Songbird Next on Endangered Profits List

Songbird estates develop and lease most of Canary Wharf, east London. The company announced last week that the value of its property portfolio fell by 9.6% to £6.7 billion in the first half of this year.

Songbird’s losses totalled £469.9 million after being hit by the financial crisis, partly because one of its tenants was the Lehman Brothers, which went into administration recently. John Garwood, Songbird’s company secretary, told the Times that the rent from the Lehman Brothers contributed to 14% of landlord’s revenues.

It is expected that Nomura will be taking some of the Lehman’s office space. This would make them neighbours with Credit Suisse, Barclays, Morgan Stanley and Citigroup. Retailers are also expected to rent office space.

London office rents and commercial property values are being hit by the credit crunch. Net assets per share at Songbird tumbled by 30.7% to 149p. Songbird management said average prime rents dropped by £2 per sq ft, to £45 per sq ft in the first six months of 2008, whereas, in the third quarter of 2007 it was £50 per sq ft, according to Knight Frank.

Songbird’s net assets are £1.9 billion, but their net debt is £3.9 billion. However, they posses valuable office space that will undoubtedly find new companies to occupy it.