52-54 LIME STREET 27 LEADENHALL STREET LONDON A PRIME FREEHOLD ACTIVE MANAGEMENT OPPORTUNITY ADJACENT TO LLOYD S OF LONDON EC3

Transcription

1 52-54 LIME STREET EC3 LONDON 27 LEADENHALL STREET A PRIME FREEHOLD ACTIVE MANAGEMENT OPPORTUNITY ADJACENT TO LLOYD S OF LONDON

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3 2/3 Investment Summary Prime location in the heart of the City of London s insurance district at the junction of Leadenhall Street and Lime Street, the premier location in EC3 Opposite Lloyd s of London and within 300 metres of the London Underwriting Centre Two freehold office buildings on a site of circa 20,000 sq ft (0.46 acres) Significant and immediate active management potential including redevelopment and refurbishment opportunities Vacant possession of the majority of both buildings achievable within the next 12 months Total passing rent of 783,097 per annum reflecting a low passing rent of per sq ft ( 206 per sq m) on let office accommodation Includes 53,862 sq ft (5,004 sq m) of vacant accommodation Total area of 98,148 sq ft (9,118 sq m) Offers are invited for the freehold interests in both buildings

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6 Location Lime Street and 27 Leadenhall Street are located at the heart of the City of London s famous insurance district. The properties occupy a highly prominent corner position at the junction of Lime Street and Leadenhall Street, two of London s oldest streets with a long association with the insurance industry. The properties are surrounded by a number of landmark City buildings including 51 Lime Street (The Willis Building) immediately to the rear, The Lloyd s Building and The Aviva Tower (both directly opposite) and 30 St Mary Axe (Swiss Re) only 100 metres away. The immediate locality accommodates the majority of London s existing and proposed tower developments within the City of London s Tower Cluster zone. Local amenities are excellent with the historic Leadenhall Market located less than 150 metres away which is home to numerous daily market stalls, wine bars, restaurants and cafés.

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8 Communications Lime Street and 27 Leadenhall Street benefit from a core location at the centre of the City of London transport network. Excellent transport links are within close walking distance including the following: Rail & Underground Fenchurch Street (315m) Mainline rail services to Essex & East Anglia Monument (385m) Circle and District underground lines Bank (360m) Central, Northern, Waterloo & City underground lines and Docklands Light Railway services to Canary Wharf and Stratford Liverpool Street (425m) Mainline rail services to Essex, Cambridgeshire and East Anglia. Direct services to Stansted Airport. Central, Circle, Metropolitan and Hammersmith & City underground lines Aldgate (350m) Metropolitan and Circle underground lines Bus Aldgate Bus Station lies some 350 metres to the east of the property providing regular services throughout the City, the West End and numerous commuter routes. Air The properties benefit from excellent links to City (20 minutes), Gatwick (45 minutes), Stansted (50 minutes) and Heathrow (55 minutes) Airports. Bicycle There is a TFL bicycle docking station on St Mary Axe, less than two minutes walk from the building.

9 8/9 Not to scale. Indicative only. Financial Professional, Corporate & Other Insurance 1 Henderson 2 ICAP 3 Deutsche Bank 4 HBOS 5 Royal Bank of Scotland 6 KBC 7 UBS 8 Credit Suisse 9 Financial Services Authority 10 Société Générale 11 Gartmore 12 Baird Capital Partners 13 Barclays 14 VTB 15 NM Rothschild 16 Daiwa Securities 17 Bank of China 18 BlackRock 19 ING 1 White & Case 2 Debevoise & Plimpton 3 Arnold & Porter 4 McDermott Will & Emery 5 Hammonds 6 Kennedys 7 Dewey & LeBoeuf 8 Accenture 9 Clyde & Co 10 Maersk Line 11 Trowers & Hamlins 12 Baker Botts 13 Bingham McCutchen 14 K&L Gates 15 Beachcroft 1 Benfield Group 2 Royal & Sun Alliance 3 Hiscox 4 Aviva 5 Equitas 6 Swiss Re 7 Lockton 8 Arthur J Gallagher 9 Thomas Miller 10 Ace 11 Tower Gate Underwriting 12 Jardine Lloyd Thompson 13 Catlin 14 Willis 15 Chubb Insurance 16 BMS Group 17 XL Re 18 AIG 19 Lloyd s Register 20 Aldgate Insurance 21 Munich Re 22 QBE 23 Aspen Insurance 24 Miller Insurance 25 General Re 26 Groupama Insurances 27 Leslie & Godwin Insurance 28 Allianz 29 Aon 30 Tokio Marine

