11 Westferry Circus

London E14 4HE

Overview

  • 11 Westferry Circus offers a unique opportunity to acquire a high quality, prominent investment in Canary Wharf.
  • Located on the globally iconic Canary Wharf Estate in Central London, benefitting from excellent transport connectivity that will be enhanced by the delivery of Crossrail in 2018.
  • Virtual freehold interest with 999 years unexpired and a head rent of £100 per annum.
  • Substantial corner site totalling approximately 0.42 acres (0.17 hectares).
  • 145,465 sq ft of office, retail and ancillary accommodation, arranged over basement levels, ground and nine upper floors.
  • Highly specified, flexible floor plates of between 2,977 sq ft and 16,980 sq ft, with the top floor benefitting from a 3,462 sq ft terrace, providing outstanding views over the River Thames.
  • The property was substantially refurbished in 2012, with the fourth and fifth floors subsequently refurbished in 2017.
  • Let to a diverse selection of office tenants including the Secretary of State for Communities and Local Government (The Ministry of Housing, Communities and Local Government) and Clearstream Banking.
  • Total gross passing rent of £4,809,162 per annum, which equates to only £33.06 per sq ft overall. This compares favourably with current prime headline rents at Canary Wharf of circa £45.00 per sq ft.
  • WAULT of 7.2 years to lease expiries and 6.3 years to breaks.
  • Offers are invited in excess of £86,200,000 (Eighty-Six Million, Two Hundred Thousand Pounds), subject to contract and exclusive of VAT, for our client's virtual freehold interest in 11 Westferry Circus.
  • This represents an attractive net initial yield of 5.48% and a low capital value of £593 per sq ft, assuming acquisition costs of 1.80% through the purchase of the Luxembourg SARL.

Location

Canary Wharf is one of Europe's most established office locations with a diverse occupier mix, coupled with a world-class retail offering.

OVERVIEW

The Canary Wharf business district extends to over 16 million sq ft of highly-specified office, retail and leisure accommodation. Encompassing over 30 acres of landscaped parks and open spaces, the landmark Estate spans a substantial area of 97 acres (39 hectares).

Designed by some of the world's leading architects including Skidmore, Owings & Merrill, Kohn Pedersen Fox, Pelli Clarke Pelli and Foster + Partners, the development of Canary Wharf commenced in 1990.
The Estate combines office buildings of the highest specification with enviable transport links, attracting high profile occupiers including Thomson Reuters, KPMG, Moodys, Barclays, IBM, E&Y, JP Morgan, Societe Generale, Boston Consulting Group and Time Inc.

RETAIL

Canary Wharf's occupiers and visitors benefit from a vibrant retail and leisure offering. Boasting the third largest covered retail provision within Central and Greater London, the Estate provides approximately 1 million sq ft of retail accommodation within four retail malls. The retail malls at Canada Place and Jubilee Place include a wide variety of leading retail brands including Montblanc, Tiffany & Co, Aquascutum, Hackett, Ted Baker, Levis, Hugo Boss and The White Company.

The newly completed Crossrail Place station has also introduced an additional 115,000 sq ft of new retail and leisure amenity. This has particularly enhanced the restaurant and leisure offering on the Estate, with Chai Ki, Roka, Franco Manca, Sticks n Sushi and Big Easy all within Crossrail Place, along with an Everyman theatre.

Situation

11 Westferry Circus benefits from outstanding connectivity including Crossrail services from 2018.

11 Westferry Circus benefits from world class connectivity to London's transport network and beyond. Situated within easy reach of the Jubilee Line Underground station, Docklands Light Railway, Thames Clipper River Services, City Airport, numerous bus routes and the imminent opening of Crossrail, the property has access to a flexible and resilient transport infrastructure, which is unrivalled elsewhere in London.

Further information is available in the marketing particulars.

Description

11 Westferry Circus is a striking office building with stunning views across the River Thames, providing 145,465 sq ft of office, retail and ancillary accommodation arranged over basement levels, ground and nine upper floors.

