AMP has acquired 50 per cent of Greycoat's long leasehold in the 100,000 sq ft office block and plans to provide the funding for the development of a 250,000 sq ft building on the site. Break clauses in the leases of existing tenants mean construction could start in 1997. Giving the green light for the scheme will depend on the state of the property cycle in two years' time, according to Peter Thornton, Greycoat's managing director.
It also hinges on approval for Crossrail, the fast rail link from Liverpool Street station to Paddington, which will have a station attached to Greycoat's planned building.
Mr Thornton agreed that starting building in 1997 might be too late to catch the current cycle, which some observers think will peak shortly afterwards.
In that case Greycoat would postpone development of the site until 2002 when the current tenants' leases run out.
The proposed development marks the return of one of the best-known names of the 1980s property boom following its narrow escape from collapse in the long slump that followed.
Greycoat, responsible for some of London's most high-profile buildings, including Embankment Place, above Charing Cross station, was as renowned for the complexity of its financing arrangements as for the quality of its buildings.
Greycoat remains committed to central London offices, which it believes will perform as well or better than any property asset class in the low- inflation environment. The UK Active Value deal followed the failure of a similar refinancing proposed by Alastair Ross Goobey, chief executive of PosTel, the Post Office and BT pension fund, which was attempting to increase its position in the recovering UK property market.
Greycoat also has positions in planned developments elsewhere in London, including the rebuilding of Paternoster Square and a large site in Victoria.