Watchdog examines Canary Wharf disclosures

The Financial Services Authority is understood to be looking into the recent public pronouncements of Canary Wharf to see if it breached rules on disclosure of information as investors demanded explanations into the events which left shares in the group another 7 per cent adrift yesterday.

While the FSA has not launched a full investigation into the matter, sources say the regulator is "casting its eye" over the events which led to a 22 per cent collapse in the company's shares on Wednesday.

The property group, which owns the office complex in London's Docklands, admitted on Wednesday that vacancy levels could rise much faster than expected. But the confession has angered the investment community, with analysts and investors insisting that that information should have been disclosed to the market far sooner.

One institutional investor said yesterday: "We will be arranging a meeting to see the company so they can explain themselves and obviously they have got some explaining to do. We are very disappointed. We just don't expect announcements like that."

Shares in Canary Wharf fell another 12p to 168p as a raft of downgrades by brokers took their toll. Analysts at Goldman Sachs slashed their fair value estimate by 44 per cent to 199p and downgraded their recommendation to "in line" from "outperform".

Canary Wharf, which had claimed to be resilient to recession because tenants sign up for 25 years, admitted that some letting agreements allowed occupiers to return parts of their buildings for five or 10 years through put options.

Three tenants – the investment bank Lehman Brothers and the law firms Clifford Chance and Skadden Arps – all have the option to lease back space for five to 10 years. The company said its vacancy rate could jump from 6.7 per cent to 11 per cent over the next two years.

"This new information means that Canary Wharf has not been giving full disclosure about these contracts in the past," analysts at Goldman Sachs said.