News that British Land has signed a pre-let deal with UBS at Broadgate in the City of London - which will be the Swiss banking giant's new London headquarters - failed to boost the developer's shares. They slipped 1.6p, or 0.3%, to 496.6p. The market as a whole is down 47 points at 5686, a 0.8% fall.
British Land and its private equity partner Blackstone said the 700,000 square foot building next to Liverpool Street station will be completed by the fourth quarter of 2014. The old 4 and 6 Broadgate buildings will be demolished in April.
The developer's plans were briefly threatened by British Heritage's attempts to list Broadgate, a symbol of the brash 1980s City culture, last year, but culture secretary Jeremy Hunt ignored the heritage watchdog's advice and gave the go-ahead for the redevelopment.
It later emerged that UBS threatened to leave London if the listing went ahead and blocked the site's revamp.
In a note entitled "Soothing any pre-let nerves," Michael Burt and Jon Stewart, property analysts at Espirito Santo's Execution Noble arm, wrote:
While we had always viewed completion of the pre-let as a formality given that the building had effectively been designed to UBS's bespoke requirements, it is still reassuring to see the transaction complete in light of CMS Cameron Mckenna's recent decision to defer a pre-let at Hammerson's nearby Principal Place office development.
The terms of the transaction remain unchanged from when first announced in August 2010: UBS will lease the entire building for an average of 18.2 years to the first break at an initial rent of £54.50 per sq ft subject to annual increases in line with RPI (within a range of 0-4% per annum). In return, UBS will get a rent free period of 18 months.
