Helical Bar plc has exchanged contracts on the purchase of 207 Old Street, London EC1 and 211 Old Street, London EC1, collectively known as The Bower development, for a combined price of £248m (€354m). The vendor was a joint venture company (the ‘Joint Venture’) owned by Helical and an affiliate of Crosstree Real Estate Partners LLP (‘Crosstree’). Simultaneously, Crosstree has agreed to acquire the Joint Venture’s retail parade, at 183-213 Old Street, London EC1, for £23m (€33m). Last week, the Joint Venture announced the sale of Empire House, part of The Bower at Old Street, to Standard Life Investments Long Lease Fund for £20.65m (€29.18m).
In undertaking the transaction, Helical will acquire 207 Old Street Unit Trust and 211 Old Street Unit Trust and dispose of its interest in the Old Street Retail Unit Trust, the asset owning entities, for a combined net £76m (€109m) payment to Crosstree, plus refinancing the existing external debt of £88m (€126m).
Helical will fund the acquisition through existing cash resources of £18m and new bank finance of £200m, £146m of which will be drawn down to complete the purchase with £54m available to fund the redevelopment of 207 Old Street. This second phase will provide 15,793m2 of office space and 678m² of retail/restaurant space, on completion of the works. Helical’s existing cash equity plus share of profits to date, a total of £84m, will remain invested in the scheme.
Phase One of The Bower development is 211 Old Street, comprising The Warehouse and The Studio, and has been substantially pre-let with Agreements for Lease signed on 92% of the redeveloped space generating approx. £7.2m (€10.3m) per annum, once rent free periods have expired. The second phase is The Tower, at 207 Old Street and works will commence before Christmas. It has a construction budget of approx. £70m (€100m)
Gerald Kaye, Helical’s development director, said: “We acquired The Bower, in joint venture with Crosstree, at a time when the renaissance of the Old Street quarter was in its early days, and have seen the area transformed over the last three years, supported in part by the achievements we have made at the scheme to date. We have been seeking to increase our investment holdings in London for some time as well as to retain ongoing development exposure. We have recently sold our London office assets at Enterprise House, Clifton Street and Artillery Lane and this acquisition of The Bower restates and reinforces our commitment to London, and in particular the ‘Tech Belt’ area. The acquisition will increase our London holdings to c. 55% of our investment portfolio. We expect The Bower will be a significant long term holding for Helical and we are confident it will contribute to the continued growth of the Company.”
Sean Arnold/Nick Lyle, founding partners of Crosstree, added: “We are proud to have worked with the team at Helical on the significant repositioning of this derelict set of buildings into a vibrant, successful mixed-use project in the heart of London’s creative district. We have every confidence in the success of Phase Two of the Bower and look forward to our continued ownership of the standalone retail asset here. We would also like to thank the CRE team at Deutsche Bank for supporting the joint venture’s ambitions for the project at a time of limited speculative development finance, as well as the leasing teams at Hatton and JLL for their great work on the scheme to date.”
