Docklands developer and bid target Songbird Estates has claimed its value had swollen by almost £500 million in just five months, putting further pressure on its Qatari and Canadian suitors to raise their £2.2 billion takeover pitch.
The Qatar Investment Authority and Canadian developer Brookfield made a low-ball 295p-a-share approach to win full control of Songbird this month. Qatar already owns 28.6 per cent of Songbird, itself a 69 per cent shareholder in developer Canary Wharf Group.
Songbird quickly dismissed the approach and today said a booming London property market, planning permission for its Wood Wharf development at Canary Wharf and major lettings to banks such as Société Générale had sent the value of the business skyrocketing since the summer.
It published updated estimates of its portfolio which put a 381p-a-share, £2.82 billion valuation on the business, well ahead of the £2.36 billion, 319p net asset value at the end of June.
Songbird chairman David Pritchard said: “The growth reflects both the continued uplift in the London investment property market and the significant progress on asset management on the estate.”
But there is also “substantial” additional value to come from its other pipeline projects, such as the overhaul of the Shell Centre on the South Bank, and the future benefits from the arrival of Crossrail at Canary Wharf in 2018, the company added.
The QIA and Brookfield have until next Thursday to make a firm approach for Songbird. Reports suggested the joint venture could turn hostile but there has been radio silence since the rejection of the initial approach.
Oriel analyst Miranda Cockburn said: “Hopefully this information will provide the QIA and Brookfield with some guidance as to a more sensible offer level, if indeed they want to make an offer now.”
Analysts at Lazarus said the net asset value of Songbird could even hit 533p a share, £4 billion, by 2018. “An offer should start with a four and not a two,” the broker said.
Canary Wharf Group has built more than 16 million sq ft of office space in Docklands over the past 25 years, and still owns around half of it. It is gearing up for its next stage of growth, with its workforce set to expand beyond the current 105,000 as it challenges the City for financial supremacy.
The QIA counts Harrods among its assets in London. It became a major shareholder in 2009 as part of a bailout for CWG, which came close to collapse amid plunging commercial property values. The joint venture would have to buy out other stakeholders including the US investor Simon Glick and China Investment Corporation.Reuse content