23
30 Warwick Street London W1B 5NH
tel +44 (0)20 7493 4933 fax +44 (0) 20 74087 5555
www.joneslanglasalle.co.uk
17 February 2014
Arazim Investments Jabotinsky 33 Ramat-Gen Israel Dear Sirs
CAPELLA PORTFOLIO
In accordance with instructions, we have valued for balance sheet purposes the freehold and long
leasehold interests in the 6 properties known as the ‘Capella Portfolio’, as identified in the attached
schedule, as at 31 December 2013.
1 The properties have been valued in accordance with the RICS Valuation –Professional
Standards March 2012, on the basis of Market Value by suitably qualified external valuers.
2 Market Value means the estimated amount for which a property should exchange on the
date of valuation between a willing buyer and a willing seller in an arms length transaction
after proper marketing wherein the parties had each acted knowledgeably, prudently and
without compulsion.
3 (a) Third parties have provided us with such information as details of tenure, tenancies,
and the like, including the current net income.
(b) We have previously undertaken inspections of the properties during May 2009 and
at that time have taken measurements of the properties in accordance with the
RICS Code of Measuring Practice. We reinspected the majority of the assets
externally for the purpose of the December 2012 valuation and understand there to
have been no material change thereto. You have confirmed that all units are still
occupied by the tenants.
(c) Our Valuation excludes any expenses which would be incurred on a realisation and
also any liabilities to tax, including Capital Gains and Development Land Taxes.
4 (a) We were not instructed to carry out a structural survey for the purpose of this
valuation and have assumed there to be no structural defects within the properties.
We have assumed that no known deleterious materials have been utilised in the
construction of any of the properties.
2
(b) No soil tests have been carried out and we cannot offer any opinion as to the
suitability of any site for existing or proposed developments, nor the condition of, or
potential liability for embankments or retaining walls.
(c) No specialist tests have been carried out on any of the services systems and for the
purpose of this valuation we have assumed that all are in reasonable working order
and in compliance with any relevant statutory or by-law regulations.
(d) No allowance has been made in our valuation in respect of rights, obligations or
liabilities arising under the Defective Premises Act 1972.
(e) We have not seen any Contaminative Uses Reports on the properties and have
therefore assumed there are no adverse factors which would materially affect the
valuation. Copies of Phase 1 and Phase 2 Environmental Assessments
undertaken by Waterman Environmental in 2007 were made available at the time of
acquisition and these generally identified the sites as being of low to medium risk,
as would be expected for properties of this age and use.
5 We have made no written town planning enquiries in respect of any property nor have we
effected Official Searches and for the purpose of this valuation we have assumed that full
planning consent exists for the existing development and present uses.
6 The valuation has been overseen by J P Asquith FRICS.
Having regard to the foregoing we are of the opinion that the Market Value of the portfolio of freehold
and long leasehold interests in the various investment properties identified in the attached schedule,
with the benefit of the tenancies as advised producing an estimated current net income of
£3,911,085 p.a. is £32,030,000 (Thirty Two Million and Thirty Thousand Pounds) as at 31
December 2013.
We have attached summary sheets on each of the properties together with a summary of the
valuation methodology and our understanding of the covenant status of the tenants.
This Valuation Certificate is for the use only of the party to whom it is addressed and no responsibility
is accepted to any third party for the whole or any part of its contents, except the inclusion and
attachment of this valuation to the 2013 annual reports of Arazim Investments, as mentioned in the
first paragraph of this letter.
Neither the whole, nor any part of this Valuation Certificate, nor any reference thereto may be
included in any published document, circular or statement, nor published in any way without our
written approval of the form and context in which it is to appear.
Jones Lang LaSalle gives its consent that the valuation be used in the financial reports of Arazim
Investments.
