vision
2020 our vision for your future
THE REEL
Fully Integrated Mixed-Use development on London’s South Bank
TEAM 57
1
VISION
To create the most exciting Media, Production and Technology hub of London. ALLOW
TO GROW AND GLOBALISE
Strengthens and enhances ITV’s brand as Britain’s largest integrated producer and broadcaster, state of the art studio and office tailored to ITV and allow ITV to expand globally.
STAGING THE SOUTH BANK IDENTITY
Located the heart of world class entertainment and cultural fabric, in close proximity to major transportation station, the development will frame London as the preeiminent home of the media industry.
24/7 DYNAMIC MIXED-USE PROJECT
A mix of Grade-A office, studio, luxury residential, blackbox theatre, boutique hotel, retail and pedestrian friendly promenade that guarantees a thriving urban neighbourhood.
EXCEPTIONAL FINANCIAL RETURNS
Presents promising returns to ITV and investors, our redevelopment strategy allows ITV to operate seamlessly, minimises its potential cost and maximises the financial return for all investors.
ATTRACT TOP TALENT TO
The Reel is in one of the Opportunity Areas of Vision 2020, and supports the Mayor’s ambition to create new homes, jobs, and attract the top talent to London.
TEAM 57
2
RE-DEVELOPMENT OVERVIEW
Smart & Vibrant 24/7 Mixed Use Re-development Site Area: 2.5 acres Total floor space: 1,140,706 square feet Public space: 10,000 square feet Grade A Office space: Modern Studio space: Private Residences: Hotel Suites: Retail:
500,000 net square feet 150,000 net square feet 170,000 net square feet 32,800 net square feet 51,000 net square feet
Tower Building height: 28 storeys Cycle spaces: 30 Car park spaces: 250 total (100 for ITV) Demolition period: Foundation period: Construction period: Fit-out period: BREEAM Offices rating:
6 months 6 months 24 - 36 months 6 months Excellent
Proposed Acquisition Price: £105,000,000 Total Development Cost: £610,969,806
TEAM 57
3
OFFICE:
WORLD TOWERS
Flexible, highly efficient Grade A work space
Total Area: • ITV: • Speculative:
500,000 net square feet 200,000 sf @ £45/sf 300,000 sf @ £60/sf
Highlights: • Team 57 to work with ITV together to understand ITVs desires for the office space, and to create an identity and landmark for ITV. • ITV sits on the lower levels of the tower directly connected to the studio space on the podium level through a dedicated lift bank. • Flexible and efficient Grade-A office space. • A separate entrance and lobby for ITV. • Full service cafeteria and executive dining option for ITV. • Dedicated electricity switch-gear and feeds for ITV. Speculative Target Tenants: • Forward looking media and tech companies
Advantages & Challenges: • Southbank office rents saw an increase to £47.50 psf by 6% and marking a return to 2007 returns. 1 • Large new developments around London Bridge and Waterloo will drive occupier confidence and accelerate rents over the next two years. 1 • New development in vicinity are driving tenants to relocate to South Bank, such as South Bank Tower, The Place, The Shard and New Elizabeth House. Source: 1. CBRE Central London Property Market Review, 4Q13
TEAM 57
4
HOTEL
Boutique hotel with a stunning view and a touch of personality Total Area: 32,800 square feet No. of Rooms: 80 Keys ADR: £150.00
“London has a post Games legacy of modernised and new hotel products to attract visitors and compete with the world’s best.”
