INVESTMENT SUMMARY

THE LOCATION

THE BUILDING

THE SPACE

TENACY, COVENANT & TENURE

READING OCCUPIER MARKET

SOUTH EAST OFFICE INVESTMENT

FURTHER INFORMATION

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T H E D E LTA B U I L D I N G121 KING'S ROAD, READING RG1 3ES

SECURE LONG LET, REVERSIONARY TOWN CENTRE

OFFICE INVESTMENT WITH 2 FIXED RENTAL UPLIFTS

INVESTMENT SUMMARY

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INVESTMENT SUMMARY

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I N V E STM E NT S U M M A RY

Prime South East headquarter office investment opportunity in one of the strongest office centres outside of London.

Reading is the economic and administrative capital of the Thames Valley, home to a thriving business community and affluent population with excellent access to Central London, the M4 motorway and Heathrow International Airport.

The Delta Building forms part of Prudential’s landmark office campus constructed in 1993 comprising 54,988 sq ft of Grade A office accommodation over basement, ground and four upper floors.

Excellent town centre car parking ratio of 1:606 sq ft.

Let in its entirety to the institutionally sought after covenant of The Prudential Assurance Company Limited expiring on 24 December 2030 with a break option on 24 December 2025.

The parent company, Prudential plc are a FTSE 100, S&P Global Rating A+, with a market capitalisation of £32.86bn.

Unexpired term of 14.3 years to expiry and 9.3 years to break.

Current passing rent of £1,236,667 per annum equating to a low rent of £23.00 per sq ft (taking reception at 50% and storage at £10.00 per sq ft) and benefitting from 2 fixed uplifts as follows:

25/12/2019: £1,342,812 per annum (£25.00 per sq ft) 25/12/2024: £1,475,493 per annum (£27.50 per sq ft)* *To the higher of OMRV or £27.50 per sq ft on offices

Virtual Freehold. 999 years from and including 5 April 2013 at a rent of £3,650 per annum which is not subject to any review.

Prime rents in Reading have increased to £34.00 per sq ft offering an opportunity to acquire a secure income asset which will still be reversionary after the fixed uplifts.

Offers are sought in excess of £20,000,000 (Twenty Million Pounds) subject to contract and exclusive of VAT. A purchase at this level reflects the following profile after allowing for purchaser’s costs of 6.75%:

- Net Initial Yield: 5.80% - Guaranteed Uplift in Dec 2019: 6.28% - Guaranteed Uplift in Dec 2024: 6.89% - Equivalent Yield: 6.23% - Capital Value: £364 per sq ft

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LOCATION

LOCAL OCCUPIERS

1 HMRC

2 Visa

3 Quantum

4 RBS Huntswood

5 BDO

6 Gateley ROC Search Olswang

7 Deloitte

8 Lloyd's Bank Santander

9 Samsung

10 Barclays Ernst & Young

11 PwC (No.3 Forbury Place)

12 Thames Water

13 Capita Royal London

14 Convatech SSE

LOCAL OCCUPIERS

10 Convatech SSE

11 PwC (No.3 Forbury Place)

12 Lloyd's Bank Santander

13 Visa

14 HMRC

LOCAL AMENITIES

1 Broad Street Mall

2 John Lewis

3 The Oracle Shopping Centre

4 Forbury Gardens

5 Forbury Retail Park

MAJOR DEVELOPMENTS

1 Thames Tower & Station Hill

2 No.1 & No.2 Forbury Place

3 Proposed Reading Prison Mixed-use Redevelopment

LONDON PADDINGTON 26 MINS

READING STATION

£895M REDEVELOPMENT CROSSRAIL OPENING 2019

BRISTOL - 53 MINS

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1 9

7

2

10

11

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12

136

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5

FRIAR STREET

BROAD STREET

A329QUEEN'S

ROAD

3

14 2

FORBURY ROAD

17 MINS

KING'S ROAD

6 MINS

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LOCATION

READING

Reading is one of the most vibrant urban centres in the UK and is the largest economic and commercial centre in the South East outside of London. Located approximately 40 miles west of Central London and 27 miles west of Heathrow International Airport, Reading is widely regarded as the capital of the Thames Valley due to its excellent road and rail connectivity, and highly skilled workforce.

The town is home to a thriving business community, and benefits from an affluent and educated local workforce. A key feature amongst the working population is the unemployment rate which is extremely low at 0.8%, well below the national average of 4.7%. This is supported by the University of Reading, ranked in the top 1% of universities in the world, which has attracted a high calibre of students, many of whom remain in the area for employment purposes.

