Canary Wharf Group said it has agreed £553 million of financings today as it reported steep falls in the value of its offices and widening losses.
The Docklands developer, which is owned jointly by Brookfield and the Qatar Investment Authority, develops, manages and owns interests in 26.5 million square feet of mixed-use space and over 1,400 residential build-to-rent apartments.
It has reported a 14.7 per cent annual fall in the value of its property holdings to £6.8 billion to end of December 2023. The fall in the value of its offices - the rump of its portfolio - was offset partly by rising retail and stable residential values.
Total losses before tax for the year were £889.3 million, compared to £194.4 million in 2022, driven by the large property revaluation deficits. That was offset in part by income earned on its transaction at 10 Cabot Square. As part of its commitment to its One Churchill Place building at the estate, Barclays returned its other office at 10 Cabot Square to Canary Wharf by prepaying all remaining lease amounts to June 2032, totalling £310 million.
The group's overall property valuation was £6.83 billion as at 31 December 2023, a reduction of £1.175 billion. That valuation fall was driven largely by an outward movement of yields that it blamed on the wider negative macro economic sentiment.
Office properties - which total 6.9 million square feet and represent 63.6% of the portfolio - decreased £918.4 million to £4.34 billion. The weighted average initial yield lifted by 40 basis points to 4.4%.
Underlying revenue was £491.9 million, compared with £467.7 million the prior year, with office rental income up by £6.8 million despite occupancy falling by 1.4%. Retail rental income lifted by £11.7 million to £68.5 million, thanks to 75 lettings in the year. The group's gross debt at 31 December was £4.557 billion, down by £15.8 million compared to the prior year. It has a £564 million loan on 1 Bank Street and £350 million of green bonds due for repayment within 12 months.
Elsewhere the group has secured £553 million of financings, demonstrating "strong support from lenders" it said.
It said they gave it financial flexibility to implement its "transformation plan" for the estate, which includes a major sustainability and greening drive and developing for a more diverse occupier base including for life sciences, and more residential and retail and leisure occupiers. The financings also significantly increase debt maturities to increase funding certainty for the longer term.
That news has followed the recent announcement that Morgan Stanley extended its lease on its 547,000-square-foot EMEA headquarters until 2038. Barclays and Citi have also recommitted to Canary Wharf in recent times.
In addition, CWG has in recent months raised £400 million from its shareholders Brookfield and the Qatar Investment Authority and secured an £84 million forward-funding residential transaction with CBRE Investment Management.
The financings completed during March and April 2024 are:
- £132.3 million secured on 15 and 20 Water Street – which is located in the cultural, leisure, retail and residential mixed-used environment that has expanded east of Canary Wharf.
- £341 million secured on 25 Churchill Place, extending the loan until July 2030 on an office building let to EY and European Medicines Agency until 2040 and 2039 respectively.
- A loan of £80 million for construction of two new serviced apartments buildings for short and medium stays in the Wharf for the first time at 3 and 15 West Lane.
Canary Wharf said last year over 67.2 million people visited the estate, an increase of 25% compared to 2022.
Becky Worthington, Chief Financial Officer, CWG, said in a statement: “These loans are testament to the strength of our assets, the transformation that has been taking place at Canary Wharf and the support we have from our lenders for our long-term plan. We are winning awards in our residential portfolio, attracting millions of visitors to the amenities within our mixed-use neighbourhood, and continuing to develop high quality, sustainable assets. With the opening of Middle Dock later this year, our exciting joint venture with the Eden Project, Canary Wharf will become an even more attractive environment to live and work.”