Nomura’s exit triggers AIG Wharf payout
JAPANESE bank Nomura’s decision to ditch the former Lehman Brothers office and house its 3,600 employees in the City will trigger a rental insurance payout of up to £224m for Canary Wharf.
As Morning Wire revealed yesterday, Nomura has signed a deal to move into the riverside complex Watermark Place in 2010, meaning it will vacate the 350,000 sq ft space at the Wharf’s 25 Bank Street.
Canary Wharf is protected from rental defaults for a four-year period by US government-backed insurance giant AIG. Under the agreement, AIG pays £53 per sq ft when a rent default occurs. The funds are currently protected in a separate bank account held at Bank of New York Mellon. If a new tenant moves in at a lower rent, AIG will pay any shortfall.
Commercial property values in the UK have plummeted 44 per cent since the market’s peak in June 2007, meaning rents will have dropped below the £53 per sq ft mark.
A source close to the talks said: “It’s a bit of a blessing in disguise. If the terms were drawn at the bottom of the market, it would be a lot less, but the payments will actually outperform the space occupied by new tenants.” Despite Nomura’s departure from the Wharf, in the next year it will be adding a 9,000 employees to its population with the opening of new offices by Moody’s, State Street, KPMG and Fitch Ratings.