Reading is a core South East office market and has attracted a number of ‘blue chip’ international occupiers, providing UK headquarter offices for Microsoft, ING Direct, British Gas, Quintiles and Oracle. The town centre has seen substantial inward investment, focusing on major infrastructure improvements and regeneration including the £895m redevelopment of Reading station which is poised to benefit further from the opening of Crossrail in 2019. Major town centre occupiers include Prudential, SSE, Hibu, Deloitte, PwC and Ernst & Young.

M25

M1

M1

M25

M25

M3

M4M4

A404 (M)

M4

A329(M)

M40

M40

A1(M)

J11

J10J12

A33

A329

A404

A413

A355

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A40

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A34

A4

A34

A4074

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A4130

A4010

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A4074

A4142

A31

A31

A322

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A3

A316

A3

A24

A24

A331

A287

A308

M3

WOKING

BASINGSTOKE

BRACKNELL

SLOUGH

OXFORD

MAIDENHEAD

LONDONREADING

WATFORD

HARROW

ST ALBANS

GUILDFORD

NEWBURY

EPSOM

HIGH WYCOMBE

HEATHROW

NAPIER RD

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CROWN ST

LONDON RD

LONDON RD

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CHATHAM ST FRIAR ST

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CASTLE ST

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INSTER ST

KING’S RD KING’S RD

KENAVON DR

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FORBURY RDGREAT KNOLLYS ST

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BROAD ST

A329

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THE ORACLE SHOPPING

CENTRE

STATION HILLFORBURY

PLACE

FORBURYGARDENS

BROAD STREETMALL

UNIVERSITYOF READING

READINGCOLLEGE

J10M4

LONDON

READINGOXFORD /BRISTOL

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LOCATION

BY ROAD

Reading benefits from excellent road communications, being situated within close proximity to a number of key motorways. The town is located approximately 4.4 miles to the north of Junctions 10, 11 and 12 of the M4 motorway, and the M25, M40 and M3 are also easily accessible.

DISTANCE

COMMUNICATIONS

BY RAIL & CROSSRAIL

Reading Railway Station is one of the busiest stations outside of London, offering regular direct services to over 300 destinations across the UK including up to 16 trains per hour to London (Paddington) with a fastest journey time of 26 minutes. The station has been substantially upgraded through a £895 million redevelopment which opened in July 2014, further enhancing Reading’s status as key transport hub in the UK.

From 2019 a new Crossrail service between Reading and London will be in operation. Crossrail will transform the connectivity from the Thames Valley into London significantly and Reading will act as the western terminus. The town centre is poised to benefit hugely, with passengers able to travel into Central London without the need to change at Paddington. Once opened there will be up to 16 trains per hour to Central London with a direct journey to Bond Street taking just 53 minutes.

JOURNEY TIMES

CROSSRAIL ROUTE

OXFORD

23 MINS

PADDINGTON

26 MINS

BRISTOL

53 MINS

BIRMINGHAM

93 MINS

CARDIFF

94 MINS

SOUTHAMPTON

55 MINS

BIRMINGHAM

BRISTOL

CENTRAL LONDON

M25 (J15)

M40 (J4) 17.5 MILES

M4 (J10/11/12)

BY AIRHeathrow International Airport is located approximately 27 miles to the east of Reading and is the world’s third busiest airport, with 80 airlines serving approximately 85 destinations. Alternative airports accessible from Reading include Gatwick, Luton, Southampton and Birmingham International Airports.

DISTANCE

BIRMINGHAM AIRPORT

LUTON AIRPORT

HEATHROW AIRPORT

SOUTHAMPTON AIRPORT

GATWICK AIRPORT

READING

HEATHROW

38 MINS

PADDINGTON

50 MINS

BOND STREET 53 MINS

CANARY WHARF 67 MINS

LIVERPOOL

STREET 61 MINS

STRATFORD

69 MINS

28.5 MILES

56 MILES

40 MILES

57 MILES

79 MILES

91 MILES

103 MILES

4.4 MILES

27 MILES

46 MILES

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LOCATION

SITUATION

The Delta Building forms part of Prudential’s landmark office campus, prominently situated at the junction of King's Road and Forbury Road. The property is located within the town centre core office pitch and benefits from excellent access to the town’s major retailing facilities including the Oracle Shopping Centre (6 mins), John Lewis (10 mins) and Marks & Spencer (10 mins).

