Canary Wharf owners look to sell stake in shopping malls as office portfolio struggles
Canary Wharf’s owners are reportedly in talks with third parties to sell a stake in its four underground shopping centres as the banking district’s office portfolio struggles with working from home trends.
Canary Wharf Group (CWG), owned by private equity giant Brookfield and the state-owned Qatar Investment Authority, is holding discussions with outside investors interested in the retail assets, The Sunday Times reported.
It is said that the talks could lead to CWG establishing a joint venture for the assets with a third party, or the group raising new debt against the shopping centres.
CWG declined to comment on the talks when approached by City PM
The malls, valued at £887.9m, are 95 per cent occupied and boast tenants including Zara and Watches of Switzerland.
Their popularity stands in contrast to the Wharf’s office space, which has been hit by post-pandemic remote working trends and higher interest rates. The value of CWG’s office portfolio has plunged by some £1.5bn to £4.27bn since 2021.
Numbers from the second quarter of last year showed that Canary Wharf’s office occupation was just under 85 per cent, down from pre-pandemic levels that were consistently above 90 per cent.
Star tenants HSBC and law firm Clifford Chance are due to leave by 2026 and 2028 respectively as part of downsizing efforts, although Wall Street giant Morgan Stanley has added another decade to its lease.
Shobi Khan, CWG’s chief executive, is now trying to transform the district into a “mixed-use neighbourhood”, including bringing in more residential and green space.
In July, CWG unveiled plans to transform the HSBC building in what it said would be the biggest-ever conversion of an office tower into a mixed-use building. The Financial Times previously reported that the conversion could cost between £400m and £800m.