The private UK company plans to become a £1bn quoted company with backing from US investor Security Capital
This month City & West End Developments tied up a deal that set a new record for London office rents in the West End of £700 per m2. It let 232 m2 to futures company Sintec at 7 Clifford Street, a scheme that City & West End bought in April.
It also let 1,850 m2 in the same building to Security Capital, the US concern which two months ago took a substantial controlling stake in City & West End. The US firm has transformed the UK developer’s outlook by placing £450m at its disposal.
City & West End was launched in 1996 from a management buyout of Arcona Properties, a Swedish-backed developer which had been run since 1990 by Patrick Despard.
As managing director of Arcona, Despard gained a reputation for pulling off bold schemes, primarily in the capital’s West End, throughout the first half of the 1990s against a background of the worst property crash in the UK for decades.
During that period City & West End completed schemes in the West End with backing from German open-ended fund DESPA, UK institution Norwich Union and Swedish property company Hufvudstaden. It was this track record that led to Security Capital, which likes specialist companies, taking its stake.
Despard has a regular property background. From 1980 to 1988 he worked at estate agency Allsop & Co in the City from where he moved to property company, London & Paris. He has also worked with high profile figures like Robert Maxted of Chesterfield Properties.
City & West End has been involved in over 46,450 m2 of central London offices worth more than £300m working with blue chip partners and investors.
These schemes included the £20m 50 Pall Mall , SW1, with AMP; 84 South Audley Street, W1, now owned by the Sultan of Brunei; and the International Press Centre in EC4, a 11,612 m2 acquisition, refurbishment and sale of a landmark office tower.
Before Security Capital came on the scene, City & West End owned West End property worth £75m, including prime buildings in Burlington Gardens, W1, and St James’s Square, SW1. It is already making big acquisitions and last month it paid television company ITN between £70m and £80m for its 25,547 m2 headquarters in Gray’s Inn Road, WC1, reflecting a yield of around 8%.
City & West End plans to build itself into a £1bn company within three years with a view to floating on both the London and New York stock exchanges. It will only consider buying or developing in a very specific central London zone – within the boundaries of the Circle Line on the city’s underground system.
The company will let office space on terms that are much more flexible than is usual in the London market, such as on three to five year leases. City & West End will hold property in a variety of ways, freehold or leasehold, and it will value itself along American lines – on the income stream and not via the net asset value as is normal in the UK.
Major development projects
14-17 Great Marlborough Street W1: 11,612 m2 office site – sold in 1995
45 Pall Mall SW1: 5,574 m2 office and residential joint venture with DESPA Fonds with a £50m end value
Borehamwood: 11,612 m2 commercial warehouse with Wilson Connolly and Hill Samuel
City & West End Developments
20-22 Queen Street
London W1X 8NE
tel +44 171 491 2388
fax +44 171 408 2152
