On the go: The trustees of British Airways’ pension schemes have moved to capitalise on businesses’ need to refinance amid the Covid-19 pandemic, purchasing the London headquarters of struggling fashion retailer Ted Baker.
The Airways scheme has agreed to pay £78.75m for the St Pancras office building, known as the Ugly Brown Building, in a deal that will complete in June and reportedly offers a 40 per cent premium on the last book value of the property.
In addition, the scheme has agreed to lease the office back to Ted Baker in the short term, and has given the fashion brand the option to enter a long-term lease of another newly developed building in its portfolio, adjacent to its current offices.
Annual rent of £3.25m will be paid to the scheme until the adjacent building, known as Bowline, is ready for occupation. The long-term leasing option lasts for 10 years and requires rental payments of £4.2m a year until a review after five years, with a rent-free period for the first 21 months of the contract.
The short-term lease will expire on March 31 2023.
The trustees’ addition to their property portfolio also allows Ted Baker to “repay existing indebtedness to significantly de-lever the group”, according to an announcement to investors posted on Monday. The chain has shut its retail outlets in response to the coronavirus pandemic, significantly disrupting its revenues.
The sale must be approved by a simple majority of Ted Baker’s shareholders, although this looks likely to be achieved with founder Ray Kelvin committing his 35 per cent of outstanding share capital to backing the deal.
