NEWCRAIGHALL EDINBURGH

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Northern Quarter Redevelopment

Newcraighall, EdinburghScotland’s premier Open Class 1 retail warehouse location•

Annual footfall >12 million•

20 minute drive time catchment - 367,388 •

Fort Kinnaird > 580,000 sq.ft. - UK’s 4th largest retail park•

Fort Kinnaird - 8th highest retail park rent in the UK•

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INVESTMENT SUMMARYEdinburgh is the capital city of Scotland located 390 miles (628 km) north of London and 48 miles (77 km) east of Glasgow.•

The subjects are strategically located on the A6095 Newcraighall Road, at the junction with the A1 trunk road opposite the •entrance to Fort Kinnaird Retail Park, the largest and most dominant retail park in Edinburgh. The A1 provides access to Edinburgh city centre 5 miles (8 km) to the west of the subjects and the A720 Edinburgh city by-pass to the east.

The subjects form part of the critical mass of Open Class 1 retail warehousing at Newcraighall which extends to approximately •920,000 sq.ft. (85,470 m²) and includes Fort Kinnaird Retail Park, a standalone B&Q, DFS, Woolworths Out of Town and Asda Wal Mart.

Other occupiers in the immediate vicinity include M&S in a full format store, Argos, Toys R Us, H&M, GAP, Boots, Next, HMV, •Mothercare, Arcadia, Currys and Comet.

The subjects benefit from an Open Class 1 (non food) planning consent with the ability to install a full cover mezzanine.•

Leasehold interest from The City of Edinburgh Council until l5 November 2104 (96 years unexpired) at a rent of £1 per •annum.

The unit extends to approximately 30,914 sq.ft. (2,871.98 m²) and the tenant will install a 25,470 sq.ft. (2,366.22 m²) •mezzanine.

The subjects are let to Tesco Stores Ltd on a new full repairing and insuring lease for a term of 20 years from the date of entry •incorporating a tenant only break option on the 15th anniversary of the lease.

The initial rent shall be £841,638 per annum (£27.50 per sq.ft.).•

The lease incorporates fixed uplifts at 5 yearly reviews as follows:•5th anniversary of the date of entry: £ 975,711o 10th anniversary of the date of entry: £ 1,131,142o 15th anniversary of the date of entry: £ 1,311,333o

Tesco Stores Ltd have a Dun and Bradstreet rating of 5A1 and a net worth as at 24 February 2007 of £4.752 billion.•

Offers are invited at a price in excess of £13.85 million subject to formal Scottish missives and exclusive of VAT. Based • upon standard acquisition costs of 5.7625%, this price reflects the following yield profile:

Net Initial Yield: 5.75%o 2013 6.67%o 2018 7.73%o 2023 8.96%o

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LOCATIONEdinburgh is the capital city of Scotland and home to the Scottish Parliament and Scottish Government and is the country’s leading financial centre. It is located 48 miles (77 km) east of Glasgow, 57 miles (92 km) south of Dundee and 390 miles (628 km) north of London.

Edinburgh is considered the United Kingdom’s second financial centre with in excess of £150bn under management and five Life Assurance companies including Standard Life, Scottish Widows and Scottish Equitable located in the city, as well as two of Scotland’s three main clearing banks, The Royal Bank of Scotland and HBoS having their headquarters in the city.

Edinburgh has emerged as the second most visited city in the UK after London, with over 2 million tourists visiting annually. The city is also a major conference and business tourism centre, in part due to the development in 1995 of the Edinburgh International Conference Centre located in the Exchange District. Edinburgh hosts a number of major festivals each year including the world renowned Edinburgh International Festival and Military Tattoo, which significantly boosts the population in the summer months.

Reproduced by permission of Geographer’s A-Z Map Co. Ltd Licence No. A0263

The Quarry

Hermiston Gait

Meadowbank

Straiton

Fort KinnardTesco Homeplus 2

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Reproduced by permission of Geographer’s A-Z Map Co. Ltd Licence No. A0263

1 Tesco Homeplus2 Fort Kinnaird3 ASDA Wal Mart4 DFS5 Woolworths6 B&Q

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COMMUNICATIONSThe City and the surrounding area benefits from excellent transport links and communications. The A8 provides access to the M8/M9 motorways leading West, while the A72 and A702 By-Pass lead onto and the A1 (East) and the national motorway network.

Edinburgh’s Waverley and Haymarket Railway Stations are situated within the central core of the City providing regular services to Glasgow and London with approximate journey times of 50 minutes and 4½ hours respectively.

Edinburgh Airport is approximately 8 miles (13 km) from the city centre and is one of Britain’s fastest growing airports, offering a wide range of both domestic and international flights.

