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Land Securities in record sale

PROPERTY developer Land Securities yesterday set a record for the sale of an undeveloped chunk of land in London, forward-selling a retail, office and residential development on Oxford Street to the Qataris.

Barwa Real Estate, in which Qatar’s sovereign wealth fund is the biggest shareholder, agreed to stump up a total of £250m for the site, as well as all the construction costs. A total of £225m of that will come as a down payment, with the remainder due on completion. Land Securities also managed to wring a share of future profits out of Barwa for the first year after completion of the site, estimated to be worth around £33m.

The deal comes just over a month after Qatar, with its seemingly insatiable appetite for property investment, snapped up the UK’s most prestigious department store, Harrods, from long-time owner Mohammed Al-Fayed for £1.5bn.

Park House will include 165,000 square foot of offices, 90,000 square foot of prime retail space and 39 luxury homes, according to Land Securities, which will continue to hold responsibility for developing the site.

Construction on Park House started last month and is not expected to be completed before November 2012.

According to analysts at Credit Suisse, the retail space will be hawked out at £500 per square foot, while each square foot of office space will be let out for about £90.

Robert Noel, boss of Land Securities’ London portfolio, said the sale enables the group to realise the majority of its profit “ahead of schedule, with significantly reduced risk and with no capital employed”.

He said the capital would be ploughed back into the group’s speculative development pipeline.

RICHARD WOMACK
SENIOR DIRECTOR, CB RICHARD ELLIS

COMMERCIAL property advisory firm CB Richard Ellis was drafted in by Barwa Real Estate to advise it on the forward purchase of Mayfair office and residential development Park House.

Leading the team at the firm was Richard Womack, an experienced senior director in the central London office.

Womack has advised on some of the most prestigious deals in London in the past few years, including Prudential’s £185m sale of 1 Knightsbridge Green, a stone’s throw from Harrods, to Abu Dhabi. He was also involved in the Hong Kong-based Ho family’s £306m sale of Arundel Great Court, bordered by The Strand, to Land Securities in 2006, and on the Oak Portfolio sale for £475m on behalf of Tele-Real Trillium.

The latter portfolio was mainly let to the Royal Bank of Scotland and included the Coutts headquarters on the Strand and the Drummonds head office on Trafalgar Square.

In his spare time, Womack is a keen skier and sailor, and has a real passion for cycling, travelling frequently to the Alps to ride in the mountains.

In contrast, Land Securities did not take any outside advice on the Park House deal, preferring to use its own in-house advisers.