The property is easily accessed from Junction 10 of the M4, vie the A4 London Road, which joins King’s Road to east of the property. Junction 11 and 12 of the M4 is also only 4.4 miles to the south of the property via the A33 and A4. The newly improved mainline Railway Station is located approximately a 7 minute walk, to the north west.

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THE BUILDING

DESCRIPTION

The Delta Building is a headquarter office building forming part of Prudential’s landmark office campus on 121 King’s Road. The property is one of Prudential’s key sites for The Prudential UK operation who have been in occupation since it was built.

The property was constructed in 1993 and comprises 54,988 sq ft of open plan and flexible Grade A floor plates arranged over basement, ground and four upper floors. It was comprehensively refurbished to a high specification in 2014 to provide high quality modern offices suitable for single or multi-occupation.

Prudential also occupy the adjoining Beta Building on the same lease terms which is connected by a bridge link at ground to third floors. If required the landlords of Delta and Beta will contribute 50% each towards its removal.

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THE BUILDING

SPECIFICATION

Internally the property benefits from the following high quality specification:

VAV air-conditioning

Suspended metal tile ceilings

Fully accessible raised floors

Floor to ceiling height of 2.7m

Category II recessed fluorescent lighting

188 seat restaurant

Impressive external courtyard

EPC Rating E (112)

3 x 10 person, 800kg passenger lifts

The property has a total of 87 car parking spaces at basement level, providing an excellent town centre car parking ratio of 1:606 sq ft on offices.

TENANT REFURBISHMENT WORKS

In November 2014, the property was extensively refurbished following the lease re-gear with The Prudential, which included the following works:

New metal tiled perforated suspended ceilings

New VRV system on part ground floor

Reconfigured VRV system to upper floors

New LG7 compliant lighting

New floor finishes throughout

Fully refurbished reception and WC’s

Following this comprehensive refurbishment, it was agreed that upon expiry of the lease there is no obligation on the tenant to reinstate to the previous fit out. The tenant's repairing covenant excludes uninsured risks and fair wear and tear.

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THE BUILDING

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THE SPACE

ACCOMMODATION

The property has been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and provides the following net internal areas:

Floor Use Sq Ft Sq M

Fourth Office 8,886 825.5

Third Office 11,129 1,033.9

Second Office 11,363 1,055.7

First Office 10,806 1,003.9

Ground Office 10,573 982.3

Ground Reception 631 58.6

Basement Storage 1,600 148.6

Total 54,988 5,108.5

TYPICAL FLOOR PLAN

For indicative purposes only, not to scale.

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THE SPACE

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THE SPACE

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TENANCY

The property is let in its entirety to The Prudential Assurance Company Limited for a term of 17 years from 23 December 2013, expiring on 24 December 2030. This provides an unexpired term of approximately 9.3 years to break and 14.3 years to lease expiry.

There is a tenant’s break option on 24 December 2025, subject to not less than 6 months and not more than 12 months prior written notice. If the break is not activated the tenant will be granted 12 months rent free from 25 December 2025.

This produces a rental income of £1,236,667 per annum equating to a low rent of £23.00 per sq ft on the offices (assuming 50% rate on reception and £10 psf on storage) and is subject to the following fixed rental increases:

Rental Profile Rent Per Annum Rent Per Sq Ft

Current £1,236,667 £23.00

Fixed uplift on 25/12/2019 £1,342,812 £25.00

Fixed uplift on 25/12/2024* £1,475,493 £27.50*

* To the higher of OMRV or £27.50 per sq ft on offices.

COVENANT INFORMATION

THE PRUDENTIAL ASSURANCE COMPANY LIMITED (0015454)The Prudential Assurance Company Limited is a UK legal entity forming part of Prudential plc. Prudential plc was established in 1848 and is a leading international financial service company, with significant operations in the UK, the US and Asia. They currently serve over 24 million customers, with £562 billion of assets under management and employs over 23,000 staff worldwide.

The Prudential have occupied Delta since 1993 and in December 2013 renewed both of their leases in this building and Beta (adjacent), on a new 17 year commitment with rental uplifts.

D&B Rating: 5A1.

Dec 2015 Dec 2014 Dec 2013

Turnover £7,261,000,000 £5,332,000,000 £6,635,000,000

Pre-Tax Profit £2,007,000,000 £1,075,000,000 £227,000,000

Net Worth £10,459,000,000 £8,857,000,000 £4,787,000,000

TENANCY, COVENANT & TENURE

PRUDENTIAL PLC (01397169)Prudential plc is the domestic and global owner of The Prudential Assurance Company Limited, with a 100% ownership of the company.

