A PRIME CHANNEL ISLAND HQ OFFICE INVESTMENT. Let to ABN AMRO & Kleinwort Benson Martello Court & Dorey Court Admiral Park St Peter Port Guernsey

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1 A PRIME CHANNEL ISLAND HQ OFFICE INVESTMENT Let to ABN AMRO & Kleinwort Benson Martello Court & Dorey Court Admiral Park St Peter Port Guernsey

2 MARTELLO COURT & DOREY COURT 1 Investment Summary 2 Economy Location 3 Situation 4 Description Specification 5 Floor Plans 7 Tenure Sub tenancies 8 Guernsey Office Market 10 Tenants Covenant Information Key Investment Considerations Business Rates VAT / GST Data Room and Supporting Information Asset Management Opportunities 11 Proposal & Viewing Contact Investment Summary Two prime freehold office buildings located at Admiral Park, St Peter Port, Guernsey, one of the world s leading offshore banking and financial centres. Net internal area of approximately 87,400 sq ft (8,119.8 sq m). - Martello Court 42,401 sq ft (3,939.2 sq m) - Dorey Court 45,000 sq ft (4,180.6 sq m) Excellent car parking ratio of 1:125 sq ft (1:11.6 sq m). Stunning aspect from all floors with views over St Peter Port harbour. Let to ABN AMRO (Guernsey) Limited and Kleinwort Benson (Channel Islands) Limited for a weighted average unexpired lease term of 16.2 years (8.75 years to break). Long leases with expiry dates in 2035 for ABN AMRO (Guernsey) Limited and 2026 for Kleinwort Benson (Channel Islands) Limited. Total income from both buildings is 3,487,866 per annum, subject to outstanding 2014 rent reviews. 3 yearly upwards only rent reviews. Car park rents rise at review in line with the increase in the Guernsey Retail Price Index. Guernsey has zero corporation tax, no capital gains tax and 20% income tax. Offers in excess of 51m, representing a net initial yield of 6.75% assuming a sale of the shares in the owning company, Les Banques Holdings Limited, with purchasers costs calculated at 1.5%. 1

3 Economy Guernsey has a population of approximately 63,000 and a gross domestic product (2013 estimate) of 2bn. As of December 2013, the total number in employment was 31,700 and 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 gross domestic product 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 particularly captive 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. Location Guernsey forms part of the Channel Islands and is one of the world s leading and most respected offshore financial centres. The Island is served by regular sea and air links to the United Kingdom, with air services to London Gatwick, London Stansted, Manchester, East Midlands, Birmingham, Exeter and Southampton. It is anticipated that flights to London City airport will commence in the autumn of Guernsey is a Crown Dependency, so is not part of the United Kingdom. The Island has its own government, called the States of Guernsey, which is responsible for its own affairs. The United Kingdom takes responsibility for Guernsey s defence and international representation. Guernsey Airport GUERNSEY Useful information sources Image courtesy of VisitGuernsey 2

4 HSBC Terra Firma Investec ABN AMRO Barclays PWC Schroders Kleinwort Benson Deutsche Bank Ernst and Young Bank of Butterfield State Street Bank Bank Julius Baer Generali Deloittes Intertrust Credit Suisse BNP Paribas S.G. Hambros Rothschilds Royal Bank of Scotland International Guernsey Financial Services Commission KPMG Royal Bank of Canada Lloyds Aon Insurance Northern Trust Permira Carey Olsen MARTELLO COURT & DOREY COURT Situation Martello Court and Dorey Court are situated at Admiral Park, a business park approximately half a mile or a fifteen minute walk from the town centre of St Peter Port. As well as ABN AMRO and Kleinwort Benson, other tenants represented at Admiral Park include State Street Bank, Northern Trust, Intertrust, Artemis Fund Managers, De Putron Fund Management and Carey Olsen. Total office accommodation at Admiral Park is approximately 230,000 sq ft, with the largest building at Admiral Park being Trafalgar Court adjacent at 112,500 sq ft. There is a 60,000 sq ft Waitrose supermarket along with its own dedicated parking immediately to the rear of Admiral Park. Being front row offices, both office buildings enjoy stunning views from all office levels across St Peter Port harbour to the island of Herm. 3

