1 King's Arms Yard

London EC2R 7AF

Overview

  • 1 King's Arms Yard is a core City of London office investment.
  • Grade A office building situated within 50 metres of the Bank of England.
  • 100% prime City of London location.
  • 56,071 sq ft of high quality office and ancillary accommodation over basement, lower ground, ground and six upper floors.
  • Rolfe Judd designed scheme, completed in 2009 with a BREEAM Very Good rating.
  • Prominent corner site with excellent natural daylight from three elevations and stunning views over the Bank of England.
  • Held long leasehold for a term expiring in 2141 with a current head rent payable of £5,000 per annum.
  • The property is securely let to eight tenants at a current gross passing rent of £2,763,197 per annum reflecting a below market rent of only £49.28 per sq ft overall. The WAULT is approximately 3.1 years to expiries.
  • Offers are invited in excess of £58,300,000 (Fifty-Eight Million, Three Hundred Thousand Pounds), subject to contract and exclusive of VAT, for our client's long leasehold interest in 1 King's Arms Yard.
  • This represents an attractive net initial yield of 4.65%and a capital value of £1,040 per sq ft, assuming acquisition costs of 1.80% through the purchase of the Luxembourg SARL.

Location

1 King's Arms Yard occupies a prime corner site on King's Arms Yard and Tokenhouse Yard of approximately 0.24 acres.

This highly desirable location is at the very heart of the City of London, just off the junction of Gresham Street, Moorgate and Lothbury. The Bank of England, in full view of the property, is only 50m to the south and Guildhall is approximately 150m to the west.

The immediate area is the favoured location for many of the City's global occupiers, including Commerzbank, Lloyds Bank, BNP Paribas, Legal & General, Standard Chartered Bank, Bank of China, Bloomberg and Investec. All of these major companies are headquartered within 500m of the property.

The immediate surrounding area and wider City core have seen a significant increase in leisure and dining provision recently, particularly with the opening of The Ned in 2017. The Ned offers a 250 bed hotel plus ten restaurants and a members club, all within the restored Grade I listed Midland Bank building on the Bank interchange, a short walk from 1 King's Arms Yard.

Situation

Due to the exceptional core City location of the property, it benefits from being within a 10 minute walk of seven major stations, providing connectivity to the London Underground, National Rail and Crossrail (Elizabeth Line) network amongst others.

Bank station, one of the key transport hubs in the City of London, provides access to three London Underground lines and the DLR, with services to the north, south, east and west of the capital as well as direct to London Waterloo. Bank is currently undergoing major infrastructure improvements, due for completion in 2022, which will result in a 40% increase in passenger capacity.

Moorgate station, another key transport node, provides London Underground access to four lines and National Rail services. It will also allow access to the Elizabeth Line (Crossrail) later this year when services become operational. Crossrail is set to revolutionise transport across Central London, and the proximity of this service to the property is a major asset.

Description

Newly developed in 2009 by Ardstone Capital and designed by renowned architect Rolfe Judd.

1 King's Arms Yard provides approximately 56,000 sq ft of high quality Grade A office and ancillary accommodation arranged over basement, lower ground, ground and six upper floors.

Floor plates are regular and range from approximately 3,500 sq ft 7,500 sq ft with only a single line of columns making them suitable for both open plan and cellular use. The floors benefit from excellent natural light with windows on three elevations, providing stunning views over the Bank of England. The 6th floor benefits from a large rooftop terrace. Secure bicycle storage and shower facilities are located in the basement.

