Lee Henry responds to UBS lease story
There has been a great deal of comment on the fact that Jersey Development Company (JDC) has taken back UBS’s premises on New Street.
JDC took on the remaining lease at 28 New Street as part of an agreement with UBS who have moved from New Street to the International Finance Centre (IFC). This take back formed part of the package of incentives that JDC negotiated with UBS. These types of lease take-backs are commonplace and often form part of the normal incentives for new office tenant agreements as in the case of UBS.
JDC is in competition with other developers and in recent years has been successful in securing three out of six new significant lease requirements meaning that the incentives and lease take-backs offered by other developers was more competitive.
It should be highlighted that JDC does not use taxpayer funds. Although JDC is 100 per cent owned by the States of Jersey, JDC does not rely on any guarantees from the States nor has it received any funds from the States of Jersey since 2007.
Securing tenants and offering incentives is part of the overall costs for IFC 1 and JDC stands by its previous publicly stated position that IFC 1 will generate a net return of at least £7.5m. Ultimately, UBS enabled JDC to commence the construction of this important flagship project which is presently 65% let and a further 10% under offer.
The Jersey Action Group’s claim as to cost of the dilapidations is wildly inaccurate - the costs will be less than half of what the Jersey Action Group claims. JDC is carrying out the dilapidations of the space and is advertising the accommodation for rent for the remaining period of the lease.
JDC would point out that to just review the Court records of the lease does not provide the true position as one of the three floors at 28 New Street is sub-let to Ocorian until the end of the lease term and therefore JDC’s total lease liability is a third lower than claimed and may reduce further if the other floors are sub-let.
JDC’s office from 2007 to 2014 was at Harbour Reach. Due to the lack of Grade A office space available in 2014, JDC moved to a small office suite in Anley Street to help secure a new incoming business to the Island, BlueCrest hedge fund, who could not find suitable modern premises in St. Helier at the time.
Between 2014 and 2017 JDC’s staff numbers have increased in-line with its development activity and JDC had to find larger premises. Instead of leaving New Street empty, JDC took the decision to move into the space but will remain flexible to move again should a tenant wish to lease the premises. As the New Street premises are fully fitted out, JDC’s move costs were literally the costs of the removal firm and some IT set-up costs (less than £10k in total).