LONDON (Reuters) - Real estate company British Land (British Land Company PLC ORD 2) has further underlined its confidence in the City of London financial district by seeking planning consent to develop prime offices for financial services firm UBS (UBS AG Ordinary Shares When Is).
The project -- a joint venture between the FTSE 100-listed company and Blackstone Group (The Blackstone Group L.P. Comm) -- would see about 700,000 square feet of net floor space built, including four trading floors, at 5 Broadgate, British Land said on Friday.
UBS would be able to bring its trading operations into one building in the City, the statement said. The development, which British Land expects will cost about 344 million pounds ($541.5 million) to build, will replace 3,4 and 6 Broadgate.
JPMorgan analyst Harm Meijer estimates the project will have a development profit of about 100 million pounds.
"We expect that a significant part of this development profit will be taken once planning is granted, which is likely to be happen in late spring or early summer of next year," Meijer said in a note to clients.
By 11:20 a.m., British Land shares were down 0.7 percent at 508.5 pence, underperforming a 0.17 percent fall in the broader UK property stocks index . UBS shares fell 0.3 percent.
"This new building also represents a further stage in the successful evolution of the Broadgate office estate and the retention of one of the world's leading investment banks in the heart of the City of London," British Land said.
Chief Executive Chris Grigg said it is "vital that the City is able to meet the current and future needs of key occupiers for attractive, flexible and sustainable floorspace as financial services will be a major driver in the recovery of the UK economy from recession."
On November 12, British Land, one of London's biggest landlords, upped its bet on the prospects of the Square Mile by unveiling a 35 million pounds redevelopment of offices occupied by Royal Bank of Scotland (Royal Bank of Scotland Group P).
In October, British Land teamed up with Canada's OMERS to develop the 340-million-pounds, 610,000-square-foot Leadenhall Building.
Its nearest rivals, Land Securities (Land Securities Group PLC) and Hammerson (Hammerson PLC ORD 25P), are heading back to the construction site with similar conviction, stirring fears the rush of speculative building may spawn a future depression in London office rents.
(Reporting by Daryl Loo)