JP Morgan Cazenove
Cazenove leased 100,000 sq ft close to the Bank of England in nine inter-connecting buildings that had been adapted to accommodate the ongoing needs of the business. To meet its growth expectations over the next decade, Cazenove sought to consolidate its operations into a single new building of around 155,000 sq ft, maximising the efficiency of the working environment for clients and staff.
In order to reach objective decisions to include a clear strategy for timetabling and implementation, Nick advised Cazenove's partnership on:
The decision was taken to relocate and Nick then managed:
By agreeing to accept a certain level of risk and cost and electing to relocate in what was then a relatively depressed City office market, Cazenove was able to acquire a new purpose-built headquarters building with a bespoke specification in a prime City location on extremely competitive rental and lease terms.Top
SunGard needed to consolidate its operations into a single new facility based in the capital's financial district. Nick's starting brief was to report on the state of the office market in The City and Canary Wharf and to investigate SunGard's strategic options. The company operated from nine central London locations and also occupied premises in Paris, Frankfurt and Zurich. The optimal solution was the acquisition of a single new site of 84,000 sq ft in the heart of London's financial district.
An initial strategy paper was prepared for SunGard that addressed:
Nick's key strength in this exercise was his robust and informed understanding of the dynamics of the central London property market, specifically in relation SunGard's requirement for lease flexibility matched to its financial needs. These included a recognition of the implications to the business of adopting both IFRS and US GAAP accounting standards, made more complex by a need to reflect in any transaction SunGard's own internal lease levelling issues.
The acquisition strategy included:
Working closely with SunGard's representatives, principally the Group CFO and the Group Facilities Manager for SunGard Europe, Nick acquired a total of 84,000 sq ft offices from Citigroup in 25 Canada Square, Canary Wharf under four separate leases. This structure afforded SunGard the flexibility it required to draw down and exit space on pre-determined dates under rental and rent-free terms that were significantly more favourable than could be expected in the open market at the time.Top
Leading specialist liability insurance provider Marketform identified the need to relocate from its existing premises in Lime Street, EC3 to larger, higher-specification premises to support the burgeoning needs of the business.
Marketform's objective was to occupy a single floor of 12-15,000 sq ft within the 'Lloyds Triangle'. The premises needed to be of a regular configuration and capable of accommodating a minimum of 50 staff, with provision for 25% headcount expansion over the next 4-5 years.
A realistic budget was determined and after an extensive market search, a larger, self-contained building providing 20,000 sq ft was identified as a potential suitable option. Nick established that the building's owner, Capital & Counties plc, wanted to sell its freehold interest in the property and that in order to maximise investment value, it needed first to secure a letting. This provided the opportunity for Nick to leverage a highly favourable transaction for Marketform.
Nick was able to negotiate a new 10-year lease on the property at a low initial rent that would rise each year up to the rent review in five years time. Also at this time the tenant would benefit from an option to determine the lease. In the event that the tenant elected to retain occupancy, no rent would be payable in year six effectively allowing Marketform to benefit from an 80% gearing after the reviewed rent had been determined.
The ground floor was sub-let on a short-term lease to reduce Marketform's exposure to property costs while affording the future flexibility needed to expand its operations in the building.Top
The Newspaper Society
In September 2004, The Newspaper Society decided to leave its existing premises in Bloomsbury House where it occupied 7,320 sq ft out of a total leased space of 12,600 sq ft.
The Newspaper Society's objective was to reduce total occupation costs while maximising occupational efficiencies through the acquisition of modern and better-configured offices on flexible lease terms.
A move to more cost competitive buildings in The City, Holborn and Docklands was considered. DCFs were produced for each property option to compare the total NPV costs of each shortlisted building against the cost of The Newspaper Society remaining in occupation of part only of the leased space in Bloomsbury House.
In order to ensure that any relocation strategy remained as risk free as possible, provisional heads of terms were agreed on two buildings to ensure that the timetable envisaged for the completion of lease and the fitting out of the new premises could be achieved by the June 2006 lease expiry on The Newspaper Society's existing offices.
