HSBC lines up deal to sell Docklands headquarters
Bank in talks to sell Canary Wharf tower, and offices in New York and Paris
Wednesday 30 September 2009
HSBC could be set to sell its London headquarters for a third time after confirming that it has received a number of expressions of interest for the Canary Wharf tower, thought to be valued at close to £880m.
The bank is also looking for offers for its Fifth Avenue office in New York and its site on the Champs-Elysées in Paris. A sale of all three, which could be announced within weeks, would raise as much as $2bn (£1.25bn) for the group.
A deal for HSBC's Docklands skyscraper would be the third time the bank has sold the site in just two years. In December last year, HSBC repossessed the office block after Spanish real estate group Metrovacesa was unable to refinance an £810m bridging loan provided by the bank for its purchase. The tower was then sold back to HSBC for £838m, after the bank sold it in 2007 for £1.09bn, netting HSBC a profit of about £250m.
The bank said in April that it was looking for ways to strike another sale-and-lease-back deal, and that it had hired real estate adviser CB Richard Ellis to start marketing the three offices. CB Richard Ellis declined to comment yesterday, while the bank refused to comment on whether a sale was imminent.
However, it is thought that preferred bidders for the sites could be named as early as next week, with reports in the South Korean press indicating that the country's National Pension Service (NPS) is close to buying the London site.
"We have resumed buying foreign properties of late, as many buildings are underrated now in the aftermath of the financial crisis," NPS spokesman Kim Ha-young said in an interview with the Korean press. "We are interested in the HSBC building in London, although we are not sure whether the building is up for sale. We don't know whether we would form a consortium or would try to buy the skyscraper on our own. All the details will be decided only if HSBC opts to sell." It is understood that HSBC is in talks with NPS over a "cash only" bid, and that there are at least two other potential bidders in the frame should the talks collapse.
Commercial-property prices have rebounded in recent months, while the number of investment groups circling potential investments in Canary Wharf and the City of London has increased. Songbird Estates, which holds a majority of Canary Wharf Group (CWG), the company that owns most of the commercial property in the area, tapped a rescue rights issue last week to secure the funding necessary to buy an additional 8.75 per cent after German bank Commerzbank sold its stake in the financial district.
It is thought that a number of investors have approached CWG about the building, which was previously occupied by Bear Stearns, the failed US investment bank that was rescued by JP Morgan.
In July, a Lebanese investment group, backed by the country's former prime minister Najib Mikati, bought part of Credit Suisse's sprawling Docklands office complex for £150m, at a yield of less than 6 per cent.
The investment group has leased the property back to the bank under a 25-year lease agreement. It is thought that there were at least 20 formal bids for the property.
Sale-and-lease-back agreements have been struck by a number of banks in recent years. Initially, the funds were used to free capital to lend. However, banks are now also under pressure to satisfy regulatory capital requirements.
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