Earlier this year, work began on the first phase of a high-quality, modern and efficient tram network for Edinburgh and is scheduled to be running on the Capital’s streets by 2011. Phase 1 will link Edinburgh Airport with the city centre via Edinburgh Park. Further information can be found at www.tramsforedinburgh.com

DEMOGRAPHICSEdinburgh has a regional population of 1,276,692 and a City population of 457,830. These figures are projected to grow to 1,306,740 and 472,193 respectively by 2012 (source: General Registrar for Scotland). Edinburgh’s catchment population is boosted by both a significant tourist population, over 2 million visitors to the city annually, and the presence of four large universities and four colleges of further education which are home to more than 93,250 full and part-time students.

The top five employers in the City are The City of Edinburgh Council, NHS Scotland, The Royal Bank of Scotland, University of Edinburgh and HBoS. Other major employers in the top 25 include Royal Mail, Lothian Buses, Tesco, Marks and Spencer and Scottish and Newcastle as well as the other major financial institutions based in the City (source: City of Edinburgh Council, Edinburgh Employers Survey 2007).

Reproduced by permission of Geographer’s A-Z Map Co. Ltd Licence No. A0263

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RETAIL WAREHOUSE PROVISION IN EDINBURGHThe total retail warehouse supply in Edinburgh is estimated to be in excess of 1,850,000 sq.ft. (171,869 m²) of which more than 75% is located on retail parks. The subject property is situated opposite the principal entrance to Fort Kinnaird, Edinburgh’s dominant and largest scheme. The other main retail warehouse schemes in Edinburgh are:

The Quarry Shopping Park – 182,500 sq.ft.The scheme owned by Henderson UK Retail Warehouse Fund is located approximately 2 miles (3.2 km) to the west of Edinburgh city centre adjacent to a Sainsbury’s food store on the A90 Queensferry Road, one of Edinburgh’s busiest arterial routes into and out of the City Centre. The Quarry has an Open Class 1 (non food) planning consent with a highest rent achieved to New Look at £37.50 per sq.ft in 2006. M&S have recently agreed to increase their presence to a 26,000 sq.ft (2,415.46 m²) General Merchandise format store. Tenants on the park include Homebase, M&S, Next, New Look, Argos, Arcadia, TK Maxx, JJB Sports, Boots and Homebase.

Meadowbank Retail Park – 149,200 sq.ft.The park is situated approximately 1 mile (1.6 km) to the east of Edinburgh city centre on the A1 London Road leading east form the city centre towards the subjects. The park, owned by British Land, is anchored by a Sainsbury’s food store with other tenants including TK Maxx, Gala Clubs, Peacocks, Au Naturale and M&S Outlet. Excluding the Sainsbury’s, the park has an Open Class 1 (non food) retail consent with the highest rent achieved being on the recent letting to Peacocks at £20.50 per sq.ft. in March 2006 on a unit extending to 7,500 sq.ft. (696.76 m²).

Straiton Retail Park – 236,000 sq.ft.Straiton Retail Park is located approximately 4½ miles (7.5 km) to the south of Edinburgh city centre on the A701 Straiton Road at the junction with the A720 Edinburgh city by-pass. The Open Class 1 retail park is arranged in two distinct phases with the most recent phase fronting Straiton Road let to M&S Simply Food, Boots, Argos, Brantano and Next. The top rent reflects c .£30.00 per sq.ft. on a 10,000 sq.ft. (929.02 m²) unit. The tenant line up in the older phase 1 situated to the east of Phase 2 includes Sports Direct, Halfords, Homebase, JJB Sports, Reid Furniture and Comet.

Hermiston Gait Retail Park – 197,000 sq.ft.Hermiston Gait Retail Park is situated at the west side of Edinburgh at the north west end of the A720 Edinburgh city by-pass at the junction with the M8 Edinburgh to Glasgow motorway close to the Gyle Shopping Centre and Edinburgh Park. The retail park owned by Invista Real Estate Investment Management is let to tenants including Currys, Staples, Mothercare and Homebase with a newly opened B&Q Warehouse now anchoring the location. Top rents on the park have historically reached in excess of £20.00 per sq.ft.

Fort Kinnaird Retail Park – 580,000 sq.ft.Fort Kinnaird is the premier macro location for retail warehousing in Edinburgh and arguably Scotland, due predominantly to its size and location. It comprises three distinct phases totalling 580,000 sq.ft. (53,883.31 m²) with planning to extend the existing critical mass by a further 81,000 sq.ft. (7,525.08 m²) in the forthcoming North Quarter. Other retail warehousing offer within the Newcraighall location include standalone Woolworths Out of Town, DFS and B&Q Warehouse as well as an Asda Wal Mart nearby at The Jewel.

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SITUATIONThe subjects are strategically situated approximately 5 miles (8 km) east of Edinburgh city centre at the junction of the A6095 Newcraighall Road and the A1 trunk road which provides access to the A720 Edinburgh City by-pass and local and national road networks.