-Robert Milburn,UK Hotels Leader, PwC
Highlights: • An exclusive upper mid-scale boutique hotel. • Contemporary and trendy guest room with full floor windows facing River Thames. • The rooftop bar offers a dramatic and glittering view while serving specialty cocktails and charcuterie. Target Users: • Young-professional who works or is interested in the media industry, who is visiting London on business but also catching up with a former colleague. Advantages & Challenges: • Overall London hotel market is strong with an average of 85% occupancy rate, ADR of £110.1 • Limited supply in the vicinity or on the river bank. • Proximity to major tourist attractions. Potential Operators / Brands:
Crowne Plaza London Bridge St. Paul’s Cathedral The Waldorf Hilton Temple
The Savoy
Sou thw ark
dg Bri e
Hu
mg
dge
Premier Inn London Southwark
SITE Charing Cross
London Bri
Brid ge
oo
terl Wa
Millennium Bridge
Blackfriars Bridge
ME London
The Mad Hatter Hotel
erfo
rd B
ridg
Holiday Inn Mercure London Express Bridge Hotel
e
Hotel Novotel London Blackfriars
Shangri-La
CitizenM London Bankside
London Bridge
ibis London Blackfriars
Source: 1. STR Report 2. VisitBritian.com, Department of Culture, media and Sport
Waterloo London Eye
Westminster
Marriott London Country Hall
Soutwark
N
Park Plaza Westminster
TEAM 57
5
RESIDENTIAL: RESIDENCES AT ONE SOUTH BANK Luxury waterfront living on the Stage
Total Area: • Condo: • Affordable Housing:
170,000 net square feet 119,000 sf 57,000 sf
Unit Mix: • 9 x Studio / 500 sf • 55 x 1 Bedroom / 800 sf • 61 x 2 Bedroom / 1,000 sf • 30 x 3 Bedroom / 1,200 sf Total: 155 homes Highlights: • Prime postcode: SE1 • Exclusive and unobstructed view of the river and skyline. • 2,000 sf health and fitness centre. • 24 hr concierge service, CCTV and a video entry system • International sales showroom to strengthen pre-sales. Target Buyer: • Creative professionals and families for living and investing from Russia, Asia, Europe and the UK.
“The prime residential market continued to go from strength to strength in 2013, supported by strong underlying market fundamentals: construction volumes, sales activity and average values all increased from 2012”
Advantages & Challenges: • Strong upward pressure on condo values. • The upper end of the market continues to expand, with an annual increase of 50% in the over £1,000 psf segment. 1 • New developments in the vicinity have driven sales and prices higher, these include: One Blackfriars, South Bank Tower, The Shard, New Elizabeth House, Saint Georges Wharf.
- CBRE Central London Property Market Review, 4Q13 Source: 1. CBRE Central London Prop Market Rev. 4Q13.
TEAM 57
6
RETAIL + PUBLIC REALM
Pedestrian friendly waterfront promenade
“The demand for London retail from international retailers will help support prime retail rents, as former secondary areas become more established due to spillover in demand. London is well positioned to capture capital flows, offering overseas investors a gateway into Europe in addition to the opportunity to invest in one of the most liquid and transparent markets in the world.”
- Adam Hetherington, MD, Central London, CBRE
Total Area: • Retail: • Public Plaza:
6,000 net square feet 51,000 sf 10,000 sf
Highlights: • A place for residents, office workers and visitors to dine and shop. • Improved public access to the river front. • Design-led lifestyle shops that energize the ground floor. • Access for the disabled. • Sufficient light to enhance the safety of pedestrians. • Spacious and pedestrian friendly waterfront promenade. • Celebrates South Bank’s unique cultural resurgence. Target Visitors: • Local community residents and office workers. • International and regional tourists and visitors. Advantages & Challenges: • Proximity to Waterloo station that generates a substantial demand for retail and public space. • Shops in vicinity: Balcony at Waterloo Station, Gabriel’s Wharf and OXO Tower Wharf Shops. Potential Tenants:
TEAM 57
7
ADDITIONAL FEATURES STUDIO CONDO
State of the art studio owned by Total Area: 150,000 square feet • Building within a building, a self-sustaining property within the greater complex. • Modernised podium space with large efficient floorplates and soaring heights from 4 metres to 7.3 metres to accomodate video production. • Ownership of the Studio Condo for ITV to control their own corporate destiny. • Dedicated loading bays • Secured underground VIP drop-offs points. • Dedicated electricity feeds and switch-gear. • Dedicated 2,000 kW generators.
