOLENT BUSINESS PARK, FAREHAM PO15 7AB

• Prominently situated on Solent Business Park, the premier business park on the south coast, adjacent to Junction 9 of the M27 motorway equidistant between Southampton and Portsmouth.

• Fusion is only a 15 minute walk and 2 minute drive from British Land’s £100m redevelopment of Whiteley Shopping Centre, which offers 340,000 sq ft of retail and leisure amenity.

• The park will also benefit from a £23m infrastructure project on Junction 9 of the M27 and Parkway South roundabout, thus reducing congestion to Solent Business Park.

• Three high quality office buildings known as Fusion 1, Fusion 2 and Fusion 3 totalling a net internal area of (14,605.39 sq m).

• Freehold.

• Fusion is multi-let to seven tenants with strong covenants on 10 leases. There is a 9,632 sq ft vacant suite on the ground floor and 14,579 sq ft vacant suite on the part 1st floor of Fusion 3. The vendor will provide a 12-month rental guarantee on the vacant space.

INVESTMENT SUMMARY

• A total passing rent of £2,890,624 per annum provides andaverage rent of £18.15 per sq ft (including the vendor’s rentalguarantee).

• A contracted rent of £2,430,615 per annum equating to anaverage rent of £15.23 per sq ft (exclusive of the vendor’srental guarantee).

• Estimated Rental Value of £19.00 per sq ft.

• WAULT of 4.67 years to expiries and 2.39 years to breaks.

• 818 car parking spaces providing an excellent car parking ratioof 1:192 sq ft.

• We are instructed to seek offers for the freehold interest inexcess of £33,800,000 (Thirty-Three Million Eight Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level provides an attractive net initial yield of 8.01% after deducting purchasers’ costs of 6.77%. This reflectsa low capital value of £215 per sq ft overall.

Solent Business Park, the premier business park on the south coast

FUSION 1 FUSION 2 FUSION 3

FUSION 1, 2, & 3, SOLENT BUSINESS PARK, FAREHAM PO15 7AB

02

Solent Business Park - Adjacent to Junction 9 of the M27 motorway equidistant between Southampton and Portsmouth.

M27

SOUTHAMPTON (10 MILES)SOUTHAMPTON AIRPORT (10 MILES)

JUNCTION 9

CAFE DALUCCI

SOLENT HOTEL& SPA

THE PARSON’S COLLAR PUB

WHITELEY SHOPPING CENTRERetailers include:Marks & SpencerTesco Superstore

WagamamaMeadowside Leisure Centre

Frankie & Benny’sCineworld

PrezzoH&M

BootsCosta Coffe

DOMINO’S &SUBWAY

TRENCHERS

PORTSMOUTH (10 MILES)

A DIVERSE RANGE OF TENANTS INCLUDE:

LIDL

SKYLARKGOLF & COUNTRY CLUB


03

FUSION 1 2 3

Solent Business Park is a major employment hub within the Solent economic region on the south coast of England. It is located on the M27 corridor equidistant between Southampton and Portsmouth. Southampton city centre is situated 8 miles to the west, whilst Portsmouth is situated 11 miles to the east. London is approximately 80 miles to the North East.

Solent Business Park covers some 79 hectares (195 acres) of mixed-use development. The Park is comprehensively landscaped with parkland and lakes.

The Park has attracted a diverse range of tenants including HSBC, St James’s Place Wealth Management, Morgan Sindall, IWG, Lloyds TSB Bank Plc, Shoosmiths Solicitors and National Air Traffic Services (NATS).

Fusion is situated at the entrance to the Business Park, occupying the most prominent position of all the office schemes located there. It is widely regarded as the prime out of town office location along the M27 corridor and southern M3/A3(M).

Road improvements are currently underway on Junction 9 of the M27 and Parkway South roundabout, Whiteley. This £23 million project is jointly funded by Hampshire County Council and Highways England. The scheme will increase the capacity of the junctions and improve traffic flows by widening the roundabouts, adding additional lanes to the motorway

LOCATION & SITUATION04


slip roads and installing traffic lights at Parkway South roundabout (the first roundabout as you approach Whiteley). The scheme will reduce congestion and unlock economic development.

Whiteley Shopping Centre Adjacent to the business park is Whiteley Village, a modern and expanding residential scheme and Whiteley Shopping Centre at the commercial centre of the development. British Land invested approximately £100m redeveloping the shopping centre which offers 340,000 sq ft of shopping and leisure amenities, anchored by Tesco and M&S alongside other high street names such as Next, H&M, Fat Face and Boots. The centre can be reached within 2 minutes by car from Fusion or a 15-minute walk.

