The 2012 edition of the Guinness Book of World Records is probably still just a twinkle in a printer’s eye, but in the field of commercial property, markers are already being laid down for a £1bn+ world record bid.
The Citigroup Tower, scraping the sky in Canary Wharf, London, has been placed on the market by entrepreneur Glenn Maud and property tycoon Derek Quinlan. The pair, operating as Gardenprime Limited, purchased the commercial property in 2007 for £1bn, just as the debt-fuelled property boom was peaking. Commercial property value subsequently suffered a severe loss of form, slumping by more than 40% and the pair have reportedly been seeking a buyer for the 1.2m sq ft commercial property since last summer.
Competitors vying for the iconic 42-storey tower are expected to include UK commercial property groups, international private investors, and insurance and pension fund groups.
The current record for a UK commercial property is the £1.09bn sale and leaseback deal made in 2007 for HSBC’s headquarters, situated close to the Citigroup Tower.
Citigroup pays £47.50 per sq ft and Jones Lang LaSalle, managing the sale, advises that the current income return of £57.6m can nudge £70m within ten years and exceed £100m within twenty years. The lease has twenty-four years to run, subject to a fixed uplift in 2015, followed by indexed 3.2% annual increases.
The Canary Wharf arena has already witnessed an accomplished performance of commercial property acquisition last year, with US investment bank JP Morgan reportedly paying £495m for the tower at 25 Bank Street, intended for use as its European headquarters from 2012.
This handed a place on the commercial property rostrum to Songbird Estates, the former owners whose annual profits reportedly rose by almost 40% on the back of the deal.
The starter’s gun appears to have been fired for the race for the Citigroup Tower, with the sellers hoping for a similarly titanic boost in profit.
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