Developer Land Securities has secured its profit on the development before it is even built
Land Securities today announced that it has negotiated a payment of £71m in respect of its future profits on the £250m Park House development on Oxford Street.
Previously, Land Securities forward sold the development to Qatari investment firm, Barwa Real Estate Q.S.C, which paid £250m for the site, all of the construction costs and a profit share on completion. Of that £250m, £225m was paid immediately and £25m was to be paid to Land Securities on completion - which is due in November 2012.
Under the new deal, construction plans for the site remain unchanged, with Land Securities continuing to act as development manager.
The original agreement said Land Securities was due to receive a payment of £25.0m on practical completion and a further profit share, up to a maximum of £50m. The fixed payment will now be made on the earlier of practical completion or 28 February 2013.
As part of today’s announcement, Land Securities also said Barwa has sold its interests in Park House to SFL3 Ltd, a subsidiary of Shard Funding Ltd, which is the parent company of the London Bridge Quarter.
Commenting on the transaction, Robert Noel, managing director of Land Securities’ London Portfolio, said: “We are making great progress at Park House and remain committed to working with QNB Capital in producing a world class building.
“Today’s transaction converts a contingent future payment into an earlier fixed payment, eliminating risk as we recycle capital back into our development programme, including our latest schemes at 123 Victoria Street, SW1 and 110 Cannon Street, EC4, both of which are due to be completed before Park House.”