CAR PARK & CYCLE Below Grade
Site plan and access point The programmes are fully integrated and complement each other within the complex to promote an exciting, 24/7, vibrant and healthy environment. RETAIL
Basement car parking spaces: 250 with 100 included in ITV Studio Condominium 30 Secure cycle spaces provided on the site.
MULTI-PURPOSE Versatile event facilities
Blackbox theatre space for television screening events, fashion shows,festivals, TED talks, and other civic uses.
TEAM 57
HOTEL STUDIO
24 18
6 12
F&B SPECIAL EVENT PARKING RESIDENTIAL
8
SEAMLESS DEVELOPMENT STRATEGY To minimise disturbance of ITV’s operations 2/2/2014 Q1
Q2
Q3
2015 Q4
Q1
Q2
2016 Q3
RELEASES EXISTING FACILITIES
Q4
Q1
Q2
2017 Q3
Q4
Q1
Q2
2018 Q3
Q4
Q1
Q2
2019 Q3
Q4
Q1
Q2
2020 Q3
Q4
Q1
Q2
2021 Q3
Q4
FIT-OUT DEMOLITION
FOUNDATIONS
Q3
Q4
ITV MOVES INTO NEW WORLDWIDE HQ
FLOORS 20-50 FIT-OUT
SUPERSTRUCTURE, EXTERIOR ENCLOSURE, INTERIORS INSPECTION / CERTIFICATION
ASSET ACQUIRED THROUGH NEW JV
Q2
EXIT YEAR
CONSOLIDATES OFFICES AND STUDIOS IN TEMPORARY FACILITY
DESIGN AND PERMITTING
Q1
CONDO OWNERS MOVE IN
SEMI-PERMANENT LOAN
CONSTRUCTION LOAN
DEVELOPMENT TEAM: Team 57 is one of the most well regarded real estate development firms globally. Team 57 is a fully integrated industry leader that excels in all aspect urban development, acquisitions, asset management, and finance. In addition to our offices in London, Team 57 is active in New York City, San Francisco, Abu Dhabi, Sao Paulo and Shanghai and boasts a team of more than 1,000 professionals. Team 57’s development experience spans across a range of best-in-class mixed-use real estate asset, including residential, retail, office, and affordable properties in top tier markets. Team 57 specializes in complex, large-scale developments and has an extensive track record of negotiating successfully with city planners and municipal governments. Team 57 has generated superior risk adjusted equity returns for numerous institutional equity partner. For The Reel, Team 57 has gathered a team of world class architects, designers, sustainability experts, and a wide range of specialized consultants who have helped transform and define urban communities around the world. Team 57 intends to bring this expertise to ITV’s new headquarters and to further announce its success globally.
TEAM 57
Traffic Consultant
Structure Constultant
Fire Safety Consultant
MEP Consultant
Interior Design Consultant
Sustainability Consultant
TEAM 57
Architect
Landscape Consultant
developer
Lighting and Media Consultant
Signage and Way-finding Consultant
9
RETURN PROFILE
Sound financial and non-financial returns • The Team 57 bid of £105,000,000 represents a return on ITV’s initial investment of 87.5% over a 16-month hold from January 2013. • In addition to realizing this exceptional return, ITV will benefit from ownership of the ITV Condominium, a building within a building that is fully self sustainable within The Reel complex, that features 150,000 net sf of studio space and 100 parking stalls, along with direct access to the extraordinary amenities in the property. • The market value of one of London’s most distinguished commercial condominium has been valued by Team 57’s underwriters as £111,036,000, detailed as follows: • 100-stall fully secure underground car park: • State of the art modernized studio space:
£4,161,000 £106,875,000
• The Condominium provides ITV with a fully modernized and efficient facility to lead the British and global television industry and to extend its legacy for the next century, provided free and clear of ground lease encumbrance thereby limiting the Condominium’s operating expenses relative to its peers. The Condominium will strengthen and enhance its brand equity and recognition as the largest integrated producer and broadcaster in the UK. • Inclusive of the Condominium’s valuation, ITV’s ROI is 285.8%. • With the world-class experienced team, the Team 57 offers a seamless integration and cost efficient development plan that aims to minimise the disturbance to ITV’s operations. • Below market rent for Grade-A office space that is tailored to ITV’s brand equity and representating over £4.2 million annual savings.
