The Salisbury House

Objective

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.

 

Services provided

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.

 

Result

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.

moorgate

Objective

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.

 

Services Provided

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

 

Result

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.

canada-square

Objective

IBTimes had outgrown its existing 2,200 sq ft offices in Canary Wharf and needed to move to larger premises. Having originally let IBTimes its existing offices, McCalmont-Woods was tasked with the job of identifying new offices on the Canary Wharf estate for IBTimes to move into.

 

Services Provided

A comprehensive market research exercise was undertaken leading to McCalmont-Woods inviting landlords on a select number of buildings to submit RFPs for consideration. The initial long-list of building options was then reviewed against a set of key criteria agreed with IBTimes and subsequently reduced to a shortlist of preferred options. Detailed cash-flows were produced on each option to assist with overall cash-flow management including fitting-out; timetable for relocations and last but not least, the rent and tenant incentive package to be agreed.

 

Result

McCalmont-Woods successfully negotiated the acquisition of 6,280 sq ft on a new 5 year lease for IBTimes UK on the part 34 floor at Citi’s 25 Canada Square.

 

Client Benefit

The premises acquired provided fully-fitted accommodation for over 80 staff which IBTimes to keep its capex costs to a minimum at the same time as providing room for future business growth.

 

tata-lg

Objective

TATA Communications wished to relocate its London operations into 15-20,000 sq ft office premises situated in a more central location (than their existing Docklands offices) for the least cost possible (in terms of operational and capex costs).

Services Provided

A comprehensive market research exercise was undertaken by McCalmont-Woods leading to a shortlist of potential options being drawn up. Detailed cash-flows were then prepared on each building, leading to a preferred relocation option being selected with heads of terms agreed and Board approval obtained, all within four months from the date of appointment.

Result

McCalmont-Woods successfully negotiated the acquisition of 18,685 sq ft offices for TATA Communications on a new sub-lease from Accenture at 20 Old Bailey, EC4 on extremely competitive terms. The premises identified benefited from a full office fit-out that included meeting rooms, comms room and kitchen facilities providing effective ‘plug & play’ offices with circa 160 desks and associated office furniture already in-situ and ready for immediate use.

Client Benefit

TATA Communication’s HR Director, Fionnula Bentley said ‘The offices we finally settled on are fantastic value for money and provide an ideal environment for our employees.”

23-College-Hill_photo-04

Objective

Dominion Corporate Services Limited wished to exit its offices in 23 College Hill, EC4 and so in March 2013 appointed McCalmont-Woods to manage the disposal of its 6th floor lease which still had 5 years to run to March 2018, subject to a 3 year tenant’s break option. The £55.00 per sq ft rent passing was subject to a rent review in April 2013.

Services Provided

McCalmont-Woods devised and implemented a marketing campaign aimed at occupiers interested in the opportunity to benefit from the flexible lease term available and also the potential significant capex savings that would result from being able to re-use Dominion’s existing high quality office fit-out. In addition McCalmont-Woods formulated a strategy for negotiating the upward only rent review against Dominion’s immediate landlord in order that the outstanding lease event would not impinge on Dominion’s ability to dispose of its surplus lease.

Result

McCalmont-Woods succeeded in identifying a US based investment bank to take an assignment of Dominion’s lease within four weeks from commencement of formal marketing.

Client Benefit

Dominion achieved c.80% lease cost savings and was also able to recoup seven months rent deposit on completion of the lease assignment.

fishlens

Objective

Abbey Offices was keen to expand its network of business centres across central London by opening a new prestigious facility located in the City core.

Services Provided

In June 2008 McCalmont-Woods identified and introduced 30 St.Mary Axe, EC3 to Abbey Business Centres Ltd where Swiss Re had taken the decision to release 17,000 sq ft of fitted-out space within the iconic ‘Gherkin’ building. The accommodation was situated on the 15th floor, the highest floor occupied by Swiss Re, with commanding views over the City of London and across to the West End and Canary Wharf.

Result

Whereas Swiss Re had initially been seeking to let its surplus offices on a traditional lease at a quoting rent of £62.50 per sq ft, McCalmont-Woods was able to convince the swiss insurer to enter into an Operator Management Agreement with Abbey Offices instead and after twelve months exhaustive negotiations, Abbey opened its new City business centre in June 2009.

Client Benefit

The innovative structure of the OMA required the creation of a detailed financial model allowing both parties to benchmark future operating success.

disposal

Objective

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.

 

Services Provided

  • Inspection of all relevant properties and supporting lease documents
  • Preparation of initial high-level report outlining the likelihood and cost of disposal
  • Production of bespoke marketing reports for each individual property containing a analysis of the best method of disposal, route to market and likely timetable to exit
  • Marketing action plan comprising indicative strategy, budget and methodology
  • Generation of DCFs to support the business case for disposal

 

Result

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.

Background

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.

 

Objective

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.

 

Services Provided

  • Consideration of existing lease contract and provisions for rent review
  • Analysis of City offices market encompassing thorough study of any relevant comparable evidence as at the valuation date
  • Preparation of initial report to client outlining McCalmont-Woods’ recommended strategy
  • Inspection of suitable premises and relevant comparables>
  • Negotiations with landlord’s agent to include submission of a ‘Calderbank’ offer

 

Result

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.

canada-square

Objective

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.

 

Services Provided

An initial strategy paper was prepared for SunGard that addressed:

  • an overview of its central London portfolio
  • the opportunities for the acquisition of new space within the determined timescale
  • the disposition of existing leased space
  • the restructuring of existing lease liabilities on its core property holdings
  • provision of dilapidations and reinstatement advice
  • advice on forthcoming lease events, e.g. rent reviews, that might impact upon the disposition of existing offices

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:

  • formulation of accommodation strategy and occupational brief
  • research into size, suitability and timing of available premises in both The City and Canary Wharf
  • arranging site inspections and presentations with potential landlords
  • drafting of RFPs and generation of DCF appraisals to illustrate total occupational costs for each shortlisted option
  • twin-track negotiation to leverage best market terms
  • advice on building specification and impact on reinstatement at lease termination
  • advice on future expansion and determination options
  • advice on level of tenant incentives
  • advice on turnkey solutions for fitting out the premises
  • advice on drafting of alienation provisions
  • drafting and negotiation of heads of terms

 

Result

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.

jp-morgan

Background

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.

 

Objective

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.

 

Services provided

  • Consideration of existing lease contract and provisions for rent review
  • Comprehensive research into, and analysis of, comparable evidence in the Docklands offices sub-market as at the valuation date
  • Preparation of initial report to client outlining McCalmont-Woods’ recommended strategy
  • Negotiations with landlord’s agent to include submission of a ‘Calderbank’ offer
  • Preparation of Statement of Agreed Facts and Statement of Agreed Evidence as a prelude to a full Arbitration

 

Result

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.