Barclays sublets Canary Wharf offices, extends lease on another
BARCLAYS has agreed to two deals with landlord Canary Wharf Group that effectively allow the bank to walk away from one major office in the east London financial district while extending its lease on another.
The bank has sub-leased its offices at a building called 10 Cabot Square and 5 North Colonnade back to the landlord, which will now re-purpose the building and find a new tenant, according to a statement on Thursday (Dec 21). At the same time, the lender has signed a five-year extension to its lease at its Canary Wharf headquarters, One Churchill Place until 2039.
The deals mean Barclays has now radically trimmed the amount of space it occupies in the area, having already agreed to hand over another Canary Wharf property to the UK government in 2016.
“After announcing our intention to exit 5 North Colonnade in 2021, I am pleased we have reached this agreement with Canary Wharf Group which delivers a long-term cost saving for the bank,” Barclays Execution Services chief operating officer Alastair Blackwell said in the statement.
The lease extension on the main headquarters is a boost for Canary Wharf Group, which has seen some key tenants including HSBC Holdings and law firm Clifford Chance leave. The landlord, which is owned by Brookfield and Qatar’s sovereign wealth fund, has been developing homes, lab space and increasing the amount of leisure and entertainment on the estate in an attempt to attract tenants.
But the shift in working patterns accelerated by the pandemic that’s encouraged some companies to look for less but more attractive space remains a threat to the landlord who is still heavily reliant on major corporate office users. The departure of some tenants also raises questions about how and at what cost the older banking towers can be repurposed and given a viable future, which is weighing on values in the district.
Canary Wharf plans to use proceeds from the 10 Cabot Square deal to pay back £263.5 million (S$443.6 million) of notes on a loan that’s secured against a portfolio of its properties. As a result, the building will no longer be part of the securitised portfolio, the landlord said in the statement.
The release of the property and the partial prepayment reduces the loan-to-value ratio on the portfolio to 63.5 per cent from 66.6 per cent previously, according to a separate statement from Moody’s Investors Service. The ratings company now values the remaining portfolio backing the loan at £1.66 billion, or 26.6 per cent lower than the reported market value,” according to the statement. BLOOMBERG
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