The British Airways Pension Trustees paid £78.75m for The Ugly Brown Building in north west London, and Ted Baker will net at least £72m, which will used to pay down debt.
The fashion chain has entered into a short-term lease of the offices for a period following completion in June, and at completion will enter into an option with the purchaser to take a long-term lease of part of the adjacent newly developed property, to be known as Bowline, on St Pancras Way.
The sale price represents a premium of approximately 39.1% to the last published book value of the property as at 26 January 2019 of £56.6m.
The sale boosts the coffers of the retailer, which has seen its share price crash after a string of profit warnings and the discovery of a £58m inventory gap in its accounts. The error was discovered after an independent review into the retailer by Deloitte, which found the figure was more than twice the amount it had previously expected.
Ted Baker has also announced that its lending bank syndicate continues to be supportive and has agreed to increase the headroom under the group’s facilities by £13.5m until 18 December 2020.
The group has also updated investors on the impact on the business of Covid-19.
In a statement to the London Stock Exchange, the group said: “The group is also not hesitating and is acting now to take a series of steps to reduce costs and protect cashflow, including suspending all non-essential capital expenditure, stopping discretionary operating expenses, and severely restricting travel.
“All available opportunities to agree rescheduling or reduction of payments are being explored with parties such as HMRC, where the Government has already signalled flexibility, landlords, and suppliers.”
The majority of the group’s stores and concessions are now closed – 384 locations closed out of a total 416 locations globally. The closed stores represent around 68% of Ted Baker’s worldwide sales.
The group added it is too early “to provide meaningful guidance” for the current financial year, and the group will update investors with its annual results in May. In line with prior guidance, the group anticipates underlying pre-tax profit to be within the £5-10m range for the year ended 26 January 2020.
Rachel Osborne, acting chief executive, said: “The sale and leaseback of the Ugly Brown Building and future relocation of our head office are significant developments resulting from the broad asset review we have undertaken in recent months. This transaction and the agreed additional financing provides further headroom and flexibility, which will support the delivery of our transformation strategy.
“The spread of Covid-19 has led to some unprecedented events around the world and uncertainty for our business and our people. We welcome the support packages so far announced by Governments and continue to focus on keeping our customers and employees safe and all of our stakeholders informed. By doing this, and by continuing to transform the way the business operates guided by our strategic priorities, we remain confident we can realise Ted’s exciting, long-term potential.”
Source: Office - propertyweek.com