TEAM 57
10
FINANCIAL OVERVIEW Return Analysis
Sources & Uses of Funds Sources
% Total
Construction Loan Equity In Other Equity
£ 387.4 mm £ 182.4 mm £46.1 mm
Total SOURCES
£ 611 MM
63% 30% 8%
100%
Construction financing
Uses Site Acquisition Acquisition Costs Contractual Redevelopment Fee Development Cost Developer Fee CIL Construction Loan Fee Contingency Total uses
DEBT
DEBT
£ 409.3 mm £ 12.3 mm £ 49.5 mm £ 5.7 mm £ 16.5 mm £ 611 mm
69% 2% 8% 1% 3% 100%
Floating + 275bps over 5 year LIBOR / 3.91% 3+1+1-year
EQUITY
EQUITY
TEAM 57
18% 1% 1%
£460,800,000/ £404 PSF/ 16.3% Yr1 DY/ 4.1 x Yr 1 DSCR
5-year Facility / Matures upon Completion in 2019 15% GP / 85% LP Joint Venture
£ 105 mm £ 6.3 mm £ 6.5 mm
Semi-Permanent Financing
£387,400,000 / £340 PSF / 68.0% Loan to Cost Floating + 400bps over 5 year LIBOR / 5.16%
% Total
Facility/ Permits flexibility for asset monetization
Joint Venture distributes cashflows through waterfall
11
FINANCIAL STRATEGY Partners Returns
An investment in The Reel redevelopment generates favourable investor returns commensurate with the project’s level of risk. TEAM 57 • 285.8% ROI • Ownership of the State of the Art corporate creativity hub • 24/7 live-work-play environment
Limited Partners • > 19% IRR • > 2.0 Equity Multiple • Conservative debt • Limited liquidity risk
• > 37% IRR • > 5.4 Equity Multiple
Promote Structure
TEAM 57
GP
LP
Original
15%
85%
> 12% / 1st Hurdle
30%
70%
> 16% / 2nd Hurdle
50%
50%
Levered IRR / CFx
37.3% / 5.4x
18.4% / 2.16x
12
FINANCIAL STRATEGY
Project Sensitivities and Disposition Strategy Exit Metric Office (352,941 sf)
6.0% Cap Rate
Hotel (80 keys)
£382,000 / Key
Retail (60,000 sf)
6.0% Cap Rate
NOI 2021
VALUATION
£ 26.1 mm
£ 463.5 mm
LP Levered IRR
Residential
£ 1.8 mm 3.0%
3.5%
4.5%
£ 6 mm
4.0%
25.3%
24.9%
24.5%
5.0%
23.6%
23.3%
22.8%
21.8% 6.0% Cap Rate 5.5% £22.2% 456,000 Office Cap Rate
Car Park (150 spaces)
20.0%
Pre-sell / N.A
LP Levered IRR
21.4%
4.5%
5.0%
5.5%
6.0%
6.5%
24.1%
23.7%
23.3%
22.9%
22.5%
22.4%
22.0%
21.6%
21.1%
20.7%
20.0%
19.6%
19.1%
£ 99.9 mm 20.5% £20.9% 7.6 mm
6.0%
20.9%
20.5%
20.0%
19.6%
19.1%
18.4%
17.8%
17.1%
6.5%
19.7%
19.3%
18.7%
18.0%
17.4%
16.7%
16.0%
15.2%
7.0%
18.5%
17.8%
17.2%
16.5%
15.8%
15.0%
14.1%
13.1%
7.5%
17.1%
16.4%
15.7%
15.0%
14.0%
13.1%
12.1%
11.0%
8.0%
15.8%
15.1%
14.2%
13.3%
12.3%
11.2%
10.2%
9.0%
GP Levered IRR Const. Cost Escalation
Const. Cost Escalation
20.0%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
37.3%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
4.5%
25.3%
24.9%
24.5%
24.1%
23.7%
23.3%
22.9%
22.5%
4.5%
51.1%
50.4%
49.7%
48.9%
48.0%
47.2%
46.2%
45.3%
5.0%
23.6%
23.3%
22.8%
22.4%
22.0%
21.6%
21.1%
20.7%
5.5%
22.2%
21.8%
21.4%
20.9%
20.5%
20.0%
19.6%
19.1%
6.0%
20.9%