11 Westferry Circus was designed by architects Koetter, Kim & Associates and developed by Olympia & York. The building comprises 130,643 sq ft of office accommodation and 14,822 sq ft of retail and ancillary space arranged over two basement levels, ground and nine upper floors. The building incorporates an attractive curved facade overlooking Westferry Circus and West India Avenue, with a covered ground floor colonnade.

The building is accessed from the front entrance facing West India Avenue via an impressive 2,101 sq ft reception, along with two alternative entrances to the building, providing access from Columbus Courtyard and Westferry Circus, which are exclusively used by The Secretary of State for Communities & Local Government. The offices benefit from flexible and easily divisible floor plates that range between 12,641 sq ft to 16,980 sq ft. The ninth floor is set back, with an area of 2,977 sq ft and an impressive 3,462 sq ft external terrace offering stunning, uninterrupted views over the River Thames and across Central London.

The building underwent a substantial refurbishment in 2012, with works including the replacement of plant and M&E services, the mechanical refurbishment of the lifts with new destination controls and the remodelling and modernisation of the office reception. In 2017 the fourth and fifth floors were also refurbished to a modern Category A specification, with the addition of new WCs and contemporary lift lobbies.

At basement levels there is car parking, bicycle storage and 10 showers.

Specification

11 Westferry Circus benefits from the following high specification:
  • Typical finished floor-to-ceiling height of 2.75 metres
  • Fully accessible raised floors with an overall void of 150 mm
  • Powder-coated perforated metal tile suspended ceilings, with LG7 lighting
  • Two pipe fan coil air conditioning system
  • 1.5 metre planning grid
  • Male, female and disabled WCs on each floor, with additional on-floor shower facilities
  • Four 21 person (1,600 kg) passenger lifts located in the main core serving all floors
  • Car parking, bicycle storage and 10 showers located at basement level


Tenure

11 Westferry Circus is held as a virtual freehold by way of a long leasehold interest from Canary Wharf Investments Limited, under title number EGL345037.

The long leasehold is for a term of 1,030 years and 8 days from 17th July 1987, expiring on 25th July 3017 (999 years remaining) at a fixed ground rent of £100 per annum.

Tenancy

11 Westferry Circus is multi-let to four office tenants and two retail tenants, producing a gross passing rental income of £4,809,162 per annum, which equates to a low overall average rent of £33.06 per sq ft.

The current contracted office passing rent of £2,725,260 per annum equates to a highly reversionary £30.49 per sq ft, which is only c. 55% of the prime headline rents at Canary Wharf.

The property has a Weighted Average Unexpired Lease Term (WAULT) of 7.2 years to lease expiries and 6.3 years to breaks.

The fifth floor is currently under offer at a rent of £37.50 per sq ft. The vendor proposes to provide a 21 month rental guarantee in respect of the remaining vacant fourth floor at a rent of £39.50 per sq ft and the vacant part third floor at a rent of £37.50 per sq ft.


Covenant Information

CLEARSTREAM BANKING

36% OF TOTAL CONTRACTED RENTAL INCOME
Clearstream is a leading European supplier of post-trading services. The wholly owned subsidiary of Deutsche Börse ensures that cash and securities are promptly and effectively delivered between trading parties. It also manages, safekeeps and administers the securities that it holds on behalf of its customers. Over 300,000 domestic and internationally traded bonds, equities and investment funds are currently deposited in Clearstream.

Clearstream maintains relationships with around 2,500 customers in over 110 countries. Its global network extends across 56 domestic markets. Clearstream International was formed in January 2000 through the merger of Cedel International and Deutsche Börse Clearing. The full integration of Clearstream was completed in July 2002.

Clearstream Banking recorded a net profit for the financial year 2017 of 194 million (an increase of 13% on the previous year) and deposited securities of 7.4 billion. A guarantee is in place from Clearstream International.

CONTEXT INFORMATION SECURITY LIMITED

15% OF TOTAL CONTRACTED RENTAL INCOME
Context Information Security Limited is a leading cyber security consultancy, which was founded in 1998 and supports businesses and organisations to meet their ever evolving information security challenges in dealing with cyber threats. Context is independently operated with FTSE 250 backing.

