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MEDWAY BRIDGE HOUSERIVERSIDE HOUSE

MAIDSTONE, KENT ME14 1JP

Multi-let office investment prominently located in an affluent South East town-centre

INVESTMENT SUMMARY

• Modern, multi-let office buildings prominently located in the county town of Kent

• Maidstone is situated approximately 32 miles to the South East of Central London and 16 miles to the east of Sevenoaks.

• The property comprises two self-contained office buildings comprising 38,814 sq ft across ground and 4 upper floors

• Exceptional town centre car-parking ratio of 1:266 sq ft

• Multi-let to 4 tenants with a WAULT of 4.9 years to breaks and 8.96 years to expiries.

• Allianz are the major occupier, accounting for 53% of the total income, having been in occupation of Medway Bridge House since the early 2000s.

• Riverside House has recently been refurbished at a cost of c.£50 per sq ft

• Passing rent of £601,648 per annum (£15.50 per sq ft) including rent guarantee on top floor of Riverside House

• Offers in excess of £7,300,000 Subject to Contract. A purchase at this level reflects a Net Initial Yield of 7.73% allowing for purchasers costs of 6.63%, and a capital value of £188 per sq ft.

• The property is not currently elected for VAT purposes, as such VAT is not applicable.

GATWICK

M20

M20

M26M25

M23

M3

M4

M25

M1M11

M25

J6J4

LONDON

GILLINGHAMCHATHAM

SITTINGBOURNE

SOUTHENDON SEA

RAMSGATE

DOVER

A299

A2

A20

A249

A229A228

A20A26

A229

A28A21

HASTINGSBRIGHTON

DORKING

DARTFORD

TUNBRIDGEWELLS

FOLKESTONE

ASHFORD

A259

A228

A21

A267

A272A23

A24

A3

A127

CANTERBURY

EASTBOURNE

M2

SHEERNESS

MAIDSTONE

J7

LOCATIONMaidstone is situated approximately 32 miles south east of Central London, 16 miles east of Sevenoaks, 8 miles south of Chatham and 27 miles south west of Canterbury.

The town is situated on the River Medway at the junction of the A20 with the A26, the A229 and the A249. Junctions 5, 6 and 7 of the M20 Motorway are all within 2.5 miles distance of Maidstone Town Centre giving rapid access to the M2, M26, M25 London Orbital Motorway, the Dartford Crossing and Heathrow, Gatwick, Stansted and London City Airports. The Channel Ports/Tunnel and Central London are all within approximately 1 hours drive of the town.

Maidstone is both a county town and the principal administrative centre of Kent, with a population of approximately 150,000.

DEMOGRAPHICSMaidstone has a large skilled labour force due to its central position locationally amongst the affluent surrounding Kent areas of Tonbridge, Sevenoaks, West Malling and Sittingbourne. With current unemployment at 0.8% and a workforce of c. 85,000 people, the dominant employment sectors are focused on Finance and Business services, ICT and administration accounting for about 25% of total jobs.

The town has a total office stock of some 2,000,000 sq ft with a current availability at circa 2% which is the lowest recorded since 2000. In the last 4 years some 500,000 sq ft of offices in Maidstone town centre have been converted to alternative uses. There is no office space currently under construction across the Maidstone market therefore supply will become even tighter.

COMMUNICATIONSRegular mainline train services connect Maidstone via its three stations to London Victoria, Blackfriars, and London St Pancras with fastest journey times of approximately 53 minutes.

Ebbsfleet International Station is approximately 25 miles drive from the town, providing 4 trains per hour to London St Pancras with a journey time of just 18 minutes.

SITUATIONMedway Bridge House and Riverside House are located in a very prominent position overlooking the River Medway at the junction of the High Street with Fairmeadow in Maidstone Town Centre. Fairmeadow is the A229 dual carriageway and forms part of the Town Centre gyratory system. There is excellent access to Junction 6 of the M20 via the A229 dual carriageway.

Maidstone town centre benefits from both the Chequers Mall Shopping Centre and the Fremlin Walk retail facility anchored by House of Fraser, with the pedestrianised Week Street linking these two centres. Close to the buildings is Earl Street which houses many of the towns restaurant offers.