It is well served by restaurants including Five Guys, Nandos, Pizza Express, Coast to Coast, Prezzo, Wagamama, Yo! Sushi, Harvester, and Frankie & Benny’s, as well as coffee shops including Starbucks, Caffe Nero and Costa and an indoor climbing soft play centre, Rock Up and a Cineworld cinema.

The Solent Hotel and Spa is located to the north of the business park and offers 111 bedrooms and conference facilities for up to 200 people. The Skylark Golf & Country Club is 1 km to the east of the park.

Solent Business Park is a major employment hub within the Solent economic region on the South Coast of England.

Road

The region benefits from direct motorway access to London via the M3 and the A3(M) / A3. Links to other major arterial routes including the A303; A31 and A36 provide convenient access to other key cities in the South.

Solent Business Park is accessible from Junction 9 of the M27, with two further secondary access routes into / out of the business park helping to alleviate peak time congestion.

Rail

Swanwick railway station is located approximately 1 mile from Solent Business Park, providing regular services to Southampton (17 minutes) and Portsmouth (31 minutes), from where South West trains operate frequent services to London Waterloo, with a journey time of approximately 1 hour and 30 minutes. Fareham railway station is located 5 miles from the Park, providing direct services into London. Bus services link Solent Business Park to Swanwick train station with onward services to Southampton and Portsmouth.

Air

Southampton Airport is located approximately 9 miles to the north-west of Fusion, adjacent to the M27 Motorway (Junction 5). It is the major airport on the South Coast providing domestic and short-haul flights. The airport has grown significantly in recent years with 21 airlines now operating out of it and flying to destinations including Edinburgh, Jersey, Dublin, Amsterdam and Paris.

The airport handles c. 1.8 million passengers annually and serves over 40 UK and European cities. The airport is a major attraction for multi-national occupiers looking at office space in the South Coast as it provides excellent connections to Europe.

Sea

Solent Business Park is strategically located between the ports of Southampton & Portsmouth. The Port of Southampton holds the title of being the UK’s busiest cruise terminal handling over 1.5 millon cruise passengers a year across four terminals and home to P&O cruises and Cunard Line. It is also the UK’s second largest container port handling over one million tonnes of bulk cargo annually. Portsmouth International Port is the second busiest channel ferry port and handles over 3.5 million people and around 2 million tonnes of imports and exports annually.

CONNECTIVITY05


144

34

4

13

12

11

11

10

9

54

7

8

9

1011

12

5

4

3

1

2

12

PORTSMOUTH

SOUTHAMPTON

SOUTHAMPTONAIRPORT & PARKWAY

SOUTHAMPTONCENTRAL

FAREHAM

A34

A32

A3

A3

A27

A27

M27

M3

A3(M)

A27

A33

A35

A31

GOSPORT

HAYLINGISLAND

PORTCHESTER

WICKHAM

WATERLOOVILLE

EASTLEIGH

BEAULIEU

HYTHE

FAWLEY

M27

T H E S O L E N T

PORTSMOUTH &SOUTHSEA

M25 & LONDON GUILDFORD& LONDON

BOURNEMOUTH

BOURNEMOUTH

BRISTOL

OXFORD

SOUTHAMPTON

L O N D O N

HEATHROW

GATWICK

SOUTHAMPTON

BRISTOL

CITY

LUTONGLOUCESTER

9

4

M3

M4

M1 A1(M)

M40

M25

M25

M25

M23

M11

M27

M20

M2

M5

A36

A34

A31A3

A24

A27

A23A22 A21

A303

A31

A36

A37

A4

A27

A3(M)

CHELTENHAM

CIRENCESTER

A10

A346

A419

A420

A44

A12

A2

READING

BRIGHTONEASTBOURNE

ISLE OF WIGHT

E N G L I S H C H A N N E L

HASTING

DOVER

WORTHING

WOKING

GUILDFORD

WINCHESTER

MAIDSTONE CANTEBURY

SALISBURY

ANDOVER

NEWBURY

ROYALTUNBRIDGE

WELLS

WEYMOUTH

DORCHESTER

YEOVIL

BATH

SWINDON

AYLESBURY

CHELMSFORD

BISHOP’SSTORTFORD

BASINGSTOKE

FOLKESTONE

PORTSMOUTH

FAWLEY

FUSION 1 2 3

FUSION 1 2 3

SOLENT BUSINESS PARK06

M27

J9 Portsmouth (10 miles)

Southampton (10 miles)

Solent Business Park is renowned as the established office park on the south coast and is home to 60 companies with over 5,000 employees.