5 Description These imposing office buildings, arranged over ground and three upper floors, were completed in 2005 to provide high specification Grade A office accommodation to meet modern business requirements not constrained by town centre building restrictions. Each building is arranged over four levels, being ground through to third floors, with each floor offering between 10,000 and 12,000 sq ft of net internal office accommodation. Construction is by way of a steel frame with curtain walling glazing. Beneath each building is a two level multi storey car park providing 700 spaces and in addition150 spaces for the adjoining residential buildings. Both Dorey and Martello Court feature impressive atriums, each having scenic lifts. Specification Impressive double height atriums with scenic lifts. Floor to ceiling height 2.7 m. Four pipe ceiling mounted air conditioning throughout. Raised floor at 150 mm void. Suspended ceilings with a recessed lighting. 3 x 10 person lift servicing car park and all floors. 100 kg goods lift servicing all floors in Martello Court. Marble walls to reception and entrance areas. Solid core American white oak veneered doors. 4

6 MARTELLO COURT INDICATIVE SECOND FLOOR PLAN A total net lettable floor area of 42,401 sq ft has been agreed between the landlord and tenant and is denoted within the lease. The table shows the approximate floor by floor breakdown. Ground floor 10,597 sq ft First floor 10,554 sq ft Second floor 10,978 sq ft Third floor 10,275 sq ft Total 42,404 sq ft 5

7 DOREY COURT INDICATIVE SECOND FLOOR PLAN A total net lettable floor area of 45,000 sq ft has been agreed between the landlord and the tenant and is denoted within the lease. The table shows the approximate floor by floor breakdown. Ground floor 10,097 sq ft First floor 12,185 sq ft Second floor 12,185 sq ft Third floor 10,581 sq ft Total 45,048 sq ft MARTELLO COURT DOREY COURT 6

8 Tenure FREEHOLD Tenancies Martello Court Dorey Court Tenant ABN AMRO (Guernsey) Limited Guarantor ABN AMRO Bank NV (See note 1) Kleinwort Benson (Channel Islands) Limited Floor area Sq ft 42,401 45,000 Lease start 21 July May 2005 Lease expiry 20 July May 2026 Break option 20 July 2026 (See note 2) 23 May 2020 (See note 3) Rent Review Pattern 3 yearly - Rent review July 2014 outstanding 3 yearly - Rent review May 2014 outstanding Passing rent per annum 1,700,378 1,787,488 Passing rent per sq ft Notes Note 1 : The lease contains a guarantee original from Fortis Bank (Nederland) NV, which was incorporated in 2010 into ABN AMRO Bank NV, for a period expiring on the fifteen year of the lease being July Note 2 : 12 months written notice is required by the tenant. Note 3 : 12 months written notice is required by the tenant along with a penalty payment representing one year s rental. Analysis of passing rent Martello Court Area/sq ft Rate Parking Total 42, ,541 1,700,378 Dorey Court Area/sq ft Rate Parking Total 45, ,488 1,787,488 3,487,866 Sub tenancies Within Martello Court, the ground and first floors have been sub let to Intertrust (Guernsey) Limited on coterminous terms to the head lease. Within Dorey Court, three sub tenancies exist to State Street Bank, Du Putron Fund Management and Lancaster trustees. All sub tenancies are on similar terms to the main leases and have identical rentals. Further information can be provided upon request. 7

9 Guernsey Office Market Guernsey s office market is centred upon St Peter Port, with the majority of the Grade A stock being along 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 and we estimate that the stock of Grade A accommodation is in the order of 700,000 sq ft. At present, within the Grade A sector, there is a low vacancy rate in the order of 2 3 % with the largest space on the market to let being only 7,000 sq ft. The most recent lettings have been in excess of per sq ft and rents have risen constantly, as demonstrated below, during the last 7 years. Prime Office Rents on new lettings in Guernsey Rent per sq ft Source: Montagu Evans Channel Islands Limited. Not to be reproduced without prior written consent. Actual Projected 8

