AIG payout will protect Canary Wharf after Nomura exit

Yesterday we reported how Nomura were set to leave their current location of 25 Bank Street in Canary Wharf and opt for a move back to the City at Watermark Place.  This would have a dealt huge blow to Canary Wharf with such as major occupier departing from the area.  However it has been disclosed that 25 Bank street is protected by a securitisation agreement with AIG, which means the landlord will still receive rent for four years.  This was taken out in the event that Lehman were to default on rental payments.

This equates to £224m, which has been set aside in the event of the tenant not meeting lease payments.  Fortunately for Canary Wharf, this means they have up to five years to find a new tenant. It is argued that the commercial property market will be in much better shape by this time, and that finding an occupier for a prime location will be much easier once the market improves.  But if a tenant is not found reasonably quickly, the potential rent the landlord can achieve may suffer.

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