3
Yours faithfully
J.P.ASQUITH FRICS
Director
Jones Lang LaSalle
CAPELLA PORTFOLIO
Summary of Individual Market Values
Address Tenure Tenant Rental Income Market Value
Gross Net
Palethorpes Pork Farms Ltd Market Drayton TF9 1QS
Freehold Pork Farms Ltd £624,367 £624,367 £6,560,000
Pork Farms Ltd Queens Drive Nottingham NG2 1LU
Long Leasehold Ground Rent - £85,000 pa
Pork Farms Ltd £786,065 £701,065 £5,300,000
Dorset Foods Pork Farms Ltd Shaftesbury SP7 8PL
Long Leasehold Ground Rent - £17,262 pa
Pork Farms Ltd £188,844 £171,582 £1,480,000
Riverside Bakery Crossgate Drive Queens Drive Industrial Estate Nottingham NG2 1LS
Long Leasehold Ground Rent - £179,000 pa
Pork Farms Ltd £618,466 £439,466 £3,200,000
Park Cakes Ltd Oldham OL8 2ND
Freehold Park Cakes Ltd £1,447,021 £1,447,021 £10,950,000
Park Cakes Ltd Bolton BL3 4DY
Freehold Park Cakes Ltd £527,584 £527,584 £4,540,000
TOTAL
£4,192,347 £3,911,085 £32,030,000
APPENDIX A
COMMENTARY ON VALUATION APPROACH AND COVENANT STATUS OF
TENANTS
The properties have been valued on an investment comparable basis whereby we would have
regard to the prices and initial yields paid in the market for investments with similar lease structures
and adjusted these for the tenure, perceived strengths of the tenants’ covenants and the nature of
the properties.
Whilst the properties have the benefit of lease structures which would be attractive to the investment
market the covenant status of the tenants is such that investors would have an increasing regard to
the relettability of the units, particularly having regard to the size and type of accommodation
provided. Given the state of the letting market and the annual rental uplifts the properties are also
becoming more over-rented each year. Furthermore three of the properties are held leasehold with
fairly high gearings and these would still be unattractive in the investment market.
We have obtained the following information from ICC in relation to the two tenants, Park Cakes
Limited and Pork Farms Limited, both of whom were incorporated in November 2006 and were
acquired by Vision Capital soon afterwards.
Park Cakes Limited
Year ending Pretax Profit / (loss)
£,000
Turnover £,000 Total assets less current
liabilities £,000
ICC Credit Score
(out of 100)
31/03/2013 (414) 116,854 13,001 43
31/03/2012 (3,367) 121,185 9,516 51
26/03/2011 (1,550) 109,142 (18,475) 51
N.B. full 2013 figures not yet published (10/02/14)
Pork Farms Limited
Year ending Pretax Profit / (loss)
£,000
Turnover £,000 Total assets less current
liabilities £,000
ICC Credit Score
(out of 100)
30/03/2013 (12,780) 152,128 29,586 43
31/03/2012 (12,799) 145,412 22,355 53
26/03/2011 (11,695) 134,047 (70,118) 52
Both companies have improved their turnover over the last three years and appear to have
converted much of their shorter term liabilities into long term ones with the result that the net asset
situation seems to be much more positive. The Credit Score of Pork Farms was reduced in the last
2
year and is now in the “Moderate” risk category. They are both within a sector (manufacture of food
products) which is competitive but should always have a potential market. The ultimate global
holding companies are Eliot (Luxembourg), SARL (Luxembourg) and Eliot Luxembourg Holdco
SARL (Luxembourg) respectively and we understand they guarantee the rental payments.
As a reflection of our perception of the market’s interpretation of the tenants’ covenant status the
respective yields used in arriving at our valuations are as follows:-
Market Drayton 9%
Bolton 11%
Oldham 12.5%
Shaftesbury 11%
Pork Farms, Nottingham 12.5%
Riverside Bakery, Nottingham 13%
3
APPENDIX B
PROPERTY SUMMARY SHEETS
4
Pork Farms Ltd, Market Drayton, TF9 1QS
Material changes since May 2009
Since our previous inspection there have been several, minor structural alterations / non-structural
alterations at the subject property, which predominantly relate to the installation and refurbishment of
new and existing plant equipment. Externally, the tenant has installed a new standalone temporary
cold store adjacent to one that was present at our last inspection. However, we do not believe these
alterations would have a significant impact on the overall value.
In respect of the local area, there does not appear to have been any significant new residential or
commercial development, despite it being previously thought that a residential development scheme
would commence in relatively close proximity to the subject property.