The subject property benefits from a highly prominent position opposite the principal entrance to Fort Kinnaird, the premier location for retail warehousing in Edinburgh and Scotland due to its size, accessibility and retailer line up. Fort Kinnaird has an estimated annual foot fall of 12 million and an average dwell time of 80 minutes, with 50% of shoppers staying between 1 and 3 hours. The CACI 2007 Retail Footprint ranked Fort Kinnaird No.1 Fashion Park by “retail attractiveness” and No.3 Fashion Park by comparison goods expenditure.

Fort Kinnaird itself comprises three phases totalling in excess of 580,000 sq.ft. (53,883.31 m²) In addition, there is further retailer representation in the immediate vicinity of the subjects including a B&Q Warehouse, a standalone Woolworths Out of Town, DFS / Carpetright, as well as an Asda Wal Mart.

Fort Kinnaird has evolved into three distinct phases where Phases 1 and 3 are linked and Phase 2 is separated by Newcraighall Road. Phase 1, anchored by a new 60,000 sq.ft. (5,574.13 m²) full format M&S store is dominated by traditional retail park occupiers, predominantly electrical and furniture retailers, together with Argos, Toys R Us and JJB Sports. Phase 3, which links directly with Phase 1, provides a mix of fashion and high street retailers, including GAP, H&M, New Look and Borders Books.

Phase 2, which is essentially a standalone development, comprises an entirely high street / fashion line up with Next, Arcadia, Boots, Mothercare and HMV being the major occupiers.

The owners of Fort Kinnaird, the Hercules Unit Trust and The Crown Estate, have plans to extend the open class 1 retail and leisure offer in the forthcoming Northern Quarter by approximately 81,000 sq.ft. (7,525.08 m²).

DESCRIPTIONThe subjects comprise a standalone retail warehouse unit originally developed for Wickes in 1993 currently being comprehensively refurbished for the new letting to Tesco Stores for their Homeplus format.

The unit is formed in steel portal frame construction with profiled steel cladding to the roof and majority of external walls. Elevations incorporate cavity facing brick construction to varying levels. The remainder of the site comprises soft landscaping, substantial tarmacadam surface car parking areas and concrete surfaced service yard and compound areas. The car park is partially bounded by facing brick retaining walls and planters. The site is typical of the land use in the general vicinity.

The refurbishment for Tesco will include a relocation of the main store entrance from the north elevation to the west elevation. The new entrance will comprise a substantial glazed feature and additional glazing to the northern elevation in place of the existing brickwork and profiled metal cladding.

THE SITEThe site is level and regular in shape and extends to approximately 3.239 acres (1.311 ha) providing a site cover of approximately 21.9%.

CAR PARKINGThe site has a total of 163 car parking spaces including 14 disabled spaces whichprovides a ratio of 1:190 sq.ft. (1:17.65 m²) on the demised area and 1:345 sq.ft.(1:32.14m²) on the total floor area including mezzanine.

TENUREThe subjects are held on a long leasehold from The City of Edinburgh Council on a lease expiring on 5 November 2104 (96 years unexpired) at a rent of £1 per annum. There are no rent review provisions in the ground lease and in our opinion the only onerous condition is the restriction of a food use on site.

ACCOMMODATIONThe demised area extends to approximately 30,914 sq.ft. (2,871.98 m²) gross internal area. The accommodation is arranged with 29,167 sq.ft. (2,709.68 m²) at ground floor level and 1,747 sq.ft. (162.30 m²) at first floor level.

The tenant is to install a mezzanine trading level extending to approximately 25,470 sq.ft. (2,366.22 m²) which is to be a tenants improvement and will not be rentalised for the duration of the lease.

PLANNINGThe subjects benefit from a Class 1 Retail planning consent that is restricted within the ground lease to a Non Food retail warehouse consent within Class 1 of the Town and Country Use Classes (Scotland) Order 1997.

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© Crown Copyright 2008. All rights reserved. Licence number 100020449. Plotted Scale - 1:1250Crown Copyright - licence no. 100018190. Based on Ordnance Survey 2006. Not to Scale - For Identification Purposes Only.

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TENANCYThe subjects are let to Tesco Stores Ltd on a new full repairing and insuring lease for a term of 20 years from the date of entry incorporating a tenant break option on the 15th anniversary of the lease.

The initial rent is £841,638 per annum The annual rent is based on a rate of £27.50 per sq.ft. on previously agreed rent review area of 30,605 sq.ft. (2,843.27 m²).

The rent is reviewed upwards only every 5 years with the following fixed uplifts documented in the lease:

5th anniversary of the date of entry: £975,71110th anniversary of the date of entry: £1,131,14215th anniversary of the date of entry: £1,311,333

COVENANT INFORMATIONThe following information is summarised from data provided by Dun and Bradstreet.

