The math behind a 998 year lease.

ircoha

From www.rte.ie

"Global banking giant HSBC has sold its London headquarters for £1.09 billion to Spanish property group Metrovacesa, in the biggest property deal in British history.

The sale, which was worth €1.6 billion, will allow HSBC to remain in the building - but Metrovacesa will own a 998-year lease, the bank announced in an official statement."

Wondering if anyone would like to 'do the math' on this one and explain how it works or should I post on daft.ie!

godtabh

ircoha wrote:

From www.rte.ie

"Global banking giant HSBC has sold its London headquarters for £1.09 billion to Spanish property group Metrovacesa, in the biggest property deal in British history.

The sale, which was worth €1.6 billion, will allow HSBC to remain in the building - but Metrovacesa will own a 998-year lease, the bank announced in an official statement."

Wondering if anyone would like to 'do the math' on this one and explain how it works or should I post on daft.ie!

I would assume that in the future the building would be worth more and they could sell the lease hold interest or what for the term to finish and own it out right

Victor

This is a 'fee farm lease' and is not uncommon. Typically 999 years.

It gives the leasee the right to pretty much do anything they want with the building, but the leasor keeps the right to fundamental change to the asset.

The leasee needsd to be careful not to go bankrupt or the landlord might repossess. :eek:

jdivision

These type of "leases" are normal in Britain because much of the land was formerly parts of an estate. you usually have to pay a token ground rent each year, £15 or something. There are a few estates in Ireland too including the Pembroke Estate and there was one in Dundalk that was sold last year.