Background
JP Morgan Cazenove occupied 16,000 sq ft business recovery offices and date centre space on the 3rd floor at 1 Exchange Tower, E14 in London’s Docklands. The 16 storey office tower at 1 & 2 Harbour Exchange was acquired by Hammerson in 1999 for £77m and subsequently sold onto MGPA Europe Fund III in September 2010 for £134.6m – an 8.1% yield. The building comprised 485,000 sq ft office space let to a range of tenants. The new landlord, MGP Harbour Exchange II S.a.r.l. sought to increase the annual rent payable under JPMC’s leases as at the 29th September 2009 review date, from £21.00 per sq ft to a highly optimistic headline rent of £32.50 per sq ft.
McCalmont-Woods was instructed by JP Morgan Cazenove to handle the upward only rent review negotiations on its behalf and mitigate any increase in rent payable from the review date.
Services provided
- Consideration of existing lease contract and provisions for rent review
- Comprehensive research into, and analysis of, comparable market evidence in the Docklands offices sub-market at the valuation date
- Preparation of initial client report on rent review outlining McCalmont-Woods’ recommended strategy
- Negotiations with landlord’s agent to include submission of a Calderbank offer
- Preparation of Statement of Agreed Facts and Statement of Agreed Evidence as a prelude to a full Arbitration
Oucome
Settlement was reached by negotiation between the parties at a revised rent of £22.00 per sq ft with McCalmont-Woods achieving almost £1 million rental savings for JP Morgan Cazenove over the 5 year term remaining on its two leases expiring in March 2015.
