Channel Islands Data Centre CSL HOUSE PITRONNERIE ROAD ST PETER PORT GUERNSEY

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1 Channel Islands Data Centre

2 Investment Summary Freehold office and industrial building in Guernsey s capital St Peter Port PITRONNERIE ROAD INDUSTRIAL ESTATE Operating as a colocation data centre, IT service management consultancy and disaster recovery facility CSL HOUSE Net Internal Area of 14,175 sq ft (1,317 sq m) 29 car parking spaces providing a ratio of 1:489 sq ft Let on a full repairing and insuring lease to Logicalis Channel Islands Limited for a term expiring on 31 March 2026 (in excess of 11.5 years unexpired) subject to 3 yearly reviews to a minimum of 5% uplift Passing rent of 229,000 per annum ( psf overall), subject to an outstanding review from 1st April 2014, (minimum 240,450 per annum) The property is currently held in a Guernsey based Special Purchase Vehicle (SPV) Guernsey s near-shore jurisdiction makes it the ideal location for corporate IT infrastructure, off-shore cloud, internet content delivery, social networking, media streaming, e-gambling and e-gaming ADMIRAL PARK Offer in excess of 3,500,000 to reflect a net initial yield of 6.4% rising to 6.8% on the minimum uplift at outstanding review and an equivalent yield of 7.5% based on future minimum reviews as follows: April 2017: 7.1% April 2020: 7.5% April 2023: 7.8%

3 Guernsey Guernsey is situated 30 miles west of the coast of France in the Gulf of St Malo and is the second largest of the Channel Islands with an area of 24 square miles and a population of approximately 63,000. The island is serviced by regular sea and air links to both the UK and the Continent. UK air services are provided to Gatwick, City Airport, Stansted, Southampton, Manchester, Bristol, Birmingham, East Midlands, and Exeter, as well as inter-island flights to Jersey and Alderney. Sea travel is provided by regular fast cat passenger ferries to the UK, France and Jersey. Guernsey is a Crown Dependency and is not part of the UK, nor is it a colony, but it does owe its allegiance to the British Crown and the UK is responsible for Guernsey s defence and international representation. Guernsey is not represented in the UK Parliament. Guernsey has a gross domestic product of 2bn. As of December 2013, unemployment stood at 1.3%. The economy is dominated by the finance sector which accounts for 20% of employment, but approximately 38% of economic activity. Over the past 5 years Guernsey s GDP has risen from 1.785bn in 2007 to 2bn in There are currently 31 licensed banks registered in Guernsey and bank deposits as at March 2014 stood at 82bn. In addition to banking the finance sector encompasses trust and fund administration, private wealth management, insurance, as well as the supporting professional service suppliers. As at December 2013 the total net asset value of investment funds registered in Guernsey or administered by local companies was 266bn a 10% increase on the proceeding year. Guernsey has zero corporation tax, no capital gains tax and 20% income tax. Situation CSL House is located in the north of St Peter Port on Pitronnerie Road and forms part of the Pitronnerie Road Industrial Estate, Guernsey s major Key Industrial Area. It occupies a prominent position with good access and main road frontage. Recognised as one of the island s main business areas benefitting from good transport networks to the nearby ports, Admiral Park and the main town centre, this is the established location for those occupiers seeking flexible business accommodation outside the prime office core. Occupiers include other data centre operators such as Cloudfloor DNS as well as more traditional trade counter and industrustrial operators including Plumb Centre and self storage facilities. CSL HOUSE GUERNSEY AIRPORT ST PETER PORT GUERNSEY PITRONN I ERIE ROAD ST PETER PORT RUET TE BRAYE ADMIRAL PARK LA GRANGE ST GEORGE S E SPLANADE MARINA HARBOUR

