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Canary Wharf Group is in talks with investors to raise funds from its shopping centre portfolio as it faces the need to refinance a £350mn bond early next year.
The east London financial district has sounded out around a dozen investors for a potential deal, likely to be a loan secured against its vast underground shopping complex, valued at £888mn, according to sources familiar with the discussions.
A new loan could help the group — owned by Canadian asset manager Brookfield and the Qatar Investment Authority sovereign wealth fund — to refinance the bond when it comes due in April, the first of three bond maturities in the coming years.
The Sunday Times first reported talks related to the shopping centres.
Canary Wharf Group has been working to refinance and extend its complex set of debt arrangements against a challenging backdrop for commercial landlords.
Higher interest rates have hammered property valuations and increased debt costs at the same time as offices face uncertain demand after the Covid-19 pandemic.
The group’s loan-to-value ratio has risen above its 50 per cent target, hitting 55 per cent at the end of June — up from 52 per cent at the end of last year.
CWG has pulled off major refinancings, including this month extending £564mn of loans secured against the office tower occupied by Société Générale and the European Bank of Reconstruction and Development at 1-5 Bank Street, which were due for repayment in November.
Lenders agreed a 5-year extension while CWG paid down the debt by around £100mn.
The landlord has also struck deals this year with lenders against the Barclays and EY towers to extend loans into the 2030s.
CWG faces an uphill battle in the office market as the banks that were traditionally its anchor tenants look to downsize or move back to the City of London.
Both Barclays and Morgan Stanley have agreed to extend their tenancies while giving up smaller buildings on the estate, with the US bank paying £27.5mn to get out of its lease at 15 Westferry Circus. The landlord has put forward radical plans to renovate the HSBC tower when the bank leaves.
The retail and hospitality portfolio is key to chief executive Shobi Khan’s strategy to diversify and add attractions to the estate to appeal to office workers, residents and visitors.
Occupancy rates in its shopping malls have been steady at 96 per cent with rental income rising to £68.5mn last year. CWG said the number of visitors to the estate so far this year was 8 per cent higher than the record figures in 2023.
CWG recently added Chinese carmaker BYD and jeweller Swarovski as tenants, and the estate boasts the UK’s largest and busiest Waitrose store.
Previous loans secured against the malls were repaid in 2021 when the landlord launched its “green” bonds.