Metrovacesa returns tower to HSBC
HSBC has re-taken control of its Canada Square HQ from stricken property company Metrovacesa, making a £250million profit in the process.
The Spanish firm bought 8 Canada Square for a record £1.09billion in April last year, but has been forced to return the building as it struggles with debts of more than £7billion.
Metrovacesa's deal for the 45-storey Wharf tower made it Britain's most expensive building, but its troubled ownership of the five-year-old building has come to an end after less than two years.
The original transaction was partly funded by a bridging loan of £810million from HSBC itself. The recent market choas left Metrovacesa unable to refinance this loan by the November 27 deadline this year, and it has therefore agreed to return the building to Europe's biggest bank.
This deal values the building at £838million, which represents the total loan plus retentions and warranties. HSBC had agreed last year to lease the building back for 20 years at an initial rent of £43.5million. But now its subsidiary HSBC Property Holdings will take full control of Project Maple II, whose main asset is 8 Canada Square.
HSBC announced the transaction would add another £250 million to its income statement for the second half of 2008.
HSBC Holdings plc's group chief operating officer David Hodgkinson said: “Clearly the market has deteriorated significantly since we agreed the sale in spring 2007.
"It was important to work with our client, Metrovacesa, to resolve the funding issue which had arisen. 8 Canada Square is a landmark building and this transaction is in the best interests of both parties and HSBC shareholders.�
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