Canary Wharf, the giant office development in London's Docklands, has pledged to return over £2bn to its shareholders ahead of schedule.
The property company said yesterday it would begin the return of capital immediately with a share buyback scheme for part of the £2bn, which is to be returned over next four years. The process had not been expected to begin until next year. Some analysts estimated that the group could eventually afford to return up to £4bn to shareholders.
Canary Wharf, whose shares closed up 5.5 per cent yesterday at 558p, said it would put forward a plan on the best way to return the bulk of the funds at its annual meeting in November.
Current redistributable reserves were estimated at £450m. The rest of the money will become available as the group securitises more buildings in the 13.5 million-sq-ft Canary Wharf estate, which will be completed by 2004.
The building programme is two or three years ahead of schedule, as offices in the development have been taken up by businesses much more quickly than expected, with many of London's leading investment banks now based there.
Paul Reichmann, the company's chairman, said: "This share buyback and other measures now being undertaken by the company are important first steps in fulfilling our intention to return capital to shareholders."
When Canary Wharf listed in 1999, its prospectus said it would return excess capital to shareholders "in due course". It has not paid dividends as a consequence. A company representative pointed out that it will be returning four times the £520m raised on flotation.
The company is also expected to announce its plans for developments beyond the 13.5m sq ft that is under way. It is expected to form a separate venture that will develop land adjourning the Canary Wharf estate, which could provide a further 5 million sq ft of office and retail space. There is also speculation that the group will consider schemes in other parts of the country.
Canary Wharf's Docklands complex was the key piece in the early-1990s fall of the Reichmann family, the high-flying 1980s Canadian developers. The development went bankrupt, but in the middle 1990s it was bought from the banks that had taken possession and nursed back to health by a consortium. It won a place in the blue-chip FTSE 100 index last year.Reuse content