UK Edition
Canary Wharf finances under pressure as workers shun the office
Commercial hub faces 'difficult operating environment' as remote working hits offices
Canary Wharf’s credit rating has been downgraded as London companies struggle to draw white collar workers back to the office full-time.
Moody’s warned that the office district faced a “difficult operating and funding environment” as it cut its outlook for Canary Wharf Group.
The company, which is owned by Qatar’s sovereign wealth fund and Brookfield Asset Management, has more than £1.4bn of debt coming due in 2024 and 2025.
Moody’s said Canary Wharf will likely have to sell buildings and may need to ask shareholders for additional capital in order to refinance and pay its debts.
It added that the company would have difficulty in selling off its offices “without offering substantial discounts”.
The warning comes as the entire commercial property sector comes under pressure from rising interest rates, the aftershocks of a banking crisis in the US and Europe, and a struggle to entice staff back to the office.
Workers in London currently spend just 2.3 days a week in the office, according to a recent Centre for Cities report.
The persistence of working from home has prompted many businesses to downsize their offices, which is pushing down the value of office space.
HSBC is considering moving its Canary Wharf headquarters to Fleet Street as it more than halves its office footprint from 1.7m sq ft to between 400,000 and 600,000 sq ft. The bank is the office districts’ most recognisable tenant, with 8,000 staff occupying a skyscraper nicknamed the “Tower of Doom”.
Credit Suisse is also selling empty office space at its Canary Wharf headquarters, with nine floors already being marketed before the company was taken over by UBS in March.
Magic circle law firm Clifford Chance announced last year that it would leave Canary Wharf when its lease ends in 2028 and move to the City of London.
A Canary Wharf Group spokesman said: “The credit rating reflects the broader market environment. We are in a strong financial position, have significant equity in the business with net assets of £3.6bn and a loan to value ratio of 50.8pc.”