10 Dewey & LeBoeuf Jardine Lloyd Thompson AIG Lloyd s Register of Shipping London Metals Exchange QBE Swiss Re Clyde & Co Lockton

11 10/11 Munich Re Accenture Royal Sun Alliance Allianz XL Re Willis Insurance Lloyd s of London RSA Tokio Marine Deutsche Bank Aviva Hiscox Tower 42

12 Description Lime Street The prime freehold site comprises two adjacent buildings, Lime Street (including Leadenhall Street) and 27 Leadenhall Street (also known as Baltic House) Lime Street is arranged over basement, ground and seven upper floors providing a total of 44,286 sq ft (4,114 sq m) of office, storage and ancillary accommodation, originally developed by Prudential Assurance in 1953 and last refurbished in the 1990s. The building is of concrete frame construction clad with Portland Stone. The building benefits from a prominent corner position fronting both Lime Street and Leadenhall Street. The office element is let to a variety of mainly insurance sector tenants, providing 32,942 sq ft (2,888 sq m) of office, storage and ancillary accommodation over regular floor plates of between 3,073 sq ft (285 sq m) and 5,946 sq ft (552 sq m). The offices benefit from excellent natural light with a lightwell to the rear of the building from the first floor upwards. There is a dedicated, manned reception fronting Lime Street serving the upper floors. At ground floor level there is a 4,695 sq ft (436 sq m) banking hall and a 650 sq ft (60 sq m) retail unit. The basement provides a wine bar extending to 4,712 sq ft (438 sq m). There is vehicular access with a lorry turntable at ground floor servicing the retail tenants.

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14 Description 27 Leadenhall Street 27 Leadenhall Street was reclad with a plain stone façade in circa 1950 and comprises an attractive, self contained office building designed by Ley, Colbeck & Partners. The reception and main lobby was comprehensively refurbished in 1985 by Rolfe Judd and the outgoing tenant, Allianz, has since remodelled and rebranded the entrance area. The building provides 53,862 sq ft (5,004 sq m) across basement, ground and six upper floors in readily divisible floor plates of between 3,191 sq ft (297 sq m) and 7,434 sq ft (691 sq m). Six lightwells bring good natural light throughout all floors. Vacant possession of the whole of 27 Leadenhall Street can be obtained through the termination of a short term licence under which Allianz temporarily occupy a small area on the ground floor.

15 14/15 Specification Both Lime Street and 27 Leadenhall Street provide good quality office accommodation with the following specification: Raised floors Suspended ceilings 2 x 8 person passenger lifts in each building Category II lighting Wall mounted storage heaters Comfort cooling Double glazed metal framed windows Male & Female toilets on all office floors

16 TOWER 42 Completed ,000 sq ft 42 storeys THE PINNACLE Completion due ,415,000 sq ft 63 storeys 122 LEADENHALL STREET Completion due ,000 sq ft 46 storeys AVIVA TOWER Completed ,000 sq ft 23 storeys WILLIS BUILDING Completed ,000 sq ft 26 storeys

17 16/17 HERON TOWER Completion due ,000 sq ft 46 storeys 30 ST MARY AXE Completed ,000 sq ft 40 storeys 100 BISHOPSGATE Approved 785,000 sq ft 40 storeys 6 BEVIS MARKS Proposed 16,000 sq ft 15 storeys ST BOTOLPHS Completed ,000 sq ft 13 storeys

