Re: Lease
British Land Co PLC
16 April 2003
16 April 2003
EBRD agrees improved terms for headquarters at Exchange Square
New terms and refit of building offer substantial savings over current lease
After extensive analysis of many options, the EBRD today recommended to its
Board of Directors to agree new terms for the lease of its current headquarters
building at One Exchange Square. The choice was made after long and intensive
negotiation with the landlord, The British Land Company plc, and serious
consideration of alternative locations.
The decision was driven by the objective of devoting the highest possible
portion of resources to the EBRD's mission of fostering transition in the
countries from central Europe to central Asia.
The new agreement with British Land significantly improves on the terms of the
current lease. The terms of British Land's offer, combined with some planned
refitting of the building to economise further, mean that leasing in the current
premises represents the most rational choice and is more favourable than any
other feasible option.
The new lease terms will run to 2022, with rent maintained at the current level
of £18,975,000 per annum and upward only rent reviews in 2006 and every five
years afterwards. There will be a 31/2-year rent-free period from June 2003. At
the end of the lease, no reinstatement of the premises will be required.
Two floors of the building are currently sublet. The EBRD will undertake a
review of offices, an auditorium and other open areas to make more efficient use
of space and release more space for subletting.
The current lease on the 367,000-square-foot building dates from 1991 and runs
through 2016. A break clause that takes effect in 2006 prompted the
investigation into alternative locations. The Bank looked into taking advantage
of downward price trends by considering a move to another rental property or to
purchase a property. After short-listing three potential sites for sale,
negotiations were opened with Canary Wharf Group on the purchase of a building,
while negotiations were held with British Land on terms for remaining at One
Exchange Square.
The decision process included rigorous financial analysis and feasibility
studies, and advice from specialist consultants on real estate, safety, legal
and other factors. There were extensive consultations with the Board of
Directors and members of staff, including on-site visits and presentations at
other building sites.
###
Following the agreement, British Land issued the following comment:
"This is excellent news for British Land and a major endorsement for Broadgate,
its premier City of London estate," said Bob Bowden, British Land's property
investment director.
"The EBRD is a prime tenant at Broadgate, and removal of the 2006 lease break,
together with a lease extension to 2022, is a dual benefit. The lease is for the
entire 367,000 sq ft building at a rent of £18,975,000 per annum, the next
upwards only rent review being December 2006.
Compared to the delay, risk and expense of seeking a new tenant, this deal makes
excellent economic sense. The rent-free period equates to a conventional
developer's discount without incurring fitting out costs or fees, and the rental
level has been held unchanged together with the existing rent review pattern.
The cost to British Land is mitigated by the deferral and the tax saving on the
rent that otherwise would be received."
British Land has given no options on taking back any potential surplus space.
Original privity of contract is preserved. At the end of the lease EBRD will not
be required to reinstate their works carried out at the commencement of the
original term, but will hand the building over in clear, open plan space in
accordance with the fully repairing obligations in the lease.
The transaction will mean the weighted average unexpired lease term, including
breaks, for the whole of Broadgate, incorporating also the recent acquisition of
1 Appold Street let to Deutsche Bank for 15 years without break, will increase
as from 31 March 2003 from 12 years to 14 years. The weighted average lease
length to expiry is 15.7 years."
Following are contacts for The British Land Company PLC:
John Weston Smith, Chief Operating Officer
tel: 020 7467 2899
Graham Roberts, Finance Director
tel: 020 7467 2948
Finsbury:
Faeth Birch
tel: 020 7251 3801
EBRD contact:
Jeff Hiday
tel: 020 7338 6997
The EBRD, which is owned by 60 governments and two public institutions, was
founded in 1991 to foster the transition from centrally planned to market
economies in central and eastern Europe and the Commonwealth of Independent
States.
Visit the EBRD's website: www.ebrd.com
This information is provided by RNS
The company news service from the London Stock Exchange
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