PRIME OFFICE INVESTMENT
Fully let to Standard Bank
47/49 La M o t te St re et , St H el i er, Jers ey, JE 4 8 XR
INVESTMENT SUMMARY
Location / Description
•
Fully let Office HQ building in St Helier, Jersey.
•
32,183 sq ft (2,989.90 sq m) NIA of high quality office accommodation arranged over ground
and three upper floors.
•
404 sq ft (37.5 sq m) of basement storage and 20 car parking spaces.
Tenure & Tenancy
•
Freehold.
•
Let to Standard Bank Jersey Ltd with a guarantee from Standard Bank Offshore Group Ltd offering excellent tenant covenants.
•
Lease expiry on 13th May 2022.
•
Total rent of £860,000 pa reflecting a rent of £25 psf. Headline ERV for St Helier is £34psf.
•
Rent reviews are every 3rd year, upwards only to OMRV.
•
Tenant has an option to extend the lease for a further 21 years to 13th May 2043.
Proposal
•
Offers are invited in excess of £11,165,000 (Eleven Million One Hundred and Sixty Five Thousand Pounds) for the freehold interest, subject to contract and exclusive of VAT.
•
A purchase at this level would reflect a net initial yield of 7.25% after allowing for purchaser’s
costs of 6.14%.
JERSEY
Location
Jersey is well established as Britain’s largest ‘offshore’
financial centre, whose economic and physical
development has experienced rapid growth over
recent years.
This role has been made possible by the islands
legal status as a Crown Dependency, which gives it
the ability to conduct it’s domestic and fiscal affairs
independent of both the UK and the European Union.
This has enabled the island to offer an attractive tax
regime for both private and corporate wealth (no VAT,
Inheritance tax, capital gains or corporation tax and
income tax at a flat rate of 20%). However, unlike many
other ‘offshore’ centers throughout the world, this
regime is available within a stable political structure
and a strict regulatory framework.
As a result Jersey accommodates the offices of
over 50 international banks, 200 licensed trusts and
company administrators, 100 investment managers,
stockbrokers, advisors, custodians and fund
administrators, the ‘big 4’ and other accountancy firms
and numerous highly regarded law firms.
The Jersey Financial Services Commission is
responsible for the regulation, supervision and, within
its legal remit, the development of financial services
industry on the island. More information can be found
at their website, www.jerseyfsc.org.
In addition to its financial roll Jersey is also a major
tourist destination with an estimated 750,000 tourists
visiting the island every year which contribute 20%
of the Islands GDP. A combination of these visitors
and the relatively high disposable incomes enjoyed
by its residents means that the island also supports
a comprehensive retail offer. Other, albeit lesser
contributions to Jersey’s economy come from hightech manufacturing and the agricultural sectors.
St Helier
residential and leisure complex was completed in 2002,
whilst Liberty Wharf, the new transport interchange,
hotel, office and retail complex was completed in 2010.
St Helier is the capital and principal population centre
of Jersey and accommodates virtually all of the
islands prime retail and office stock. The town has a
population of 28,000 which accounts for approximately
27% of the total population of Jersey.
Numerous new office developments have taken place
to accommodate the demand for larger and better
quality buildings from financial sector tenants.
Its economic growth has prompted considerable public
and private sector development. A new marina,
Portinfer
St John
St Mary
A8
Trinity
St Ouen
Les Mielles
Nature Reserve
St Peter
Jersey
A12
St Clair
Jersey Airport
La Haule
St Martin
Le Hurel
A9
Bellozanne
A13
Le Catel
A8
Maufant
THE
PROPERTY
Archirondel
Faldouët
Five Oaks
A1
St Hellier
Grouville
La Pulente
Les Creux
Fauvic
A4
St Helier, Je-Sain
Samarés
t Peter Port
Poole - Jersey (St Helier)
SITUATION
La Motte Street is situated in the heart of St Helier
with occupiers within the city including:
King Street, which is 350m from the subject property,
is the prime retail pitch in the town, housing retailers
including; Marks & Spencer, Next, Boots, Swarovski, JD Sports, Waterstones, New Look and Burton.
- BNP Paribas
- ING Bank
- Mourant Ozannes
- Jersey Telecom
- RBC
- Dept For Social Security
A1
1
Hill St
r St
aste
e
Rou
te d
uF
ort
Rd
ur’s
avi
o
Ann St
St
S
La Motte Street
Grosvenor St
Don R
d
La
nS
t
th
Eliz
abe
La
Por
t
ve St
Hilgro
lc
Mu
8
Co
lom
ber
ie
La
Rte
du
n St
s St
ad
Quee
St Jam
e
lan
King S
t
Gr
ee
2
Es
p
Hilary St
dS
t
Halkett Pl
Br
oa
Regent Rd
7
St
3
New
4
eS
t
5
THE
PROPERTY
Ca
6
stl
7
47/49 La Motte Street occupies a prominent corner
site at the junction of La Motte Street and Ann Street
and has an extensive return frontage to the latter.
