Prime Mayfair Office Investment

111-113 Park Street | Mayfair |  London  | W1K 7JL

£20,750,000

offers in the region of

FOR SALE

Summary

  • An opportunity acquire a London Mayfair Prime Office Investment

  • The property is located within close proximity to internationally renowned landmarks

  • The property has recently been refurbished to a high standard

  • The property has recently been let for 13 years

  • The new letting provides secure income

  • The rental income will increase in line with increases in the Consumer Price Index (CPI), subject to a cap and floor of between 1% and 4%

  • Offers in the region of £20.75 million reflecting a net initial yield of 3.5% (costs assumed at 6.75%)

  • The property is available by way of fast and secure online execution using the clicktopurchase® platform, with the added security of Blockchain anchoring.

Location

Park Street is situated in Mayfair, Westminster within the West End of Central London.

Many of London’s most renowned sites are situated in the borough, including St James’s Palace, Buckingham Palace, the Houses of Parliament and 10 Downing Street. It is also home to the West End, London’s most famous shopping area. Streets within the borough include Oxford Street, Regent Street, Piccadilly and Bond Street. As an indication of the status of the area, it is reported that some 813 million passengers travelled at Westminster’s various railway stations during 2017 (Source: www.london.gov.uk).

The City of London and Docklands are situated to the east, approximately 4.8 km (3 miles) and 9.6 km (6 miles) respectively. London City Airport is some 16 km (10 miles) to the east and London Heathrow is some 22 km (14 miles) to the west. Both are easily accessible via London’s public transport system.

Park Street benefits from excellent communications and is less than 1.6 km (1 mile) south of the Marylebone Road (A501) and a short distance from Baker Street, one of the principal north to south thoroughfares linking Regents Park to Portman Square. The A41, one of London’s main arterial routes is a short distance to the north and provides access to the M1 Motorway.

Park Street is well connected to the London underground and national railway networks, being situated 300 metres (1,000 feet) from Marble Arch Underground Station (Central Line) and 0.5 km (0.3 miles) west of Bond Street Underground Station (Jubilee & Central Lines). There are also numerous bus services along Oxford Street.

Rail communications are set to be further enhanced when Bond Street station will be fully served by Crossrail, scheduled for completion in 2020. The new “Elizabeth Line” will increase capacity, accommodating over 225,000 people using the Jubilee, Central and Elizabeth lines daily. When the full Crossrail route opens, a service every two and a half minutes at peak time will allow passengers to travel all the way through to Paddington, Heathrow or Reading in the west and Shenfield or Abbey Wood in the east. An estimated 200 million annual passengers will use Crossrail, increasing central London rail capacity by 10% (Source: Crossrail).

Situation

The subject property benefits from being immediately to the south of Oxford Street, the world’s biggest high street offering 2.4 km (1.5 miles) of shopping with more than 90 flagship stores. High Street brands such as Primark, Marks & Spencer, River Island, John Lewis and Topshop are all in close proximity. In addition, the world-renowned Selfridges department store is a mere two minute walk from the subject property.

Park Lane is immediately to the west, home to renowned hotels such as Grosvenor House, the Dorchester, London Hilton, Four Seasons and InterContinental. The property also benefits from being adjacent to Hyde Park, the largest Royal Park in London.

Mayfair, London property office investment W1K 7JL
Mayfair, London property office investment W1K 7JL

Description

The property comprises a recently comprehensively refurbished Mayfair office property, double-fronted and arranged over lower ground, ground and four upper floors.

The property provides high quality, “CAT A”, Central London attractive office accommodation. The refurbishment was completed during 2017 with the development specification including the installation of VRF air conditioning, a new 12 person passenger lift, metal raised tile floors, floor to ceiling heights up to 3.0 metres and a new rear terrace/courtyard. The WCs, which are located on each floor, and lower ground floor showers have been finished to a high standard with finishes including limestone tiling.

A full set of drawings and plans in relation to the property are held within the data room. In addition, the marketing presentation provides high quality video and photography, as well as a “Virtual Tour” to enable an investor to fully appreciate the quality of the property easily.

Full details of the professional team and contractor used for the refurbishment are held within the data room, along with warranty and associated information. Professional warranties, along with associated construction documentation, will be assigned to the purchaser of the investment.

