Canary Wharf Group looks set to boost the recovering central London market after announcing plans to pursue commercial developments in the area - with more than £700 million cash to spend.
The firm, which released its half-year results last week, has traditionally focused on developments in the London docklands business district.
However, it said it was looking at opportunities across the City, including a joint venture with Land Securities for the 20 Fenchurch Street site, known as the Walkie Talkie.
David Pritchard, chairman of parent company Songbird, revealed that Canary Wharf might agree to enter a 50-50 joint
venture on the Walkie Talkie and then sell a 35 per cent cent share of the project to a number of its largest investors. Mr Pritchard said: “It’s not a done deal at this point, but discussions are going well.”
By limiting its stake to 15 per cent, the firm would leave a substantial amount of cash aside for other City developments.
But commercial specialists said the move would be a substantial departure for Canary Wharf.
One source said: “It’ll be interesting to see how they get on with substantial developments closer to the centre of London. They are used to nice, oven-ready sites, but the nature of the projects they are hinting at really require a different skill set. They’ve clearly got the cash to spend though.”
Plans to build the 160 m Walkie Talkie were put on hold at the beginning of the financial crisis, but Land Securities revived the project earlier this year, saying it would accept informal tenders from contractors for the job.
Mace, Laing O’Rourke, Sir Robert McAlpine and Brookfield were all rumoured to be interested in the project.
But if the deal with Canary Wharf goes through, it is almost certain to be the Docklands firm’s in-house contracting arm that carries out the development.
Canary Wharf posted a 6 per cent rise in net asset value as the demand for offices across the estate held firm against the UK’s shaky economic outlook.
It also announced it could be set for a £76m sweetener if JP Morgan decided to axe plans to develop its bespoke European headquarters, saying it would retain the fee if construction was postponed or deferred altogether. There has been speculation over whether the development will go ahead, due to fears of a possible backlash from banking regulators.
“If construction is postponed, or deferred altogether, Canary Wharf Group will retain £76m representing a portion of the developer’s profit related to the development, of which £68.5m had been received by 30 June 2010,” said the report.
“If JP Morgan proceeds with full construction, additional fees will be due.”