Revealed: As Tenants Exit, £542M Is Wiped From Value Of Canary Wharf Office Portfolio
The value of Canary Wharf Group’s office investment portfolio fell by around 10% last year, Bisnow can reveal, while its retail and rented residential assets proved resilient.
2022 accounts for the holding company that owns Canary Wharf Group, itself owned by Brookfield and the Qatar Investment Authority, showed that Canary Wharf Group’s 6.9M SF office portfolio in the Docklands area of east London saw a valuation decline of £542M, driven by a rise in yields.
Some of its office developments completed and were transferred to its investment portfolio. Overall, its office assets dropped in value from £5.59B to £5.26B.
The valuation news comes as it emerged that HSBC will move out of its 1.8M SF HQ on the Docklands estate. That building is owned directly by QIA, not by Canary Wharf Group.
Another large tenant in a Canary Wharf Group-owned building, law firm Clifford Chance, said in November last year it was moving from the estate to the City of London in 2028.
In the accounts, Canary Wharf Group said the leasing side of its 12-strong office portfolio had been resilient. It completed 417K SF of new leases or lease renewals during the year at average headline rents of £59.69 per SF, up from 223K SF in 2021 at £46.65 per SF. The average lease length was 6.4 years.
Its office rental income fell from £241M in 2021 to £237M in 2022, while its occupancy fell from 93.5% to 92.5%. Its weighted average lease term to break is 8.7 years.
Overall, Canary Wharf Group’s portfolio fell in value by £330M, driven by rising yields. Its retail portfolio actually rose in value by £290M to £1.14B, partly due to a £114M revolution uplift and partly due to new developments completing. The retail portfolio produced £57M of rent.
Its rented residential portfolio was broadly flat at £665M, but the asset class has performed well operationally. Its four residential buildings are 96% leased, and like-for-like rents increased by 7% last year. There are now 3,500 people living on the estate, the company said, and it has an active development pipeline of 2,400 more units. The rental portfolio produced £21M of rent.
The company has refinanced, is in the process of refinancing or can repay from cash £453M of debt that was scheduled to mature in 2023, it said. It is also in talks about securing construction financing for part of Phase 3 of its Wood Wharf expansion, which has an expected development cost of £205M.
The company has total debt of £6.7B. It said its loan-to-value ratio once derivatives are excluded is 52%.
Wood Wharf has the potential for another 1.8M SF of office development, and Canary Wharf has also struck a joint venture deal to build a 500K SF life sciences tower with AXA-owned Kadans Science Partner.
