Tall & Urban News

Citigroup is in talks to buy its London skyscraper office for about £1.2 billion (US$1.68 billion), as the US bank commits its long-term future to the UK despite the political and economic turmoil surrounding Brexit.

Citi hopes to agree to a deal to purchase the 25 Canada Square Tower in Canary Wharf from Middle East-backed private equity group AGC Equity Partners in the next few weeks, according to a person familiar with the sale.

The US bank has occupied the 200 meter-high, 42-story office building since 2001, and has said the building will remain its European, Middle Eastern and African headquarters, even after Brexit. The offer is part of Citi’s global strategy to own, rather than rent, its major office buildings, in the belief that this will cut expenses in the long term.

Citi’s London negotiations follow the acquisition of its New York global headquarters in Tribeca for $2 billion in 2016. At the time, the bank said the move would save it a significant amount of money and was part of chief executive Michael Corbat’s drive to make the lender smaller and simpler.

The Canada Square sale would be a boon for London’s financial sector and property market, demonstrating the city’s continued appeal to international business despite the risks surrounding the UK’s departure from the EU.

Citi is pursuing a different real estate strategy to Wall Street rival Goldman Sachs, which negotiated a £1.2 billion sale and 25-year leaseback of its new London headquarters with Korea’s National Pension Service in August.

UBS decided to lease rather than own its new London HQ. In June, the steel-coated 13-story “groundscraper” at 5 Broadgate was sold to a property company founded by the Hong Kong tycoon Li Ka-shing.

Alongside Goldman’s £1.2 billion (US$1.6 million) property deal, Citi’s planned acquisition is one of the highest prices ever paid for a London office, after the 2017 sale of the“Walkie Talkie” tower for £1.3 billion (US$1.7 billion) to Hong Kong’s Lee Kum Kee.

When Citi’s lease on the adjoining 18-floor 33 Canada Square building expires in about seven years, the bank plans to leave the connecting property and consolidate its 6,000 London staff in the tower it is in talks to buy, the person familiar with the deal said. 25 Canada Square has 1.2 million square feet (111,000 square meters) of office space and is the fifth-tallest building in the UK.

As part of its planning for Brexit, Citi has said it will create between 150 and 250 new roles in Europe, only 60 of which will be staff relocated from London. The UK will remain by far its largest international hub, with some 9,000 employees. It also set up a financial technology innovation center in London last year, and is hiring at least 60 coders and programmers.

Separately, Citi is looking for a bigger office in Paris after deciding to increase the number of trading jobs it plans to relocate to the city. The decision was prompted by staff lobbying for a move to the French capital rather than Frankfurt, which has been designated the company’s main post-Brexit EU trading hub.

CBRE is advising private equity group AGC on the sale of 25 Canada Square, after a refinancing of the building’s debt over the summer laid the groundwork for its disposal.

For more on this story visit the Irish Times.