A16
La Route
A4
KEY
1. Liberty Wharf
2. Ernst & Young
3. KPMG
4. City Bank
5. OGIER
6. Jersey Finance
7. HSBC International
8. Fort Regent
du Fort
COMMUNICATION
Jersey is situated off the north-west coast of France, 14 miles from Normandy and 85 miles from the south coast of
England. It can easily be accessed via sea and air links, which mainly serve the UK, France and Switzerland.
Sea
Jersey is well served by frequent and regular flights
from airports in the UK. Journey times for flights from
London Gatwick Airport and London City Airport are 1
hour 20 minutes, and 1 hour respectively. Jersey Airport
is located approximately 5 miles (8km) to the west
of St Helier.
Fast ferries from the UK to Jersey operate a regular
service from Poole, with fastest journey times of 3 hours
30 minutes. A daily ferry departs from Portsmouth, with
a fastest journey time of 9 hours 30 minutes. Ferries
from the UK dock in St Helier on arrival in Jersey.
Beres
6
1
7
ur’
sR
d
av
io
St
St
S
5
Queen
Hilary St
St
4
THE
PROPERTY
King S
t
e St
Hilgrov
Bath St
3
Peter St
Haljkett
Halkett P
Don St
t
rch S
Chu
e St
La Mott
8
lom
be
rie
Le Breton Lane
La C
hass
Fort Regent
Co
e
La
St
Hill St
St James
2
lace
reet
ford S
t
Ann St
Wesley St
Air
KEY
1. Barclays Wealth
2. Marks & Spencer
3. JD Sports
4. Burton
Chapel
Don
5. Next
6. Waterstones
7. Boots
8. BNP Paribas
Rd
Lane
PROPERTY OVERVIEW
The property, completed in 2001, comprises a self-contained office building arranged over basement, ground and
three upper floors totaling approximately 32,183 sq ft (2,989.90 sq m). The building is of frame construction with
stone and brick elevations under flat roofs. Windows are powder coated, double glazed units with a curtain wall
feature over the entrance and on the third floor. Car parking, storage and plant rooms are located at basement
level and office accommodation on the four upper levels with further plant areas at roof level.
The main entrance gives access to a reception area which in turn leads to the principal core which contains a
spacious stair case, a 10 person lift and male, female and disabled WCs and a kitchen at each office level. To the
rear of the building there is a second core with similar lift and stair facilities and male and female WCs on every
floor, together with various cleaner’s cupboards, showers and tea/coffee preparation facilities.
The office accommodation benefits from the following specification:
•
Excellent natural light
•
Carpet tiled metal encapsulated full access floors
•
Suspended ceilings with recessed fluorescent lights
•
Environmental control via comfort cooling system
There are 20 car spaces within the basement car park which is accessed via a ramp from the lane at the rear of
the building.
ACCOMMODATION
The property provides flexible, open plan floorplates which are designed to appeal to a whole spectrum of occupiers.
The property areas are defined in the lease for rent review purposes as follows:
Floor
Sq m (NIA)
Sq ft (NIA)
Third
645.49
6,948
Second
810.21
8,721
First
810.21
8,721
Ground
723.99
7,793
Total
2,989.90
32,183
In addition there is a basement storage area of approximately 37.53 m²/ 404 ft².
LIGHTWELL
STAIRS LIFT
STAIRS
Example of upper floor office configuration.
TENURE
Freehold.
LIFT
TENANCY
The property is let to Standard Bank Jersey Ltd with a
parent guarantee from Standard Bank Offshore Group
Limited.
Floor
Office
The property is let on full repairing and insuring terms
for 21 years from 14 May 2001 expiring on 13 May 2022.
The tenant has an option to take a new lease for
a further term of 21 years at an open market rent
at expiry of the existing lease. The current rent is
£860,000 per annum which equates to £25 per square
foot, subject to upwards only rent reviews every three
years (as is the custom in Jersey). The rent has been
analysed as follows:
Size
Rental
Rate
Total
32,183 sq ft £25.00psf £804,575
Basement
Storage
404 sq ft
£13.43psf
£5,425
Car Parking
20 Spaces
per space
£2,500
£50,000
Total
£860,000
Standard Bank have sublet the third floor office
space to Consortia Partnership Ltd. Consortia are an
independent trust company who provide fiduciary, fund
and corporate services to clients across the globe.