Accounts Year End

Turnover (£’000’s)

Pre-tax Profit (£’000’s)

Net Worth (£’000’s)

D&B Rating

24 Feb 2007 32,687,000 2,890,000 4,752,000

5A125 Feb 2006 30,087,000 1,285,000 3,399,000

26 Feb 2005 26,861,000 3,399,000 3,357,000

MARKET COMMENTARYRecent asset management initiatives in the vicinity of the subjects are centred on Fort Kinnaird and most notably include M&S relocating from their Simply Food format into a 60,000 sq.ft (5,574.14 m²) full format store in a redevelopment of the former Argos unit. The new store opened in 2007 at a headline rent of £28.00 per sq.ft. As a result of this move, a new letting was undertaken to New Look of 13,000 sq.ft. (1,207.73 m²) in the original M&S Simply Food unit at £45.00 per sq.ft in July 2007.

In facilitating all of this, Argos relocated into 15,000 sq.ft. (1,393.53 m²) at a commencing rent of £40.00 per sq.ft rising to £45.00 per sq.ft by the fifth year, in part of Holiday Hypermarket’s existing unit and the former Miller Brother’s unit. We understand British Land’s strategy moving forward is to remove the ‘bulky’ retailers off the park where possible and convert it into a full shopping park across all phases.

The tone rent on the park for a 10,000 sq.ft. (929.02 m²) unit is in the order of £45.00 - 47.50 per sq.ft and £55.00 per sq.ft on a 5,000 sq.ft. (464.51 m²) unit.

Of the larger units on Fort Kinnaird, one of the most pertinent pieces of comparable evidence is from the review settlement on the Toys R Us unit. The review, effective in November 2004, on the 40,000 sq.ft. (3,716.09 m²) unit, was agreed at rate of £25.10 per sq.ft. with a 5% adjustment to reflect a prohibition on subletting in part.

British Land are now onsite to develop The North Quarter, approximately 81,000 sq.ft. (7,525.08 m²) in place of the Melrose Tea Factory and part of the existing leisure accommodation on Phase 1. The North Quarter is to offer a range of unit sizes ranging from less than 1,000 sq.ft. (92.90 m²) up to 15,000 sq.ft. (1,393.53 m²) configured in a modern high street layout with terraces facing each other across a pedestrian precinct.

In a secondary position close to Phase 2 of Fort Kinnaird, between the VW and Porsche / Ferrari car showrooms, Vogue Home Furnishings occupy 20,000 sq.ft. (1,858.04 m²) as part of a new development undertaken in conjunction with Progressive Properties. Martin & Frost took the remaining 20,000 sq.ft. (1,858.04 m²) at a commencing rent of £20.00 per sq ft demonstrating its off pitch location.

Elsewhere in the vicinity, B&Q, situated immediately to the south of the subjects, have secured planning consent for up to 47,500 sq.ft. (4,412.86 m²) of Open Class 1 (non-food) accommodation adjacent to their existing store which they are currently in the process of marketing at a quoting rent around £30.00 per sq.ft.

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IMPORTANT NOTICE: Savills, their clients and any joint agents give notice that:

1. They are not authorised to make or give any representations or warranties in relation to the property either here or elsewhere, either on their own behalf or on behalf of their client or otherwise. They assume no responsibility for any statement that may be made in these particulars. These particulars do not form part of any offer or contract and must not be relied upon as statement or representations of fact.

2. Any areas, measurements or distances are approximate. The text, photographs and plans are for guidance only and are not necessarily comprehensive. It should not be assumed that the property has all necessary planning, building regulation or other consents and Savills have not tested any service, equipment or facilities. Purchasers must satisfy themselves by inspection or otherwise.

VATThe subject property is elected for VAT. The vendor would expect to treat the sale as a transfer of a going concern (TOGC), with the intention that no VAT would be payable on the purchase price.

PROPOSALOffers are invited for the leasehold interest in the subject property in excess of £13.85 million (thirteen million eight hundred and fifty thousand pounds), subject to formal Scottish missives and exclusive of VAT.

Based on standard acquisition costs of 5.7625%, this price reflects the following yield profile:

Net Initial Yield: 5.75%1st review 6.67%2nd review 7.73%3rd review 8.96%

CONTACTSNick PennySavills8 Wemyss PlaceEdinburghEH3 6DH

Tel: 0131 247 3803Email: npenny@savills.com

Jaime DunsterSavills20 Grosvenor HillLondonW1X 4HQ

Tel: 020 7409 9929Email: jdunster@savills.com

savills.com

Designed & Produced by Savills Commercial Marketing: 020 7499 8644 May 2008

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