Fusion is situated at the entrance of Solent Business Park, with the buildings located to the south west of a landscaped lake feature. There is a coffee shop amenity situated next to the lake with an outside seating area which is well utilised by occupiers across the park. The Solent Centre also provides several amenity offerings including a café, Subway, and Dominos a short walk away.

Solent Business Park is home to 60 companies with over 5,000 employees.

1 The Parsons Collar Pub

2 The Solent Hotel Spa & Gym

3 Lidl

4 Whiteley Shopping Centre

5 Cafe Dallicci

6 Subway

7 Dominos

8 Whitleye Dental Practice

9 Trenchers Sandwich Bar

10 Skylark Golf & Country Club

WHITELEYSHOPPING CENTRE

SPA HOTEL & GYM

SUPERMARKETS GOLF & COUNTRY CLUB

ON-SITE CAFE / RESTAURANT


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3

4

5

6

7

8

9

10

FUSION 1

FUSION 2

FUSION 3


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SOUTH COAST ECONOMY08


The M27 corridor is well positioned between the UK’s busiest port, the Southampton Docks, and Portsmouth, the home to The Royal Navy. The cities of Southampton and Portsmouth boast an impressive economy worth approximately £47bn and are the homes of over 65,000 businesses. A number of large completed regeneration projects in Portsmouth including Gun Wharf Quays and Spinnaker Tower have created a rival destination to Southampton.

Portsmouth International Port is the second busiest channel ferry port and handles over 3.5 million people and around 2 million tonnes of imports and exports annually. Portsmouth is renowned for its strong marine and maritime economies in the UK and anchored by the Royal Navy.

Global giants in advanced manufacturing, defense, technology and aerospace such as Rolls Royce, Airbus, GKN, Cooper Vision, BAE Systems, Pall, Estée Lauder and QinetiQ have been attracted to the city and continue to take up a large presence. The Southampton docks plays a vital role in the regional and national economy as the busiest export port and largest for car exports, the 2nd largest container port and the UK’s largest cruise terminal. The Southampton Port handles over £71bn of international trade every year including a remarkable 90% of goods exported to outside of the EU.

The cities of Southampton and

Portsmouth boast an impressive economy worth approximately

£47bn.

The Southampton Port handles over £71bn

of international trade every year.

09


Southampton and Portsmouth are home to 65,000 businesses.

Portsmouth International Port

handles over 3.5 million people and around 2 million tonnes of

imports and exports annually.

Renowned for its strong marine and

maritime economies.

90% of goods exported to outside of the EU.

Suspended ceilings with recessed, daylight-dimming lighting and PIR sensors

Enhanced and optimised four-pipe VRF heating and cooling system

Inverter technology heat-recovery ventilation, providing up to 81.5% efficiency

Raised access floors

Shower facilities

Dedicated 11,000V power supply exclusively for the tenants services

13 person/1000kg capacity lifts

Bicycle facilities

Extensive allocated parking with parking enforcement

Refurbished reception areas

24/7 Security

HDPT2 Infrared security cameras

Paxton video access controls

4 Electric car charging points

DESCRIPTION10


Fusion comprises three high quality office buildings known as Fusion 1, 2 & 3. The buildings are arranged over ground and first floor levels and total 157,211 sq ft (14,605.39 sq m). Fusion 1 & 3 benefit from the following specification:

Fusion offers some of the most efficient and cost-effective office space in the region

The recent refurbishment of the common parts of Fusion 1 includes natural finishes, tactile timber and living plant walls in the reception area.

Fusion 2 was fully refurbished in 2011 and includes:

SiteThe overall site extends to approximately 3.82 hectares (8.95 acres).

Datacentre Power Originally developed as a datacentre the power capacity coming into Fusion is one of the greatest in the park. The available capacity is varied from 550 kVA in Fusion 1 to an available capacity 1000 kVA in Fusion 3.

Car Parking There is a total of 818 car parking spaces providing an exceptional car parking ratio of 1:192 sq ft on the office accommodation.

Spacious reception area

Air-conditioning

Suspended mineral fibre ceilings incorporating

Category II lighting

Full accessed raised floors with carpet tiling

Double glazed sealed windows throughout

Male, female, disabled WC’s and shower facilities

Three 8 person passenger lifts serving each floor

ACCOMMODATION11


The properties were measured by Bray Fox Smith & LSH (in accordance with the RICS code of measuring practice, 6th Edition) and comprises the following Net Internal Floor Areas:

TENUREThe property is held freehold.

