Value Falls On £425M Pair Of London Offices Prompt Loan And Building Sales
A London office building owned by a Hong Kong investment firm has been put up for sale for less than the value of the debt secured against it — and a loan to the same borrower secured against a nearby building is also up for sale.
JLL has been appointed to sell the 527K SF 20 Canada Square in Canary Wharf, which is owned by Hong Kong firm Cheung Kei. The building has a guide price of £250M, Bloomberg reported, and has a £265M loan secured against it. The loan was provided by Lloyds Banking Group and matured in October but was not repaid, Bloomberg said.
Cheung Kei paid £410M for the building in 2017, but BP, one of the two main tenants, is exiting the building. The space is being marketed as a repurposing opportunity for life sciences occupiers. The company lined up a deal to sell the building to Spear Street in 2021 but the deal fell through.
The company bought the 319K SF 5 Churchill Place just afterward in 2017 for £270M. Lloyds is now looking to sell a £175M loan secured against the building ahead of a maturity next month, Bloomberg said. JP Morgan occupies the building on a lease that expires in 2029. It took over the lease when it bought Bear Stearns in 2008. Its main London office is the nearby 500K SF 25 Bank Street.
Signs of stress in the London office market are starting to emerge with loans hitting maturity without being repaid. The fast rise in interest rates means that loans underwritten at a time of record low rates from 2017-2022 are becoming increasingly difficult to refinance.
Elsewhere in London, Chinese sovereign wealth fund CIC completed the sale of Winchester House in the City to a joint venture between Malaysian investor Gamuda and private equity firm Castleforge for £257M. The duo said that the 320K SF building will be refurbished in a process that could see the total investment rise to £1B.
