Ted Baker, the global lifestyle brand, announces it has secured its new global HQ, at 101 on Cleveland in the heart of Fitzrovia, London. The new HQ, which will be called the Gorgeous Brown Building (GBB), is a fitting home for the brand with its distinctive flatiron shape and epic ceiling heights. This will inspire Ted’s creativity in a flexible workspace configured for collaboration in a beautiful new working environment for the team.
Under the new 10 year lease agreement with the landlord, Westminster City Council, the Group has secured 30,000 sq.ft. of net space at a cost of £30.33 per sq.ft. and expects to move during Summer 2022. The new headline annual rent will be £0.9m at GBB compared to the current £3.25m annual rent for Ugly Brown Building (UBB), and up to £4.2m in relation to option to lease for Block A of the Tribeca development in Kings Cross. These savings are separate to the fixed rent cost saving target of 15% for financial year 2022 that the Group announced at its Preliminary Results on 14 June 2021.
As part of the transformation plan that was launched in June 2020, the Group completed the sale and leaseback of its long-time global HQ, the UBB, for £78.75m, alongside a short-term leaseback until 31 March 2023. The deal included an option to lease the redeveloped next door building Block A. Subsequently, the commercial property market landscape has changed dramatically. The Group has taken advantage of this and agreed a more commercially attractive deal for a prime central London office, allowing the option on Block A to lapse. Over the first five years of the GBB lease, aggregate cashflow benefit of the new HQ is in excess of £13m compared to the lease on Block A. This further demonstrates the cashflow discipline the team has established over the last 18 months.
Under the sale and leaseback agreement on UBB last year with BA Pension Fund, the Group negotiated an £8m cash payment to use for the fitout of a new HQ. The Group will use this £8m to ensure no net additional capex is spent on the new HQ. Therefore, the Group reiterates its previous capex guidance of £15m for the financial year to January 2023.
The total annual rent bill of £0.9m will be funded by the Group’s existing resources. Accounting for the lease under IFRS16, a right of use asset worth approximately £6m will be reflected on the Group’s balance sheet, along with an associated lease liability of approximately £8m.
Rachel Osborne, CEO, said,
“We are delighted to have secured a gorgeous 30,000 sq.ft. building as our new Global HQ in Fitzrovia. It will enable us to work more efficiently and collaboratively, and most importantly to express our unique brand personality. We look forward to making our team members comfortable and hosting our global partners in our new showrooms from Summer 2022.
Having spent more than 20 years in the Ugly Brown Building, it will be invigorating to be in our new site in Fitzrovia. Times have changed, as have our ways of working, and our brand has a refreshed personality and energy, which will be perfectly reflected in the Gorgeous Brown Building.”