Investing in Henderson Central London Of central offices Project and Project Vanquish. Peter Neal – Portfolio Manager: Peter has specialised in the Central London office investment market for eight years.

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    Henderson Central London Offices

    central Londonoffices

    Investing in

    with Henderson

    September 2012This document is solely for the use of professionals and is not for general public distribution.

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    Henderson Central London Offices Henderson Central London Offices

    Who we are Henderson Property are major investors in the global property market with 30 years in-depth experience. Our innovative property teams represent 19% of our overall business by assets under management. We have a dedicated global presence with offices across Asia, Europe and the US managing around 12.2bn of property assets across c.60 property funds and mandates.

    Clive Castle Director of Property Clive has over 30 years experience specialising in the Central London office market. Since joining Henderson in 1996, he has delivered consistent performance against his benchmarks and been involved in a wide range of successful investment, development and active management.

    Nick Deacon Director of Property Nick is the co-fund manager for CLOF I and has been highly involved in the growth of the London office franchise at Henderson since joining in 2004. Nick has over 12 years experience within the Central London markets and has a broad network of relationships with agents and principals. Notable investment transactions include 27 Knightsbridge, the Soho Project and Project Vanquish.

    Peter Neal Portfolio Manager Peter has specialised in the Central London office investment market for eight years. He joined Henderson in 2009 and has been responsible for key asset management initiatives as well as some very successful acquisitions and disposals for the team.

    Ilna Patel Assistant Portfolio Manager Ilna has six years experience within the property market, with a strong valuation and analytical background, She has been specialising in asset management, acquisitions and disposal activity in the Central London office market since joining Henderson in 2011.

    Geoff Harris Director of Property Development Geoff has 31 years experience in the UK property markets. With an invaluable background in engineering and development, Geoff now leads Hendersons development management capability in the London office markets. He has been responsible for major mixed use and office developments in London, Edinburgh, Birmingham and Madrid totalling over 2.8 million square feet.

    *As at August 2012 post performance fees. Past performance is not a guide to future performance.

    New Brook Buildings

    Launched in 2004, our flagship Central London Office Fund has delivered robust returns of 9.0% pa since inception.*

    The Property team

    We are a niche London office specialist team with 80 years combined experience which we apply in the management of our Central London office franchise. We are an integral part of the Henderson Property business and benefit from our integrated property investment platform, including finance, research, development, debt and currency management, performance analytics, client care, fund and transaction structuring. We have a client centric approach which ensures that we understand investors goals and develop the right products and structures for their needs.

    We have a bias towards core plus/value add strategies; the team manages 1bn of central London real estate in both pooled and segregated accounts. Our segregated accounts focus on bespoke situations evaluating structured debt and equity opportunities targeting the higher risk / return end of the investment spectrum. We currently manage two pooled funds, the Central London Office Fund (CLOF I), targeting the Central London IPD benchmark, and Central London Office Fund II (CLOF II), targeting an annualised IRR of 10% pa.

    Central London team AUM of

    c.950m

    Henderson Global Property AUM

    12.2bn

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    Property portfolio Current assets under management total c.950m across 26 assets spread across the main sub-markets of Central London. Our standing investment portfolio extends to 2 million sq ft of office accommodation and our development portfolio provides for a further 850,000 sq ft with planning consents and anticipated planning consents.The team has transacted over 2.5 billion of Central London stock.

    Our experience and record of efficient delivery has built us a strong market presence with well established relationships with agents and principals.

    docklandsSOUTH QUAY PLAZA, MARSH WALL, E14

    the cityTHE HOUNDSDITCH ESTATE: CUTLERS COURT, 115-116 HOUNDSDITCH, EC3117-119 HOUNDSDITCH, EC3;CUTLERS EXCHANGE, 123 HOUNDSDITCH, EC3

    LEADENHALL TRIANGLE: 52-56 LEADENHALL STREET, EC3109-114 FENCHURCH STREET, EC3100 FENCHURCH STREET, EC39-13 FENCHURCH BUILDINGS, EC349 LEADENHALL STREET/ 22 BILLITER STREET, EC3

