By Anita Likus Of DOW JONES NEWSWIRES LONDON -(Dow Jones)- Troubled Spanish property group Metrovacesa S.A. (MVC.MC) was Friday forced to hand back the flagship London headquarters of HSBC Holdings PLC (HSBA.LN) to the global banking giant, after failing to refinance its loan amid turbulent financial markets.
HSBC sold the Canary Wharf HSBC Tower, in Canada Square, to the Spanish company in a record-breaking GBP1.09 billion sale-and-leaseback deal in May last year, at the peak of Britain's property boom.
Metrovacesa funded the acquisition with a GBP810 million bridging loan - partly provided by HSBC - and the bank agreed to lease back the building for 20 years at an initial annual rent of GBP43.5 million, representing a net initial yield of 3.8%.
But Friday, Metrovacesa was forced to hand back the keys to HSBC in return for GBP838 million, giving the bank a gain of about GBP250 million, which will be booked in its second half.
Metrovacesa is the latest victim of the freeze in the credit markets and collapsing housing markets as recession looms. Like other property investors, it had taken advantage of cheap and easy access to debt to fund its purchases, but then struggled to refinance its borrowings as the credit markets froze and amid sharp falls in the value of real estate in both the U.K. and Spain.
Metrovacesa, Spain's biggest real estate company by assets, has more than EUR7 billion in debt. Its stock traded Friday at EUR51.50, giving the company a market value of EUR3.56 billion.
Earlier this week, its top shareholders agreed with creditors to exchange debt for a majority stake in the troubled company.
HSBC's Chief Operating Officer David Hodgkinson said, "clearly the market has deteriorated significantly since we agreed the sale in spring 2007.
"It was important to work with our client, Metrovacesa, to resolve the funding issue which had arisen. 8 Canada Square is a landmark building and this transaction is in the best interests of both parties and HSBC shareholders."
Company Web site: www.metrovacesa.com
By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; anita.likus@dowjones.com
(Jason Sinclair in Madrid contributed to this article.)
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(END) Dow Jones Newswires
December 05, 2008 04:57 ET (09:57 GMT)

Publié le 05 Décembre 2008 Copyright © 2008 Dowjones