By Ed Ballard and Art Patnaude
Qatar's sovereign-wealth fund has completed the purchase of the
London headquarters of HSBC Holdings PLC, in the U.K.'s largest
ever real estate deal, giving Qatar a huge slice of the Canary
Wharf business district even if a high-profile bid to take control
of the estate founders.
The Qatar Investment Authority, which manages around $300
billion, bought 8 Canada Square--which at over a million square
feet is London's largest office building--from the National Pension
Service of Korea, or NPS, according to a statement from J.P. Morgan
Asset Management, which advised NPS on the deal.
This is the fourth time the tower has changed hands in seven
years. HSBC sold it to Metrovacesa SA for GBP1.09 billion ($1.71
billion) in 2007, at the height of the U.K.'s previous property
boom and bought it back less than two years later for around GBP250
million less before selling it to NPS in 2009.
The latest sale price wasn't disclosed but the building fetched
more than its GBP1.1 billion marketing price, according to people
familiar with the situation. The sale represents a windfall for the
Korean seller, which acquired the tower for just GBP772 million and
is yet another indicator of the depth of overseas demand for office
space in the U.K. capital.
"NPS capitalized on the cyclicality of the global real estate
capital market by timing their entry into the London market at or
near its nadir...NPS has been rewarded with an outstanding
risk-adjusted return," said Bradley Larsen, co-head of European
acquisitions for J.P. Morgan Asset Management.
The sale could be the final trophy asset to change hands in a
big year for London office deals. Last month, a Brazilian firm
bought the Gherkin, one of the most recognizable towers in London's
skyline, while Chinese investors have scooped up eight London
properties for a combined $4 billion this year, with another Canary
Wharf skyscraper among them.
"If you were looking for a single word to sum up the demand
you'd say unrelenting," said Jon Stewart, an analyst at Liberum
Capital Ltd. "It's hard to think of that many markets in the world
where you have this quality of stock and this liquidity."
The conclusion of the widely-trailed deal comes at a critical
moment in Qatar's bid to take control of the company that began
developing the wider Canary Wharf district in former dockyards two
decades ago and still owns around half of its 16 million square
feet of office space.
Songbird Estates PLC, which owns 69% of Canary Wharf Group, has
yet to respond formally to the GBP2.6 billion offer tabled by QIA
and Canada's Brookfield Property Partners, but said it undervalues
the portfolio.
"Without a valuation [for Monday's sale] it's very hard to get a
read-across for Songbird, but what it does do is flag Qatar's
enduring interest in this part of London," said Liberum's Jon
Stewart, who noted that Qatar has traditionally preferred "trophy
assets" in central London, such as the Harrod's department
store.
Write to Ed Ballard at ed.ballard@wsj.com and Art Patnaude at
art.patnaude@wsj.com
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