Canary Wharf files $4.28bn claim over Lehman

Lehman occupied around 1million square feet of space on the estate before it filed for bankruptcy in September last year. Its rent is currently being paid by current tenants, but is further protected by collateral deposited in an account by insurer AIG.

John Garwood, company secretary of majority shareholder Songbird Estates, said that the claim "reserves rights in respect to the administration process, which will take a long time to resolve."

The former Lehman HQ at 25 Bank Street is currently being occupied by tenants including Japanese bank Nomura and administrator PricewaterhouseCoopers. While some have speculated that the rent will be paid through insurance once Nomura follows through with its plan to relocate to the City, Mr Garwood confirmed that it is the landlord's decision when to "trigger" the insurance policy.

Songbird Estates announced earlier this week that it was raising its stake in Canary Wharf Group by 8.45 per cent to 69.3 per cent. The shares had been bought for £112.5million from Commerzbank AG, who had in turn called them in from Canary Wharf founder Paul Reichmann.

Songbird chairman David Pritchard advised that the share acquisition was "from Commerzbank rather than anyone else".

Mr Reichmann had set up Canary Wharf in the late '80s through his company Olympia and York, and had retained a small percentage of shares following the takeover of the estate by a consortium including Morgan Stanley in 2004. John Carrafiell - who helped push through the £1.7billion deal five years ago and acted as a consultant on the share offer - confirmed that this move did not result in a change in the decision-making hierarchy.

He said: "He's had zero involvement in management or the board in that time. Canary Wharf Group has been consistently without involvement from Mr Reichmann since 2004."

Songbird will fund its share purchase through a scheme announced today (Thursday), designed to raise £1.03billion. It will raise £620million with an open offer and placing of new ordinary shares at one penny each, and £275million through the placing of preference shares with Qatar Holding and a subsidiary of China Investment Corporation. It also announced a new credit facility of £135million. As a result of this move, Qatar now becomes the largest shareholder in Songbird with 30 per cent, while China Investment Corporation will own 20 per cent.

Songbird confirmed the move would not "change the composition of the board of directors". The money raised will be used to settle an £880million loan from Citi, at a five per cent discount. It revealed earlier this year that it was in danger of breaking the covenant on this loan, due to the fall in the value of property on the estate sparked by the downturn.

Chairman David Pritchard said: "The Proposals provide a stable financial footing for Songbird and are a good outcome for our shareholders. We have a strong and supportive group of investors and a company which will be financially transformed by this transaction.

"Songbird's shareholding in Canary Wharf provides investors with an attractive opportunity to benefit from the long term growth prospects of a leading integrated property developer with a prime real estate portfolio.

"Despite the continuing tough economic environment, Canary Wharf is well positioned with low vacancy rates, long average unexpired lease terms and is underpinned by a strong rental income.

"We are seeing some signs of optimism returning to financial markets and recent improvement in stabilisation of yields in the property sector. We can now look forward to the future with a greater degree of confidence."