There is also a significant quantity of offices in the town centre with occupiers including Kent County Council, Maidstone Borough Council, Hidden Hearing, Invicta Law, MHA MacIntyre Hudson, Whitehead Monkton Solicitors and many professional firms. Other local office occupiers include ASB Law, Wilkins Kennedy Chartered Accountants and Towergate Insurance.

GATWICK

M20

M20

M26M25

M23

M3

M4

M25

M1M11

M25

J6J4

LONDON

GILLINGHAMCHATHAM

SITTINGBOURNE

SOUTHENDON SEA

RAMSGATE

DOVER

A299

A2

A20

A249

A229A228

A20A26

A229

A28A21

HASTINGSBRIGHTON

DORKING

DARTFORD

TUNBRIDGEWELLS

FOLKESTONE

ASHFORD

A259

A228

A21

A267

A272A23

A24

A3

A127

CANTERBURY

EASTBOURNE

M2

SHEERNESS

MAIDSTONE

J7

HIGH STREET KING STREET

ASHFORD ROAD A20

FAIRMEAD

OW

TONBRIDGE ROAD

A26KNIGHTRIDER STREET WAT TYLE

R W

AY

BISHOPS WAY COLLEGE RO

AD

EARL ST

MEDWAY ST

LONDON ROAD A20

PALACE AVENUE A229

NEW

CUT

RO

AD

A249

ROYAL ENGIN

EERS ROAD

STAT

ION

ROAD

LWR. BOXL

EY ROAD HOLLAND ROAD

A229

ROMNEY PLACE

A24

9

SITT

INGB

OURN

E RO

AD

GABRIEL’S HILL

WEEK STREET

A229

THE MALLSHOPPING CENTRE

COUNTYHALL

MAIDSTONEBARRACKS

MAIDSTONEWEST

MAIDSTONEEAST

FREMLIN WALK

J7

J6

LAWCOURTS

LOCKMEADOW ENTERTAINMENT

CENTRE

M20

RETAILPARK

ST P

ETER

’S S

TRIVERSIDE HOUSE

MEDWAY BRIDGE HOUSE

MAIDSTONEPOPULATION150,000 AP

PROX

Maps not to scale. For indicative purposes only.

DESCRIPTION Medway Bridge House and Riverside House comprise a purpose built office development constructed in circa 1990 on a self-contained site. Medway Bridge House comprises four storeys of office accommodation over undercroft parking, whilst Riverside House comprises five storeys with a surface car park above the Medway Bridge House car park.

The buildings are constructed of steel frame under low pitch metal roofs to open plan specifications. Medway Bridge House contains two 8 person passenger lifts, whilst Riverside House has a single lift.

RIVERSIDE HOUSE has recently been refurbished to a high standard, including the following specification:

Gas fired central heating Suspended ceilings LED lighting Raised access floors New lift New carpeting 59 on-site car parking spaces Male and Female toilets included within each demise

Riverside House comprises 19,096 sq ft of accommodation with 59 car spaces equating to a ratio of 1:324 sq ft.

The ground floor is let to a Snap Fitness franchisee and is fully fitted out as a gym. The four upper floors are fitted out as offices with only the fourth floor currently not occupied.

MEDWAY BRIDGE HOUSE has the following specification:

Gas fired central heating and air conditioning Suspended ceilings Recessed lighting Raised access floors 87 undercroft on-site car parking spaces Male and Female toilets in each core at each level

Medway Bridge House comprises 19,718 sq ft of office accommodation over 4 floors, together with 87 car parking spaces equating to a ratio of 1:227 sq ft. The tenant, Allianz, has recently committed to the fourth floor of the building and will be undertaking a fit-out, including provision of new air conditioning. Allianz already had leases of the three other floors.

ACCOMMODATIONThe property has previously been measured in accordance with the then RICS Code of Measuring Practice. Our client has opted out of measurements under RICS Property Measurement IPMS3 Office except for the upper floors of Riverside House.