18 Accommodation Both Lime Street and 27 Leadenhall Street have been measured in accordance with the RICS Code of Measuring Practice (6th Edition) and warranted surveys will be available to the purchaser Lime Street provides the following Net Internal Areas as measured by Michael Gallie & Partners in November Lime Street Floor Use Area Sq ft Sq m 7th Offices 3, th Offices 4, th Offices 4, th Offices 4, rd Offices 4, nd Offices 5, st Offices / Storage 5, Ground Bank / Retail 5, Basement Retail / Storage 5, Totals 44,286 4, Leadenhall Street provides the following Net Internal Areas as measured by MSA in November Leadenhall Street Floor Use Area Sq ft Sq m 6th Offices 3, th Offices 4, th Offices 4, rd Offices 6, nd Offices 7, st Offices 7, Upper Mezzanine Offices 3, Ground Offices 3, Lower Mezzanine Offices 3, Lower Ground Offices 7, Basement Storage 2, Totals 53,862 5,003.9 The total combined Net Internal Area of both Leadenhall Street and 27 Lime Street is 98,148 sq ft (9,118 sq m) comprising 86,804 sq ft (8,064 sq m) of office and storage accommodation and 11,344 sq ft (1,054 sq m) of retail.

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20 Floor Plans Lime Street Ground floor EAT BALLS BROTHERS RECEPTION Not to scale. Indicative only Lime Street Typical upper floor Not to scale. Indicative only.

21 20/21 27 Leadenhall Street Ground floor, reception and upper mezzanine 27 Leadenhall Street Typical upper floor Reception Not to scale. Indicative only. Not to scale. Indicative only.

22 Site Area The properties occupy an extensive, prime freehold site extending to circa 20,031 sq ft (0.46 acres). This comprises an area of 9,908 sq ft (0.228 acres) for Lime Street and 10,123 sq ft (0.232 acres) for 27 Leadenhall Street. Tenure Both Lime Street and 27 Leadenhall Street are held freehold. This plan is based upon the Ordnance Survey Map with the sanction of the controller of H.M Stationary Office. Crown copyright reserved. For indicative purposes only not to scale. 3D model of buildings 27 Leadenhall Street Lime Street 27 Leadenhall Street Lime Street Level EC3 RBS

23 22/23 View looking north along Lime Street

24 Tenancies Lime Street is currently producing a total rent of 783,097 per annum. The office element of Lime Street produces 595,703 per annum reflecting, on average, a rent of per sq ft ( 206 per sq m). The office uppers are multi-let in accordance with the tenancy schedule below. The banking hall at Lime Street is let to Royal Bank of Scotland plc. The previous lease expired in June 2009; the tenant is currently holding over. Further details are available in the dataroom. Tenant Demise Use Net Demised Area (sq ft)* Lease start Expiry Rent (per annum) North Star Underwriting Ltd 7th Floor Office 3, Jul Mar-11 87, ,3 Cornhill Asset Management Ltd 6th Floor Office 4, Jun Mar-11 79, Prime Professions (UK) Ltd 5th Floor Office 4,799 9-Jun Mar-11 77, ,3 Paul Ridley Ltd Part 4th Floor Office Jun Mar-11 15, Blackmore Borley Ltd Part 4th Floor Office 3, Jul Mar-11 67, LEBC Group Ltd Part 3rd Floor Office 1, Jul Mar-11 24, Norman Butchers & Jones Ltd Part 3rd Floor Office 2, Mar Mar-11 53, Equus Independent Financial 2nd Floor Office 5, Mar Mar-11 89, Management Presnow LLP 1st Floor Office 5, Feb Mar , Vacant 1st Floor storage Storage 48 The Royal Bank of Scotland plc Level EC3 Ltd Ground Floor Banking Hall Basement Part Bsmt, part Ground & part 1st Floor Banking Hall Storage GF Retail Unit LG Restaurant 4,695 1, ,712 Rent ( /psf) Notes 24-Jun Jun , Sep Sep ,6 Energis Communications Ltd Basement Storeroom Storage Sep-03 2,000 4 London Electricity plc Basement Transformer Chamber Sub-station 25-Dec Dec Total 42,509* 783,097 * - Net Internal Area as demised in the lease plan; there is an increase in Net Internal Area if the building is not multi-let 1 - The lease does not provide for the recovery of service charge, there is a shortfall of 2,250 per annum. 2 - There is a schedule of condition appended to the lease. 3 - A service charge cap is in place which increases in line with RPI. A schedule of service charge caps is available from the Jones Lang LaSalle website. 4 - Tenancy at Will 5 - Rent psf reflects half rent on basement accommodation 6 - Sublet to Balls Bros (in administration) who in turn sub-let part to EAT Ltd

