Great Portland Estates plc ("GPE") announces it has formed The Great Wigmore Partnership, a 50/50 joint venture with Scottish Widows Plc ("SW"), to own and develop two central London properties.
GPE will contribute its office development scheme at 179-202 Great Portland Street, London W1 ("180 Great Portland Street") and £5.0 million in cash. In addition to the existing 15,500 ft² of retail space currently producing a rent of £0.3 million per annum, 180 Great Portland Street will provide a further 90,000 ft² of retail and office space due for practical completion in December 2006 on a site area of 0.48 acres. Adjusted for subsequent capital expenditure, at 30 June 2006 180 Great Portland Street had a book value of £51.7 million. The development will be completed by GPE under a development agreement with The Partnership. The development agreement provides for the reimbursement of anticipated costs to complete the development by The Partnership to GPE. While construction cost risk remains with GPE, letting and other market risks are transferred to The Partnership.
SW will contribute 79/97 Wigmore Street, 25/27 Duke Street, 35/37 James Street and 1/7 Picton Place, London W1 ("Wigmore Street"). Wigmore Street currently comprises 97,300 ft² of office retail and residential accommodation on 0.76 acres, produces a current rent of £3.5 million and has a current value of £63.1 million.
GPE and SW have agreed to commit up to a further £50.0 million each to The Partnership in order to fund the potential redevelopment of Wigmore Street and as a general headroom facility.
GPE will provide strategic asset and development management advice in relation to The Partnership's properties under a property management agreement with The Partnership.
Toby Courtauld, Chief Executive of GPE, said: "We are delighted to have formed this partnership with Scottish Widows. The Group has used an existing asset to gain access to future development pipeline which was unlikely to have come to the open market. 180 Great Portland Street will be completed in a matter of months and available to let in a resurgent West End office market. Wigmore Street provides a virtual island site with plenty of scope for significant redevelopment when the majority of the occupational leases expire at the end of 2008. We look forward to working with our partners to make the most out of these high quality assets."
Tom Laidlaw, head of property at SW, said: "We are pleased to be working with Great Portland Estates in this newly formed partnership. We forecast that the central London office sector will see the strongest rental growth and total returns over the next four to five years and look forward to being involved with the development of these two exciting properties".