Property specific valuation considerations
Market Drayton is considered a secondary industrial location, with occupiers in the area
predominantly characterised by a mix of local and regional tenants. The subject property, a
production warehouse of piecemeal construction, would be considered large for the local market,
5
and, as such, we would anticipate a substantial letting void of 12-24 months should the property be
exposed to the market. Furthermore, due to the piecemeal layout, we do not believe the property
would subdivide into smaller units, more suited to the local market. Accordingly, redevelopment of
the site may be a long term option. As such, there is no established rental tone for this type of
property in this location.
6
PARK CAKES LIMITED, BELLA STREET, BOLTON, BL3 4DY
Material changes since May 2009
The subject property is situated approximately 1.4 miles to the south west of Bolton town centre on
Bella Street at its junction with the A579 St Helens Road. The A579 links Bolton town centre and
junctions 4 and 5 of the M61 via the A6 approximately 1.5 miles to the south and south west of the
property respectively. As such the surrounding area is very mixed in character typical of suburban
areas surrounding arterial routes. There have been no discernable changes with the subject
property still dominating the area being exceptional in both its size and use. Other uses in the area
include industrial, predominantly motor related, retail in both a parade of local shops and a small
format Asda supermarket, multi storey warehousing, an Islamist health centre and meeting hall and
residential predominantly in Victorian terraces.
Property specific valuation considerations
The subject property occupies an irregular site of some 1.632 hectares (4.033 acres) and provides a
production and distribution facility with offices extending in total to approximately 11,337 m² (122,036
ft²). We understand that the buildings were constructed between 1992 and 1996 replacing a
previous manufacturing facility and are of steel portal frame construction with metal sheet clad
elevations with the three storey office building at the junction of Bella Street comprising brick
elevations beneath a flat roof.
7
There are two entrances from Bella Street but the property has restricted loading access via a single
dock level loading door to the north western elevation and three level access loading doors towards
the centre of the Bella Street elevation. As such whilst the current use of the property has evolved
within the site there is no doubt that a modern equivalent would be developed more efficiently. There
would be limited demand for the facility due to its size, bespoke nature and poor loading and hence
any demand for the premises from another occupier either for the same or alternative use is unlikely.
A break-up of the buildings might be viable although only with a loss of floorspace and the expense
of redistributing services. Even then the demand for the resultant space will only be of a local nature
with low rents, short leases and high vacancy rates. The residual value of the site is therefore likely
to be based on an employment use or a residential led scheme subject to planning with ancillary
employment uses as the local authority would undoubtedly resist any significant loss of employment
resulting from the closure of this facility.
8
PARK CAKES LIMITED, ASHTON ROAD, OLDHAM, OL8 2ND
Material changes since May 2009
The subject property is situated on the A627 Ashton Road close to its junction with the A6104
Hathershaw Lane. Oldham town centre lies approximately 1.25 miles to the north of the subject
whilst junction 22 of the M60 lies within 1.5 miles, accessed via the A6104. The surrounding area is
mixed in character and there have been no discernable changes since 2009 with the subject
property still dominating the area being considerably larger than other commercial enterprises and
over twice the height of local housing. Other uses in the area include industrial, a small element of
local retail and residential, predominantly in Victorian terraces.
Property specific valuation considerations
The subject property is atypical of the area occupying an irregular site of some 3.83 hectares (9.45
acres) and comprising a variety of industrial / storage / production and office buildings with a total
area of approximately 39,808.10 m² (428,494 ft²). The buildings have been developed piecemeal
since the 1930s with the original buildings being brick built and is heavily bespoke to the current
bakery operation. The most recent extension is a standalone high bay warehouse of steel portal
frame construction with metal clad walls. This is an exception however as the majority of the
accommodation is multi-level with low eaves height.
9
Whilst the current use of the property has evolved within the site there is no doubt that a modern
equivalent would be developed more efficiently. It is extremely doubtful therefore that there would be
any demand for the premises by another occupier and it is only inertia and the cost of relocation
which prevents the current operation from relocating. A break-up of the buildings might be viable
although only at a significant loss of floorspace and the expense of redistributing services. Even
then the demand for the resultant space will only be of a local nature with low rents, short leases and
high vacancy rates. The residual value of the site is therefore likely to be based on a residential led
scheme subject to planning with ancillary employment uses as the local authority would undoubtedly
resist any significant loss of employment resulting from the closure of this facility.
