Grosvenor and Derwent London have established a joint venture to bring forward the redevelopment of a key West End site at Hyde Park Corner.
The partners are in the process of selecting architects to design a luxury hotel, office and residential scheme for the 1.5-acre site at 1-5 Grosvenor Place, SW1.
Leases to the site, which is currently occupied by 168,000 sq ft of predominantly office buildings, have been restructured.
Under the agreement, Derwent London’s leases, which were due to expire in 2063 and 2084, have been restructured into a new 150-year term at a ground rent of 5% of rental income.
Grosvenor holds the freehold. Simultaneously, Derwent London has sold 50% of its ownership to Grosvenor for £60m.
The existing buildings are fully occupied, with lease breaks in 2014 and 2016, at a gross income of £6.2m per annum.
Derwent London will continue its asset management role at the site, with Grosvenor managing the development.
Derwent London chief executive John Burns said: “We are delighted to have formalised our joint venture with Grosvenor.
“Having assembled the ownership of this site over many years, this initiative unlocks the opportunity for a substantial redevelopment in one of the best locations in the West End. We look forward to working with the Grosvenor team, with their vast experience in the area.”
Giles Clarke, Grosvenor Britain & Ireland’s executive director with responsibility for its London estate, said: “Signing this deal with Derwent London means we can now start working up detailed plans for this important site. This is one of the most exciting development opportunities currently available in prime central London.”
bridget.o’connell@estatesgazette.com