    7-11 BISHOPSGATE, EC2

    mid town NEW BROOK BUILDINGS, 8/18 GREAT QUEEN STREET, WC2

    COMMONWEALTH HOUSE, 1/19 NEW OXFORD STREET, WC1

    SMITHFIELD MARKET: CHARTERHOUSE PLACE, 1-2 FARRINGDON ROAD, EC1GENERAL MARKET & ANNEX BUILDINGS, SMITHFIELD, EC1

    city fringe 1/3 NORTON FOLGATE, E1

    BISHOPS COURT, 29 ARTILLERY LANE, E1

    kings cross REGENT QUARTER: BLOCK D, 1-8 RAILWAYS STREET, N1 DANCE STUDIO, 42-50 YORK WAY, N1

    REGENTS WHARF,10-18 ALL SAINTS STREET, N1

    west endTHE SOHO PROJECT: 54 GREAT MARLBOROUGH STREET, W155/57 GREAT MARLBOROUGH STREET, W1 47 POLAND STREET, W148 POLAND STREET, W149/50 POLAND STREET, W1

    CORINTHIAN HOUSE, 279 TOTTENHAM COURT ROAD, W1

    MEDIUS HOUSE 2 SHERATON STREET & 152-160 WARDOUR STREET, W1

    PADDINGTON CENTRAL UNIT TRUST SHELDON SQUARE, W2

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    With a current pipeline capable of delivering over 850,000 sq ft of Grade A office accommodation over the next five years, the team has a strong track record in the delivery of high quality schemes in the London market. With in house development management expertise, we are able to realise additional value from complex development situations and opportunities, leveraging the teams technical and professional experience and long standing relationships with the influential London planning authorities and other key consultants and public bodies.

    Development pipeline

    Smithfield Market and Caxton House, WC1Acquired from the Administrators of Thornfield Properties on behalf of a Canadian client, this high profile portfolio comprises Caxton House, Smithfield General Market, Smithfield Annex and the Red House. Detailed planning permission has been obtained for a 195,000 sq ft office led mixed use redevelopment of Caxton House which has also been demolished to ground floor in preparation for development. In relation to the remaining buildings which are located within the Smithfield conservation area, we are currently working with conservation groups and the City of London planners in order to bring these unused buildings back into long term commercial use. We expect, through the sensitive re-development of the existing buildings, to deliver an exciting new experience for the Smithfield area, to create a new retail destination coupled with the delivery of Grade A office accommodation for one of Londons fastest improving sub markets. These buildings have enormous potential and are complex in nature as solutions have to address the adjacencies to Crossrail and Network Rail, the needs of the conservation area and, in the case of the Smithfield Estate, must be sympathetic to the existing Victorian buildings.

    The Soho Project, W1 Westminster City Council approved the Funds planning application for a circa 90,000 sq ft mixed use scheme designed by renowned Eric Parry Architects. With five separate acquisitions made over the last five years to amalgamate the site, the development will represent a major new contribution to Sohos office market in what is one of Londons most undersupplied sub markets. Commencement of the scheme is anticipated by the end of 2012 with practical completion due for Summer 2014.

    Bishops Court, E1Bishops Court was acquired during Q1 2011 in an innovative swap transaction conducted off market with Royal London Asset Management. Since then a scheme has been progressed with architects Alford Hall Monahan Morris for the redevelopment of the site to provide 77,000 sq ft of grade A office and retail accommodation. Planning consent was achieved in August 2012 from Tower Hamlets planning authority. Located close to the historic Spitalfields Market and now a hub for the tech industries, the location is set to continue its trajectory as one of Londons most dynamic office sub-markets.

    Pre-let of the year: 85,000 sq ft pre-let achieved at Regent Quarter to MacMillan Publishing one of the largest pre-lets in 2011.

    Regent Quarter, Kings CrossThe final phase of Regent Quarter, Kings Cross, a joint venture funding transaction with Istithmar P&O Estates was agreed in Q1 2011. The scheme is set to provide 125,000 sq ft of mixed use accommodation with some 85,000 sq ft Grade A office accommodation and 38 residential flats. Over half of the residential flats were sold off plan in the Far East during the final quarter of 2011 while an agreement for lease for the letting of the entire commercial element with Macmillan Publishing was completed during Q1 2012. Macmillan are to take three 15 year leases (without break) at a rent reflecting 45 per sq ft. The buildings make up a strategic island site on the east side of York way, a short distance from the 67 acre major regeneration project at Kings Cross Central which is currently under construction.