In addition, a Building Survey Report, including sub-consultant reports, is available to review. A purchaser will be able to formally rely upon the Report

A complete Operations and Maintenance Manual is available for review on request.

Accommodation

The property has been measured by Plowman Craven in accordance with the Code of Measuring Practice published by the Royal Institution of Chartered Surveyors.

Fourth 1,671 sq ft 155.2 sq m
Third 1,744 sq ft 162.1 sq m
Second 1,764 sq ft 163.9 sq m
First 1,723 sq ft 160.1 sq m
Ground (including reception) 1,997 sq ft 185.6 sq m
Lower Ground 2,324 sq ft 216.0 sq m
Total Net Internal Area 11,223 sq ft 1 042.9 sq m

 

Roof 178 sq ft 16.5 sq m
Fourth 2,230 sq ft 207.2 sq m
Third 2,237 sq ft 207.8 sq m
Second 2,267 sq ft 210.6 sq m
First 2,300 sq ft 213.7 sq m
Ground (including reception) 3,183 sq ft 295.7 sq m
Lower Ground 4,000 sq ft 371.6 sq m
Total IPMS 2 Area 16,395 sq ft 1 523.1 sq m


The measured survey will be assigned to a purchaser.

Mayfair, London property office investment W1K 7JL
Mayfair, London property office investment W1K 7JL

Tenure

The interest for sale is a long leasehold interest held from Grosvenor West End Properties for a term of 125 years from 25th March 1998, expiring 24th March 2123. Hence, approximately 103 years unexpired remains on the lease term. The lease is held on effectively full repairing and insuring terms.

The ground rent payable is equivalent to 10% of the “Income for that Rent Period”, namely the yearly period from 25th March.  “Income” is defined as “…the rental received by the Tenant…”  Hence, head rent will not be payable to the head landlord during the rent-free and half-rent periods granted to the occupational tenant.

Consent to the assignment of the head lease will be required from the head landlord.  If the buyer is offshore the head landlord is likely to require either a guarantee from an appropriate UK based entity, or a rent deposit of three times the annual outgoing, in respect of the long leaseholder’s obligations to reimburse the costs of insuring the premises.  The current rent deposit would be £39,102.

Tenancy

The property has been let to Landmark Space Limited for a term of 13 years from 14th June 2019 on effectively full repairing and insuring terms, at an initial rent of £860,000 per annum (£824.62 per sq m / £76.63 per sq ft overall)

The lease provides for five yearly upwards only rent reviews based upon increases in the Consumer Price Index (CPI) subject to an annual cap and floor of between 1% and 4%.

The letting provides the tenant with an incentive package equivalent to 29 months’ rent free by providing a 14 month rent free period, plus a further 30 months at half-rent. The vendor will “top-up” the income by an appropriate adjustment on the completion sum in order that the purchaser does not suffer an income shortfall.

The lease is guaranteed by O.C.S Group Limited. The guarantor will be released from their obligations on receipt of three consecutive year’s audited accounts from the Lessee showing net profits of at least three times the annual rent.

Mayfair, London property office investment W1K 7JL
Mayfair, London property office investment W1K 7JL

Covenant

Landmark Space Limited (the tenant) is a wholly owned subsidiary of O.C.S Group Limited (the guarantor). 

As confirmed on the company website, O.C.S was founded in 1900 and is the largest family-owned facilities management services company in the world, delivering over 70 internationally accredited services globally.  The company has more than 87,000 staff and over 150 family shareholders.

The OCS Group is managed under two different brands - OCS and Landmark - delivering specific areas of expertise to clients, with significant operations across the UK, Ireland, Middle East, Asia and Australasia.

OCS offers a comprehensive range of facilities services around the world, including security, cleaning, passenger assistance and aviation support services, catering, front of house and support services, and mechanical and electrical services.

Landmark Space Limited is one of the country’s leading providers of professional, flexible, shared workspaces, operating an expanding number of business centres in prime city centre locations across the UK.  In 2018 OCS merged their i2Office and Landmark businesses under the Landmark brand.  There are now 44 Landmark workspace locations across the UK with each including 24/7 access to prestigious buildings with a premium reception area, concierge style service, communal spaces and secure Wi-Fi. For further information see https://www.landmarkspace.co.uk and https://www.ocs.com.