25 24/25 Part of the ground floor and basement, including a first floor plant room, are let on a long lease to Level EC3 Limited. The lease is for a term of 99 years from 29th September 1956, expiring 29th September 2055 at a rent of 394 per annum with no provision for review or recovery of service charge for this demise. Level EC3 have sub-let this accommodation to Balls Brothers (in administration) who in turn have sub-let part of the ground floor to EAT. 27 Leadenhall Street was formerly let in its entirety to Allianz Management Services Limited expiring on 24th March 2011; this lease has recently been surrendered. Allianz remain in occupation of only 88 sq ft (8.2 sq m) under a licence at nil rent. This licence is terminable by either party giving three business days notice. London Electricity plc have a lease of a basement substation for a term of 60 years from 1st May 1985, expiring 30th April 2045 at a rent of 0.05 per annum.

26 Active Management Potential Indicative massing looking south (all CGI images supplied by Kohn Pedersen Fox Associates) Both buildings present significant and immediate active management opportunities to benefit from a strong occupational market in the insurance district with limited competing supply. This sector of the market has remained resilient throughout the economic downturn and continues to gain strength as a result of substantial underlying levels of demand for high quality office accommodation from insurance occupiers Lime Street is let to nine office tenants, all with expiries in March 2011, currently paying a low average passing rent of per sq ft ( 206 per sq m). Many of these tenants have contacted the vendor indicating a willingness to renew leases, all of which are outside the security of tenure provisions of The Landlord and Tenant Act The incumbent tenant base and lease expiry profile provides purchasers with the opportunity to either renew existing leases, relocating tenants where appropriate, or to refurbish or redevelop one or both properties and deliver the properties back in to a strong leasing market at the optimal time in the cycle. It may be possible to increase the floor areas of the existing buildings by reclaiming onfloor plant rooms, infilling of light wells, reconfiguration of existing floorplates and the addition of extra floors subject to obtaining the necessary consents. Currently the onfloor plant rooms occupy an area of approximately 6,523 sq ft (606 sq m) and the lightwells occupy a total area of approximately 9,666 sq ft (898 sq m).

27 26/27 Vacant possession of 27 Leadenhall Street is achievable on short notice, as Allianz currently occupy only a small part of the premises under a short term licence determinable on three days notice. The buildings are located in the heart of the City of London s Tower Cluster. High density development is encouraged in this area under the City of London Core Strategy Policy Number Six. Additional value may be added through extensive redevelopment, subject to obtaining the necessary consents. Further information regarding Core Strategy Six and the Eastern Cluster is available from the City of London website. A link to this information is available from the Jones Lang LaSalle website or at the City of London website: A bulk and massing study has been commissioned to determine the redevelopment potential of the entire site (including the long leasehold element) by architects Kohn, Pedersen Fox Associates (KPF). This concluded that the site could support a development of up to 145,228 sq ft (13,492 sq m) net internal area and a gross internal area of 198,424 sq ft (18,434 sq m) over ground and nine upper floors reflecting an approximate 50% increase of 47,081 sq ft (4,374 sq m) on the current area. Further information regarding these studies and relevant rights to light information is available from Jones Lang LaSalle on request.