Prudential plc is a FTSE 100 listed company

S&P Global Rating A+

Market capitalisation of c.£32.86bn

Moody’s Rating A2

Fitch Rating A

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SITE

The property extends to 0.69 acres (0.28 hectares).

TENURE

Virtual Freehold (highlighted red on the adjoinning plan). The property forms part of an estate and is held under a 999 year long lease from and including 5 April 2013 at a rent of £3,650 per annum which is not subject to any review.

The Freehold to the estate is owned by 121 Kings Road Limited which is also the management company (highlighted blue on the adjoining plan). The long leasehold owners of the three blocks at the estate each own shares in the management company. The Delta Building represents 36.5% of the shares in the management company.

The long lease contains estate service charge provisions to which The Prudential Assurance Company Limited have agreed to provide the services for which are set out in a 'Services Agreement'.

FOR

BU

RY

RO

AD

KING’S ROAD

GAS WORKS R

OAD

ALPHABETA

DELTA

For indicative purposes only.Freehold Virtual Freehold

TENANCY, COVENANT & TENURE

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READING OCCUPIER MARKET

TAKE UP

Reading is a core office market in the Thames Valley, which in 2015 saw a strong performance with occupier demand continuing to rise strongly as the trend of occupiers moving away from Central London begins to take shape.

The town performed extremely well in 2015 with take up recorded at approximately 578,224 sq ft, a 35% increase on total take up in 2014. The increase in take up over the past twelve months was driven by SSE leasing 185,000 sq ft at No 1 Forbury Place adjacent to Reading train station, which is scheduled for completion in Q3 2016. This highlights Reading’s status as a key headquarter location for corporate occupiers, who are attracted by the town’s excellent transport communications and skilled labour force.

2016 is set to be another strong year for the town with 261,554 sq ft transacted to date, and there being over 750,000 sq ft of active occupier demand in the Reading office market, further demonstrating the buoyancy of the occupational market.

SUPPLY & DEMAND

Total supply in Reading has decreased substantially over the past 5 years, which totalled 1,370,000 sq ft in 2015. This has been led by increased occupational activity with Reading attracting a number of corporate occupiers who have moved from Central London. It is anticipated that there will be continued demand for office space in the town centre, as good quality supply continues to be absorbed and the significant prospects of reduced travel times through the opening of Crossrail in 2019.

Reading is experiencing strong levels of inward investment, with 800,000 sq ft of Grade A stock currently under construction and due to complete over the next 18 months. The majority of this activity is focused in the town centre which is expected to have a positive spill-out effect where existing stock will be refurbished and new headline rents will be achieved.

RENTS

Reading has experienced strong rental growth over the past two years, with prime rents currently standing at £34.00 per sq ft. It is anticipated there will be further upward movements in headline rents in the town centre as a result of the delivery of a number of speculatively built schemes to the market over the next 18 months.

Set out in the table below are recent Grade A lettings in Reading town centre:

Property Tenant Size (Sq Ft) Date Rent (Per Sq Ft) Term Certain

One Valpy Virtual Stock 7,581 Jun 2016 £33.50 10 years

One Valpy Inside Sales 7,243 Jun 2016 £32.50 5 years

The Blade Gateley 7,235 Apr 2016 £34.00 5 years

No 3 Forbury Place Osborne Clarke 16,059 Nov 2015 £32.50 5 years

Apex Plaza Aldermore Bank plc 9,145 Oct 2015 £33.00 10 years

No 3 Forbury Place Convatech 14,000 Aug 2015 £32.50 5 years

No 3 Forbury Place SSE 185,000 Aug 2015 £34.00 15 years

Total take-up

2006

0sq ft

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

ANNUALISED TAKE UP

2006

0

500,000

1,000,000

sq ft

1,500,000

2,000,000

3,000,000

2,500,000

2007 2008 2009 2010 2011 2012 2013 2014 2015

READING AVAILABILITY

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SOUTH EAST OFFICE INVESTMENT

SOUTH EAST OFFICE INVESTMENT MARKET

The South East office investment market witnessed a record year in 2015 as investment volumes totalled £3.4bn, with investors attracted by increased occupier demand, reduced vacant rates and rental growth. Investment activity was also helped by the ongoing migration of occupiers and investors from Central London, as they search for greater value and volume of opportunities.

