Derwent London announced that it had exchanged a conditional contract to purchase the freehold of City Road Island EC1, which houses the Moorfields Eye Hospital and the University College London Institute of Ophthalmology for £239m on Thursday.
Derwent London said that Moorfields Eye Hospital NHS Foundation Trust and UCL, as part of the Oriel joint project, are selling the facility for £239m before costs which is contingent on final Treasury approval, which is expected in the second half of 2022.
Completion of the purchase is also contingent on Oriel delivering the new eye hospital at St Pancras and then vacating City Road Island, which is expected to happen in early 2027.
Derwent London has hired architects AHMM and a whole professional team, and as part of its regeneration plans, it will engage the community extensively.
This significant 2.5-acre site, which includes approximately 400,000sqft of existing buildings, is in the heart of the Tech Belt, where the group has significant assets.
According to our first assessments, the site has the potential to provide a large 750,000+ sqft campus with ample public space and high environmental credentials.
Paul Williams, CEO, Derwent London, said, “We are delighted to have secured such an important central London regeneration opportunity in the heart of the Tech Belt, where we aim to deliver the next generation of distinctive ‘long-life, loose-fit, low carbon’ commercial space.”
“This is a significant step towards realising the Oriel joint initiative. Oriel will bring together UCL’s formidable research base with Moorfields’ world-class healthcare delivery in one integrated centre of research, education and care,” added Professor Alan Thompson, Dean of the UCL Faculty of Brain Sciences.
The acquisition is likely to have a minimal impact on the company’s profitability once it is completed.
The £239m payment that Derwent London will pay upon completion of the transaction is in accordance with the market value of the estate, which does not yet have planning consent, and will be funded by undrawn lending facilities and cash.
The contract also includes potential overage provisions that may be payable if the site receives planning approval and/or is sold within a certain time frame.
The potential sums payable under such overage arrangements are subject to an aggregate cap, which includes the purchase consideration due at completion.
Martin Kuper, Chief Executive of Moorfields Eye Hospital NHS Foundation Trust stated, “This is an important step forward for our plans for Oriel, a new eye care, research and education centre. The sale of our City Road Island, which is conditional on Treasury approval of Oriel, is a key element of our funding strategy.”
“All proceeds will be reinvested in the new centre to secure the long-term future of world-leading eye care, research and education in a way that represents value for money and benefits our patients. We will continue to maintain our strong links with Islington Council as plans for City Road Island progress.”
Derwent London shares rose 3.5% to 3,003p in early morning trade on Thursday.