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    Project Vanquish Five adjoining office buildings known as the Leadenhall Triangle were acquired from Administrators, PricewaterhouseCoopers in May 2011 at a price in excess of 185m. A new Limited Partnership structure was created with equity provided by CLOF, CLOF II and a Canadian investor. Complex and multi-faceted, the transaction was executed through a unique underwriting mechanism within a very short timeframe. In all, Vanquish was notable as being the largest transaction undertaken in London during 2011 as a product of a distressed CMBS situation. Plans for the assets focus on the asset management of the existing buildings and tenant base in tandem with understanding the redevelopment potential for the site.

    Case Studies Our hands on approach to asset management and investment activity is evident in our performance track record.

    Moor House, London Wall EC2 A half share in the original 1960s building was acquired for 10m in 1995 on behalf of a major UK Life Fund. Planning consent was achieved to construct a 22 storey landmark scheme designed by Foster & Partners which tripled the site density to 328,000 sq ft. The interest was partially sold down in 2001 with the client receiving 10m for a reduction in its stake in the development JV from one half to one third. The total development cost for the project was 190m (including site at 60m) with an end value in 2006 of circa 300m.

    27 Knightsbridge SW1 27 Knightsbridge was acquired in late 2004 from Standard Life for 52.50m reflecting a net initial yield of 6.5%. A good quality 65,000 sq ft headquarters office building overlooking Hyde Park, the team embarked on an aggressive asset management strategy involving the surrender of a lease from Alfred Dunhill and the refurbishment of building during 2005. The space was relet on a floor by floor basis with rents achieved from 60.00 per sq ft in mid-2005 up to 107.50 per sq ft achieved in early 2007. Sold to Morley Asset Management on behalf of Aegon for 100.30m reflecting a net initial yield of 3.5%, the project delivered an annualised total return of 33.5% pa compared to the benchmark of 24.0% pa over the same period.

    Telstar House, Paddington W2 Rio Tintos London Headquarters was acquired on behalf of Warburg Henderson PEF3 for 74.5 million reflecting 6.4% net initial yield in August 2009. The building comprises some 108,500 sq ft and is let to Rio Tinto Holdings Ltd for a further 18 years at a rent reflecting 49 per sq ft. The property was subsequently sold to a private overseas investor in December 2010 in an off market transaction for 96.8 million reflecting 5.1% net initial yield.

    2011 2006

    2007

    2010

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    Opportunities

    CLOF IFUND

    CLOF II FUND

    Segregated Mandates/ Special Situations

    Status Closed Open Open

    AUM 600m 100m 250m

    Target return** IPD Central London benchmark* 10% pa IRR Bespoke

    Launch date 2004 2010 Bespoke

    Fund term remaining 3.5 years 3 years + max 2 year wind down Bespoke

    Target fund size n/a 250m Bespoke

    Current gearing 17% 19% Bespoke

    *Central London Office component of the IPD UK Annual Universe (excluding CLOF I). Source: Henderson Global Investors. **Target returns are subject to certain assumptions and risks and there can be no guarantee that such target returns will be achieved. Target returns are pre-tax and gross of fees and expenses.

    Our innovative approach enables us to source opportunities in one of the worlds most competitive investment markets. We provide both pooled and bespoke solutions for investing.

    Our experience extends across sourcing investment product, structuring bespoke segregated mandates and investment clubs together with the manufacture of market leading pooled funds. In all cases we work closely in partnership with our clients to ensure that we meet their needs and exceed their expectations.

    The Soho Project

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    Henderson Central London Offices

    Key contacts Clive CastleDirector of PropertyT: +44 (0)20 7818 5603 E: clive.castle@henderson.com

    Andrew FriendDirector of Institutional BusinessT: +44 (0)20 7818 2439E: andrew.friend@henderson.com

    Nick DeaconDirector of PropertyT: +44 (0)20 7818 5045E: nick.deacon@henderson.com

    Laura BarstowDirector of Institutional BusinessT: +44 (0)20 7818 5035E: laura.barstow@henderson.com

    Note: All data as at 31 August 2012 unless otherwise stated.This document is intended solely for the use of professionals and is not for general public distribution. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. Any investment will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions, risks and fees. This document is intended as a summary only and potential investors must read the Prospectus before investing. Issued by Henderson Global Investors Limited (reg. no. 906355), (incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) is authorised and regulated by th...

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