Floor Area (sq ft) Area (sq m)

Fusion 1 Ground Floor 21,126 1,962.67

Fusion 1 1st Floor 21,700 2,016.00

Fusion 1 2nd Floor 22,505 2,090.78

Fusion 1 Total 65,331 6,069.45

Fusion 2 whole 41,314 3,838.20

Fusion 2 Total 41,314 3,838.20

Fusion 3 Ground Floor 23,522 2,185.27

Fusion 3 1st Floor 27,044 2,512.47

Fusion 3 Total 50,566 4,697.74

Fusion 1, 2 & 3 Total: 157,211 14,605.39

The Property is multi let to seven tenants in accordance with the tenancy schedule below. The total passing rent including guarantees is £2,890,624 per annum, equating to an average rent of £18.15 per sq ft on the office accommodation. The WAULT is 4.67 years to expiries and 2.39 years to the breaks.

TENANCIES12


Floor Tenant Area (sq ft)

Passing Rent

Rent (per sq ft)

Term (years)

Lease Start

Lease Expiry Break Rent

Review Comments

Fusion 1 Part Ground

Leidos Innovations UK Ltd 16,370 £306,937 £18.75 5 11/08/2018 10/08/202383 allocated parking spaces. Guaranteed by Leidos Holdings Inc.


Capita Business Services Ltd 4,756 £88,313 £18.57 10 22/10/2016 21/10/2026 22/10/2021 22/10/202123 allocated parking spaces plus 5 car spaces at £663.96 per space with the licence expiring on 21/10/2020. Outside the Act.

Fusion 1 Part 1st Floor

Microchip Touch Solutions Limited 12,050 £226,000 £18.76 11 27/07/2020 26/07/2031 27/07/2026 27/07/2026

Guaranteed by Microchip Limited. 60 allocated parking spaces. 15 months rent free plus a further 6 months if break not exercised. 6 month rent penalty on the break. Service charge cap agree at £8.25 psf and RPI linked.


Police and Crime Commissioner for Hampshire

9,650 £179,963 £18.65 10 02/12/2018 01/12/2028 02/12/2023 02/12/20233 month rent penalty on the break. 40 allocated parking spaces. Inside the Act.

Fusion 1 Part 2nd Floor

Police and Crime Commissioner for Hampshire

22,505 £438,581 £19.49 10 02/12/2018 01/12/2028 02/12/2023 02/12/2023

3 month rent penalty on the break. 118 allocated parking spaces plus 45 car spaces at £750 per space with the licence expiring at the break date in the main leases. Inside the Act.

Fusion 2 & Pt Ground Floor Fusion 3

Domo Tactical Communications (DTC) Limited

40,294 £669,000 £16.60 10 09/05/2011 08/05/2021223 allocated parking spaces. Underlet to Metocean Telematics (UK) Limited, underlease expires on 30 April 2021 (c.12,000 sq ft).

Fusion 2 EMC Warehouse


1,020 £5,000 £4.90 9 yrs 4 mths 23/12/2011 08/05/2021


Vacant 9,632 £183,008 £19.00 12 months rental guarantee.


ITV Broadcasting Limited 12,465 £226,750 £18.19 10 yrs 3m 09/09/2014 24/12/2024 31/01/2021Guaranteed by Carlton Communications Limited Break not exercised. Tenant granted further 12 months rent free. 61 allocated parking spaces.



Fusion 3 Ground Floor

Optegra UK Limited 13,890 £253,000 £18.21 15 23/11/2009 22/11/2024Guaranteed by FIL Investment Management Limited. 65 allocated parking spaces.

Substation SSE Services plc £1 42 29/09/1986 28/09/2028

Car Park Police and Crime Commissioner £33,750 10 02/12/2018 02/12/2023

Car Park Capita Business Services Ltd £3,320 4 22/10/2016 21/10/2020

Totals (inclusive of rental guarantee) 157,211 £2,890,624 £18.15

Totals (exclusive of rental guarantee) £2,430,615 £15.23

13


Floor Tenant Area (sq ft)

Passing Rent

Rent (per sq ft)

Term (years)

Lease Start

Lease Expiry Break Rent

Review Comments


Leidos Innovations UK Ltd 16,370 £306,937 £18.75 5 11/08/2018 10/08/202383 allocated parking spaces. Guaranteed by Leidos Holdings Inc.