4 Description The property comprises a mixed use office and industrial building with accommodation arranged over three floors (basement, ground and first). Logicalis have recently completed a 100,000 external refurbishment to the brickwork elevations, inclusive of rebranding. The property benefits from upvc windows, and a double loading door on the eastern elevation and three stair cores. Internally, the ground and first floors are fitted to an office specification, with carpet tiled flooring, perimeter trunking, suspended ceilings, recessed fluorescent lighting and a number of stud partitioned cellular offices. A centralised air conditioning and fire alarm system serves the open plan office areas of each floor with additional wall mounted units serving the majority of the cellular offices. The property is classified as an unregulated office with ancillary accommodation. From a planning and use class persepective, the property is regarded as Sui Generis due to the mixed use nature which results in it falling outside of the use class ordinance. The property is operated as a colocation data centre, IT service management consultancy and disaster recovery facility, supporting a number of the island s financial services occupiers. The site benefits from a fibre optic connection, 400amp 3 phase electricity supply and an onsite generator making it one of few locations capable of hosting such a facility. Colocation Facility A colocation facility is a data centre where equipment, space, and bandwidth are available for rental to retail customers. Colocation facilities provide; space, power, cooling, and physical security for the server, storage, and networking equipment of other firms and connect them to a variety of telecommunications and network service providers with a minimum of cost and complexity. They are used increasingly by small businesses, those having a disaster recovery plan and finance companies who require such services via banking continuity legislation and law. Accommodation The property provides a Net Internal Area of approximately 14,175 sq ft, as set out in the lease, in addition to a tarmac forecourt and car parking for 29 motor vehicles. NIA Accommodation Sq ft Sq m Basement 4, Ground Floor 4, First Floor 4, Total 14,175 1,317 The property has an actual GIA of 1,506 sq m (16,206 sq ft). Tenure Freehold. Tenancy The property is let in its entirety Logicalis Channel Islands Limited on a 36 year full repairing and insuring lease from April 1st 1990 at a current passing rent of 229,000 per annum. This equates to on the ground and first floor office accommodation, 10 psf on the basement storage and 900 for each of the 29 external car parking spaces. The lease is subject to 3 yearly upward only rent reviews. The April 2014 review is in the process of being settled and we are advised by our client s lawyer that a minimum uplift of 5% is achievable at every review based upon the mechanism for determining the open market rental value: 1st April 2014: 240, st April 2017: 252, st April 2020: 265, st April 2023: 278, A copy of the lease is available on request. ^N

5 Tenant Covenant Logicalis Channel Islands Limited is wholly owned subsidiary of the Logicalis Group, a international IT solutions and managed services provider with specialist knowledge and expertise in communications and collaboration; data centre and cloud services; and managed services. In March 2013 Logicalis Group, a divisional group of Datatech acquired the original occupier, 2e2 Offshore Limited (in addition to 2e2 Jersey Limited / 2e2 Guernsey Limited / 2e2 Paperflow Limited - the European subsidiaries collectively known as 2e2CI, from global IT provider 2e2) and renamed this business Logistics Channel Islands Limited. Logicalis employs 3,700 people worldwide who design, specify, deploy and manage CT infrastructures to meet the needs of 6,000 corporate and public sector customers. To achieve this, Logicalis maintains strong partnerships with technology leaders such as Cisco, HP, IBM, CA Technologies, NetApp, Microsoft, VMware and ServiceNow. The Logicalis Group has annualised revenues of $1.6 billion, from operations in Europe, North America, Latin America and Asia Pacific, and is established as one of the leading IT and Communications solution integrators, specialising in the areas of advanced technologies and services. The Logicalis Group is a division of Datatec Limited, listed on the Johannesburg and London AIM Stock Exchanges, with revenues of over $5 billion. A Dun & Bradstreet report for Logicalis Group Ltd identify their minimum risk of failure (0.1%) and is available on request. Logicalis is the largest IT services company in the Channel Islands and offers a comprehensive range of Information and Communications Technology (ICT) solutions & services, with a 37 year track record and a client base spanning every industry sector. The Logicalis Group has a strong IT services focus and provides access to an expanded range of services and solutions enabling the LCI Ltd business to offer a broad range of high quality services in the Channel Islands.