SITEThe property occupies a site of approximately 0.76 acres (0.31 hectares)

TENUREThe entire property is held Freehold.

TENANCYMEDWAY BRIDGE HOUSEFLOOR NIA TENANT GUARANTOR COMMENCEMENT DATE TERM BREAK EXPIRY RENT PSF RENT REVIEW

1F 5,424 sq ft Allianz Management Services Ltd Allianz Holdings PLC 22.02.2018 10 years 21.02.2023 21.02.2028 £89,496 16.50 22.02.2023




19,718 sq ft £319,518

RIVERSIDE HOUSEGR 5,375 sq ft Enkay Investments Ltd (Snap Fitness Franchise) 08.05.2017 10 years NONE 07.05.2027 £80,625 15.00 08.05.2022

1F 3,776 sq ft Crowe Clark Whitehill LLP01.09.2017 10 years 31.08.2022 31.08.2027 £112,530 15.00 01.09.2022

2F 3,726 sq ft Crowe Clark Whitehill LLP

3F 3,665 sq ft Questor Insurance Services Limited 01.10.2017 10 years 01.10.2022 30.09.2027 £54,975 15.00 01.10.2022

4F 2,554 sq ft Vacant – 18 months rent, rates and service charge guarantee £34,000 15.00† Includes 475 sq ft restricted height

19,096 sq ft £282,130*

TOTAL 38,814 sq ft TOTAL RENT £601,648

*Assumes letting of 4FL Upper floors of Riverside House IMPS3 Office. †4th floor Riverside House comprises 2,079 sq ft at £15.00 psf plus 475 sq ft restricted height at £6.00 psf (average rent £13.31 per sq ft).

COVENANT INFORMATIONAllianz Management Services Ltd / Allianz Holdings PLC

Allianz Management Services Ltd (Reg. No: 03947280) is wholly owned subsidiary of Allianz Holdings Plc is a general insurer in the United Kingdom. It primarily offers motor, household, commercial property, business interruption and liability insurance products.

Their most recent financial results are as follows:31st December

2016 – £000’s31st December

2015 – £000’s31st December

2014 – £000’s

Sales Turnover £397,515 £384,651 £401,766Profit / (Loss) Before Taxes £10,489 £15,462 £19,291Tangible Net Worth (£167,808) (£119,487) (£132,093)

Allianz Holdings PLC act as a Guarantor for Allianz Management Services Ltd and is the largest general insurers in the UK and part of the Allianz SE Group, the largest property and casualty insurer in the world. Allianz SE Group employs 142,000 employees worldwide, and in the UK employs over 4,600 people across a network of 26 offices. Their most recent financial results are as follows:

31st December 2016 – £000’s



Sales Turnover £2,184,900 £1,685,800 £1,964,300Profit / (Loss) Before Taxes £81,800 £61,900 £153,800Tangible Net Worth £1,170,300 £1,100,000 £1,168,500

Crowe Clark Whitehill LLP

Crowe Clark Whitehill LLP (Reg No: OC307043) is a national audit, tax and advisory firm that is the eight largest global professional services network with 200 independent member firms operating from offices around the world. Their most recent financial results are as follows:




Sales Turnover £69,776 £65,006 £61,358

Profit / (Loss) Before Taxes £16,513 £11,707 £14,844

Tangible Net Worth £14,708 £10,033 £8,513

Questor Insurance Services Limited

Questor Insurance Services Limited (Reg No: 06201617) is an award winning independent provider of car hire excess and other niche insurance products distributed in more than 20 countries.

30th September 2017 – £000’s



Tangible Net Worth £270 £286 £220

Retained Profit / (Loss) Reserve £155 £171 £106

Total Assets £427 £413 £315

Enkay Investments Ltd t/a Snap Fitness

Enkay Investments Ltd (Reg No: 09538577) is trading as Snap Fitness started in 2015. It is a franchise gym fitness with over 2,000 facilities open or in-development around the world. The landlord holds a 6 month rent deposit.

