55 Gracechurch Street

London EC3V 0EE

Overview

  • A reversionary freehold building at the very heart of the City.
  • Core City of London location in close proximity to the Bank of England, Leadenhall Market and the Lloyds Building.
  • 74,622 sq ft (6,932.6 sq m) of office, leisure and ancillary accommodation arranged over basement, lower ground, ground and six upper floors.
  • Securely let to four tenants generating a current passing rent inclusive of vendor top-ups of £3,035,449 per annum, reflecting a below market rent of only £40.68 per sq ft overall.
  • The Royal London Mutual Insurance Society Limited is the principal tenant, occupying the building as its headquarters and accounting for circa 61% of total income.
  • Immediate opportunities to add value and improve the running yield.
  • Offers in excess of £60 million (Sixty Million Pounds) are sought for our client's freehold interest, subject to contract. A purchase at this level reflects a net initial yield of 4.73% and a low capital value of c.£805 per sq ft assuming full purchaser's costs of 6.80%.

Location

55 Gracechurch Street is situated in the heart of the City of London, the historic epicentre for trade and commerce in the capital. The property is within 400 metres of both the Bank of England and Leadenhall Market, traversing the border of London's globally recognised financial district and its renowned insurance quarter.

The 0.38 acre freehold site occupies a prominent position on the east side of Gracechurch Street, a key thoroughfare from outside the City through EC3 to London Bridge. The property is located close to the intersection of Gracechurch Street, Fenchurch Street and Lombard Street, and is within 40 metres of 20 Fenchurch Street (the Walkie Talkie).

In addition to attracting some of the world's leading organisations, the micro-location offers an unrivalled retail position within close reach of international retailers such as Gap and Marks & Spencer. High end restaurants, bars and boutiques are also located nearby in Leadenhall Market and the Royal Exchange.

Significant developments have been completed nearby in recent years. Local landmark towers include The Leadenhall Building, 20 Fenchurch Street and W.R. Berkley's 52 Lime Street which is due to be completed in 2019. These schemes have attracted some of the world's leading occupiers such as AON, RSA Group, Markel and Clydesdale Bank plc.

Situation

55 Gracechurch Street is situated in the heart of the City of London, the historic epicentre for trade and commerce in the capital. The property is within 400 metres of both the Bank of England and Leadenhall Market, traversing the border of London's globally recognised financial district and its renowned insurance quarter.

Description

55 Gracechurch Street was developed by Land Securities to an institutional standard and provides 74,622 sq ft of well specified office, leisure and ancillary accommodation arranged over basement, lower ground, ground and six upper floors.

The property provides open plan floorplates which range in size from circa 5,000 sq ft to 11,000 sq ft. The floors are regularly configured and benefit from excellent levels of natural light.

The elevation fronting Gracechurch Street is finished with Portland stone and granite. The side elevations are finished with metal and glass curtain walling. Access to the property is via a large contemporary reception area which leads to four thirteen-person passenger lifts. A rear entrance also provides separate access onto Brabant Court and Philpot Lane. There is a gym and a car park in the basement. These are accessed via St. Benet's Place and Talbot Court respectively.

Specification

55 Gracechurch Street has recently undergone a significant programme of refurbishment to upgrade the buildings plant and machinery. This includes works to the air conditioning systems and replacement of all lifts within the building.

Floor Areas

A measured survey of the property has been undertaken by Plowman Craven in accordance with the guidelines as described in the Sixth Edition of the Code of Measuring Practice, published by the Royal Institution of Chartered Surveyors. Details of floor areas can be found in the link below.

Specification

55 Gracechurch Street has recently undergone a significant programme of refurbishment to upgrade the building's plant and machinery. This includes works to the air conditioning systems and replacement of all lifts within the building.
  • VAV/ VRF air conditioning systems;
  • Metal tiled suspended ceilings;
  • Integrated LG7 compliant lighting;
  • 150mm raised floors;
  • Minimum 2.60 metre finished floor to ceiling height across all floors;
  • Male, female and disabled WCs on all floors;
  • Refurbished reception;
  • Four x 13 person passenger lifts;
  • Goods lift serving all floors;
  • Vehicle lift serving ground and basement levels;
  • Secure car parking and bicycle storage;
  • Tenant shower and changing facilities;
  • Roof terrace on the 6th floor.


Tenure

Large Freehold Site.

The property is held freehold under title number NGL 435622.

