Our ref
Donaldsons LLP 48 Warwick Street London W1B 5NL
CMH/iw
Telephone +44 (0)20 7534 5000 Facsimile +44 (0)20 7434 0045 Direct Line +44 (0)20 7534 8526
[email protected] www.donaldsons.co.uk
The Directors Hammerson UK Properties plc 100 Park Lane London W1K 7AR
07 March 2007
Dear Sirs HAMMERSON UK PROPERTIES PLC PORTFOLIO VALUATION AS AT 31 DECEMBER 2006 In accordance with your instructions, we have prepared valuations of the freehold and long leasehold properties held by the Company for your year end accounts as at 31 December 2006. DATE OF VALUATION Our valuations have been prepared as at 31 December 2006. BASIS OF VALUATION Our valuations have been prepared in accordance with, and subject to, definitions, assumptions and caveats set out below and have been made on the basis of Market Value in accordance with the Practice Statements of the current RICS Appraisal and Valuation Standards and the International Valuation Standards. Market value is defined as“The estimated amount for which an asset should exchange on the date of the 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”. The valuation of each property was on the basis of Market Value, subject to the assumptions that Investment Properties will be sold subject to any existing leases and Properties held for Development will be sold with vacant possession in their existing condition. The valuer’s opinion of Market Value was primarily derived using comparable recent market transactions on ‘arm’s length’terms. ASSUMPTIONS CAVEATS AND SOURCES OF INFORMATION 1. Title documents We have not been supplied with any documents relating to the freehold titles in the properties and our valuations are on the assumption that good freehold titles can be shown and that they are not subject to any easements, wayleaves, restrictive covenants, tenancies or encumbrances other than those that you have informed us of.
Page 1 of 3 London
Birmingham
Bristol
Cheltenham
Edinburgh
Glasgow
Leeds
Manchester
and the Donaldsons europe network of affiliated companies Donaldsons LLP is a limited liability partnership registered in England. Registered number OC311075 Registered office: 48 Warwick Street London W1B 5NL, at which a list of members is available
We have been supplied with copies of headleases and specimen underleases but have otherwise relied on the information regarding tenancies which you have supplied to us. We have assumed that the headleases and tenancies are not subject to any easements, wayleaves, restrictive covenants, tenancies or encumbrances other than those set out in the headleases or the tenancies that you have supplied to us. Where we have only been provided with brief details of leases we have assumed that none of the leases contain any unusual or onerous provisions affecting value and that, except where noted otherwise, all rent reviews are to the full rack rental value. 2. Inspections In the preparation of this Report, we inspected the majority of the properties including all those with a value in excess of £20m. The remaining properties will be inspected in accordance with your requirement that all properties are inspected over a three year cycle. We did not make internal inspections of the whole of every property. We have not carried out structural surveys and have not, therefore, inspected those parts of each property that are covered, unexposed or inaccessible. We have not tested the service installations. We are unable to report that any parts of the properties are free from defect, including latent defects, rot and inherently dangerous or unsuitable materials and techniques. We have not made investigations regarding soil stability, mining, geological conditions, or contaminated land and have assumed that the sites and any adjoining or nearby land are not contaminated and that there are no dangerous materials on or in the vicinity of the properties. Inspections were made between December 2005 and December 2006. 3. High alumina cement concrete and other deleterious materials We have been informed by you that no high alumina cement concrete, calcium chloride additive or other deleterious materials have been used as structural materials in these properties, save for two minor exceptions where you have informed us that no defects have developed and that the normal time for conversion of high alumina cement passed some years ago. We have therefore made no reduction in our valuation. Our valuations reflect this position. We have accepted these statements and have not made further investigations. 4. Local authority information In the preparation of our Report and Valuation, we made enquiries of local authorities as to the effect of any town planning or highway proposals on the properties. We believe that the information we have been given is correct but we cannot accept liability for either incorrect information or for material omissions in the information supplied to us. We have not investigated further the planning position relating to each property and have relied on the information you have supplied to us. In particular, we have assumed that, unless noted otherwise, all properties and uses are authorised by planning permission or have become lawful under Section 191 of the Town and Country Planning Act 1990. 5. Disposal and acquisition costs We have considered each property as if free and clear of all mortgages and other charges which may be secured thereon. We have not allowed in our Market Valuations for the costs, which would be incurred on the disposal of the properties. In accordance with market practice the values reported make a deduction for purchasers’ costs of acquisition. 6. Taxation No allowance has been made for any liability for taxation (including Value Added Tax) on either the rental income from these properties (if any), the notional sale price or any gain which may be realised on disposal, whether actual or notional.
Page 2 of 3 Hammerson UK Properties plc
Portfolio Valuation as at 31 December 2006
7. Areas As agreed we have not measured any of the properties specifically for the purposes of this valuation but have relied on the floor areas provided by Hammerson, which we have assumed to be in accordance with the current edition of the Code of Measuring Practice published by the RICS. 8. Development costs, repayments and similar sums Where it has been necessary to incorporate in our valuations information relating to capital and interest repayments, development costs, irrecoverable service charge expenditure, turnover and similar sums we have relied on the information you have supplied to us and have not verified this information. 9. Joint Ventures Where the Company does not own the whole of a property or a property is held under a Joint Venture Arrangement our valuation is of the relevant percentage of the Company’s share of the property interest, in a Joint Venture. This may or may not be equivalent to Net Asset Value. VALUATION We are of the opinion that as at 31 December 2006, the aggregate of Market Values of the freehold and long leasehold interests in the properties owned by the Company as at this date was: £3,218,743,600 (Three Billion, Two Hundred and Eighteen Million, Seven Hundred and Forty Three Thousand Six Hundred Pounds) QUALIFICATIONS OF VALUERS We confirm that these valuations have been prepared in our capacity as External Valuers to the Company, by individual valuers who conform to the requirements of the Practice Statements of the current RICS Appraisal and Valuation Manual. The above valuation is a Regulated Purpose Valuation under UK Practice Statement 5.1 (UKPS5.1) of the RICS Appraisal and Valuation Standards (May 2003). PUBLICATION AND THIRD PARTY LIABILITY This Report has been prepared for your internal use and for incorporation in an agreed form in your Annual Report and Accounts. Although our agreement is given in principle to the incorporation of this Report in your Annual Report and Accounts, we reserve the right to approve the manner in which it is incorporated or referred to in these documents. Except as stated above, this Report may not be sent to any third party (except your auditors) nor included in any published document, circular or statement nor published in any way without our prior written approval. We cannot accept responsibility to any third party for the whole or any part of the contents of this Report. Yours faithfully For and on behalf of DONALDSONS LLP
John Shaw MRICS Partner
Chris Hessel FRICS Partner
Page 3 of 3 Hammerson UK Properties plc
Portfolio Valuation as at 31 December 2006
