22nd Oct 2014 08:50
LONDON (Alliance News) - Thalassa Holdings Ltd Wednesday revealed details of its proposed move of its UK operations from Cornwall to Wiltshire, saying it was responding to "recent inaccurate press coverage" about the lease on its new building.
The company with interests in marine geophysical services and autonomous robotics said it had entered into the lease on 10,000 square foot of office space at Eastleigh Court in Wiltshire so that it could be closer to Heathrow and Gatwick airports, a move that board excluding Executive Chairman Duncan Soukup, thinks is crucial to attracting specialist and highly skilled personnel and to running an international business.
Soukup owns Eastleigh Court Ltd, which owns Eastleigh court. The company had reported the lease deal as a related party transaction on October 3.
"Given that terms had not been agreed by the company with ECL in relation to leasing the office space at the property, the company had no obligation to make any announcement in relation to the lease in the July trading update; it would have been misleading to do so until the terms of the same were settled. The lease had also not been entered into at the time of the Interim Results announcement and was therefore not capable of being disclosed at that time," Thalassa said in a statement.
It reiterated that the terms of the lease are a rental at GBP12 per square foot for 10 years starting on October 1 of this year, the term length demonstrating "to its employees the company's long term commitment to the property".
"The Independent Directors would emphasise that the overriding factor in the company's decision to rent the Property from ECL was that, in their opinion, it presented the best value for money for the company and its shareholders, having considered the options and potential means of financing a new premises available to the company at the time," it said.
"Yield was also discussed and the Independent Directors concluded that it was impossible to accurately calculate yield, as the maintenance and full renovation costs, which ECL is responsible for, will not be known until building works have been concluded," it added.
It said it had wanted to make a "best estimate" of yield and to do so used the actual cost of buying the property of GBP1.425 million, 4% stamp duty of GBP57,000 and legal fees of GBP7,500, a total up front cost of GBP1.489 million. Eastleigh Court's architects estimated renovation costs at GBP £230,000, making the aggregate up front and renovation costs GBP1.72 million, giving Eastleigh Court Ltd a theoretical yield of 6.98% before taking into account the additional costs of maintenance, service and operation of the Property, all of which are EastLeigh Court Ltd's responsibility.
Thalassa also said the Eastleigh Court property gives it opportunities to expand if needed in the future, a factor that it considered when it took the lease.
"This information has not been included in any previous disclosure, as the company has no current need for the space and because rent would be negotiable at the appropriate time, but not to exceed GBP12 per square foot," it said.
"When the Independent Directors reviewed other properties in the region that could have met their criteria as to size and length of lease, they established that all of the other office premises reviewed were at a cost premium to Eastleigh Court," the company said.
"The Independent Directors' review was further underpinned by the understanding that GBP12 per square foot was an achievable market rent for the Property. This opinion was supported by documentary evidence of 37, mainly rural, properties in the greater Wessex area. Of the 37, only 7 properties were large enough to accommodate the company's current needs. However, not all of these would have been able to accommodate future growth," it added.
The rents on the other properties looked at ranged from GBP12.50 per square foot to GBP18.50 per square foot, it said.
"The Independent Directors remain of the opinion that this transaction is in the best interests of the company and its shareholders," it added.
Thalassa shares were down 1.2% at 80.00 pence Wednesday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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