COVENANT INFORMATION
Standard Bank Jersey Ltd (J-12999) has its registered
office at 47/49 La Motte Street and reports its
principle activities as banking and regulated financial
services activities including stockbroking, asset
management, investment management and custodian
services.
For 2015 it reported income of £36m, pre tax profit of
£7.1m and equity shareholder funds of £2.054bn. Dun
& Bradstreet give Standard Bank Jersey Ltd a rating of
O1, representing an undisclosed financial strength and
a minimum risk of business failure.
Standard Bank Jersey Ltd is a wholly owned subsidiary
of Standard Bank Offshore Group Ltd (J-43694) who
act as guarantor. Standard Bank Offshore Group Ltd
reports its principle activity as that of an investment
holding company.
Standard Bank Offshore Group Ltd’s ultimate parent is
Standard Bank Group Ltd of South Africa which has a
Fitch rating of BBB-.
MARKET COMMENTARY
The Jersey economy has been remarkably resilient to
the global downturn and has shown real and tangible
signs of growth.
Jersey is increasingly gaining stature as a mature, well
regulated and sophisticated international player and
has a AA- rating by Standard and Poors.
Despite the recent and prolonged recession in
europe, the Jersey economy continues to thrive. It
has an innate ability to flatten out the peaks and
troughs of the UK
and worldwide cycles despite being
commercially intertwined with these sectors through
its offshore financial services industry.
Offices
Prime office rents have, over the past decade,
demonstrated
a steady upward trend avoiding the
downturns experienced elsewhere. A robust planning
regime, geographical constraints and a lack of
speculative development have combined to make for
a tight supply of prime space which has traditionally
been supplied on a pre-let basis.
In addition to the consistently benign market
conditions investors are also able to benefit from:-
• Longer than average lease duration
• Multiple 3 yearly, upward only OMV or JRPI linked
indexed rent reviews
• UK based commercial leases
• An absence of security of tenure and complex
landlord & tenant legislation
• A large number of international covenants and UK
backed tenancies
• Nominal/low property rates, usually recoverable
• A pool of first class professional expertise
JERSEY LETTING MARKET
Rental growth has been achieved, even in the poor
economic climate of recent times, due to a tight planning
regime, limited speculative development and occupier
appetite from better quality offices arising due to relocations, consolidations, mergers and acquisitions.
No 37 Esplanade was instrumental in driving rental rates
forward. The property was part pre-let setting a new
benchmark and the remaining “speculative” element
presented
a much needed opportunity for a number of
businesses seeking quality offices. Demand was such that
the developer was able to achieve rents of £32-34 per sq
ft (net effective circa £30 per sq ft). This rental rate is
expected to be further enhanced following completion of
the 80,000 sq ft pre-let to Royal Bank of Canada at 68-72
Esplanade.
Liberation House and Windward House are now let at
£28 psf reflecting the market rent as at last reviews in
2013/14. The next Reviews are due from October 2016
where further rental increase are anticipated to move in
line with current net effective rental levels of £30.00 psf.
Of St Helier’s estimated office stock of 2.8m sq ft, less
than 160,000 sq ft, (5.7% of the total) is vacant, much of
this stock being second-hand space. True prime Grade
A stock is now severely limited following the letting of
37 Esplanade and there is now limited availability of
good quality accommodation until completion of 68-72
Esplanade. The lack of supply coupled with anticipated
demand is putting pressure on headline rents indicating
that rents in Jersey have the potential to increase further.
The majority of occupier demand is for good quality,
Grade A accommodation in close proximity to the
Esplanade and Waterfront. At present we are aware that a
number of major, local financial occupiers are discussing
pre-lets which should provide the catalyst for these
developments. These include BNP Paribas, UBS, Jersey
Trust Co, Deloitte & Sanne Group.
Recent comparable letting transactions of note:
Date
Address
Tenant
Headline Rent (PSF)
Apr 16
Jersey International Finance Centre
BNP Paribas
(pre let details TBC)
July 15
27 Esplanade
Jersey Trust Company
(pre let details TBC)
Jun 15
Jersey International Finance Centre
UBS
(pre let details TBC)
May 14
68-72 Esplanade
Royal Bank of Canada
(pre let details TBC)
Nov 13
37 Esplanade
Firs Names (Jersey) Limited
£27 rising to £38
Nov 13
37 Esplanade
Breven Howard
£33 rising to £35
Nov 13
37 Esplanade
Volaw Group Services Limited
£31 -£32
Jun 12
37 Esplanade
Colins Stewart
£34
Aug 12
37 Esplanade
KPMG
£32
Nov 12
37 Esplanade
PWC
£32
Est £34
Est £34
Est £34
Est £32-£34
OFFICE INVESTMENT MARKET
The Jersey office market has experienced strong investor interest over the past 18 months, albeit restricted by a
lack of supply as landlords are unwilling to dispose of assets which have performed well over the past 8 years.
