Capital
House
KING WILLIAM STREET LONDON EC4
prime central london freehold
Investment Summary
Freehold 0.486 acre island site City Core location 100 metres from the Bank of England Developed in 2003 with over 50% of the offices refurbished in the last 5 years High quality self-contained Grade A office building comprising 125,590 sq ft (11,667.7 sq m) of office, retail and ancillary accommodation arranged over basement, lower ground, ground and eight upper floors Attractive regular floorplates ranging from 7,885 - 14,206 sq ft (NIA) with two striking roof terraces overlooking Bank Junction and the Tower Cluster Multi-let to seven office and three retail tenants providing a diverse tenant mix, including Trading Technologies, Alpha Bank, Beale & Co and Advanz Pharma Wired Certified Gold, demonstrating its superb digital infrastructure and connectivity WAULT of 2.6 years to earliest determination and 5.4 years to expiries Passing rent (including vendor rental cover) of £6,873,262 per annum, reflecting a highly reversionary rent of £54.73 per sq ft overall Asset management opportunities to further enhance value through lease expiries, re-gears, rent reviews and letting of vacant space
• • • • • • • • • •
Location: EVOLUTION OF THE CITY CORE
The immediate location has been enhanced over recent years with the completion of both the Ned and Bloomberg Place which have improved the street scape and public realm in the immediate vicinity. The planned part pedestrianisation of Bank Junction, follows the increase in number of pedestrians using the junction in recent years, coupled with the works to upgrade Bank Underground station, which are due to complete in 2022, will see the creation of public space that prioritises pedestrians and cyclists. Under the ‘All Change at Bank’ project, works have already begun in widening pedestrian crossings and footways at Bank Junction. The project also looks at longer term options to restrict vehicular access at the junction which will further improve air quality and encourage pedestrians to use the new public realm.
Improvements to Bank junction
Improved public space
Improved pedestrian environment
bloomberg
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the ned
bank of england
royal exchange
Bloomberg Place was constructed in 2017, designed by architects Foster + Partners, the new site is Bloomberg’s new European headquarters that occupies 3.2 acres, c.1.1 million sq ft of sustainable office space, three new public spaces and Bloomberg Arcade - home to nine independent restaurants. The development reinstated an ancient Roman road, Watling Street, a historic and natural extension of the City that will endure and improve the surrounding public realm.
The Ned occupies the former Midland Bank headquarters overlooking Bank Junction. Originally built in the 1920s, the Grade I listed historic bank was transformed in 2017 by Sydell Group and Soho House to create a luxury 252 bedroom 5-Star hotel along with nine restaurants, gym and spa facilities and both indoor and rooftop swimming pools.
The Bank of England was founded in 1694 and it is the world’s second oldest central bank and the world’s eighth oldest bank. It is the central bank of the United Kingdom and the model on which most central banks are based, which acts as banker to the Government.
The Royal Exchange was founded in 1658 and is a centre for commerce for the City of London. Having twice been destroyed by fire, the building was redeveloped in 1840 and today comprises offices, a number of luxury retail brands, a bar and restaurant.
bank
Bank Area Enhancement strategy
Location: Bank
Capital House is surrounded by unrivalled retail amenity, with the luxury retail offer at the Royal Exchange, 100 metres to the north, Cheapside, the City’s primary retail thoroughfare, 200 metres to the west, and Bloomberg Arcade in close proximity.
View from the 8th floor terrace
Acuris Deliveroo Nomura EDF & MANN Nedbank Wells Fargo Mills & Reeve cms DNB ASA ICBC VTB Capital Fidessa State Bank of India Korea Exchange Bank Alliance Trust Plc Bank of China ISBANK Bank of England
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OCCUPIERS
View owners
union investment kiwoom AM deka london & oriental lasalle renhe cit beltane Ares / Black Mountain aew keppel land ICBC Ivanhoe Cambridge Falcon Group Ho Bee Land KanAm Corpus Sireo cheung and sons Resolution / Fosan CDL Pembrey AM pembroke mitsui fudosan bank of china Million Cities bank of china KanAm natwest NTT UD rothschild & co cathay life INSURANCE bloomberg hana bank global Wing Tai Properties /Manhattan Group China Resources Land/ NorthStar Realty Europe
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The city of London is home to key global occupiers and owners
Location: Owners AND OCCUPIERS
owners
View occupiers
Location: Connectivity
Overlooking Bank Station, Capital House benefits from exceptional transport communications, providing seamless connectivity across Central London, London’s airports and the South East. The introduction of Crossrail and improvements to both Bank Station will further enhance connectivity for occupiers and investors.
