The Aldgate Tower site, located on an island in the midst of the Aldgate gyratory, benefitted from a planning permission dating from 2004. Two developers had unsuccessfully attempted to build out the scheme and when the financial crisis in 2008 hit, the building contractors went into administration and the developer’s loan was called in by their funders. At this stage, the previous building had been demolished and foundation piling had been completed, but all of the above ground work remained outstanding.
The site was handed over to receivers and marketed for sale in 2010. There were many obstacles between this open area of land and the 317,000 sq ft office block envisaged by the planning permission. Aldgate Tower Investments acquired the site in December 2010.
Before any work could commence above ground, the company needed to arrange releases of rights of light from which the surrounding buildings benefitted. This involved negotiations with numerous parties and was finally concluded in early 2012.
The property is situated above the entrance to Aldgate East tube station. There is a small area of flying freehold, which takes support from a column that had been constructed within the new entrance and for which a lease would be granted from London Underground. As with normal leases from a statutory body such as LUL, the lease contained provisions allowing the landlord to forfeit for broad and subjective reasons. Given that this lease was vital to secure the structure of the building, this particular point was very sensitive to the company’s future funders.
Having dealt with the pre-commencement requirements, a construction package was arranged with Brookfield Multiplex and a professional team including EC Harris, Wilkinson Eyre and Ove Arup. This was financed by Helios Capital – the first major speculative development facility to be provided in the City since the financial crisis had begun.
The development progressed to time and to budget, with project managers FT Squared keeping a close eye on proceedings. Practical completion was achieved on 28 November 2014 and the building re-financed with a new joint venture comprising Starwood Capital and Aldgate Developments.
There had been interest from various companies during the construction period, but no lettings had been secured. It was clear that the first letting would be the most important and, after a lengthy period of negotiation, Williams Lea (a subsidiary of DHL) agreed terms to take two floors in February 2015. This was swiftly followed by lettings to high-flying start-ups Uber and WeWork. The leases were all based on an institutionally acceptable template, but these relatively young companies posed an interesting challenge in the form of security. The traditional rent deposits or parent guarantees were not appropriate or acceptable for the US based Uber and WeWork. Fladgate were commissioned to devise a bespoke package which would provide adequate protection to the client and an institutional investor in the future. This was a challenging task, but a mutually acceptable solution for landlord and tenant was secured. Further lettings to law firm Ince & Co, the Intellectual Property Office, shipping giant Maersk and global services provider AECOM followed.
The property was sold, by way of a share sale in the company, in April 2016 to a joint venture between Chinese insurer China Life and Brookfield Property Partners for £346m.
The Aldgate Tower project had lasted just over five years – from acquisition of the site, through construction, letting and to the sale. Fladgate LLP real estate partner Nick Mumby acted on all aspects of the transaction, and was supported by colleagues in the real estate team (Richard Reuben, Ed Willis and Rebecca Tavares), construction (Chris Farrell), banking (Gary Smith) and corporate (Amy Collins, Hamilton Forrest and Adrian Mawlabaux).