6 Guernsey Leases There is no security of tenure in Guernsey, allowing flexibility on refurbishment or redevelopment. Unlike in England and Wales, there is no landlord and tenant statutory framework that must be adhered to and as such landlords are not restricted and can agree leases on whatever terms they require. In Guernsey, it is the lease itself that governs the landlord and tenant relationship and leases are construed in the same way as contracts. The absence of any security of tenure legislation means that landlords are not required to renew business tenancies at the expiry of the term and as such, all leases in Guernsey can be considered to be contracted out. Guernsey Offices Guernsey s office market is centred upon St Peter Port, with the majority of the Grade A stock being along the nearby Glategny Esplanade and at Admiral Park. It is estimated that the Island s total stock is in the region of 1.8 million sq ft with a vacancy rate of approximately 2%. The most recent prime office lettings have been in excess of per sq ft and rents have risen constantly during the last 7 years. Channel Island Data Centres Near-Shore jurisdictions such as Guernsey provide many advantages and appeal to ICT operators due to: Guernsey s business friendly legal and tax regimes (Guernsey has sovereign dependency on the UK but is an independently administered jurisdiction). Access to nearby high value markets providing a portal for trade. A wealth of qualified and experienced tax, legal, accounting and ICT professionals. Respect for the sovereignty of confidential client data Guernsey s experience of providing the platform on which the international e-gambling industry operates within on-island data centres. Proven access to the European power grid together with additional capacity from on-island generation. A large sub-sea telecommunications infrastructure providing excellent global connectivity. Quality security through Guernsey s dedicated border controls and procedures, together with its low crime rate. Guernsey s independently run regulation. The above makes Guernsey a suitable location for corporate ICT infrastructure and related sectors.

7 Pricing We are instructed to seek offers in excess of 3,500,000 to reflect a net initial yield of 6.4% rising to 6.8% upon the realisation of the outstanding review at a 5% increase, an equivalent yield of 7.5% based on minimum 5% uplifts at increases as follows: April 2017: 7.1% April 2020: 7.5% April 2023: 7.8% This is based upon costs of 1.5% assuming an acquisition of the SPV. Costs VAT & GST (Goods and Services Tax) are not applicable in Guernsey. Stamp duty is 3% and is included within standard purchaser s cost of 4.5%.

8 CSL House Pitronnerie Road St Peter Port Guernsey Giles Worrall Darren McGill Wing Lai Jo Watts Edmund Hendry Cluttons LLP Watts & Co Portman House One High Street 2 Portman Street St Peter Port London W1H 6DU Guernsey GY1 2LZ Cluttons LLP & Watts & Co for themselves and as agents for the vendor or lessor (as appropriate) gives notice that: 1. These particulars are only a general outline for the guidance of intending purchasers or lessees and do not constitute in whole or in part an offer or a Contract. 2. Reasonable endeavours have been made to ensure that the information given in these particulars is materially correct but any intending purchaser or lessee should satisfy themself by inspection, searches, enquiries and survey as to the correctness of each statement. 3. All statements in these particulars are made without responsibility on the part of Cluttons LLP & Watts & Co or the vendor or lessor. 4. No statement in these particulars is to be relied upon as a statement or representation of fact. 5. Neither Cluttons LLP & Watts & Co nor anyone in their employment or acting on their behalf has authority to make any representation or warranty in relation to this property. 6. Nothing in these particulars shall be deemed to be a statement that the property is in good repair or condition or otherwise nor that any services or facilities are in goodworking order. 7. Photographs may show only certain parts and aspects of the property at the time when the photographs were taken and you should rely upon actual inspection. 8. No assumption should be made in respect of parts of the property not shown in photographs. 9. Any areas, measurements or distances are only approximate. 10. Any reference to alterations or use is not intended to be a statement that any necessary planning, building regulation, listed building or any other consent has been obtained. 11. Amounts quoted are exclusive of VAT if applicable. October 2014