Investor sentiment in the South East continues to remain strong, with prime yields remaining stable at 5.00%. This has been aided by a strengthening occupational market that is experiencing rental growth, especially in under-supplied markets with good connectivity to Central London.

Reading has developed into one of the UK’s strongest office centres outside of London. Investment volumes reached £313m in 2015, 37% above the 2014 total of £229m, with the market experiencing significant interest from both domestic and overseas investors. Investor demand is expected to remain strong in Reading, especially when prime secure income assets with guaranteed performance become available.

Recent office transactions in the South East include:

Date Address Size (Sq Ft) Term Certain(years)

Purchase Price Yield Cap Val psf Purchaser

Aug-16 Wey House, Guildford 46,000 10.50 £22,650,000 5.10% £492 Guildford Borough Council

Jul-16 800 The Boulevard, Luton 52,752 13.70 £15,000,000 6.07% £284 Tritax

Jun-16 Sherard Building, Oxford 28,167 4.90 £9,000,000 6.05% £320 Private

May-16 Abbvie House, Maidenhead 55,958 11.50 £24,425,000 5.42% £436 Ramsala

Mar-16 Alpha Building, Reading 68,438 - £12,500,000 - £183 Westcore

Feb-16 Frizzell House, Bournemouth 113,383 25.00 £23,844,500 5.00% £209 Canada Life

Jan- 16 420 Thames Valley Park, Reading 72,012 5.00 £25,450,000 6.55% £374 Palm Capital

Jan-16 The Beta Building, Reading 27,162 10.30 £9,730,000 5.90% £358 Mayfair Capital

Dec-15 54 Clarendon Road, Watford 29,830 4.70 £8,850,000 6.06% £297 Canada Life

Nov-15 3 Longwalk Road, Stockley Park 108,788 11.00 £47,750,000 4.29% £438 CCLA

Nov-15 1 Roundwood Avenue, Stockley Park 32,892 4.40 £15,000,000 5.92% £386 CCLA

Oct-15 Landmark Place, Slough 74,151 3.80 £19.015,000 5.20% £256 Hermes

Oct-15 Mallards Reach, Maidenhead 37,544 5.00 £16,850,000 6.25% £449 Kames Capital

Aug-15 Leonardo Building, Crawley 110,545 16.50 £45,300,000 5.30% £410 F&C REIT

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FURTHER INFORMATION

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FURTHER INFORMATION

CAPITAL ALLOWANCES

Further information is available on request.

VAT

We understand the property will be treated as a Transfer of a Going Concern for VAT purposes.

PROPOSAL

Offers are sought in excess of £20,000,000 (Twenty Million Pounds) subject to contract and exclusive of VAT. A purchase at this level reflects the following profile after allowing for purchaser’s costs of 6.75%:

- Net Initial Yield: 5.80%- Guaranteed Uplift in Dec 2019: 6.28%- Guaranteed Uplift in Dec 2024: 6.89%- Equivalent Yield: 6.23%- Capital Value: £364 per sq ft

FURTHER INFORMATION

For further information or to arrange an inspection of the property, please contact:

CHRIS LEWIS020 7152 5554

MAX CLYNES020 7152 5710

IMPORTANT NOTICE: Cushman & Wakefield gives notice to anyone who may read these particulars as follows: 1.These particulars are prepared for the guidance only of prospective purchasers. They are intended to give a fair overall description of the property but are not intended to constitute part of an offer or contract. 2. Any information contained herein (whether in the text, plans or photographs) is given in good faith but should not be relied upon as being a statement or representation of fact. 3. Nothing in these particulars shall be deemed to be a statement that the property is in good condition or otherwise nor that any services or facilities are in good working order. 4 The photographs appearing in this brochure show only certain parts and aspects of the property at the time when the photographs were taken. Certain aspects may have changed since the photographs were taken and it should not be assumed that the property remains precisely as displayed in the photographs. Furthermore no assumptions should be made in respect of parts of the property which are not shown in the photographs. 5. Any areas, measurements or distances referred to herein are approximate only. 6. Where there is reference in these particulars to the fact that alterations have been carried out or that a particular use is made of any part of the property this is not intended to be a statement that any necessary planning, building regulations or other consents have been obtained and these matters must be verified by any intending purchaser. 7. Descriptions of a property are inevitably subjective and the descriptions contained herein are used in good faith as an opinion and not by way of statement of fact. September 2016