A Canary Wharf office once occupied by a casualty of the 2008 banking crisis is to be sold at a £160m discount in the latest blow to London’s beleaguered financial district.
An Israeli businessman has bought 5 Churchill Place in a £110m deal, seven years after it was acquired by Cheung Kei Group, a Chinese investor, for £270m.
5 Churchill Place, which was occupied by American investment bank Bear Stearns before its demise during the financial crisis, was placed in receivership last year after Cheung Kei Group defaulted on loans backed by the property.
Haim Taib’s Menomadin Group has now bought the lease at a 60pc discount in a deal brokered by Savills, React News reported.
This sale marks one of the largest distressed sales in London so far. The Chinese investor had previously tried to offload 5 Churchill Place in 2022 for around £400m but was unsuccessful. The building is primarily let to JPMorgan on a long-term lease.
The Chinese company bought 5 Churchill Place with £196m of debt, approximately 70pc of the building’s worth, with around £175m provided by Lloyds Banking Group.
It comes as Britain’s offices have faced a severe reckoning as stubbornly high interest rates sent values tumbling.
Meanwhile, the rise in hybrid working has piled additional pressure on office owners as it has led to many businesses downsizing their workspace.
The sale of 5 Churchill Place is yet not confirmed but it is likely to set a precedent for the value of properties in the already beleaguered financial district.
Canary Wharf has suffered a number of high-profile exits, with HSBC’s decision to leave its global headquarters last July in favour of the City dealing the district its largest blow.
Other companies including Clifford Chance and Credit Suisse have also announced that they will leave the district.
Empty office space in the Docklands now stands at 16pc – the highest level in years.
5 Churchill Place is one of three buildings for sale in Canary Wharf. The property formerly home to the Financial Conduct Authority has been put on the market by Blackstone, having been bought in 2014 for around £165m.
Cheung Kei Group has a second building in the district, 20 Canada Square, that receivers will also likely be looking to sell later this year. The company has already defaulted on its £265.5m loan against the building.
Matthew Pointon, senior property economist at Capital Economics said: “As businesses look to downsize, many will take the opportunity to move to central, prime areas in a bid to attract staff into the office. We therefore think Canary Wharf will continue to underperform.”
Canary Wharf Group, which owns swathes of land across the district, secured a £400m cash injection from shareholders last year.
That included cash from private equity group Brookfield and the Qatar Investment Authority.
In May last year, rating agency Moody’s said the company would have difficulty selling its offices without “offering substantial discounts”.
Cheung Kei Group has been contacted for comment. Savills refused to comment.
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Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