Capita Business Services Ltd 4,756 £88,313 £18.57 10 22/10/2016 21/10/2026 22/10/2021 22/10/202123 allocated parking spaces plus 5 car spaces at £663.96 per space with the licence expiring on 21/10/2020. Outside the Act.


Microchip Touch Solutions Limited 12,050 £226,000 £18.76 11 27/07/2020 26/07/2031 27/07/2026 27/07/2026

Guaranteed by Microchip Limited. 60 allocated parking spaces. 15 months rent free plus a further6 months if break not exercised. 6 month rent penalty on the break. Service charge cap agree at £8.25 psf and RPI linked.


Police and Crime Commissioner forHampshire

9,650 £179,963 £18.65 10 02/12/2018 01/12/2028 02/12/2023 02/12/20233 month rent penalty on the break. 40 allocated parking spaces. Inside the Act.

Fusion 1 Part 2nd Floor

Police and Crime Commissioner forHampshire

22,505 £438,581 £19.49 10 02/12/2018 01/12/2028 02/12/2023 02/12/2023

3 month rent penalty on the break. 118 allocated parking spaces plus 45 car spaces at £750 perspace with the licence expiring at the break date in the main leases. Inside the Act.

Fusion 2 & Pt Ground FloorFusion 3


40,294 £669,000 £16.60 10 09/05/2011 08/05/2021223 allocated parking spaces. Underlet to Metocean Telematics (UK) Limited, underlease expires on 30 April 2021 (c.12,000 sq ft).

Fusion 2 EMC Warehouse


1,020 £5,000 £4.90 9 yrs 4 mths 23/12/2011 08/05/2021




ITV Broadcasting Limited 12,465 £226,750 £18.19 10 yrs 3m 09/09/2014 24/12/2024 31/01/2021Guaranteed by Carlton Communications Limited Break not exercised. Tenant granted further 12 months rent free. 61 allocated parking spaces.



Fusion 3 Ground Floor

Optegra UK Limited 13,890 £253,000 £18.21 15 23/11/2009 22/11/2024Guaranteed by FIL Investment Management Limited.65 allocated parking spaces.

Substation SSE Services plc £1 42 29/09/1986 28/09/2028

Car Park Police and Crime Commissioner £33,750 10 02/12/2018 02/12/2023

Car Park Capita Business Services Ltd £3,320 4 22/10/2016 21/10/2020

Totals (inclusive of rental guarantee) 157,211 £2,890,624 £18.15

Totals (exclusive of rental guarantee) £2,430,615 £15.23

COVENANT 14


31/12/2018 31/12/2017 31/12/2016

Sales Turnover £130,239,000 £123,435,000 £85,384,000

Profit (Loss) Before Taxes £9,508,000 £8,154,000 (£9,812,000)

Total Current Assets £47,287,000 £57,333,000 £49,658,000

Total Current Liabilities £25,604,000 £43,707,000 £42,029,000

LEIDOS INNOVATIONS UK LTD (COMPANY NUMBER SC112421)

12.63% of contracted rent. Dun & Bradstreet rating of 4A1.

Leidos is a leading partner to the U.K. government, the Scottish government as well as having key client partners in transportation and energy. Leidos employs 1,100 people across the U.K. supporting technology and business process transformation programmes for clients such as the Home Office, the Ministry of Defence and Met Police.

31/12/2019 31/12/2018 31/12/2017

Sales Turnover £1,401,500,000 £1,329,300,000 £1,454,791,000

Profit (Loss) Before Taxes £50,400,000 £391,800,000 £124,369,000

Total Current Assets £948,600,000 £1,002,500,000 £706,293,000


CAPITA BUSINESS SERVICES LTD (COMPANY NUMBER 02299747)


Capita is a consulting, digital services and software business. Captia employees over 61,000 people and operates in the UK, Europe, India and South Africa across six divisions: Software; Technology Solutions; People Solutions; Customer Management; Government Services and Specialist Services.

31/03/2019 31/03/2018 31/03/2017

Sales Turnover £6,809,707 £6,646,526 £3,537,293

Profit (Loss) Before Taxes £1,316,062 £591,904 £306,910


Total Current Liabilities £975,791 £1,356,059 £1,384,246

MICROCHIP TOUCH SOLUTIONS (COMPANY NUMBER 10172612)


Microchip Touch Solutions replace mechanical push buttons with a touch or gesture-controlled interface, adding value with advanced features and application, improving product’s performance and reliability. The company was founded in 1987 and employees over 18,000 people internationally.

