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Qatari fund bids for Canary Wharf owner Songbird Qatari fund bids for Canary Wharf owner Songbird
(about 4 hours later)
Qatar’s sovereign wealth fund is bidding to add yet another London landmark to its portfolio of trophy assets, by making an approach to buy all of Songbird Estates, the company that owns Canary Wharf in London’s Docklands. Qatar is aiming to add yet another London landmark to its string of trophy assets in the capital with a bid to take over the company that controls Canary Wharf.
The oil and gas-rich state’s investment arm, the Qatar Investment Authority (QIA), made a preliminary approach on Wednesday afternoon together with the commercial property firm Brookfield Property Partners. The QIA already owns 28.6% of Songbird, which boasts a property portfolio worth £6.3bn. The two companies have until 4 December to make a firm offer or will have to walk away for six months under UK takeover rules. If its bid is successful, the energy rich state would be adding buildings that make up some the most famous parts of the London skyline to a range of investments that already includes Harrods and stakes in Sainsbury’s, Volkswagen and Porsche.
Other major shareholders in Songbird that the pair need to buy out are Simon Glick’s Glick Entities, which holds a 25.9% stake, the China Investment Corporation with 15.8%, Morgan Stanley with 8.5%, and Third Avenue Management, with its 3.2% holding. Only a fortnight ago, it reportedly bought HSBC’s 44-storey global headquarters in Canary Wharf for just over £1.1bn. The deal made the tower – one of two built either side of the original 50-storey Canary Wharf tower – London’s most expensive office building.
Shares in Songbird leapt 20% on the news, a 53p rise to 315p, giving the company a market value of £2.3bn. The attempt to take full control of Canary Wharf comes at a time when office buildings in London are securing rising rents and as the Docklands site prepares to expand for the first time since the banking crisis. Qatar built an investment in Canary Wharf in the immediate aftermath of that crisis by pouring billions of pounds into a rescue fund which stopped the business collapsing under its own debt.
Qatar’s move comes less than a fortnight after it agreed to buy HSBC’s global headquarters – also in in Canary Wharf – for a reported £1.1bn, making the HSBC Tower London’s costliest office building. Qatar’s property-buying spree in London started in 2008 with a 20% stake in Camden market, followed by the high-profile takeover of Harrods for £1.5bn. It bought the famous Knightsbridge store from Mohamed al-Fayed, who had owned it for 25 years.
Through the QIA or its Qatari Diar property arm, the tiny emirate of Qatar already owns a number of London landmarks – including the Shard, Harrods, Chelsea Barracks and the Olympic Village in Stratford, east London. The Shard is 95% owned by Qatar which swooped on the tower at the height of the financial crisis when western investors took fright. The Qataris also own the US embassy building in Grosvenor Square. The stakes are held through a number of investment vehicles which also own stakes in Barclays and the miner Glencore as well as a 95% stake in the Shard, also snapped up during the financial crisis when other investors took fright. The Olympic Village in Stratford, east London, and Chelsea Barracks, in the west of London, are also among its investments.
The former Qatari prime minister Sheikh Hamad bin Jassim bin Jaber al-Thani owns One Hyde Park, home to the world’s most expensive flat which sold for £140m earlier this year, in a joint venture with the Candy brothers. The latest foray is through the Qatar Investment Authority, which is working with the US commercial property firm Brookfield to buy out Songbird, the company that effectively owns Canary Wharf.
Songbird owns 69% of the Canary Wharf Group (CWG), which owns the Docklands site that plays host to some of the world’s biggest banks. Brookfield owns 22% of CWG. Songbird also holds joint stakes in the Walkie Talkie in the City with Land Securities, and the Shell Centre on the South Bank with Qatari Diar. Shares in Songbird, which is partially listed on the stock market, leapt almost 23% after the property developer was forced to confirm City speculation that the Qataris and Brookfield were preparing a joint approach for company.
This summer Canary Wharf Group received the green light to construct 30 buildings, including more than 3,000 homes, at the eastern edge of the Docklands site, the first extension since the 2008 banking crisis. It is also revamping London’s South Bank around the Shell Centre tower. Winning control of the estate may not be easy as a result of Songbird’s complex ownership structure. While QIA owns almost 27% there are other investors. Simon Glick, the son of a diamond merchant who helps run his family’s Glick Entities property empire, owns almost 26%. The China Investment Corporation, an investment arm of the Chinese state, owns 15.8% while the US investment bank Morgan Stanley owns 8.5%. The bank was one of the key tenants when the development was first opened on land once occupied by warehouses before the docks became disused.
The Qatari buying spree in London started in 2008 when they snapped up a 20% stake in Camden market through investing in property firm Chelsfield, followed by the 2010 purchase of Harrods for an estimated £1.5bn, ending Mohamed al-Fayed’s 25-year ownership of the famous Knightsbridge store. A week ago, the department store paid its Qatari owners a £118m dividend after another year of brisk trade. In 2011, the Olympic Village was sold to Qatari Diar and UK property developer Delancey Estates in a deal that left UK tapayers £275m out of pocket. The development was the brainchild of the late Paul Reichmann who brokered the terms of the ambitious building project with then prime minister Margaret Thatcher in 1987. Reichmann bowed out when Songbird swooped on Canary Wharf Group. Brookfield, the Qatari’s joint bidder for Songbird, already owns 22% of Canary Wharf Group.
Through their investment companies, the Qatari royal family also holds 26% of Sainsbury’s and a stake in Barclays. However, they are not always victorious. Last year, the QIA failed in its attempt to buy House of Fraser losing out to the Chinese conglomerate Sanpower, which acquired the department store chain in a £480m deal. Songbird also owns stakes in the Walkie Talkie skyscraper in the City and in the Shell Centre on the South Bank – which it co-owns with another part of the Qatari investment empire.
Qatar’s sovereign wealth fund and its Qatari Diar arm were founded in 2005 to strengthen the gulf state’s economy by investing in new assets around the world.