Real Estate Investment and Finance (Wiley Finance) by Baum Andrew E. & Hartzell David

Author:Baum, Andrew E. & Hartzell, David
Language: eng
Format: epub
Publisher: Wiley
Published: 2020-10-27T16:00:00+00:00

Size

1,400,000 sq. ft

Rent

£70/sq. ft

Cap rate

5.0%

GDV

£1,960,000,000

Cost

£575/sq. ft

Cost inc. fees

£1,006,250,000

Site cost

£300,000,000

Yield to cost

7.5%

Profit

£653,750,000

Profit

50.0%

LRD and AXA-REIM and their professional advisory teams worked very hard over the June to October 2017 period to persuade investors to proceed, and succeeded (Figure 10.2). Confidence in London had been boosted by recent tech property deals (by Google, Amazon, and others), and it was agreed that the developers make as much noise about the decision as possible in order to deter other developments and reduce the competing supply of space.

The developers also took the opportunity to make a virtue out of the huge lettable area and changes in occupier preferences towards lifestyle facilities and co-working. Convene – a hospitality provider – signed up for 100,000 square feet. Space was set aside for food markets, gyms, innovation and fitness hubs, a club, a cycling park, and reflective areas.

By 2018, the anticipated profit was down from the heady days of 2016, and (assuming a successful letting programme) settling around a “normal” level of 25% of costs, and a development yield premium of 1.3% (Table 10.16).

By 2019, construction was almost complete and letting activity was well underway. Completion was planned for the end of 2020. The eventual success of 22 Bishopsgate was about to be settled once and for all.

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