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International banks provide £625m for London’s HSBC tower, despite Brexit uncertainty

The Qatar Investment Authority has signed a debt facility with a syndicate of six banks to refinance its global headquarters in the Canary Wharf financial district.

A multinational club of banks has refinanced HSBC’s global headquarters in London with a £625 million (€722 million) loan, despite uncertainty surrounding the UK’s planned exit from the European Union and its impact on the country’s financial services sector.

The loan – provided to Project Maple II, a subsidiary of the Qatar Investment Authority – was completed with a syndicate of six banks including France’s Crédit Agricole, Germany’s DekaBank and Deutsche Bank, Singapore’s DBS Bank and the tower’s tenant, HSBC Bank. These five banks all acted as lenders and mandated lead arrangers. Italy’s Intesa Sanpaolo also acted as a lender and Banca IMI, its investment bank, as a mandated lead arranger.

“The existing financing was outside the period where a prepayment fee would have been applicable and would have matured in 2020,” a QIA spokesman told Real Estate Capital. “The refinancing was a prudent action to undertake in terms of risk and liquidity management and was well covered by the new lenders.”

The QIA acquired the 1.1 million square feet 8 Canada Square, as the tower is formally known, from the National Pension Service of Korea in a cash transaction in December 2014. The sovereign wealth fund reportedly paid just over £1.1 billion before refinancing the acquisition in 2015 with a group of relationship banks.

In 2007, HSBC agreed a 20-year lease with Spanish property group Metrovacesa at an annual rent of £43.5 million and with an option to extend for a further five years. According to media reports, the bank has an option to break the lease in 2022.

The latest refinancing shows international lenders’ continued appetite for exposure to the best commercial properties in London, including those in Canary Wharf’s financial district. This is despite fears of an exodus of thousands of jobs in the UK’s financial services sector sparked by Brexit uncertainty, which could affect occupancy in the London office market.

In August 2018, HSBC announced that seven of its European offices would move from London to Paris in early 2019. The bank did not mention Brexit explicitly to explain the relocation, which would affect 1,000 staff, but it said it was “adjusting its activities” in light of “political and regulatory developments in Europe”.

UK newspaper The Times reported that Ewen Stevenson, HSBC’s group chief financial officer, had told the bank’s annual meeting on 12 April that the recent agreement to delay Brexit until 31 October would “inevitably” cause the lender to slow the pace of the relocations.