TIDMDLN
RNS Number : 5754E
Derwent London PLC
11 February 2015
11 February 2015
Derwent London plc ("Derwent London" / "the Group")
DERWENT LONDON AGREES PROPERTY SWAP TO BOOST FARRINGDON EXPOSURE
AND FORMS WHITECHAPEL JOINT VENTURE
Derwent London plc has exchanged contracts with LaSalle
Investment Management ("LaSalle"), to acquire a minimum 175-year
long leasehold of 20 Farringdon Road, Clerkenwell EC1 in London's
Tech Belt.
In return Derwent London will dispose of two properties: 22
Kingsway WC2 and Mark Square House EC2, and a 50% interest in a new
joint venture at 9 and 16 Prescot Street E1 to LaSalle. The price
of the acquisition is GBP88.0m before costs, and the combined
disposal proceeds are GBP115.3m. Derwent London will receive the
balance of GBP27.3m in cash before costs.
20 Farringdon Road is a prominent corner property, adjacent to
the site of the new Farringdon Crossrail station and opposite 19
Charterhouse Street EC1, which the Group acquired in November 2013.
The six-storey property totals 170,600 sq ft comprising 141,400 sq
ft of offices, 5,700 sq ft ancillary space, 1,200 sq ft retail, and
a 22,300 sq ft gym. The passing rent is GBP3.6m per annum or
GBP3.2m per annum net of the 10% ground rent. The ground floor
offices (26,200 sq ft) are let at a peppercorn with a break in
December 2015. The average rent on the other office floors is
c.GBP27 per sq ft with leases expiring between 2015 and 2022. The
net initial yield is 3.4%, which reflects a capital value of GBP545
per sq ft after costs.
The acquisition has significant near term potential to raise the
rental income, as well as representing a substantial development
opportunity in the medium term.
The two outright disposals of 22 Kingsway WC2 (91,400 sq ft) and
Mark Square House EC2 (61,700 sq ft) will raise GBP96.6m before
costs, which is a10% uplift on December 2013 values. It also
represents a premium to June 2014 values. The combined rent was
GBP4.5m per annum, which represents a net initial yield to the
purchaser of 4.4% (or a capital value of GBP670 per sq ft).
In addition both partners will take a 50% share in a joint
venture being established to hold 9 and16 Prescot Street E1. These
two properties have been sold to the joint venture for GBP37.4m
which represents a net initial yield to the purchaser of 4.9% or
GBP370 per sq ft. In the short term these properties are income
producing, but longer term there are redevelopment opportunities
across the whole site.
9 Prescot Street is a 98,500 sq ft office building, which
following recent management activity is let to two tenants. Barts
Health NHS Trust occupies the lower five floors, comprising 60,000
sq ft, on a five-year lease for a rent inclusive of service charge
of GBP1.5m pa. The Co-operative Bank ("Co-op"), whose lease over
the whole building was due to expire this year, now lease the top
three floors. In total the Co-op occupy 36,600 sq ft, where the
lease will break later this year. The joint venture intends to
refurbish this space once it becomes available.
16 Prescot Street is an 8,800 sq ft restaurant let at GBP9 per
sq ft. The lease expires in 2021.
John Burns, Chief Executive Officer, commented:
"We are pleased to have secured a major potential project
adjacent to the site of Farringdon Crossrail station in the heart
of Clerkenwell, an area where we already have substantial
interests. In return we have sold two smaller properties, and have
established a joint venture in Whitechapel. Both Clerkenwell and
Whitechapel are being transformed by the impact of Crossrail and
creative industry occupiers, and we look forward to working with
our new partner, LaSalle Investment Management, to maximise these
opportunities."
For further information, please contact:
Derwent London John Burns, Chief Executive Officer
Tel: +44 (0)20 7659 3000 David Silverman, Director
Quentin Freeman, Head of Investor
Relations
Brunswick Group Simon Sporborg
Tel: +44 (0)20 7404 5959 Nina Coad
Notes to editors
Derwent London plc
Derwent London plc owns a portfolio of commercial real estate
predominantly in central London valued at GBP3.7 billion as at 30
June 2014, making it the largest London-focused real estate
investment trust (REIT).
Our experienced team has a long track record of creating value
throughout the property cycle by regenerating our buildings via
development or refurbishment, effective asset management and
capital recycling.
We typically acquire central London properties off-market with
low capital values and modest rents in improving locations, most of
which are either in the West End or the Tech Belt. We capitalise on
the unique qualities of each of our properties - taking a fresh
approach to the regeneration of every building with a focus on
anticipating tenant requirements and an emphasis on design.
Reflecting and supporting our long-term success, the business
has a strong balance sheet with modest leverage, a robust income
stream and flexible financing.
Landmark schemes in our portfolio of 5.7 million sq ft as at 30
June 2014 include Angel Building EC1, The Buckley Building EC1,
White Collar Factory EC1, 1-2 Stephen Street W1, Horseferry House
SW1 and Tea Building E1.
In December 2014 Derwent London topped the real estate sector
for the fifth year in a row and was placed ninth overall in the
Management Today awards for 'Britain's Most Admired Companies'.
Also in 2014 the Group won the Property Week 'Developer of the
Year' and the RICS London Commercial Award, and was shortlisted for
awards by Architects' Journal, BCO, NLA and OAS. The Group was also
awarded EPRA Gold for corporate and sustainability reporting.
For further information see www.derwentlondon.com or follow us
on Twitter at @derwentlondon
Forward-looking statements
This document contains certain forward-looking statements about
the future outlook of Derwent London. By their nature, any
statements about future outlook involve risk and uncertainty
because they relate to events and depend on circumstances that may
or may not occur in the future. Actual results, performance or
outcomes may differ materially from any results, performance or
outcomes expressed or implied by such forward-looking
statements.
No representation or warranty is given in relation to any
forward-looking statements made by Derwent London, including as to
their completeness or accuracy. Derwent London does not undertake
to update any forward-looking statements whether as a result of new
information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast.
This information is provided by RNS
The company news service from the London Stock Exchange
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