Great Portland Estates plc ("GPE") announces it has agreed to forward sell its proposed 200,000 ft² office development at 154/172 Tooley Street, London, SE1 to UBS Global Asset Management (UK) Ltd ("UBS") for approximately €130 million (£94.3 million).
Purchased in four separate transactions from June to September 2004 for approx. €28 million (£20.0 million) including costs, the Group obtained a resolution to grant planning permission for the site in November 2005 and completed a Section 106 agreement in March. Construction is scheduled to start later this year with completion of the development due in early 2008. UBS will pay approx. €50 million (£36.2 million) for the site, generating a surplus for the Group of approx. €10.5 million (£7.7 million) on the March 2006 book value. Of this, approx. €46 million (£33.8 million) is payable in July 2006 with two further payments totaling approx. €3.3 million (£2.4 million) to be paid over the next two years.
Construction works will be completed by GPE under a development agreement, with all associated costs, estimated at approx. €66 million (£48.3 million), immediately reimbursed by the purchaser. A construction profit estimated by the Group to be approx. €13.4 million (£9.8 million) will be paid by UBS on practical completion bringing total net proceeds (excluding reimbursed construction costs) to approx. €63 million (£46.0 million). This represents a surplus of approx. €24 million (£17.5 million) to the March 2006 book value, equivalent to a post tax NAV uplift of 8 pence per share and a return on the Group's capital employed of 78%.
Whilst construction cost risk remains with GPE, all other risks, including void and letting risk have been transferred to the purchaser. A further profit payment of up to approx. €2.75 million (£2 million) is available to GPE subject to certain letting targets being achieved by UBS.
Commenting on the transaction, Toby Courtauld, GPE's Chief Executive, said: "This is further good business for GPE."