Principal Place, EC2

1 Principal Place, London EC2
Strategic Advisory

Strategic Advisory

Development Consultancy

Development Consultancy

Capital Markets

Capital Markets

Head Lease Restructuring

Head Lease Restructuring

Turning a £1 investment into a £128m profit 

In 1986, The London Borough of Hackney acquired a three-acre site straddling Shoreditch High Street and Liverpool Street. The site, costing the princely sum of £1, was granted as planning gain during the earlier phases of Broadgate’s development. With a number of short-term tenants and no immediate plans for the site, nothing much happened for years and the Borough was at a loss to know what to do with it. 

The brief 

The Kauffman’s team first got involved with this project in the ‘90s. The overriding brief was, “how do we make the most of what we’ve got?” 

Following our advice, the Borough acquired the rights to develop over the railway lines into Liverpool Street Station, which also gave us frontage onto Shoreditch High Street. Along with the acquisition of a further adjoining site, we increased the area from 3 to 3.75 acres. 

To say the project was a ‘slow burn’ would be an understatement. 

The challenge 

To make things even more complicated than usual, the landowner was also the planning authority. And having basically inherited the site for nothing, there was an inclination to get rid of it with as little fuss as possible. 

When the Borough received an offer of £8M, we stepped in and advised that if they stuck with us, we would expect to achieve in the region of £88M. 

The Borough put their faith in us and the long game began. 

The process 

We produced an outline development brief for a large office building and a separate residential tower. Meanwhile, we advised the Borough to retain its Freehold interest, sell down a new 250-year leasehold and retain a 7% ground rent. 

Following a targeted marketing campaign, the Long Leasehold interest was sold to Hammerson PLC, who subsequently assigned the site to Brookfield. Working with the new development team, planning consent was granted for Foster & Partners to design 620,000 sq ft of offices and a 51-storey residential tower comprising 311 private, and 58 affordable apartments. 

But, the development proposals were so large and costly, that the building couldn’t be built on a speculative basis. Undeterred, we secured a pre-letting of the entire building off-plan. Amazon PLC agreed to make Principal Place their new European Headquarters at a rent of £31M per annum – before a single brick had been laid. And to this day, the Borough retains the Freehold interest and receives an index-linked rental income stream. 

The result 

Principal Place was Shoreditch’s first large floorplate development. It was the catalyst that attracted Amazon, which in turn was the springboard for drawing hundreds of other exciting new occupiers to the area. It wouldn’t be an exaggeration to say that Principal Place has been integral in the uplift of the whole northern City fringe. 

The development has added huge value for the Borough, bringing significant inward investment and creating thousands of jobs. 

And that promise of £88m? We actually achieved a very healthy £128m.  

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