Songbird Estates Feel the Crunch
Songbird estates, the name of the firm which owns Canary Wharf is reportedly close to breaching covenants on a loan of over £800 million. The falling value and demand for office space, as well as contracting rental values, haa landed the company in it’s current predicament. If the breach were to occur, then the lender (Citigroup) could have the right to demand early repayment. In a statement Songbird said that this would then…”cast significant doubt on the group’s ability to continue as a going concern and… it may be unable to realise its assets and discharge its liabilities in the normal course of business.”
The company has sought the advice of Investment Specialists Rothschild to help it decide how to proceed. Other companies face similar problems due to the value of commercial property falling which then adversely effects their debt to value ratio. So even without further borrowing, the sheer fall in prices means that other investors and developers could be caught in financial turmoil.