British Land in City tower JV with Canadian partner

LONDON: British Land is teaming up with Canada's Oxford Properties to develop the Leadenhall Building in London's City financial district, the second crisis-hit skyscraper project to be revived within a week.

Britain's second-largest property company said on Monday it had agreed terms to build the 47-storey scheme in a 50:50 joint venture with the real estate arm of the OMERS Worldwide Group of Companies, one of Canada's largest pension plans.

The cost of developing the property, known as "the Cheesegrater" for its distinctive tapering shape, is estimated at 340 million pounds (RM).

British Land shares gained 0.4% to trade at 509 pence by 0933 GMT, in line with the broader UK listed property market .

Last week, British Land's biggest rival Land Securities announced it would resume construction work on a 37-storey building known as the "Walkie Talkie" at nearby 20 Fenchurch Street after striking a similar tie-up with Canary Wharf Group.

The Leadenhall Building is expected to inject 610,000 square feet of space into London's supply-starved office market, while the Land Securities 500 million pound project will add around 690,000 square feet of commercial space.

Both schemes are due to complete in the second quarter of 2014 after long delays caused by a shortage of debt and the collapse in demand for prime offices following savage job cuts in Britain's financial sector.

After securing the equity funding necessary to trim the risks of their development plans, British Land and Land Securities will be competing directly to find tenants for their properties at the highest possible rents on the longest terms.

The designs of both schemes offer floorplates of various sizes, allowing the companies to tap the widest possible market for tenants, with smaller floors aimed at growing or recovering businesses and the larger floors aimed at large multinational corporations.

Canadian advance

News of Oxford Properties' investment in the Leadenhall Building comes less than a month after it agreed to buy out partner UBS Global Asset Management in the Watermark Place office complex, highlighting its growing interest in London's rebounding property market.

Oxford Properties and UBS-South East Recovery Fund have been joint owners of Watermark Place since mid 2007.

Watermark Place was fully let to Japanese investment bank Nomura in 2009.

Oxford oversees and manages approximately $18 billion of real estate including the Royal Bank Plaza in Toronto, the West Side Yards in New York and Centennial Place in Calgary. — Reuters