The Lime Street Estate

London EC3

Overview

Executive Summary

  • Situated in a prime City of London location, within the eastern Tower Cluster.
  • Located directly opposite Lloyd's of London, the world's leading specialist insurance market.
  • 121,711 sq ft (11,306 sq m) of office and ancillary accommodation arranged in two adjoining and interlinking buildings.
  • Highly divisible floorplates ranging from suites of 500 sq ft up to 10,000 sq ft.
  • Multi-let to 30 tenants with staggered lease events.
  • All leases are drawn on effective FRI terms.
  • Occupiers include Everest Advisors, Tokio Marine HCC, Skuld Services, White Oak Underwriting Agency and Fenchurch Law.
  • WAULT for the Estate of 4.31 years to expiries and 3.16 years to break options, as at July 2019.
  • Total gross contracted rent of £6,088,219 per annum (inclusive of Vendor top ups), reflecting a rent of £50.17 per sq ft overall.
  • Held long leasehold for a further circa 137 years at a gearing of 15.00% of rents receivable.
  • Net rental income of £5,174,986 per annum exclusive.

The Opportunities

  • Approximately 27,655 sq ft (2,569.2 sq m) of office floorspace is currently vacant, affording an opportunity to upgrade accommodation and reposition the asset with immediate effect.
  • The Lime Street Estate offers numerous opportunities to manage lease events, re-let vacant accommodation and re-gear existing leases.
  • The public realm will continue to improve as a result of neighbouring development activity, in addition to the recent pedestrianisation of Lime Street.
  • Significant long term development potential, subject to the necessary consents. The Estate is situated in an area designated suitable for high rise buildings.
Offers in excess of £72 million (Seventy-Two Million Pounds) are invited, subject to contract, for the long leasehold interest.

This reflects a net initial yield of 6.73%, assuming purchaser's costs of 6.80% and an attractive capital value of £592 per sq ft.

Location

The Estate is situated in heart of the City of London, directly opposite Lloyd's of London, the world's leading specialist insurance market. The buildings occupy a highly prominent position with substantial frontages onto Lime Street and Fenchurch Avenue.

Many of the world's most pre-eminent insurance businesses have entered into long-term lease commitments and freehold acquisitions within the immediate vicinity. Notable examples include Willis, AON, RSA, Amlin, SCOR and WR Berkley. The critical mass of insurance industry expertise within the vicinity of Lloyd's will undoubtedly ensure the success of this district for many decades to come.

In recent years, a number of internationally acclaimed developments including The Scalpel, The Leadenhall Building, 20 Fenchurch Street and Plantation Place have attracted corporates, financial services providers, law firms, accountancy businesses and tech firms into the area. This thriving commercial district, once the preserve of insurance and shipping industries, is now more diversified than at any point in its history.

Situation

The Eastern Tower Cluster
The Estate is located in the eastern Tower Cluster area of the City of London, where high density commercial development is encouraged. The properties are equidistant between two internationally recognised buildings, 20 Fenchurch Street and The Leadenhall Building.

Since 2018, a number of new developments within the Tower Cluster have reached practical completion. The developments at 10 Fenchurch Avenue and The Scalpel, 52 Lime Street supplied the market with circa 800,000 sq ft of accommodation, a large amount of which was pre-let to occupiers including M&G, WR Berkley, Decus, AXIS and National Australia Bank.

Lloyd's of London
The main entrance into Lloyd's of London is situated directly opposite the Estate.

Lloyd's is the world's oldest and leading specialist insurance market operating across 200 territories, offering an unrivalled concentration of specialist underwriting expertise. In its 330 year history, Lloyd's has diversified such that it now insures the world's largest and most unusual risks.

Lime Street is synonymous with global insurance and has a rich heritage. Brokers and underwriters requiring swift access into Lloyd's will pay a premium to be located on Lime Street given the direct access into Lloyd's.

Leadenhall Market
Leadenhall Market, one of the City's most vibrant spots, is situated directly adjacent to the Estate. This Victorian Grade II* listed building of grand proportions is crammed full of restaurants, bars, coffee houses, market stalls and artisan boutiques. Alfresco dining and live entertainment provide exceptional amenity, day and night.

Leadenhall Market is integral to the insurance community and the way in which it functions. The specialist nature of the policies written dictates that a high degree of interface still takes place between the brokers and underwriters. The coffee houses and restaurants in and around the market provide a convivial environment in which to cement relationships and conduct business, much of which still takes place on a handshake.

A wide collection of retailers are situated along Lime Street. Concessions include Charles Tyrwhitt, Cheaney Shoes, Roderick Charles, M&S, Vodafone, Boots, Links London, Oliver Bonas and Cycle Republic.

Local Developments

The neighbouring area is one of the most transformed areas in Central London. The vicinity is home to some of London's highest profile towers, including The Leadenhall Building and 20 Fenchurch Street.

These iconic landmarks, in addition to a substantial number of forthcoming developments, are delivering exceptional improvements to the amenity of EC3 and to the public realm. Moreover, these developments are providing a world class business environment which attracts global businesses at market leading rents.

Connectivity

The Estate is situated in the core of the City of London and benefits from excellent transport communications.

The whole of Central London is accessible via the Underground and rail network. Liverpool Street, Bank, Fenchurch Street, Monument and Cannon Street stations are all within a 500m radius of the Estate.

All of London's international airports are within an hour of the property and train services to Europe operate via Eurostar from St Pancras International Station, which is about 8 minutes by tube.

The Elizabeth Line (Crossrail)

The Elizabeth Line is scheduled to become operational in Q1 2021, with the nearest station being Liverpool Street, located within a 5 minute walk.

The circa £15 billion initiative is Europe's largest infrastructure project. Services will be fully integrated with London's existing transport network. State-of-the-art trains capable of accommodating 1,500 passengers, will bring an extra 1.5 million people to within 45 minutes of Central London.

