Morgan Stanley sets out Canary Wharf vision

Songbird, the Morgan Stanley-led consortium that is taking over Canary Wharf, has laid out its strategy for the future of the 97-acre Docklands estate.

The consortium, which last Friday finally succeeded in its £1.7bn bid for Canary Wharf, had been expected to sell off the estate piecemeal following the acquisition.

However, John Carrafiell, Head of Morgan Stanley’s European Real Estate Group, said that although certain assets may be sold off to boost private equity return, it would retain the majority of the estate.

Over a third of the 13.1m sq ft estate has already been sold to Credit Suisse First Boston, HSBC, Morgan Stanley, Reader’s Digest and Bank of Scotland. Carrafiell said: “When you come onto this estate, is there any sense that those assets were sold?”

Properties that may be sold in the future will be those that have matured as investments and are over-rented, have fixed rental increases or lower growth potential.

Songbird may also convert the estate into a REIT, the tax-transparent property investment vehicle expected to be introduced in the UK.

Canary Wharf will continue to be run by Chief Executive, George Iacobescu and Finance Director, Peter Anderson. Its strategy will not differ hugely from before the sale.

The consortium is happy with developing the remaining 5.7m sq ft of space on the estate once the London office market improves. Its strategy will include carrying out bespoke developments to sell to owner-occupiers. The company will also look to enter into joint ventures with institutions and developers.

Before the sale process began, Canary Wharf had planned to establish a second company to carry out developments outside its core estate. Carrafiell said it was “up to the directors to decide” if they still wished to pursue that policy. However, he said it could happen because “Canary Wharf has one of the best development teams in the market.”
Source: Freeman / Property Week

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