Bank
Capital House
Liverpool Street
St. Pancras International
Luton Airport
Stansted Airport
Stratford
Canary Wharf
Whitechapel
Gatwick Airport
Tottenham Court Road
Paddington
Bond Street
The Elizabeth Line (CroSsrail)
Bank Station Development
9 minutes
51 minutes
60 minutes
3 minutes
40 minutes
8 minutes
41 minutes
4 minutes
10 minutes
6 minutes
City Airport
Heathrow Airport
33 minutes
City Thameslink
14 minutes
Cannon Street
The Elizabeth Line (Crossrail)
Capital House is situated 600m from the Elizabeth line (Crossrail) station at Liverpool Street which is scheduled to open in 2021and will increase rail capacity to 200 million passengers a year across Central London. Crossrail will transform London’s transport network, bringing an extra 1.5 million people to within 45 minutes of Central London and will link London’s key employment, leisure and business districts.
CGI of Crossrail Entrance at Moorgate
CGI view from Cannon Street
Bank Station is the third busiest interchange on the London underground network and is used by more than 52 million passengers a year. Bank Station is undergoing a significant £640m improvement programme which will include a new station entrance just 50 metres south of Capital House which will further improve pedestrian flow in the vicinity. The works are due to complete in 2022.
New Station Entrance 50 metres from Capital House
Building Description
Occupying a prominent island site of 0.486 acres.125,590 sq ft (11,667.7 sq m) of Grade A office, retail and ancillary accommodation arranged over basement, lower ground, ground and eight upper floors. The office floors range from 7,885 sq ft (8th floor) to 14,206 sq ft (3rd floor) and provides good levels of natural light on all elevations. Attractive terraces on the seventh and eighth floors with views over both Bank Junction and the City’s Tower Cluster. Prominent entrance off King William Street into a modern reception area which was comprehensively refurbished in 2017. Internally, the office floorplates are efficiently configured around the central core, providing open and flexible space.
Developed by Greycoat in 2003, Capital House is a Grade A office building overlooking Bank Junction.
Building Specification
• 738 sq ft terrace on 7th floor and 2,774 sq ft terrace on 8th floor • Typical floor to ceiling height of 2.70 m • Typical raised access floors of 150 mm • 2-pipe fan coil air conditioning • 4 x 16 person passenger lifts (1,250 Kg) • 1 x 21 person goods lift (1,660 Kg) • 1 x 8 person firefighters lift (630 Kg) • 42 secure bike racks • 44 lockers • Communal shower facilities (3 male / 3 female) • Wired Certified “Gold”
Building: Accommodation
The property has been measured by Plowman Craven in accordance with the Royal Institution of Chartered Surveyors (RICS) Property Measurement (2nd Edition, January 2018 and incorporating IPMS) and comprises the following net internal floor areas:
Basement
10,251 sq ft / 952.4 sq m
Ground
8,259 sq ft / 767.3 sq m
2nd Floor
14,183 sq ft / 1,317.6 sq m
8th Floor
7,885 sq ft / 732.5 sq m
Matterport embed
Tenure
Capital House is held freehold under title numbers NGL382564, LN217953 and NGL797158, as outlined in red on the adjacent plan. The property is situated on an island site extending to approximately 0.486 acres (0.197 hectares). Capital House is not listed but is located within the Bank Conservation Area.
Tenancies
The property is multi-let to seven office and three retail tenants providing a diverse occupier mix and producing a current passing rent of £5,738,387 per annum (£45.69 per sq ft). A number of income supplements will be provided as detailed below and such the proposed passing rent will be £6,873,262 per annum equating to £54.73 per sq ft. On the basis of the above, this reflects a WAULT of 2.6 years to earliest determination and 5.4 years to expiries.
8th floor will become vacant in December 2020, which will be subject of a Vendor top up of 24 months. 5th floor in a period of half rent until March 2021, the Vendor will top up this outstanding rental period. 2nd floor is currently vacant, which will be subject to a Vendor top up of 24 months. The basement storage (units 1, 5A & B) are currently vacant which will be subject to a Vendor top up of 24 months. The retail units 2 and 3 will be subject to a Vendor rent cover of 18 months.
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INCOME SUPPLEMENTS
TENANT COVENANT RISK SECTORS
% of total income by tenant
% of total income by sector
View Tenancy SCHEDULE
Professional Services
TMT
Banking
Services industry
public administration
50%
20%
15%
11%
4%
CDM (T/A COCO DI MAMA)
2%
PHARMACEUTICALS
13%
Arthur j gallagher (UK) LIMITED
16%
Beake & Company solicitors LLP
14%
ALpha bank London limited
12%
GFT UK LIMITED
Trading Technologies UK Limited
17%
Sainsbury's Supermarket
7%
Pret a manager limited
3%
c (in administration)
B (Low risk)
a (very low risk)
78%
2020 Q3: 4.4 million sq feet
ASSET MANAGEMENT POTENTIAL
Capital House presents a number of asset management opportunities, that will further enhance this exceptional asset.