31/12/2019 31/12/2018 31/12/2017

Sales Turnover £22,815,000 £19,694,000 £25,652,000

Profit (Loss) Before Taxes £2,360,000 £919,000 £1,733,000



DOMO TACTICAL COMMUNICATIONS (COMPANY NUMBER 01456922)


DTC is a global technology leader working in high performance overt and covert surveillance, communications and broadcast systems. DTC specialise in detecting, monitoring, communicating and sharing information with confidence in complex environments. There are 5 companies in the Domo Tactical Communications Limited corporate family and employees over 100 people.

15


31/12/2019 31/12/2018 31/12/2017

Sales Turnover £22,815,000 £19,694,000 £25,652,000

Profit (Loss) Before Taxes £2,360,000 £919,000 £1,733,000



31/12/2018 31/12/2017 31/12/2016

Sales Turnover £1,314,684,000 £1,313,159,000 £1,371,228,000

Profit (Loss) Before Taxes £319,861,000 £373,284,000 729,729,000



ITV BROADCASTING LIMITED (COMPANY NUMBER 00955957)


ITV is a British free-to-air television network with its headquarters in London. It was launched in 1955 as Independent Television to provide competition to BBC Television. ITV is a network of television companies that operate regional television services and share programmes between each other to be shown on the entire network. ITV has circa 6,500 employees.

30/06/2019 30/06/2018 30/06/2017

Sales Turnover £40,249,810 £36,464,109 £34,068,845

Profit (Loss) Before Taxes (£12,213,001) (£11,961,793) (£10,348,422)



OPTEGRA UK LIMITED (COMPANY NUMBER 05846041)

10.41% of contracted rent. Dun & Bradstreet rating of 3A2. .

Optegra UK Limited is an award-winning laser eye surgery that employs 237 employees.

POLICE AND CRIME COMMISSIONER FOR HAMPSHIRE

26.83% of contracted rent. Dun & Bradstreet rating of O1.

Undoubted covenant.

Mircrochip space.

SUPPLY

Total office supply on the South Coast was at 868,625 sq ft at the end of Q3 2020. In 2009 available supply along the M27 corridor was over 2 million sq ft with supply falling by almost 60% over the past decade.

Solent Business Park has around 100,000 sq ft of available (non-serviced) office space out of a total built stock of 1.35m sq ft representing a current vacancy rate of only 7.4%.

There is an expectation that some “grey” space will return to the market in Q4 2020 and beyond as tenants look to reduce the space they occupy following the impact from Covid-19. However, whilst demand from tenants has reduced in scale, it has increased in terms of quality and therefore prime rents in the region remain under pressure to increase.

With the uncertainty surrounding Covid-19, we are unlikely to see any speculative new office development in the region and with the loss of office buildings to alternative uses set to continue, this could place further pressure on supply in the immediate future.

TAKE UP

Despite issues surrounding Covid-19, Solent Business Park recorded the largest transaction along the M27 corridor during “lockdown” with 12,050 sq ft being let to Microchip Touch Solutions Ltd at Fusion 1. Take-up overall in 2020 will undoubtedly be less than the 5 year average of c.300,000 sq ft, however there are a number of transactions for Grade A space under offer, pointing to a recovering market as occupiers adjust to the ongoing economic challenges. Some sectors have in fact benefited from the pandemic with Healthcare, TMT and financial services all being active in the marketplace.

There is undoubtedly a shift in occupational needs accelerated by the pandemic, but whilst tenants are likely to take less space, they are also focusing on health and wellbeing as a priority going forward. Therefore demand will almost certainly be focused on better space available in the market.

OCCUPATIONAL MARKET16


RENTS

Achieved prime rents within Southampton city centre are £22.50 per sq ft, with transactions under offer at rents of £23.00 per sq ft. This represents a rental increase of 21.6% on headline rents in the last 5 years. Prime quoting rents in Southampton city centre and along the M27 corridor (Lakeside) have now reached £24.50 per sq ft for fully refurbished Grade A office space.