The property occupies a large freehold site extending to approximately 0.38 acres (0.15 ha).

Tenancy

Low overall passing rent of £40.68 per sq ft

55 Gracechurch Street is let to an enviable list of tenants from the insurance, leisure and professional industries, including Royal London, Shepherd Compello and Fitness First.

The property is multi-let to three office tenants and one leisure tenant (by way of eight leases). The newly refurbished 5th floor has recently been let to Royal London at a rent of £59.00 per sq ft.

The weighted average unexpired lease term is circa 4.3 years to expiries. Total income, assuming a vendor top-up in respect of the vacant car parking and storage, is £3,035,448.50 per annum equating to a low overall rent of only £40.68 per sq ft. This compares favourably to prime City of London rental levels currently in excess of £65 per sq ft.


Covenant Information

The Royal London Mutual Insurance Society Limited

Royal London Mutual Insurance Society Limited forms part of the Royal London Group, the UK's largest mutual life and pensions company with £106 billion of total assets under management.

The organisation, headquartered at 55 Gracechurch Street, was founded during 1861 in a London coffee shop.

Since then, Royal London has grown to become one of the country's most trusted providers of life insurance and investment products.

Record sales levels and increased profits were generated during 2016. Pre-tax profits rose 16% from 2015 to reach £282 million and the Present Value of New Business Premiums increased by 28% to £8,686 million. Total sales of personal pensions and drawdown rose 17% from 2015 levels to £3.8 billion.

Royal London won the Outstanding Achievement award at the 27th Financial Adviser Service Awards in 2017 and company of the year in 2016. The organisation's Pension and Investment services were recognised and deemed to have delivered five-star service throughout the previous 12 months.

The Royal London Mutual Insurance Society Limited Mutual organisations such as Royal London are owned by their members so have no shareholders to pay. This safeguards the distribution of profits which are shared to members or reinvested to provide greater returns and service. The 2016 profit share distributed to the one million members of Royal London totalled £114 million, an increase of 63% from the previous year.

Other subsidiaries within the group include Royal Liver Assurance, Scottish Life, Royal London Asset Management and Caledonian Life.

Further information can be obtained from the company website: www.royallondon.com

Lee Hecht Harrison Penna Limited, guaranteed by Olsten (UK) Holdings Limited*

Lee Hecht Harrison Penna Limited is a global firm specialising in career transition, leadership development and workplace transformation. The organisation recorded a turnover of £23 million in 2016, up 132% from 2015 levels. The volume of total assets also rose during 2016 by 127% to reach £35 million.

Olsten (UK) Holdings Limited is a wholly owned indirect subsidiary of Adecco Group AG and reported a pre-tax profit of £17.8 million in 2016.

Further information can be obtained from the company website: www.lhh.com

Shepherd Compello Limited

Shepherd Compello Limited specialise in automobile, machinery and heavy equipment insurance. Shepherd Compello increased turnover during 2016/17 by 58% to reach almost £10 million. Profits before taxes have doubled from 2015 levels.

Further information can be obtained from the company website: www.shepherdcompello.com

Fitness First (Curzons) Limited

Fitness First is the largest privately owned health club group in the world, consisting of more than 360 clubs capturing over 900,000 members in 16 countries. The company recorded a turnover in 2017 of £101 million, an increase of 35% from the previous year.

Further information can be obtained from the company website: www.dwfitnessfirst.com


Capital Allowances

Capital Allowances may be available.

VAT

The property is elected for VAT.

EPC

An Energy Performance Certificate (EPC) is available on request. The building has a D rating of 98.

Data Room

Please contact the vendor's agent, Cushman & Wakefield, for a user name and password to access the data room.

Planning

55 Gracechurch Street is situated within the jurisdiction of the Corporation of London, which is the local authority for the City of London.

The property is not listed. However, a set of attractive iron gates to the rear of the property fronting Brabant Court are Grade II listed.

The property is located on the border of the Eastcheap Conservation Area with part of the freehold title falling within it.

55 Gracechurch Street sits in close proximity to the Eastern Tower Cluster of the City.

Proposal

Our client is seeking offers in excess of £60,000,000 (Sixty Million Pounds), subject to contract and exclusive of VAT. A purchase at this level reflects a net initial yield of 4.73% (assuming full purchaser's costs) and a low capital value of c.£805 per sq ft.

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NET INITIAL YIELD:
4.73%
PRICE:
£60,000,000
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