Qatar fund makes joint approach for Canary Wharf . . . Indeed, Qatar Investment Authority (QIA sovereign wealth fund) and Brookfield Property Partners LP, a U.S. investor have approached Canary Wharf-owner Songbird Estates (SBDE.L) about a possible takeover, a deal which would increase the sovereign wealth fund’s presence in London real estate.
SBDE.L is the majority owner of the Canary Wharf Group estate, established some twenty-five years ago on former docks as a new financial district and in a statement last Thursday announced it would consider the joint approach from the QIA and Brookfield Property Partners LP, which it described as at a preliminary stage.
The QIA already owns 28.6% of Songbird, while Brookfield, which operates and invests in office space and industrial property development, has a 22% stake in Canary Wharf Group.
The deal would add to Qatar’s already significant presence in London. Shard, western Europe’s tallest skyscraper at about 310 metres is one of a string of high profile developments it owns in the city.
Meanwhile, Songbird shares surged more than 22% to 320 pence, and the statement came in response to a story in Real Estate Capital, which said the pair had approached Songbird Thursday afternoon last week.
Songbird’s portfolio is valued at £6.28bn, and includes assets such as One Canada Square. It added that if an unconditional offer is made, “then a mandatory offer will be required to be made for Canary Wharf Group”.
A London property analyst said the bid had likely to have been prompted by a thriving commercial real estate market in the UK capital, as well as a significant new development planned for the former docklands, which gained approval in July.
However any deal would have to get past Songbird’s two other big shareholders, New York investor Simon Glick, who has almost 26% and China’s sovereign wealth fund, which owns 15.8%.
Some equity investment experts close to Songbird’s, said the ownership structure has been a stumbling block for many investors before and that they could see the attraction of a deal at this point; saying:
“I can see why the Qataris would want to buy it, London is growing and will continue to grow, there is a good opportunity to do some residential stuff and some of the retail has done incredibly well,” Scott said.
Historically, Canary Wharf once housed the docks for Britain’s imperial shipping trade but most of them closed in the 1970’s as Britain’s economy stagnated and containerisation of cargo shipping pushed work downstream to deeper ports.
It was taken over in the 1980’s by Canadian developer Paul Reichmann at the request of then Prime Minister Margaret Thatcher, who wanted a home for the Wall Street-style banking sector she expected to follow her “Big Bang” financial deregulation policies.
Now home to Barclays (BARC.L) and HSBC (HSBA.L) as well as the main European offices of Citi (C.N), JPMorgan (JPM.N) and Morgan Stanley (MS.N), it has a working population of over 100,000 and has one of London’s largest retail centres.
It is believed that the estate could double in size in the near future because of an increase in London’s population and investment in the city’s infrastructure.
Canary Wharf Group will help to meet demand for more housing with its first residential development ‘Newfoundland’ and a new 20-acre waterside site at Wood Wharf, with 3,100 homes and office buildings, as well as a school and more retail space.
The estate will also have a station for Crossrail, the new high speed rail link connecting east and west London and major international airport Heathrow.
QIA and Brookfield have until 4th December to make a firm intention to make an offer for the company.
Latest News on Monday 10 November 2014
QIA is understood to be preparing another takeover bid for London’s Canary Wharf.
On Friday Songbird Estates, majority owner of the development, rejected an initial takeover bid by QIA and Brookfield Property Partners.
Songbird stated that the 295-pence a share offer considerably undervalued the company.
However, QIA, advised by Barclays and Citigroup, and Brookfield by HSBC, are reformulating another approach, reports Qatar Tribune.