The owner of Canary Wharf has had its credit rating cut deeper into “junk” territory over concerns about its debts as it struggles to attract workers back to the east London office hub after the pandemic.
The credit rating agency Fitch has further downgraded Canary Wharf Group, the landlord of the development, in a reflection of risks over an upcoming bond refinancing.
Its rating has been reduced by three notches from BB to B because of the short-term risk of £350m of bonds, which are scheduled to be refinanced in April 2025, as well as a further £250m equivalent secured bond in April 2026.
The group, which is owned by the Qatar Investment Authority and Brookfield, had gross debt of £4.2bn as of June.
A number of high-profile tenants have announced plans to leave Canary Wharf including HSBC, which has said it will ditch its 45-floor skyscraper at 8 Canada Square when the lease expires in 2027 and move to a smaller office near St Paul’s Cathedral, following in the footsteps of other companies such as the law firm Clifford Chance.
Canary Wharf Group plans to remove large chunks from the HSBC tower after its departure.
London office landlords have been hit hard by the increase in staff working from home triggered by the pandemic, which has reduced demand for space.
Workers in London have been slower to return to the office than those in other global cities such as Paris and New York, according to research by the Centre for Cities thinktank, which surveyed employees and employers in six big cities.
Workers in central London spend 2.7 days a week in the office on average, up from 2.2 days a week last year, the poll found. That is less than their counterparts in Paris who come in 3.5 days a week, those in Singapore on 3.2 days and those in New York 3.1 days.
Fitch said there had been an evolution of Canary Wharf from pure office space to some mixed and residential use, and that more than 3,500 people now lived in the area. This was driving more growth in retail and leisure facilities targeted at residents and commuters, it said.
The Fitch report also said that there was a drive to attract life-science tenants to help diversify the mix from financial services, which represented 51% of tenants at the end of 2023.
Canary Wharf was the creation of the late Canadian property tycoon Paul Reichmann, who befriended the then prime minister Margaret Thatcher.
Thatcher gave the development generous tax breaks as part of the project to overhaul London’s docklands, with construction beginning in 1988.
The district’s fortunes had largely reflected those of the wider economy, hit by the recessions of the early 1990s and the 2008 financial crisis before the pandemic drastically reshaped Britons’ working patterns.