10 Guernsey Office Market (continued) With almost full occupancy and at present no new office buildings either under construction or sites being available with detailed planning permission for office development, we are anticipating a shortage of stock leading to continuing rental growth. To demonstrate the pattern of constantly rising rentals in Guernsey the following rates per sq ft have been agreed on both Martello Court and Dorey Court with the tenants at the rent reviews in 2008 and Lettings / Rent Review per sq ft Martello Court Dorey Court Original letting Rent Review (ave) (ave) Rent Review (ave) (ave) Rent Review Outstanding Outstanding 9

11 Tenants Covenant Information Martello Court ABN AMRO (Guernsey) Limited In millions (GBP Sterling) Turnover Profit / Loss Equity shareholders Funds Total Assets 1, , , ABN AMRO Group N.V In billions (Euro) Operating Income Profit / Loss Total Equity Total Assets Dorey Court Kleinwort Benson (Channel Islands) Limited 2011* In millions (GBP Sterling) Total Income Profit / Loss ( 3.639) ( 2.180) Equity Shareholders Funds Total Assets 1, , , *restated as per note 1 in 2012 Financial Statements Key Investment Considerations Well let to internationally recognised tenants. Attractive initial yield. Shortage of Grade A office stock. Provable pattern of retail growth. Rent reviews outstanding. Low transaction costs. 3 yearly rent review pattern. Business Rates Business Rates, known as TRP, are very low in Guernsey. These currently equate to approximately 3.50 per sq ft. VAT / GST At present neither VAT nor GST (Goods and Services Tax) is applicable in Guernsey. Data Room and Supporting Information A data room has been set up, to which access can be provided to interested parties. Within the data room information encompasses photographs, plans, leases, sub leases, tenant s accounts and other supporting information which it is considered will be required by interested parties. Asset Management Opportunities There is a relationship between the vendor and ABN AMRO (Guernsey) Limited. The opportunity exists for discussion with a chosen purchaser to agree the rent review on Martello Court prior to completion. Kleinwort Benson have recently acquired Close Bank Guernsey Limited we believe there may be long term opportunities to restructure the lease, to create direct landlord/tenant relationships with the current sub tenants and so drive rental growth. 10

12 Third floor boardroom at Martello Court Montagu Evans Channel Islands Limited, 22 Smith Street, St Peter Port, Guernsey, GY1 2JQ Whilst every care is taken in the preparation of these particulars, Montagu Evans Channel Islands Limited, any joint agent, legal advisors and the vendor, take no responsibility for any error, mistake or omission in the information documents, logos and graphics published on this site for any purpose. All such documents and related graphics are provided as is without warranty of any kind and are subject to change without notice. In no event shall Montagu Evans Channel Islands Limited, any joint agent, legal advisor or the vendor be liable for any direct, consequential, incidental, special, punitive, or other damages whatsoever, (including without limitation, damages for loss of business, profits, business interruption or loss of business information), even if Montagu Evans Channel Islands Limited has been advised of the possibility of such damage. 11 The particulars, details and brochure do not constitute an offer or contract and no person in the employment of Montagu Evans Channel Islands Limited has any authority to make or give any representation or warranty whatsoever in relation to the property. A prospective purchaser and their advisors should make their own investigations prior to finalising any agreement to purchase either the property or the shares in the owning company. Proposal Our clients are seeking offers in excess 51m. A purchase at this level reflects a net initial yield of circa 6.75% having allowed for a sale of the owning company with costs at 1.5%, the initial yield will rise following settlement of the 2014 rent reviews. Viewing Viewing is strictly by appointment. Contact Tony Rowbotham Telephone: tony.rowbotham@montagu-evansci.com Mark Girling Telephone: mark.girling@montagu-evans.co.uk Tom Paton-Smith Telephone: tom.paton-smith@montagu-evans.co.uk Montagu Evans LLP, 5 Bolton Street, London, W1J 8BA.