UPDATE 2-Songbird portfolio rises as bank tenants rally

* Canary Wharf majority owner posts 11 pct rise in rents

* Adjusted NAV per share up by 27 pct to 168 pence

* Occupancy remains above 96 pct despite Lehman’s collapse

* Shares down 0.9 pct by 1022 GMT

(Adds detail, quotes, shares and analyst comment)

By Sinead Cruise

LONDON, March 26 (BestGrowthStock) – Songbird Estates (SBDE.L: ),
majority-owner of London’s Canary Wharf estate, said it sees no
long-term threat to the capital’s status as a global financial
hub as key bank tenants eye new space in preparation for growth.

The AIM-listed company’s forward-looking comments came as it
booked a 7.6 percent rise in its portfolio value, to 5 billion
pounds ($7.5 billion), since June, and a 10.7 percent increase
in its full-year rental income to 318.4 million pounds.

“New and diverse tenants are increasingly coming to Canary
Wharf, attracted by our ability to provide on competitive terms
space tailored to requirements,” Chairman David Pritchard said.

“The strength and potential of Canary Wharf Group’s existing
portfolio, coupled with the resilience of its rental income,
provide us with an engine for managed growth despite fragility
remaining in the wider UK economy,” he said.

Earlier this month, an influential report from the City of
London Corporation showed the UK capital was now tied with rival
New York for the title of the world’s most important business
centre as companies flee higher taxes and tighter regulation.

Songbird shares dipped 0.9 percent to 171.2 pence by 1022
GMT despite a marginally higher-than-expected 27.3 percent lift
in the company’s adjusted net asset value per share to 168 pence
against 132 pence at June 30.

“We continue to believe there is value in the stock,”
analysts at JPMorgan Cazenove said in a note, highlighting
Songbird’s weighted average lease length of 14.8 years and 5.5
million square feet of development potential as a shortage of
offices with trading room-style floorplates looms over London.


Home to many of the world’s largest financial institutions,
including Morgan Stanley, HSBC, Barclays and Citi, Songbird’s
Canary Wharf estate has become a focal point for the calamities
that engulfed global banks between 2007 and 2009.

Its cluster of high-rise towers became symbols of a
credit-fuelled economic boom that was silenced by failed
multi-billion dollar bets on U.S. subprime mortgages and the
collapse of complex financial funds which invested in them.

Notwithstanding the turmoil among key tenants including
bankrupt bank Lehman Brothers, Songbird said its 8 million
square foot portfolio was still 96.2 percent let at
end-December, compared with 99.7 percent at Dec 31 2008.

Sources close to the matter said petrol giant Shell was
mulling a new lease that could absorb much of the estate’s
vacant space at 40 Bank Street later this year.

Pritchard said Songbird was back on a financially sound
footing after raising just over 1 billion pounds of new equity
and debt last October.

The fundraisings enabled Songbird to wipe out its
third-party corporate debts after buying back an 880 million
pounds loan from Citi at a five percent discount, teeing up new
acquisitions and development in the east London complex.

Qatar Holding, the investment arm of Qatar’s sovereign
wealth fund, became Songbird’s largest shareholder with a 24
percent stake after backing the record 895 million pounds share
sale, which was also supported by China Investment Corp (Read more about U.S. companies investment into China).
[ID:nL2413853] [ID:nLA37813]

“These transactions…represent a vote of confidence in the
achievements of our principal subsidiary and London as a global
business centre,” Pritchard said.

Investment Analysis

(Editing by Raji Menon; Editing by Andrew Macdonald)
($1=.6702 Pound)
(See www.reutersrealestate.com for the global service for real
estate professionals from Reuters)

UPDATE 2-Songbird portfolio rises as bank tenants rally