17


Date Building Name Town / City Size (sq ft)

Rent (sq ft)

Lease Length Break Rent Free

(months) Tenant

Q4 2020Building 1000 Lakeside

Portsmouth 21,993 £23.00 10 12 KINTO UK Limited

Q3 2020 5 Waterside Place Southampton 4,494 £20.00 10 5 9 NMT Shipping

Q3 2020 11 The Avenue Southampton 4,947 £20.00 10.5 5.5 15 In Communicaitons Ltd

Q2 2020Fusion 1, Solent Business Park

Fareham 12,050 £18.75 11 6 9Microchip Touch Solutions Ltd

Q4 2019 Grosvenor House Southampton 12,200 £21.00 10 5 10 BE Offices

Q3 2019 Burlington House Hedge End 5,500 £21.00 10 5 9 Pure Gym

Q3 2019 Leroux House Fareham 6,209 £18.75 10 5 6 Future Fit Training

Q2 2019 Mountbatten House Southampton 10,257 £19.50 10 5 12 Prestige Cruise Services


Portsmouth 27,000 £20.00 10 5 12 Check-a-Trade


Portsmouth 10,922 £18.50 10 5 12 AT&T


Portsmouth 15,022 £20.00 7 3 3 Babcock

Q2 2019 Oceana House Southampton 16,742 £21.00 10 5 9 Avask

Q2 2019Beresford House, Town Quay

Southampton 9,636 £22.50 10 5 12 Starling Bank

Q2 2019Forum 3, Solent Business Park

Fareham 7,426 £19.00 10 5 9 OPCC

Q1 2019Forum 4, Solent Business Park

Fareham 17,238 £18.50 10 5 9Aztec Financial Services (UK) Ltd

RECENT OCCUPATIONAL TRANSACTIONS

The effect of the coronavirus pandemic has led to a reduction in transactions in the south east office investment market over the past six months. However, the proportion of out of town business park transactions has grown significantly. The proportion of transactions for out-of-town assets in the south east office market rose to 64% in Q3 2020.

The move towards out-of-town assets, which was already emerging prior to the outbreak, has accelerated with occupiers and investors now looking for assets that are more resilient to lockdown restrictions with lower densities, car-friendly transport, and good parking ratios. It suggests that town centre locations are perceived as a higher risk due to reliance on public transport and overcrowding.

Overseas capital has been particularly active, especially for properties let to blue-chip occupiers in resilient industries. Furthermore, assets like Fusion that offer investors the opportunity to add value by implementing realistic asset management remain sought after. Recent comparable transactions below:

INVESTMENT MARKET18


RECENT INVESTMENT TRANSACTIONS

Date Address Sq Ft WAULT to expiry (break) Tenant Purchaser Price NIY Cap Value

£PSF

Sep-20Bourne Business Park, Weybridge

184,4597.90 6.10

Multi-let Straits Real Estate £80,532,011 6.75% £436.58

Aug-20Mountbatten House, Southampton

106,4956.6

(2.8) Multi-let Castleforge Partners £17,600,000 7.60% £165.27

Jul-20Building 3000, Hillswood Business Park, Chertsey

66,5627.5

(5.2)Multi-let M7/Kamco £23,000,000 7.07% £345.54

Mar-20Lakeshore, Bedfont Lakes Business Park, Feltham

541,886 5.5Cisco Systems

Limited Frasers Property £135,000,000 7.77% £249.13

Mar-20Omnibus, Lesbourne Road, Reigate

67,4397.0

(3.5)Multi-let Skelton Group £15,200,000 9.19% £225.39

Dec-19Caldecotte Lake Business Park, Milton Keynes

172,0006.18

(4.51)Multi-let Galliard & Mutual Finance £35,250,000 7.67% £204.94

Oct-19The Heights, Weybridge

349,9034.95

(3.85)Multi-let Kennedy Wilson £136,000,000 6.93% £388.00

KEY ASSET MANAGEMENT CONSIDERATIONS 19


Rental Reversion

• Fusion’s average rent is £15.23 per sq ft (on the contracted rent) with the latest deal agreed at£18.75 per sq ft and ERV on refurbished space of £19.00 per sq ft. This represents a reversion of19.84%.

• Prime rents in Southampton city centre and along the M23 corridor have reached £22.50 per sq ft.This represents a £7.27 per sq ft discount to the average passing rent at Fusion.

Further Enhancement of the Existing Offices

• Fusion is a high-quality office asset, which benefits from excellent fundamentals. There is shortto medium term potential to further enhance the asset through a comprehensive refurbishmentof the vacant suites and common parts of both Fusion 2 & 3. The existing owner has undertakena full refurbishment of the common parts in Fusion 1 which secured a letting to Microchip TouchSolutions Limited.

• Improve the external signage and landscaping.

• Re-branding.

BUSINESS PLANBased on a 5-year hold period, realistic business plan initiatives include:

Demise Tenant Event Term Certain

Rental Income

Capital Value Opportunity

2020/2021

Fusion 3 - Common Parts Common Parts / Reception Refurbishment Refurbish the common parts & reception of Fusion 3 to replicate Fusion 1.

