Hammerson is undertaking the work needed to refurbish the building, which it estimates will cost pounds 65m. Part of this will be covered by the building's insurers, although the amount is subject to negotiation. The insurers will refund the cost of restoring the building, but Hammerson plans to rebuild it to a higher specification.
Work on refurbishment - already started by HSBC - will be taken over by Hammerson on Monday and is expected to be complete by March 1996. Ron Spinney, Hammerson's chief executive, said the office was one of the most prestigious in the City.
'Following completion, we shall effectively have an entirely new building, whilst having the benefit of the income under the existing leases in the meantime.' He added that the lack of development in the City following the property crash meant that it would be one of the few prime buildings available.
HSBC, the parent group of Hongkong Bank and Midland Bank, was also one of the 19 tenants.
The total rent roll for the 290,000 sq ft of office space is pounds 11.8m, although Hammerson is also liable to pay pounds 3.8m a year to Prudential. It owns the freehold, but has sold a long lease, expiring in 2073, at a rent that increases at seven-year intervals until it reaches half the income from the building. The leases of about half the tenants are due to expire in September 1996, although Hammerson hopes to re-let.
Hammerson could have to pay HSBC up to pounds 7.5m more, depending on the cost of the refurbishment and its eventual value.
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