HSBC has agreed the sale and leaseback of its head office building in Canary Wharf, London for £1.09 billion, the largest single property deal in UK history.
A wholly-owned subsidiary of Metrovacesa, S.A., one of Europe's most respected property companies, and HSBC have exchanged contracts on the deal which sees the bank retain full control of occupancy while Metrovacesa takes a 998-year lease. HSBC has leased the building back for 20 years at an annual rent of £43.5 million with an option to extend for a further five years.
HSBC's 1.1 million square foot, 210-meter high, tower at 8 Canada Square will remain the Group's global headquarters. HSBC has been headquartered in London since 1993 and announced plans for the new head office building in 1998. It moved in, in 2002, having incurred some £500 million in construction costs. The building houses 8,000 staff, and includes advanced facilities, such as a gym that occupies an entire floor, dining rooms, shops and a medical center.
HSBC's 210 meter high tower at 8 Canada Square will remain the Group's global headquarters.
HSBC, which became the first bank to go 'carbon neutral', in 2005, last year achieved an overall rating of 'Excellent' for the head office building from the Building Research Establishment (BRE), the UK's leading environmental standards authority. This was the first time that any building in the Canary Wharf development had received the highest possible rating for site management. Key to the building's design is the use of energy efficient systems and practices.
David Hodgkinson, Group Chief Operating Officer of HSBC Holdings plc, said: "London is one of the great crossroads of the world and there is no better place for HSBC, the world's local bank, to be headquartered. This is a good opportunity for HSBC to manage its property assets effectively and we're pleased to do so with the assistance of Metrovacesa, one of Europe's pre-eminent property companies."
Jesús García de Ponga, deputy to the Chairman of Metrovacesa, commented: "We are delighted to have reached agreement with HSBC on this landmark deal for Metrovacesa. The acquisition of the HSBC global headquarters through this sale and leaseback transaction is evidence of our commitment to establish a significant presence in major international cities such as London and thereby achieve our aim to be one of the world's leading international real estate investors.
"The iconic status of the building, its 'best in class' environmental credentials and the strength of the HSBC covenant made this a compelling investment opportunity for us. We look forward to building a strong ongoing relationship with HSBC, both as our tenant and as a partner."
The deal is expected to complete in the first half of 2007. CB Richard Ellis and Freshfields acted for HSBC, and Colliers International in Spain, Colliers CRE and Clifford Chance acted for Metrovacesa.