HSBC buys back Canary Wharf HQ

Global banking giant HSBC today booked a £250m (€280m) profit after repurchasing its European headquarters in London from a Spanish property firm.

Metrovacesa spent a record £1.1bn (€1.26bn) on the building 18 months ago but offered to sell it back to the bank at a loss after failing to refinance a loan secured on the 690ft-high Canary Wharf tower.

The Spanish firm was unable to refinance the £810m (€935m) bridge loan as the credit crunch sent residential and commercial property prices into freefall.

HSBC’s base, known as 8 Canada Square, cost £500m (€577m) to build and has been the global headquarters of the bank since 2002.

It had been leasing the building, which houses 1.1 million square feet of office space, for up to 25 years and paying an annual rent of £43.5m (€50m).

The bank made the sale as part of plans to exploit the value of its property portfolio – and Metrovacesa bought at the peak of the property bubble.

HSBC said today: “As a result of the significant market disruption that has impacted the availability of term funding, syndication of the bridging loan has not been possible and the parties have come to an agreement that the building will be handed back to HSBC.”

Today’s deal valued the property at £838m (€967m), resulting in HSBC booking a gain of around £250m (€280m) in its second half results.