Recent comparable investment transactions of note:
Date
Property
Size (Sq ft)
Tenants
Rent (PSF)
Q3 16
Liberation & Windward
House, Esplanade
86,668
Multi-Let
£26-£28
Q3 16
13 Esplanade
-
Appleby
Q1 15
26 New Street and
Dumaresq House
-
Q1 15
Trafalgar Court,
Guernsea
Q1 15
Q1 15
Price (Purchaser)
ca£34,000,000
NIY
7%
(Under Offer)
ca
-
£10,750,000
6.6%
Bedells Lawyer
-
£14,270,000
7%
-
Multilet - Northern
Trust, Aztec
-
£61,380,000
(Stenprop)
6.5%
Ogier House
75,946
Ogier
Esplanade Ltd
-
£27,000,000
(Standard Life)
7.5%
Sir Walter Raleigh
House
21,114
Multi Let 50% vacant
-
£6,450,000
(Valad)
7.33%
CAPITAL ALLOWANCES
Unclaimed Capital Allowances maybe available to the purchaser. More details can be provided on request.
VAT
VAT is not applicable in Jersey. Goods and Services Tax (@ 5%) may be applicable. All figures quoted in this
brochure are exclusive of GST and we would recommend that prospective purchasers make their own enquiries as
to liability.
JERSEY CORPORATE STRUCTURE
Most acquisitions of Jersey commercial property are via a Jersey corporate structure. The benefits of structuring
an acquisition in such a manner include:
· Significant potential Jersey stamp duty savings – the stamp duty rate for a direct purchase is 5% for properties with a value of over £2 million (with a lower rate for the first £2 million). No stamp duty should be payable on a purchase of a Jersey company holding the property (though an element of stamp duty is payable on registration of security).
· More flexible ownership structure – a company enables you to have a more varied ownership structure, and makes any future changes to ownership percentages both simpler and cheaper.
· Limited liability – shareholders in a company will have the usual limited liability protection that a limited company provides.
· Potentially more attractive to lenders – Jersey law provides limited options for enforcing security directly over
property, so holding the property via a company gives the lender potentially greater options and may therefore be more appealing to lenders.
DEBT
Kimmre have secured indicative debt proposals from a number of banks which can be made available to potential
purchasers.
The salient terms would be as follows:
•
LTV – 55%
•
Margin – 2.55% over 3 month Libor
•
Term – 3 years
More information can be provided upon request.
PROPOSAL
Offers are invited in excess of £11,165,000 (Eleven Million and One Hundred and Sixty Five Thousand Pounds) for
the freehold interest, subject to contract and exclusive of VAT / GST.
A purchase at this level would reflect a net initial yield of 7.25% after allowing for the purchaser’s costs of 6.14%. PURCHASE RATIONALE
•
A more stable occupational market that the main land UK.
•
6 years unexpired to a secure international banking tenant.
•
Very low office vacancy rates.
•
High quality office accommodation.
•
Rental growth prospects.
•
Investing via a corporate structure will offer investors a tax efficient method of acquiring a secure and attractive investment.
•
Using the available debt package, will require equity of approximately £5.2m.
•
The addition of debt may enhance the equity returns over the investors hold period.
CONTACT DETAILS
For further information, or to arrange an inspection of the property, please contact:
Richard Peace MRICS
Mike Burden MRICS
Simon Buckley FRICS
e: [email protected]
e: [email protected]
e: [email protected]
t: +44 (0) 20 7952 6104
t: +44 (0) 20 7952 6103
t: +44 (0) 1534 880 880
m: +44 (0) 7870 649 217
m: +44 (0) 7815 305 180
5 South Molton Street, London, W1K 5QE
www.kimmre.com
MISREPRESENTATION ACT 1967
Kimmeridge Real Estate Ltd and Buckley & Co on its own behalf and for vendors or lessors of this property, whose agent it is, gives notice that: 1. The particulars are produced in good faith, but are a
general guide only and do not constitute any part of a contract. 2. No person in the employment of the agent(s) has any authority to make or give any representation or warranty whatsoever in relation
to this property. 3. The property is offered subject to contract and unless otherwise stated all rents are quoted exclusive of VAT. 4. Nothing in these particulars should be deemed a statement that
the property is in good condition, or that any services or facilities are in working order. 5. Unless otherwise stated, no investigations have been made regarding pollution, or potential land, air or water
contamination. Interested parties are advised to carry out their own investigations if required. Publication Date: August 2016
www.jrb-creative.com
Hackney, London