20.5%
20.0%
19.6%
19.1%
18.4%
17.8%
17.1%
6.5%
19.7%
19.3%
18.7%
18.0%
17.4%
16.7%
16.0%
15.2%
7.0%
18.5%
17.8%
17.2%
16.5%
15.8%
15.0%
14.1%
13.1%
7.5%
17.1%
16.4%
15.7%
15.0%
14.0%
13.1%
12.1%
8.0%
15.8%
15.1%
14.2%
13.3%
12.3%
11.2%
10.2%
Office Cap Rate
Office Cap Rate
Cost Escalation £Const. 30.4 mm
5.0%
47.3%
46.4%
45.5%
44.6%
43.6%
42.5%
41.3%
40.1%
5.5%
43.5%
42.5%
41.4%
40.3%
39.0%
37.7%
36.2%
34.8%
6.0%
39.8%
38.6%
37.3%
35.8%
34.4%
33.5%
32.5%
31.4%
6.5%
36.0%
34.5%
33.5%
32.5%
31.5%
30.4%
29.3%
28.0%
7.0%
32.8%
31.9%
30.9%
29.8%
28.6%
27.4%
26.8%
26.2%
11.0%
7.5%
30.5%
29.4%
28.3%
27.1%
26.5%
25.9%
25.3%
24.6%
9.0%
8.0%
28.2%
27.0%
26.4%
25.8%
25.2%
24.5%
23.8%
23.1%
GP Levered IRR
Office Cap Rate
Const. Cost Escalation 37.3%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
4.5%
51.1%
50.4%
49.7%
48.9%
48.0%
47.2%
46.2%
45.3%
5.0%
47.3%
46.4%
45.5%
44.6%
43.6%
42.5%
41.3%
40.1%
5.5%
43.5%
42.5%
41.4%
40.3%
39.0%
37.7%
36.2%
34.8%
6.0%
39.8%
38.6%
37.3%
35.8%
34.4%
33.5%
32.5%
31.4%
6.5%
36.0%
34.5%
33.5%
32.5%
31.5%
30.4%
29.3%
28.0%
7.0%
32.8%
31.9%
30.9%
29.8%
28.6%
27.4%
26.8%
26.2%
28.3%
27.1%
26.5%
25.9%
25.3%
24.6%
7.5%
TEAM 30.5% 57 29.4%
13
POSITIVE IMPACT
A better London SE1 for everyone Greater London Authority, Lambeth Council, South Bank Employers Group, Waterloo Community Development Group and the local community : • • • •
Deliver a £600 million investment into South Bank to create a new business district for London. Attract top talent to work in South Bank. Additional 500,000 sf of office spaces to attract media and creative company to South Bank. Bring a major economic boost with around 4,000 jobs on the site as well as 155 new homes generating £11 million spent in the local economy every year. vision
2020
RISKS & MITIGANTS Development of 351,000 sf speculative office and 60,000 sf speculative retail space. Exposure to construction pricing due to inflation and labour cost. Residual valuation, investment period of capitalisation rate of 6%. Obtaining the demolition and planning approval due to heights and modern design
TEAM 57
our vision for your future
• Secure by investment grade (Moody’s Ba1) anchor tenancy that will attract media/tech type tenants. • Strategically seek a Not-to-Exceed-Price contract to provide cost certainty; a 6% construction contingency has been assumed in the underwriting. • Prime office capitalisation rates dipped below 4.5% in 2013 transactions; retail capitalisation rates fall below 4%. • 10 new developments over 50 storeys are in the pipeline; experienced architects and engineers familiar with submission procedures. 14
vision
2020 our vision for your future
THE REEL
A fully integrated mixed-use evelopment on London’s South Bank.
TEAM 57
15