Canary Wharf swings into full year loss

Property company Canary Wharf Group PLC swung into the red in the full year, posting a pretax loss before exceptionals of 13.3 mln stg against last year´s 22.6 mln profit. After exceptional items, it recorded a 13.2 mln stg pretax loss against a profit of 203.1 mln.

The company said it is now beginning to see signs of recovery in demand for office space after the difficult market environment in the UK property sector last year.

'It is not clear whether we have reached the bottom of the market, but from the level of enquiries we are experiencing we would not expect the current market downturn to be sustained for much longer,' it said.

There is, nevertheless, still a large amount of space available in the London office market, both of new and existing space and the group anticipates next year the beginning of a tightening in the market for the new, large floorplate office space it offers.

'We do not, however, foresee an immediate return to new development at Canary Wharf except on a fully pre-let or bespoke basis,' it said.

Canary Wharf, which has been in a management buyout offer talks with chairman Paul Reichmann, and also with Goldman Sachs and Morgan Stanley, said it is 'actively involved' in reviewing indicative proposals it received 'in order to determine if any of these can be developed into an offer suitable for recommendation to shareholders'.

Turning to financials, the group reported a 21 pct sales increase to 250.3 mln stg from 206.8 mln. Net assets fell to £1.5bn at June 30 from £1.86bn in 2002.

Interest costs increased from 107.6 mln stg to 178.5 mln as a result of the two securitisations completed in February and October 2002 and the refinancing of 20 Canada Square in March 2003. These planned issues increased total debt from 3.95 bln stg to 4.710 bln and were used in part to fund the share buy-back programme and special dividend.

Some 25.2 mln shares were bought back during the year at a cost of 108.1 mln stg. Special dividend of 372.8 mln stg was paid bringing the total under the return of capital programme to date to 887 mln.

The group´s investment portfolio totalling 8.4 mln square feet was 89.4 pct let. Properties under construction totalled 3.1 mln square feet, of which 99 pct was covered by agreements to lease.

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