Leading investors reduce stakes in Canary Wharf

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The Independent Online
SEVERAL LEADING investors in the Canary Wharf Group announced yesterday that they were reducing their stakes in Britain's biggest office complex.

The pounds 213m move comes as the lock-in period following the group's listing last March expires, and analysts say that further offerings could follow.

The proposed sale also comes just days after the much-delayed opening of the Jubilee Line extension at Canary Wharf, which was seen as helping to boost long-term operations at the complex.

Shareholders including CNA Financial Corporation, the Glick family, Edmond Safra and his Republic New York offered 50.7 million shares, or 7.4 per cent of the company.

Nan Rogers, an analyst at Charterhouse Securities, said: "It makes sense [to trim their stakes]. I remain cynical about prospects for large-scale office developments in London over the coming 10 years."

Canary Wharf floated 25 per cent of the group in March at 330p a share. The stock, which reached a high of 450p last July, ended 7p lower yesterday at 384p.

CNA Financial Corporation offered 20 million shares, a fifth of its stake, while Mr Safra is selling a further 10 million shares, or more than half his holdings in the 81-acre development. The Glick family, which held 97 million shares, is off-loading 10 million.

Credit Suisse First Boston, lead-managing on the deal, said: "[The sale] will meet the company's desire to increase its free float in order to attract new shareholders, increase the marketability of the company's equity and satisfy the demand for shares following the company's entry into the FT-SE 250 Index."

The transaction should net the sellers a sizeable profit. Canary Wharf Group bought the docklands project from its creditors in 1995 for about pounds 800m; it is now worth about pounds 2.5bn.

Not all leading shareholders are reducing their exposure, however. Paul Reichmann, the Canary Wharf chairman, who started the development in the 1980s when he headed developer Olympia & York, is retaining his 11 per cent holding.

Saudi Arabia's Prince Alwaleed Bin Talal, who holds 6 per cent of the equity, is also holding firm.

Credit Suisse First Boston said that there was an over-allotment option of a further 5 million shares. It added that the shareholders paring their stakes were not allowed to make further sales within 30 days.

In a separate announcement yesterday, Canary Wharf said that it had bought Texaco's London headquarters for pounds 82.5m.

The bulk of the 217,000sq ft block at One Westferry Circus, at the entrance to the main Canary Wharf site, will be leased back to the US oil company for pounds 27.50 per sq ft.

The balance will be let to Credit Suisse First Boston.

Canary Wharf said that it would finance the deal with cash on hand, and arrange longer-term financing in the coming months. It did not give details of the length of its lease for the building.

Earlier this month, Canary Wharf announced better-than-expected results for the year to June and said that it would turn a profit by next year.

It reported pre-tax losses of pounds 42.8m, compared with the previous year's losses of pounds 96.3m.

When complete, Canary Wharf will comprise 13.5 million sq ft of grade- A office and retail space. Of this, 8.3 million sq ft, or 61 per cent of the total, is completed, under construction or set to start construction in the coming weeks.