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Citigroup Tower could be sold for £$1.2b

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Citigroup rents all of the space in the tower at Canary Wharf on long leases linked to inflation, and has sublet most of the building to other tenants.

London

THE owner of the Canary Wharf skyscraper that's leased to Citigroup is considering a sale of the building for more than £1.2 billion (S$2.16 billion), as investors continue to line up for London's trophy buildings, people with knowledge of the plan said.

Broker CBRE Group is working with AGC Equity Partners to advise on the potential disposal of one of the UK capital's largest office towers.

The Middle Eastern-backed private equity group completed a refinancing of the building this summer that has paved the way for the sale, the people said.

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London's office market has remained buoyant despite the country's broader economic slowdown since the country voted to leave the European Union (EU) two years ago.

Investors' Brexit fears have been mitigated by their search for long-term investments that offer secure rental income.

This year, the new headquarters of Goldman Sachs Group and UBS Group have both sold for over £1 billion. Deals for offices in the City of London will total about £12 billion this year, according to a forecast published by broker Savills last week. That's just shy of the record £12.6 billion sold in 2017.

AGC bought the building in London's Docklands financial district for a reported £1 billion in 2013 using a £661 million loan from Bayerische Landesbank.

That loan was refinanced by French lender Societe Generale this summer. The building was last valued at £1.2 billion by a BNP Paribas unit, according to a May filing.

Citigroup rents all of the space in the tower at 25 Canada Square on long leases linked to inflation, and has sublet most of the building to other tenants.

The tower encompasses about 1.2 million square feet, the equivalent of almost 19 football fields. Together with the adjoining 33 Canada Square, the building is known as the Citigroup Centre.

Investors spent about £4.7 billion on central London offices in the second quarter, almost a third more than a year earlier, according to data compiled by broker Knight Frank.

Overseas buyers benefiting from a weak pound, particularly those from Asia, accounted for about 89 per cent of spending in the City of London district. BLOOMBERG