From Liverpool Street station it will take just 7 minutes to reach Bond Street, 6 minutes to reach Canary Wharf and 33 minutes to arrive at Heathrow Airport.

Description

Estate Overview

The Estate is held by way of a single headlease and comprises two adjoining self-contained office buildings which are arranged around a large central lightwell. The buildings benefit from a centralised concierge and are interconnected at basement level.

The floorplates range from suites of 500 sq ft up to 10,000 sq ft. Accordingly, the Estate is well placed to cater for a wide variety of occupational requirements. All office accommodation is air conditioned and has excellent levels of natural daylight.

The Estate has been independently measured by Plan London in accordance with the RICS code of measuring practice (6th edition). The Net Internal Areas of the estate are summarised in the Schedule link below.

40 Lime Street

  • Floor Area - 84,001 sq ft
  • % Estate Area - 69%
  • Gross Rent - £4,299,479 pa
  • Net Rent - £3,654,557 pa
  • Rent psf - £51.21 psf overall (tenanted accommodation)
  • WAULT (July 2019) - 5.34 years to expiries (3.71 years to breaks)
40 Lime Street/4 Fenchurch Avenue is strategically positioned directly opposite Lloyd's of London and has substantial frontages onto Lime Street, Fenchurch Avenue and Fen Court. The building has entrances onto each of the aforementioned thoroughfares which converge into a large centralised reception. From here the concierge also oversees operations at 37-39 Lime Street.

The property provides 84,001 sq ft (7,803.6 sq m) of lettable office and ancillary accommodation arranged over two basements, ground and nine upper floors. The floorplates are divided into North and South suites, comprising circa. 7,000 sq ft and 2,500-3,000 sq ft respectively.

The property has been modernised on a rolling basis, with the ongoing landlord works to the second floor being the most recent refurbishment. Large roof terraces have been created on the 5th, 6th, 7th and 8th floor north-facing units.

The specification includes:-
  • Four eight-person passenger lifts
  • Ceiling mounted fan-coil air conditioning
  • Metal/mineral fibre tiled suspended ceilings with LG compliant recessed light fittings
  • Raised access floors
  • Male, female and disabled WCs
  • Shower and bike storage facilities at basement level

37-39 Lime Street

  • Floor Area - 37,710 sq ft
  • % Estate Area - 31%
  • Gross Rent - £1,788,740 pa
  • Net Rent - £1,520,429 pa
  • Rent psf - £47.83 per sq ft overal (tenanted accommodation)
  • WAULT (July 2019) - 1.83 years to expiries
37-39 Lime Street dates from the 1930s and is Grade II listed. The property has an attractive Portland stone façade fronting onto Lime Street and provides 37,710 sq ft (3,502.3 sq m) of lettable office and ancillary accommodation arranged over two basements, ground and seven upper floors.

The floorplates are typically circa 3,800 sq ft (353.02 sq m) and are capable of being leased as whole, or sub-divided into three units of occupation per floor. The ceiling heights are generous throughout and there are good levels of natural daylight from three elevations.

The reception and common areas were refurbished in 2017 and all the office accommodation (save the fifth floor east) has been refurbished since 2008. The seventh floor was the most recent floor to be refurbished, with works completing in 2019.

The specification includes:-
  • Two nine-person passenger lifts
  • Ceiling mounted fan-coil air conditioning
  • Metal tiled suspended ceilings (with the exception of the ground floor, part fourth floor [part front] and seventh floor [front]) with LG compliant recessed light fittings
  • Raised access floors
  • Male and female WCs alternate between floors
  • Shower, bike and disabled WCs at basement level


Tenure

The properties are held by way of a single headlease from the Carpenter's Company which expires on 29/09/2156, offering circa 137 years unexpired.

The Freeholder is entitled to 15.00% of rents receivable from underletting(s), subject to a minimum rent of £355,000 per annum. The minimum rent increases by £25,000 per annum on 29/09/2031 and twenty-five yearly thereafter.

A summary of the main headlease terms can be found within the marketing particulars.

Tenancy

The Estate is let in accordance with the Tenancy Schedules, which can be found within the marketing particulars.

The gross rent is £6,088,219 per annum exclusive equating to £50.17 per sq ft overall in respect of the tenanted accommodation. Following deduction of the headrent, the net rental income is £5,174,986 per annum exclusive.

We would draw your attention to the following:-

  • All leases are drawn on effective full repairing and insuring terms.
  • The Weighted Average Unexpired Lease Term for the Estate is 4.31 years to expiries and 3.16 years to break options, as at July 2019.
  • All leases are excluded from the Landlord and Tenant Act 1954.
  • Approximately 27,655 sq ft (2,569.2 sq m) of office floorspace is currently vacant, affording an opportunity to upgrade accommodation and reposition the asset with immediate effect.

VAT

The Estate is not elected for VAT.

PLANNING

37-39 Lime Street is Grade II listed and located within the Leadenhall Market Conservation Area.
40 Lime Street is not listed, nor is it situated within a designated Conservation Area.

DEVELOPMENT POTENTIAL

Further information can be found within the marketing particulars.

EPC

37-39 Lime Street (D85).
40 Lime Street (D82).
Further information is available upon request.

SERVICE CHARGE

With the exception of the vacant units, there are no service charge shortfalls in respect of the tenanted accommodation.

Proposal

Offers in excess of £72 million (Seventy-Two Million Pounds) are invited, subject to contract, for the long leasehold interest.

This reflects a net initial yield of 6.73%, assuming purchaser's costs of 6.80% and an attractive capital value of £592 per sq ft.

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NET INITIAL YIELD:
6.73%
PRICE:
£72,000,000
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