HSBC to sell NYC base for $330m via Danker IDB with lease-back provisions
Updated: 2009-10-06 06:46
(HK Edition)
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HONG KONG: HSBC Holdings Plc, Europe's largest bank, has agreed to sell its New York City headquarters for $330 million in cash to a company controlled by Israeli businessman Nochi Dankner.
The London-based lender will lease back the tower at 452 Fifth Avenue, according to a company statement. HSBC agreed on the transaction with 452 Fifth Owners LLC, a company owned by Koor Industries Ltd and Property & Building Corp, both controlled by Danker's IDB Holding Corp.
HSBC is selling some of its landmark office buildings to raise cash. South Korea's National Pension Service said September 28 it's interested in HSBC's headquarters in London's Canary Wharf.
Chief Executive Officer Michael Geoghegan told the Financial Times in an interview published yesterday he expects the economic recovery to be "W" shaped.
"I'm not as convinced we're through the worst as others are," the FT cited him as saying. HSBC shares slipped 1.4 percent yesterday at 12:30 pm in Hong Kong.
HSBC Bank USA agreed to a leaseback for the entire New York building for one year and floors one to 11 for 10 years, according to the release from the bank. The transaction is expected to close in the first quarter of 2010.
The Israeli companies announced the deal in a statement to the Tel Aviv Stock Exchange. Koor holds a 1.71 percent stake in Credit Suisse Group AG, and Dankner's buying and selling of his shares in the Swiss bank has netted the company at least 750 million shekels ($199 million) of profit.
The deal is a "good signal" for the local investment market because it's all cash and involves a foreign investor, said Robert White, president of Real Capital Analytics, a New York-based property research company.
HSBC sold the Canary Wharf skyscraper to Spain's Metrovacesa SA in June 2007 for 1.09 billion pounds ($1.74 billion). The lender then bought the building back in December 2008 for 838 million pounds after the Spanish developer failed to refinance a loan from the bank, making a profit of 250 million pounds.
The bank said in April it may sell three of its landmark buildings. At the time, real estate brokers said the properties might fetch 2.7 billion pounds.
HSBC said last month Geoghegan will move to Hong Kong from London as the global bank increases its focus on emerging markets such as China, India and Brazil.
Bloomberg News
(HK Edition 10/06/2009 page4)