A new lease was agreed on 4,912 sq ft on the 8th floor of St. Andrew's House, 18-20 St. Andrew's Street, London EC4 in The Newspaper Society's preferred Holborn location on cost-effective terms that provided a cap on both the service charge and future rent review.Top
Cable & Wireless
Cable & Wireless sought to reduce its headcount by 2,700 in the UK by the end of June 2001, thereby releasing surplus offices for disposal. This included the disposal of its UK headquarters in 26 Red Lion Square, WC1 and its global headquarters in 124 Theobald's Road, WC1. Property values in The City of London were at that time the highest across the entire London office market.
Nick managed and implemented the successful disposal of nine office buildings in central London, encompassing in excess of 300,000 sq ft and including both 26 Red Lion Square and 124 Theobalds Road. These disposals resulted in a more efficient use of premises within Cable & Wireless's existing portfolio and allowed for the acquisition of a new 18,000 sq ft office in Paddington housing the Group executive to support the re-engineering of the overall business.
The disposal of 42,000 sq ft in 26 Red Lion Square to The Economist Group helped release funds for the business at a time when they were most needed. Shortly thereafter, Cable & Wireless vacated 124 Theobald's Road. Acting on Nick's advice, the company embarked on a significant upgrade of its surplus accommodation with a view to seeking a single occupier for the whole building. Five months after completion of the upgrade, Nick let the entire building to MediaCom, a subsidiary of WPP.
The acquisition of 18,000 sq ft in The Point, Paddington Basin, W2 heralded a move away from Cable & Wireless's historic Holborn location and provided the lynchpin for issuing a new policy directive requiring all new premises acquired be held on shorter-term leases.
Cazenove Capital Management
Cazenove Capital Management occupied c. 34,000 sq ft at 12 Moorgate, EC2 under a 25-year lease dating from 1998. Prior to selling the freehold in the property, landlord New Star Property Asset Management sought an increase in the annual rent passing at review from the existing £47.00 per sq ft office rent to a new rent based on a highly optimistic £60.00 per sq ft headline rent.
McCalmont-Woods was referred by its existing client JP Morgan Cazenove and was subsequently instructed by Cazenove Capital Management to negotiate the upward only rent review and mitigate any increase in rent payable as at the 24th June 2008 review date.
McCalmont-Woods negotiated an 83% saving for Cazenove Capital Management on the increase proposed by the landlord, resulting in a minimal uplift of 1.5% on the rent passing. The settlement was reached by negotiation between the parties without the need for independent arbitration.
JP Morgan Cazenove
JP Morgan Cazenove occupies c. 16,000 sq ft on the 3rd floor of 1 Exchange Tower, E14 under two separate leases expiring in March 2015.
The 16 storey office tower at 1&2 Harbour Exchange was originally acquired by Hammerson in 1999 for £77m but was then sold in September 2010 to MGPA Europe Fund III for c. £134.6m - an 8.1% yield. The building comprises 485,000 sq ft of office space let to a range of tenants.
The new landlord, MGP Harbour Exchange II S.a.r.l. sought an increase in the annual rent passing at review from the existing £21.00 per sq ft office rent to a new rent based on a highly optimistic £32.50 per sq ft headline rent.
McCalmont-Woods was instructed by JP Morgan Cazenove to negotiate the upward only rent review and mitigate any increase in rent payable as at the 29th September 2009 review date.
McCalmont-Woods negotiated a saving for JP Morgan Cazenove on the increase proposed by the landlord, equivalent to almost £1m in rent over the 5 year lease term remaining.Top
International Accounting Standards Committee Foundation
The International Accounting Standards Committee (IASC) needed to acquire additional offices either in, or located close by, its existing London premises to accommodate expansion. The situation was complicated by the fact that the IASC's existing leases in Cannon Street were due to expire in 12 months time and that its landlord was actively seeking to sell on the freehold interest in the building in order to capitalise on a rising investment market.
Nick negotiated the acquisition of a new and separate leasehold interest on part of the ground floor (west) in 30 Cannon Street while simultaneously restructuring and extending the IASC's existing leases on the accommodation it occupied on the part basement, part ground floor (east) and first floors in the building.
Nick also negotiated capping the service charge on both the new and existing leases, yielding immediate cost savings.
With Nick's assistance, the IASC was able to explore a broad range of options in a relatively complex situation, and in ensuing negotiations. The strategy of leveraging the acquisition of new premises with the grant of a reversionary lease 12 months in advance of lease expiry resulted in a very satisfactory (and financially beneficial) outcome for the IASC Foundation.Top