Canary Wharf property deal stalls
View PDF | Print View
by: Admin
Total views: 134
| The £1bn purchase of Britain's second-tallest tower, in London's Canary Wharf, remains uncompleted four months after it was agreed, in a vivid sign of how the credit squeeze has affected the real estate market. Royal Bank of Scotland LSE: RBS.L - news) agreed in July to sell 25 Canada Square, headquarters of Citigroup (NYSE: C - news) , to a consortium of investors including Derek Quinlan, the Irish financier, and Propinvest, a private property group. Since then, however, debt finance has become much harder to obtain and the negotiations have yet to be finalised. One person close to one of the parties said that speculation that the deal was collapsing was wide of the mark, and he expected Mr Quinlan and Propinvest to complete within the next fortnight. RBS bought the building and neighbouring 5 Canada Square - sold in July for £453m - for £1.1 bn in December 2003. A successful sale of the pair would generate an impressive return for the bank. But should the larger transaction founder, it would be one of a string of property transactions to fail in recent weeks. RBS declined to comment on whether it was providing the debt for the deal. Last month saw Delek Global Real Estate, an Aim-listed property company, withdraw from the £1.4bn purchase of a portfolio of 88 buildings owned by Jelmoli (JEL.SW - news) , a Swiss retailer. Delek and Israeli partner Igal Ahouvi blamed the "continuing uncertainty in the global commercial property market" for its decision. The consortium tried unsuccessfully to cut the sale price by more than 10 per cent before abandoning the purchase. Asset prices have slipped since the early summer, with some analysts now pencilling in a downturn with price falls of 10 per cent or more. This gloom is reflected in the share prices of listed real estate companies with none immune from the downward trend. At the most extreme, Capital & Regional has fallen 59 per cent in 12 months, Mapeley (LSE: MAY.L - news) by 53 per cent, Savills (LSE: SVS.L - news) by 47 per cent and Warner Estates (LSE: WNER.L - news) by 42 per cent. The Bank (TBHS - news) of England warned last month that the sector is "particularly prone to further shocks." But Great Portland Estates, which has 81 per cent of its portfolio in London's West End, on Tuesday announced a strong set of results as a result of rising rents in the six months to September 30. This trend outweighed the cooling investment market, allowing GPE to report adjusted net assets per share up 11 per cent to 660p. Adjusted pre-tax profits were up 55 per cent to £10.4m. Toby Courtauld, chief executive, said property markets were "engulfed in negative sentiment" but the environment played to GPE's "relative strengths". |
Rating: Not yet rated
Login to vote