Canary Wharf sale when the price is right

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The Independent Online
Canary Wharf sale when the price is right

Canary Wharf has been written off as a 1980s white elephant for so long now that even serious players in the property market have forgotten what was said when the Docklands development crashed in 1992; someone, some day will make a fortune from it. News that four potential buyers have approached the banks that own the development suggests that day may not be too far away.

Canary Wharf is three-quarters let. Add to that the fact that half a dozen investment banks are seeking buildings with over 200,000 square feet in London, and prospects for letting the rest look better than ever. The question now is, will the 11 banks that requisitioned the development be tempted to sell out?

First, a method of valuing Canary Wharf has to be found. The development has been using rent-free periods and other inducements to attract tenants, all of which remain commercially confidential. Most observers think there is very little income stream at the moment, which renders conventional methods of valuation redundant. The only real benchmark seems to be the pounds 800m of debt attatched to the complex; the banks would be unwilling to sell for less.

They also appear split on what to do with their investment. The North Americans seem keener to get out sooner than the rest, while the UK high street banks are happy to sit tight and wait another few years. One worry is that Canary Wharf is sitting on hundreds of millions of pounds of tax losses, which the foreign banks think vulnerable to an incoming Labour government. The British banks, however, are unphased by the possibility of Tony Blair in Number 10 and seem prepared to wait for the right price.