External Signage &Landscaping

Common Parts Enhance Remodel and refresh external signage and landscaping as part of a re-branding.

Fusion 3 - Ground floor Vacant Let vacant suite ^ ^ ^ Secure current interest and establish ERV.

Fusion 3 - 1st floor Vacant Let vacant suite ^ ^ ^ Secure current interest and establish ERV.

Vacant Car Parking Vacant Let car parking spaces ^ ^ ^ Establish a new car parking rent.

2021

Fusion 2 Domo Tactical Communications Lease expiry ^ ^ ^ Regear or tenant vacate, refurbish building and re-let at ERV.

Fusion 1 - Part Ground Capita Action rent review ^ ^ Allow 2021 tenant break to pass. Negotiate rental uplift.

2023

Fusion 1 – Part 1st floor & 2nd floor

Police and Crime Commissioner for Hampshire Action rent review ^ ^ Allow 2023 tenant break to pass. Negotiate rental uplift.

Fusion 1 – Part Ground Leidos Innovations UK Ltd Lease expiry ^ ^ ^ Regear or tenant vacate, refurbish building and re-let at ERV.

2024

Fusion 3 – Part 1st floor ITV Broadcasting Limited Lease expiry ^ ^ ^ Regear or tenant vacate, refurbish building and re-let at ERV.

Letting Opportunity

• Immediate opportunity to enhance the current specification and let the two vacant suites in Fusion 3.

• Secure current interest in Fusion 3.

Alternative Use

• Given that Fusion was originally developed as a datacentre and the power capacity lined into thebuilding is one of the greatest on the park. There is an opportunity to convert one or more of thebuildings back into a datacentre at lease events and through tenant management.

Potential Additional Revenue Streams

• Fusion includes electric car charging points and there may be scope to provide other chargingfacilities given the exceptional power facility.

• Introduce a licenced monthly rolling and controlled parking scheme to generate immediate income.

ANTI-MONEY LAUNDERING In accordance with Anti Money-Laundering Regulations, the successful purchaser will be required to satisfy AML check and provide evidence on the source of funds to be used to complete the transaction.

EPC Fusion 1: B49

Fusion 2: B49

Fusion 3: B50

VATThe property is elected for VAT and the sale will be treated as a Transfer of a Going Concern (TOGC).

SERVICE CHARGEThe service charge budget for the year ending 31/12/2020 is £1,016,487 per annum equating £6.47 per sq ft overall. Service charge budget available on request.

PROPOSALWe are instructed to seek offers for the freehold interest in excess of £33,800,000 (Thirty-Three Million Eight Hundred Thousand Pounds), subject to contract and exclusive of VAT. A purchase at this level provides an attractive net initial yield of 8.01% after deducting purchasers’ costs of 6.77%. This reflects a low capital value of £215 per sq ft overall.

CONTACTS For further information or to arrange a viewing please contact:

Scott Helyer D: 020 3362 4348M: 07808 479 345E: [email protected]

Harvey Veitch D: 020 7629 5575M: 07795 103 177E: [email protected]

Jerry Vigus D: 023 8020 6111 M: 07711 167 057 E: [email protected]

Matt Barker D: 023 8024 9181M: 07860 189 598 E: [email protected]

Andy Hodgkinson (Occupational) D: 023 8071 3075M: 07702 801 595E: [email protected]

Misrepresentation Act 1967: Messrs Bray Fox Smith & Lambert Smith Hampton for themselves and for the vendor(s) of this property whose agents they are, give notice that 1. These particulars do not constitute, nor constitute any part of, an offer or contract. 2. None of the statements contained in these particulars as to the properties are to be relied on as statements or representations of fact. 3. Any intending purchaser must satisfy himself by inspection or otherwise as to the correctness of each of the statements contained in these particulars. 4. The vendor(s) or lessor(s) do not make or give and neither Messrs Bray Fox Smith & Lambert Smith Hampton nor any person in their employment has any authority to make or give, any representation or warranty whatever in relation to this property. Finance Act 1989: Unless otherwise stated all prices and rents are quoted exclusive of VAT. Property Misdescriptions Act 1991: These details are believed to be correct at the time of compilation but may be subject to subsequent amendment. Compiled October 2020.

FURTHER INFORMATION20


FUSION 1 2 3 SOLENT BUSINESS PARK, FAREHAM PO15 7AB

fusion 1 2 3

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