Case Studies

Property letting, sales and investment case studies - BNP Paribas Real Estate UK  

Allegra European Holdings

How we helped Allegra increase their return on investment by £15 million.
Securing a longer term income stream through purchasing an office investment for £44.5m, and successfully working with the tenant to restructure the lease from four to 15 years.

  • Location 5 King William Street, London EC4
  • Key figures 82,000 sq ft - Purchased for £44.5m - A net initial yield of 7.43% - Higher internal rate of return (IRR) of 16.13%
  • Contact Paul Henwood, +44 (0) 20 7338 4391

 

The results

  • The value of the property with the new lease in place at July 2010 is estimated at £70 million, after costs.  Allegra invested a further £13 million into the asset and the profit returned, is in the region of £15 million after all costs.

The challenges

  • The client was facing the expiry of income for the entire building and potential vacancy, if major works had not been completed and the lease was not re-geared.  We have negated this challenge and have enhanced the value of the asset whilst maintaining their income stream.

What we did

  • We agreed a 15 years term on the new lease without break, effective from March 2012 and subject to 5 yearly upward only rent reviews
  • We agreed a rent of £3.50 million representing a rent of £42.67 per sq ft overall
  • We liaised with the tenant, Daiwa, who agreed to undertake a £12 million refurbishment of the property
  • Refurbishment costs were shared equally between landlord and tenant
  • We agreed a Cat A specification for the works for all future rent reviews, and in return provided 2.25 years rent free from the commencement date of the refurbishment works.
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