Specification

1 Kings Arms Yard benefits from the following high quality specification:
  • 2.65m typical floor to ceiling heights, with 3.05m on the ground floor
  • Steel frame construction with composite concrete floors and a Portland Stone façade
  • 1 person per 10 sq m occupancy ratio
  • 3 x 13-person passenger lifts and 1 x 8-person fire lift
  • 1.5m planning grid and 7.5m structural grid
  • Fully accessible 600mm x 600mm tile raised floor system with 150mm void, with 100mm to 6th floor
  • Predominantly perforated metal tile suspended ceilings with 1200mm x 300mm planks with integrated lighting
  • Large roof terrace on 6th floor
  • Four-pipe fan coil air conditioning system
  • Male, female and disabled WCs on all floors
  • Cycle storage, changing and shower facilities at basement and further shower on 6th floor

Accommodation

The property has been measured by Plowman Craven in accordance with the RICS Code of Measuring Practice (6th edition). A duty of care for the measured survey can be supplied. The net internal areas are as shown in the link below:


Tenure

The Property is held on a long leasehold basis from The Wardens and Commonalty of The Mystery of Mercers of the City of London. The lease is for a term of 140 years expiring in April 2141. The head rent payable is fixed at £5,000 per annum, with a fixed uplift of a further £5,000 every 25 years (next uplift due in 2026).

Tenancy

1 King's Arms Yard is multi-let to eight tenants from the financial and professional services sector. The offices are fully let, with only two small units at basement level currently unoccupied (accounting for less than 1% of the income for the asset).

The total gross passing rent is £2,763,197 per annum, including top-ups, which equates to an overall rent of £49.28 per sq ft, an attractive level in a market where prime rental levels are currently in excess of £65.00 per sq ft.

The property provides medium term income with a weighted average unexpired lease term (WAULT) of approximately 3.1 years to expiries.

There is a rent review on the fifth floor (31 May 2018) which is currently passing off a low rent of £47.08 per sq ft. Recent reviews in the building have settled at net effective rents from c.£57.00 to £58.00 per sq ft suggesting an uplift on this floor which will enhance the level of rental income and improve the running yield.

It is proposed the vacant storage and office units at basement level will be guaranteed by the vendor at a rent of £15.00 and £20.00 per sq ft respectively for a duration of 18 months.


Covenant Information

ALBION VENTURES LLP

7% OF RENTAL INCOME
Albion Ventures LLP is a leading independent investment manager serving clients in the United Kingdom. It was founded in 1996 and invests in technology and asset based businesses. It is part of the wider Albion Group that manages funds of circa £1 billion.

Albion Ventures LLP has a Dun & Bradstreet rating of A 1, which represents a low risk of business failure.

Further information: https://www.albion.capital

SAUL TRUSTEE COMPANY

14% OF RENTAL INCOME
SAUL Trustee Company (STC) is the administrator and Trustee of SAUL, which was set up in 1976 to provide pensions for non-academic staff of the University of London. STC employs around 60 people and is responsible for the day to day operations of SAUL as well as looking after the interests of the SAUL members.

The lease is guaranteed by SAUL and has an Experian Risk Disk rating of 100/100 representing a very low risk of default and a Dun & Bradstreet rating of N 1, which represents a low risk of business failure.

Further information: http://www.saul.org.uk

UNION BANK UK PLC

12% OF RENTAL INCOME
Union Bank UK Plc is a wholly owned subsidiary of the Union Bank of Nigeria plc, one of the oldest and most revered banks in West Africa. Their UK subsidiary has been operating in London since 1983 and has acted independently as a UK bank since 2004. The bank offers a comprehensive range of banking services primarily to customers who do their business in Nigeria and West Africa.

Union Bank UK plc has an Experian Risk Disk rating of 89/100 representing a low risk of default and a Dun & Bradstreet rating of 5A 1, which represents a low risk of business failure.

Further information: https://www.unionbank.com

WILMINGTON TRUST SERVICES (LONDON) LIMITED

16% OF RENTAL INCOME
Wilmington Trust Services is a provider of international, corporate and institutional services, investment management and private banking. The firm was founded in 1903 as a banking trust and safe deposit company and in 2010 became a subsidiary of M&T Bank. The firm have been a leading provider of administrative services for some of the largest bankruptcies in US history.