10
Queens Drive, Nottingham, NG2 1LU
Material changes since May 2009
Since our previous inspection and from our cursory external re-inspection of the property there is one
small addition to the property on the rear elevation. A small single storey rear extension has been
constructed in June 2012 to comprise a Laundry room. We have estimated the addition to amount to
32.3 sq m (350 sq ft) which is considered insignificant compared to the overall size of the property.
Otherwise there have been no major demolitions, structural alterations or additions to the subject
property, which would have either a beneficial or onerous effect upon value.
The Queens Drive Industrial Estate remains an established and popular industrial location located about
a mile south of Nottingham City Centre. The subject property is at the front of the estate and also fronts
the A453 Queens Drive, one of the main arterial routes to the south of Nottingham City Centre. The
Queens Drive Industrial Estate is flanked to the north by the more modern NG2 Business Park and to
the south by the Riverside Business and Retail Park which is also a mature fully built out scheme.
11
Property specific valuation considerations
The property occupies an irregular shaped site extending to some 3.09 hectares (7.64 acres). It is a
prominent site at the front of the Queens Drive Industrial Estate accommodating a sizeable food
production facility with ancillary office accommodation dating from the 1970s and subsequently extended
and adapted. The facility is predominantly a single-storey food production building with a two-storey
office component to the front.
Due to a combination of the size of the subject facility, its age and specification we believe there would
be limited occupational demand for it at the current time should it be vacant. There may potentially be
interest in it from other food production operators but for alternative industrial uses, whether it be
production or ambient warehousing, we believe demand at the current time would be modest. The
configuration of the property does not allow for easy breakup should a multi-occupational scenario be
considered and, in any event, we consider that the resultant space from sub-division would be likely to
be let for relatively short term leases and would require reasonably strong inducements to secure
lettings in the current property climate. As a result we consider the property which is a large facility in
the context of its physical locality where typical unit sizes are 10,000 – 30,000 sq ft would be best
disposed of as a single entity to occupiers within the same use sector with a longer term likelihood that
the site, which is well located, is redeveloped. We do not, however, see this occurring in the short-
medium term and envisage the current building having a useful economic life of at least a further 15
years.
12
Riverside Bakery, Crossgate Drive, Queens Drive Industrial Estate, Nottingham, NG2 1LS
Material changes since May 2009
Since our previous inspection and from our cursory re-inspection of the property there is one
reasonably substantial extension into the yard area currently under construction, presumably as a
despatch facility. However, at this time the extension is some way from completion and only the steel
framework for it is currently in place. Otherwise there have been no major demolitions, structural
alterations or additions to the subject property, which would have either a beneficial or onerous effect
upon value.
The Queens Drive Industrial Estate remains an established and popular industrial location located about
a mile south of Nottingham City Centre. The subject property fronts the A453 Queens Drive at the
entrance to the Estate and is flanked to the north by the more modern NG2 Business Park, which is now
reaching maturity. To the south is the Riverside Business and Retail Park which is also a mature fully
built out scheme.
Property specific valuation considerations
The property occupies a somewhat irregular but roughly square shaped site extending to some 3.37
hectares (8.35 acres). It is a prominent site at the front of the Queens Drive Industrial Estate
13
accommodating a sizeable food production facility with ancillary office accommodation dating from the
early 1980s and subsequently extended in the mid-1980s and late 1990s. The facility is predominantly a
single-storey food production building with a two-storey office component to the south west. This is a
large facility in the context of its physical locality where typical unit sizes are 10,000 – 30,000 sq ft.
Due to a combination of factors including the size of the subject facility, its age and specification we
believe there would be limited occupational demand for it at the current time should it be vacant. There
may potentially be interest in it from other food production operators but for alternative industrial uses,
whether it be production or ambient warehousing, we believe demand at the current time would be
modest. The configuration of the property does not allow for easy breakup should a multi-occupational
scenario be considered and, in any event, we consider that the resultant space from sub-division would
be likely to be let for relatively short term leases and would require reasonably strong inducements to
secure lettings in the current property climate. As a result we consider the property would be best
disposed of as a single entity to occupiers within the same use sector with a longer term likelihood that
the site, which is well located, is redeveloped. We do not, however, see this occurring in the short-
medium term and envisage the current building having a useful economic life of at least a further 15
years.
Arazim Investments CVA Valuation 31 Dec 13Capella valuation - 31 12 13
2014-03-25T19:04:01+0000Not specified
