NAMA in line for windfall with sale of Citigroup HQ
Published 14/12/2010 | 05:00
NAMA could be set for a windfall from the sale of the landmark Citigroup building in London's Canary Wharf in 2011. It comes as the 42-storey building is about to be put on the market.
The building is the European headquarters for the US bank and was bought by a consortium including Derek Quinlan (right) in 2007 in a £1bn (€1.2bn) deal.
Mr Quinlan bought the tower alongside UK property company Propinvest, a company controlled by property investor Glenn Maud. The deal was backed by lenders Santander and AIB.
Mr Quinlan and Mr Maud are listed as directors of the company that owns the building, according to the UK Companies Office.
The AIB loans are understood to have transferred to NAMA.
One source said NAMA would be repaid at close to the full face value of the loans if a deal goes ahead in the current market -- that would generate a windfall for the Irish 'bad bank' because it acquired the loans at a steep discount.
A source involved in the transaction said agents Jones Lang LaSalle are due to begin marketing the property to potential buyers early next year.
The building dominates the skyline of Canary Wharf and was bought by Mr Quinlan and Propinvest from the Royal Bank of Scotland. At the time it was the second biggest property deal in UK history.
The building was completed in 2001 and Citigroup's 25-year lease expires in 2026, with upward-only rent reviews every five years, making it a prime investment property.
Accounts filed this year for 25 Canada Square, the vehicle that owns the property, showed that it had breached the terms on the £870m (€1.03bn) of loans outstanding on the property.
The company recorded a loss of more than £106m (€126m) in the year to the end of June 2009 after it generated income of £45.5m (€54m) but paid £204m (€242m) in interest on its loans.
Lenders agreed to waive the breach of terms, however. In July lenders also agreed to begin talks to extend the loans beyond the due date in November this year.
The decision to put the property up for sale suggests those talks did not succeed, though a source in London said co-owner Propinvest is still exploring possible refinancing deals and is prepared to put up new money to keep control of the tower.