A guarantee is in place from Babcock Integrated Technology Limited. Babcock Integrated Technology Limited has a Dun & Bradstreet financial strength indicator of 4A 1.

TAG RESTAURANT HOLDINGS

9% OF TOTAL CONTRACTED RENTAL INCOME
TAG Restaurant Holdings Limited currently has three sites across London, one site in Birmingham and two international outposts in Istanbul and Dubai. The London locations include Chelsea, which opened in November 2006, followed by Canary Wharf and a bar at HMS Belfast.

TAG Restaurant Holdings Limited has a Dun & Bradstreet financial strength indicator of N4.

JLL

3% OF TOTAL CONTRACTED RENTAL INCOME
Jones Lang LaSalle Limited (JLL) is a professional services and investment management firm offering real estate services. JLL has more than 200 corporate offices operating in 80 countries worldwide. The company has more than 53,000 employees.

JLL has a Dun & Bradstreet financial strength indicator of 5A 1.

SECRETARY OF STATE FOR COMMUNITIES AND LOCAL GOVERNMENT

32% OF TOTAL CONTRACTED RENTAL INCOME
The Secretary of State for Communities and Local Government (now known as The Ministry of Housing, Communities and Local Government) is a major government department, who are responsible for creating places for people to live and work, and to devolve power to local communities.

A UK government department provides an undoubted covenant

KAS BANK N.V.

4% OF TOTAL CONTRACTED RENTAL INCOME
KAS Bank N.V. is a specialist European Custodian and Fund Administrator with offices in London, Frankfurt and Amsterdam. Founded in 1806 in The Netherlands, they have over 200 years experience of servicing clients. KAS Bank N.V. specialises in delivering securities services.

For financial year 2017, KAS Bank posted a turnover of 104.6 million and a net profit of 15.1 million.

CANARY WHARF MANAGEMENT LIMITED

1% OF TOTAL CONTRACTED RENTAL INCOME
Canary Wharf Management Limited undertakes management across the 97 acre estate of Canary Wharf Group Plc.

Canary Wharf Management Limited has a Dun & Bradstreet financial strength indicator of 2A 1.

VAT

The property is elected for VAT.

Asset Management Initiatives

  • Undertake 2018-2020 rent reviews
  • Lease the vacant fourth floor and part third floor at market rents
  • Office passing rent of only £30.49 per sq ft is highly reversionary and substantially below the prime Canary Wharf rent of circa £45.00 per sq ft
  • Potential to update on-floor lift lobbies and WCs at lease expiries / breaks to match the fourth and fifth floors

Additional Information

PLANNING
11 Westferry Circus falls within the jurisdiction of Tower Hamlets Council. The property is not situated within a Conservation Area. The property is however in close proximity to the West India Dock and Narrow Street Conservation Areas, which are located to the north and north-west of the building respectively. The property is not listed nor are there any Listed Buildings in the vicinity.

ENVIRONMENTAL PERFORMANCE
The property has an EPC rating of D (98) and has been certified as BREEAM Very Good.

CAPITAL ALLOWANCES
It is anticipated that any capital allowances may be available to qualifying parties. Further details of these, if applicable, are available in the online data room.

DATA ROOM
Access to an online data room containing further information is available on request.

Proposal

  • Offers are invited in excess of £86,200,000 (Eighty-Six Million, Two Hundred Thousand Pounds), subject to contract and exclusive of VAT, for our client's virtual freehold interest in 11 Westferry Circus.
  • This represents an attractive net initial yield of 5.48% and a low capital value of £593 per sq ft, assuming acquisition costs of 1.80% through the purchase of the Luxembourg SARL.
  • 11 Westferry Circus is part of the Amundi Collection of eight UK properties located in London, Glasgow and Cardiff. These assets are available individually or as a portfolio.
  • Full details can be found at www.amundicollection.com

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NET INITIAL YIELD:
5.48%
PRICE:
£86,200,000
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