QUESTOR INSURANCE SERVICES LTD CROWE CLARKE WHITEHILL

ALLIANZ

SNAP FITNESS

OCCUPATIONAL MARKET OVERVIEWThe Maidstone office market has seen a significant change over the past 4 years. In excess of 500,000 sq ft of existing stock has been lost to Permitted Development for residential or for leisure uses. Buildings such as Bishops Terrace (28,000 sq ft), Link House (21,000 sq ft), Concorde House (60,000 sq ft), Kent House (70,000 sq ft), Star House (25,000 sq ft) and Brenchley House (70,000 sq ft) have been or are in the process of being converted into residential use. London House (30,000 sq ft) is now a Premier Inn.

As a result of this, together with an upturn in demand, the vacancy rate for offices in Maidstone has reduced significantly, to circa 2%. Schemes such as Turkey Mill (100,000 sq ft), Springfield House (16,000 sq ft) and Maidstone House (60,000 sq ft) are largely fully occupied and there is a distinct shortage of modern quality office space available to let.

The last 2 years has seen significant transactional activity, including the letting to Invicta Law of almost 13,000 sq ft at Priory Gate, three lettings at Riverside House comprising Snap Fitness (5,000 sq ft), Crowe Clarke Whitehill (7,500 sq ft) and Questor Insurance (3,600 sq ft). Lettings have also taken place in Maidstone House to Chubb (4,000 sq ft), KSS (3,500 sq ft) and Think Telecom (3,500 sq ft). We are of the opinion that prime office rents in Maidstone are in excess of £20 per sq ft.

SOUTH EAST OFFICE INVESTMENT MARKETInvestment volumes in the South East reached £3.6BN for 2017, close to the record levels of £3.7BN achieved the previous year. 2018 has started buoyantly, with £636M of stock transacting, held back only by a lack of stock being brought to the market, particularly good quality town centre office buildings in tight markets such as the subject property. Knight Frank expect the South East Office investment market to remain characterised by good levels of investor demand and a shortage of stock, which could see prime yields harden to below 5.00% NIY. A schedule of comparables are listed below:

INVESTMENT COMPARABLES DATE ADDRESS TENANT PRICE PRICE PSF YIELD WAULT

March 2018 Weald & Darenth House, Sevenoaks Multi-let £10.11M £252 8.00% 4.8 yearsFeb 2018 Kingsgate, Redhill Multi-let £10.65M £248 7.66% 6.9 yearsNov 2017 Furness House, Redhill Multi-let £5.20M £195 7.74% 2.08 yearsAug 2017 Abbey Gate, Reading Multi-let £14.83M £259 7.81% 3.8 yearsJuly 2017 Vandervell House, Maidenhead Multi-let £7.85M £313 7.78% 2.47 years

ALTERNATIVE USESWe understand that residential values in Maidstone currently stand in the region of £375 per sq ft. Further information available on request.

SERVICE CHARGEDetails of Service Charge available on request.

VATOur clients advise that the exemption to VAT has not been waived and thus VAT is not applicable.

EPCMedway Bridge House: D81

Riverside House: C74

PROPOSALOffers sought in excess of £7,300,000 (Seven Million Three Hundred Thousand Pounds). A purchase at this price would reflect an attractive net initial yield of 7.73%, after allowing for usual purchase costs of 6.63%. This price equates to a low capital value of £188 per sq ft.

Subject to Contract and Exclusive of VAT

Important notice 1. Particulars: These particulars are not an offer or contract, nor part of one. You should not rely on statements by Knight Frank LLP & Watson Day 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 & Watson Day 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. Photos etc: The photographs show only certain parts of the property as they appeared at the time they were taken. Areas, measurements and distances given are approximate only. 3.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. 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. June 2018.

FURTHER INFORMATIONFor further information or to arrange an inspection, please contact the following:

Nick Threlfall Telephone: 01634 668000 Mobile: 07860 504621 Email: [email protected]

Simon Rickards Telephone: 020 7861 1158 Mobile: 07787 844384 Email: [email protected]

Alasdair Collins Telephone: 020 3826 0608 Mobile: 07532 380285 [email protected]

01732 897799 | createwithimpact.com (E6227/LU)

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