Set new headline rental tone through RE-letting THE refurbished 2nd floor. Extend income profile, with 5 lease expiries / break OPTIONS on the office accommodation between 2021 and 2024. Drive rental performance through FOUR forthcoming rent reviews given low OVERALL average passing rent of £54.73 per sq ft. Regear and extend Sainsbury’s lease FROM March 2023. Improve the Wired Certification to 'Platinum' through installing a fixed wireless solution on the roof.
5 leases are excluded from 1954 act giving landlord control
50% of office accommodation refurbished by landlord / tenant in last 5 years
Overall office rent of £55.49 psf reflects a 23% discount to city prime rents of £72.50 psf
Asset Management Timeline
APR-20
7th floor outstanding upward only rent review
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DEC-20
8th floor lease expiry
MAY-21
6th floor break option 3rd floor break option
SEP-23
7th floor lease expiry 1st floor lease expiry
DEC-24
4th floor upward only rent review
JUL-20
2nd floor newly refurbished
JAN-21
5th floor upward only rent review
MAR-23
Retail unit 1 lease expiry
Refurbished 2nd floor
REFURBISHMENT STATUS
Forward thinking asset management and refurbishment programme to meet ‘post Covid-19’ tenant requirements
Flexible office floorplates allowing for formation of adaptive space designs
Improvements to shower and changing facilities Creation of additional cycle storage to meet the increased demand
Improve access and make terrace space usable for tenants
LEASING COMPARABLES
CITY PRIME RENT IS £72.50 PSF
Investment Transactions Surrounding the Bank of England SIGNIFICANT premium in capital values for transactions in close proximity to Bank
ADDitional Information
The property is elected for VAT and as such, it is anticipated that the transaction will be treated as a transfer of a going concern (TOGC).
VAT
Full Stamp Duty Land Tax will be payable on the purchase price.
SDLT
An Energy Performance Certificate (EPC) is available in the dataroom.
EPC
Capital allowances may be made available to a purchaser by way of separate negotiation.
CAPITAL ALLOWANCES
Further information relating to prospective debt terms will be available in the dataroom.
DEBT
Please contact the Vendor’s agents to arrange access.
DATAROOM
Offers are invited for the freehold interest in Capital House, subject to contract, and exclusive of VAT.
PROPOSAL
Gallery
Pret A Manger retail unit on King William Street
3rd floor office accommodation
8th floor office accommodation with terrace overlooking Bank junction and views of St Paul’s Cathedral
View from 8th floor terrace towards London’s iconic Bank junction
Striking 7th floor terrace looking west over King William Street
5th floor office reception
8th floor office accomodation
Sainsbury's and Pret A Manger retail units on Lombard Street
View from 8th floor terrace
Coco di Mama retail unit
6th floor office accommodation
Wired Certification provides the global benchmark for digital connectivity in commercial office buildings. Capital House has:
• 738 sq ft terrace on 7th floor and 2,774 sq ft terrace on 8th floor • Typical floor to ceiling height of 2.70 M • Typical raised ACCESS floors of 150 mm • 2-pipe fan coil air conditioning • 4 x 16 person passenger lifts (1,250 KG) • 1 X 21 person GOODS LIFT (1,660 KG) • 1 X 8 person FIREFIGHTERS LIFT (630 KG) • 42 SECURE bike racks • 44 lockers • Communal shower facilities (3 male / 3 female) • Wired Certified “Gold”
Four independent Fibre providers Why this matters - this provides substantial choice for tenants around their own (existing or potential) service and options for backup provision. It also creates a competitive pricing environment providing tenants with access to the best available rates. Four diverse points of entry Why this matters - this reduces the risk of single points of network failure and provides tenants with resiliency. This will allow sophisticated tenants to occupy the building. Telecommunications equipment kept in a secure and dedicated location Why this matters - this mitigates the risk of physical damage or unauthorised access to equipment and tenant data. Physical security of a building’s telecoms equipment is a key consideration for tenants.
MARKET COMMENTARY INVESTMENT CASE
Window OF opportunity in the City Core
JLL predict prime City rents to be £75.00 psf by 2023
Active tenant demand remains above average, weighted towards Professional Services requirements
Limited number of available floors in City Core, particularly with terrace space
Only 3 comparable City Core floorplates with terraces currently available
Exceptionally low new build vacancy rate of 0.30% compared to the 10-year average of 1.7%
Current Grade A vacancy rate of only 4.40%, lower than Soho (4.60%), Kings Cross (5.50%) and Covent Garden (6.60%) respectively
Restricted new build development pipeline averaging only 230,000 sq ft per annum between 2021-2024, with long-term average take-up of 450,000 sq ft per annum
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one of the lowest occupancy costs at £110 psf IN CENTRAL LONDON