28 The EC3 Market The EC3 market has proved extremely resilient compared with other financial service sectors due to a diverse occupier base and strong covenants. Due to the service provided often being an obligatory purchase for consumers, the insurance industry survived the credit crunch relatively unscathed. TAKE-UP In the 12 months to October 2009, take up in the City stood at c.3.5 million sq ft, 12 months later this figure stands at 6.3 million sq ft, an 80% increase. RENTS Rents continue to climb with prime City rents having increased circa 20% over the past 12 months. Prime City rents are currently at to per sq ft ( 565 to 592 per sq m) although tower space is commanding rents in excess of per sq ft. With Grade A vacancy rates standing at only 3.5% and little supply coming through in the short term, further rental increases appear inevitable with many forecasters anticipating continued rental growth with prime rents forecast to reach at least per sq ft ( 726 per sq m) by City Prime Rents DEMAND There is considerable forthcoming structural demand in the area. Jones Lang LaSalle have identified approximately 2.5 million sq ft of lease events between now and Demand from insurers is focused on the core area of EC3. SUPPLY The Grade A vacancy rate in the City has fallen to 3.5% with the Eastern Grade A vacancy rate rising slightly to 4.5% as 40 Gracechurch Street and 1 Bartholomew Lane were launched. Historically the vacancy rate of the Eastern City sector is lower than that of the wider City. Overall there is a lack of large Grade A units in the Eastern City compared to other City sectors. There are very few traditional office schemes currently under construction for delivery in 2012 and beyond in the Eastern sector. The majority of the pipeline is either in the Aldgate area, or comprised in tower schemes such as 20 Fenchurch Street and The Leadenhall Building, which will have significant lead-in times. This will ultimately put further pressure on vacancy rates in the short to medium term. Recent Benchmark Letting Deals Address Date Size (Sq Ft) Tenant Rent (per sq ft) 40 Gracechurch Street, Under Offer 9,810 UPP EC3 Heron Tower, EC2 Jan-11 36,000 Landmark Plc Lime Street, EC3 Dec-10 14,402 SCOR (SE) Ltd St Mary Axe, EC3 Aug-10 11,902 ARES Heron Tower, EC2 Jul-10 25,000 McDermott Will & Emery Lime Street, EC3 Jun-10 5,563 FM Insurance Company Ltd 51.00

29 28/29 The City of London and the Insurance Market London is the global leader in the insurance market having been at the centre of the industry for over 300 years, with a number of key accolades supporting its success including the following: London is the only centre in Europe to rank amongst the top five insurance destinations in the Global Financial Centres Index (September 2010), ranking first in the overall index London is the world s largest international insurance market, with gross premium income of 24.5bn in 2008, over half of which transacted at the Lloyd s market London is the only market in which all of the world s largest insurance groups are represented London is the global market leader in marine insurance with a 17% market share in 2008 Value Added Tax Proposal We are advised that the properties have not been elected for VAT purposes. We are instructed to invite offers for the freehold interests in Lime Street and 27 Leadenhall Street.

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32 Further Information An electronic dataroom is available containing further information including a vendor due diligence package. For further information or to arrange an accompanied inspection please contact the sole agents: Jones Lang LaSalle 10 Gresham Street London EC2V 7JD Andrew Hawkins Chris Northam Peter Kirk Tom Swanson Andrew.Hawkins@eu.jll.com Chris.Northam@eu.jll.com Peter.Kirk@eu.jll.com Tom.Swanson@eu.jll.com Acting on the instructions of Misrepresentations Act 1967 & Declaration: Jones Lang LaSalle for themselves and for the vendors of this property whose agents they are give notice that: a) the particulars are set out as general outline only for the guidance of intending purchasers and do not constitute, nor constitute part of, an offer or contract; b) all descriptions, dimensions, references to condition and necessary permissions for use and occupation and other details are given in good faith and are believed to be correct, but any intending purchaser should not rely on them as statements or representations of fact but should satisfy themselves by inspection or otherwise as to the correctness of each of them; c) no person in the employment of Jones Lang LaSalle has any authority to make or give any representation or warranty whatever in relation to this property. February 2011 (Q1693)