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.

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.

Background

JP Morgan Cazenove occupied 16,000 sq ft on the 3rd floor at 1 Exchange Tower, E14 under two separate leases expiring in March 2015.
The 16 storey office tower at 1 & 2 Harbour Exchange was acquired by Hammerson in 1999 for £77m but then sold in September 2010 to MGPA Europe Fund III for £134.6m – an 8.1% yield. The building comprised 485,000 sq ft office space let to a range of tenants.
The new landlord, MGP Harbour Exchange II S.a.r.l.had sought to increase the annual rent at review from £21.00 per sq ft passing to a new and highly optimistic headline rent of £32.50 per sq ft.

 

Objective

McCalmont-Woods was instructed by JP Morgan Cazenove to negotiate the upward only rent review on its behalf 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 successfully negotiated a saving of almost £1 million for JP Morgan Cazenove over the 5 year term remaining on the tenant’s lease.