Goldman Sachs to bid for Canary Wharf

Goldman Sachs Group Inc´s real estate fund has emerged as one of three bidders expected to submit final offers for Canary Wharf Group PLC, the London Docklands property company, at the end of the month, according to a report in the Financial Times. Without naming its sources, the report states Whitehall Funds, an investment arm of Goldman Sachs, and the other potential buyers are expected to submit offers on Aug 28.

The other bidders are Morgan Stanley´s real estate fund and Brascan, the Canadian property company that has a 9 pct stake in Canary Wharf.

Paul Reichmann, Canary Wharf´s executive chairman, and other managers would be expected to team up with any of the three that emerges as a potential lead bidder, the paper said.

Reichmann is thought to have not hired his own advisers. However, that could change: he developed the site in the 1980s, saw it collapse into receivership and then bought it back from the banks before floating it in 1998.

In April, Canary Wharf´s independent directors formed a committee to evaluate any offers after receiving a number of approaches. Shares in the company, which owns an 86-acre office and development site in London´s Docklands, fell 20 pct in March after revealing that tenants had the right to give vacant space back to the company. Shareholders were disappointed they had not been told about the agreements.

If all of Canary Wharf´s tenants exercised their options, the company could end up with a vacancy rate as high as 16.6 pct, according to JP Morgan.

The shares have recovered from their 52-week low of 128 pence after that announcement, and on Monday closed at 236 pence. Analysts have said they expect a bid to be worth about 1.5 bln stg.

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