Landmark Space Limited (Co. No. 05374141) has reported the following figures:

Year Ending 31st December 2018
Turnover £103.173m
Pre-Tax Profits £7.083m
Net Assets £9.551m

Dun & Bradstreet report the company to have a “Minimum Risk” assessment.

O.C.S. Group Limited (Co. No. 01298292) has reported the following figures:

Pro-forma Year ending 1st January 2018
Turnover £1,025.051m
Pre-Tax Profits £47.888m
Consolidated Balance Sheet £85.654m

Dun & Bradstreet report the company to have a “Minimum Risk” assessment.

Office Sector Commentary

“In 2017 alone, the total amount of flexible space in the top 20 largest flex markets globally grew by 30% - equivalent to around 1 million square metres. Since 2014, the market has more than doubled, and in leading cities such as London, it now accounts for one-fifth of take up.” - JLL Flex space EMEA Research, November 2018

“Leasing activity across the West End continued to remain resilient over the first quarter of this year, amidst the continued uncertainty, with occupiers remaining undeterred and pushing forward to complete on 98 transactions. Overall 1.2m sq ft completed making it the highest amount of take-up we have seen over the first quarter in 6 years, and up 30% on the long-term average.” - Savills West End Office Market Watch – UK Commercial April 2019

“Prime yields were stable in Q1 2019 at..3.50% in the West End” - Avison Young Research, Central London office analysis Q1 2019, May 2019.

“..certain key submarkets are beginning to see downward movement in incentive packages in the face of record shortages of new/refurbished accommodation…..the minimal supply of new product over the next 12 months will provide continued support for potential prime rental growth in Q3-Q4 2019.” - Collier’s International, London Offices Snapshot Q1 2-19

lMayfair, London property office investment W1K 7JL
Mayfair, London property office investment W1K 7JL

VAT

The Seller has opted to tax in respect of the property.  It is anticipated that the sale will be treated as a Transfer of a Going Concern (TOGC).

Capital Allowances

No Capital Allowances are available to a purchaser. [They may be available to a purchaser by separate agreement.]

Mayfair, London property office investment W1K 7JL
Mayfair, London property office investment W1K 7JL

Proposal

We are instructed to seek offers in the region of £20,750,000 (Twenty Million Seven Hundred and Fifty Thousand Pounds), subject to contract, reflecting a net initial yield of 3.5% assuming purchaser’s costs of 6.75%.

Investment Considerations

  1. An opportunity to acquire a prime, London Mayfair office investment

  2. The property is located in a prominent and prime office location

  3. The office has recently been extensively refurbished to a high standard

  4. The property has recently been let to a secure covenant

  5. The recent letting provides income for a term of 13 years

  6. An opportunity for an investor to easily acquire a prime investment where the rent will rise in line with increases in the Consumer Price Index (CPI)

Mayfair, London property office investment W1K 7JL

Data Room and clicktopurchase®

Access to the data room and for the ability to purchase online with speed and ease, please click the clicktopurchase® “C” icon or the clicktopurchase® side bar. Purchasers will be able to access the complete legal package, clear verification and submit legally-binding offers to acquire the property.

Purchasers benefit from the trust, security and transparency provided by the platform. All activities, including the online contract execution, will form part of the electronic audit trail which is anchored in the clicktopurchase® Blockchain.

clicktopurchase® provides the opportunity for any investor, whether located UK or abroad, to uniquely purchase online with ease and certainty. To learn more about clicktopurchase®, click here.

finance

Finance

We have partnered with a leading finance adviser to provide loan services. To learn more, please visit our “Finance” section.

Contact Us

Singer Vielle   +44 (0) 207 935 7200
Neil Singer neil@singervielle.co.uk +44 (0) 203 478 9120
Dale Henry dale@singervielle.co.uk +44 (0) 203 701 1356
Samantha Smith samantha@singervielle.co.uk +44 (0) 203 478 9121

Vendors Solicitor

Teacher Stern LLP   +44 (0) 207 242 3191
David Irwin d.irwin@teacherstern.com +44 (0) 207 611 2314
Sapna Shah s.shah@teacherstern.com +44 (0) 207 611 2323
customer service