Tuesday, September 29, 2009

HSBC Nearing $2 Billion Sale Leaseback of Assets in New York, London & Paris

Reuters - September 29, 2009

HSBC, Europe's biggest bank, is close to selling landmark offices in London, New York and Paris to boost its balance sheet by around $2 billion by end-2009, a person familiar with the matter told Reuters.

HSBC has been mulling offers to sell its premises on New York's Fifth Avenue, the Champs Elysees in Paris and London's Canary Wharf for several months, and is now in advanced talks with buyers on each asset with a view to striking deals within weeks, the source said.

Bids for the New York office have come in at between $350 million and $400 million, the source said. The London and Paris buildings have attracted offers of around $1.3 billion and $500 million, respectively, he said.

Exclusive bidders on each office could be named as early as the end of the week, the source said, without disclosing buyer identities.

HSBC and real estate advisor CB Richard Ellis started marketing the portfolio as a sale-and-leaseback investment opportunity in April.

CBRE declined to comment on the proposed sales. HSBC could not be reached for comment.

HSBC shares were trading 0.9 percent down by 1239 GMT.


Like most banks, HSBC is keen to see how much cash it can potentially unlock from its operational real estate holdings while turbulence in global capital markets persists.

Lloyds Banking Group, which is majority-owned by the UK taxpayer, has also appointed property advisors CBRE and Jones Lang LaSalle to devise and execute a strategy to pump cash tied up in property back into its core business.

News of the progress on the sales scotches market chatter that HSBC was just testing demand for its offices and was unlikely to sell before a big rebound in global property prices.

It sold its iconic Canary Wharf skyscraper to Spain's Metrovacesa for 1.1 billion pounds ($1.75 billion) close to the top of Britain's real estate market in April 2007 before taking back possession last December after the property company failed to refinance bridging debt secured from HSBC to buy the tower.

It made a quick profit after buying the property back for 838 million pounds last December, but average UK commercial property prices have fallen by around 5 percent between December 2008 and July 31, threatening the bank's chances to achieve a sale at a similar level.

South Korea's National Pension Service is one investor linked with HSBC's London property. A spokesman for the organisation -- the world's fifth-largest pension fund -- said the NPS was interested in the asset but no detailed talks had taken place.

NPS appointed real estate investment manager Rockspring to take charge of its central London property acquisitions strategy less than a month ago.

The pension fund, which has around $200 billion in assets, plans to invest $3 billion in real estate in Tokyo, Sydney, New York and London in 2009. Rockspring declined to comment. Sphere: Related Content

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