Wilmington Trust has an Experian Risk Disk rating of 100/100 representing a very low risk of default and a Dun & Bradstreet rating of 3A 1, which represents a low risk of business failure.

Further information: https://www.wilmingtontrust.com/wtcom

CHECKFREE SOLUTIONS LIMITED (NOW TRADING AS FISERV)

16% OF RENTAL INCOME
CheckFree Solutions Limited was acquired by Fiserv in December 2007. Fiserv was founded in 1984 and specialises in development, distribution and service of financial software.

The firm has approximately 24,000 associates worldwide and more than 12,000 clients in over 80 countries.

Checkfree Solutions Limited has an Experian Risk Disk rating of 100/100 representing a very low risk of default and a Dun & Bradstreet rating of 4A 1, which represents a low risk of business failure.

Further information: https://www.fiserv.com

ALDER ASSET MANAGEMENT

10% OF RENTAL INCOME
Alder Asset Management manages personal investment portfolios, trusts and fund assets over several asset classes. The firm is particularly known for managing the investments of a well known extended English family; which has over 80 members as clients and shareholders.

Alder Asset Management has an Experian Risk Disk rating of 100/100 representing a very low risk of default and a Dun & Bradstreet rating of 2A 1, which represents a low risk of business failure.

Further information: http://alder-investment.co.uk

NEXANT LIMITED

16% OF RENTAL INCOME
Nexant provides software, consulting and services to utilities, energy enterprises and chemical companies, in order to enhance productivity. The company was founded in 2000 and now has a worldwide network of over 650 employees across 32 global offices spanning four continents.

Nexant has an Experian Risk Disk rating of 96/100 representing a very low risk of default and a Dun & Bradstreet rating of 2A 1, which represents a low risk of business failure.

Further information: http://www.nexant.com

TWENTY RECRUITMENT LIMITED

9% OF RENTAL INCOME
Twenty Recruitment is one of the worlds fastest expanding independent recruitment companies. The company specialises in several sectors including finance technology and legal & compliance. The company was formed in 2009 and operates from offices in London and New York, employing around 200 people across these offices.

Twenty Recruitment Limited has an Experian Risk Disk rating of 75/100 representing a below average risk of default and a Dun & Bradstreet rating of A 3, which represents a high probability of business failure.

Further information: https://www.twentyrecruitment.com

VAT

The property has been elected for VAT.

Asset Management Initiatives

The overall rent of 1 Kings Arms Yard is £49.28 per sq ft offering a sound platform for strategic asset management opportunities to drive future performance from the asset. This is helped by the majority of leases being held outside the security of tenure provisions of the Landlord & Tenant Act 1954. Specific opportunities include:
  • Settle the outstanding rent review on the fifth floor lease where Union Bank are currently paying a low passing rent of £47.08 per sq ft. Recent rent reviews have been settled on a net effective basis at rents ranging from £56.96 - £58.14 per sq ft.
  • Potential restructuring of the occupational leases to lengthen and improve the income profile.

Additional Information

PLANNING
1 Kings Arms Yard is located under the jurisdiction of the City of London Corporation planning authority. The property is not listed but does sit within the Bank conservation area.

ENVIRONMENTAL PERFORMANCE
1 Kings Arms Yard has an EPC rating of C59 and the EPC certificate can be found in the online data room. The redevelopment in 2009 was completed to a BREEAM Very Good rating.

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
For access to the online data room please contact the sales agents.

Proposal

Offers are invited in excess of £58,300,000 (Fifty-Eight Million, Three Hundred Thousand Pounds), subject to contract and exclusive of VAT, for our client's long leasehold interest in 1 King's Arms Yard.

This represents an attractive net initial yield of 4.65% and a capital value of £1,040 per sq ft, assuming acquisition costs of 1.80% through the purchase of the Luxembourg SARL.

1 King's Arms Yard 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:
4.65%
PRICE:
£58,300,000
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