Porta Wealth Management LLP, a new company established in early 2014, wished to open an office in the City of London and after due consideration as to the merits of entering into a licence agreement on serviced offices, elected instead to acquire a new 5-year lease on premises.
Being a new start-up it was important to project the right image to clients and staff while at the same time exercising control on operating and capex costs. Equally important was the need to retain lease flexibility to reflect the businesses’ future growth pattern and hence it was decided that the new lease should incorporate an option to determine in the third year of the term.
McCalmont-Woods sourced and supplied details of a longlist of property options within a 800-1,200 sq ft size range for Porta to consider and then organised for the LLP members to inspect the options shortlisted after which detailed cash-flows were prepared to highlight the cost profile of each selected property under consideration.
Once a preferred building had been identified, heads of terms were quickly prepared and agreed. Reflecting the scarcity in availability of good quality small suites in the City, the parties entered into a four week exclusivity period in which to negotiate and conclude the lease contract. The whole process from initial to contact to agreement of HoTs took four weeks.
On Porta’s behalf, McCalmont-Woods acquired approximately 900 sq ft Grade A offices in a newly refurbished mutli-let building located in the heart of the City on a new 5-year lease direct from the building owner and incorporating a 3rd year tenant break option. A competitive rent and tenant incentive package was agreed enabling Porta to manage its cost base over the lease term in accordance with its business plan.
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 timetable in which the Partnership needed to decide whether to ‘stay or go’
- the current and projected status of The City and Canary Wharf office markets with an assessment of how the supply and demand pipeline might affect rental value
- a cost benefit analysis of the Partnership continuing to invest in the infrastructure of its existing buildings
- the likely cost of terminal dilapidations and reinstatement to be borne by the Partnership on relocation
The decision was taken to relocate and Nick then managed:
- the formulation of a detailed occupational brief
- research into size, deliverability and timing of properties available for pre-letting
- arranging site inspections and presentations with potential landlord/developers
- generation of DCFs to illustrate total occupational costs over the projected lease term
- review of relevant investment considerations and impact on profit sharing arrangements
- the drafting and negotiation of heads of terms
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.