Monday, Jun 30, 2008
This is hilarious - beyond satire
This Is Money: HSBC may repossess own head office
Last year, HSBC sold its Canary Wharf HQ building to the Spanish property group Metrovacesa for £1 billion, in a sale-and-lease-back scheme that allowed HSBC to remain in the building. This was the largest property deal in UK history at the time.
Metrovacesa took on £800m of short-term debt to buy the building. It borrowed the money from.... you guessed it, HSBC.
Now they are struggling to refinance the debt, as no-one wants to lend to them. HSBC want their money back, and Metrovacesa can't pay. HSBC may now repossess the building.
Sweet!
Posted by little professor @ 12:02 PM (1031 views) Add Comment
14 Comments
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1. little professor said...
HSBC built the tower themselves in 2002 for £500m.
When it was sold to Metro last year for £1billion, it was hailed as a great deal for both companies, and a sign of the strength of the UK property market.
http://www.forbes.com/2007/04/30/hsbc-headquarters-spain-markets-equity-cx_po_0430markets05.html
2. Fatjock said...
@little professor
Thanks for that it really made me chuckle, you couldn't make this stuff up.
3. disillusioned said...
I remember talking about this shrewd move at the time. I think there was even an article on the Blog titled "HSBC sold to rent!" - HAHAHAHA!
4. yorkshireman said...
Somewhere between Whitehall Farce and a Carry on Film. Any suggestions - Carry on up the Creek maybe ?
5. last_days_of_disco said...
Wow, what a confused mess.
6. Lasertrip said...
The whole deal smells to me. I bet the whole point of it was to push up their accounting profit to boost their share price and management's bonus.
I bet they recognised the difference between the cost to build it and the "sale value" as a profit in their accounts last year. I doubt their auditors questioned them very hard on the fact they were still using the building and still had the risk of it falling in value and I bet the stupid analysts factored it into their valuation models.
I have no faith in any of these fools.
7. d'oh said...
I remember when the HSBC building was sold and thought:
(1) HPC is definitely coming
(2) You clever buggers HSBC
Isn't it wonderful - they get gobs of lolly from some Spanish investors for a couple of years, AND get to keep their building...what a hedge. Damn clever (but completely unethical.)
8. hpwatcher said...
hehe..silly s*ds.
9. This comment has been removed as it was found to be in breach of our Blog Policies.
10. European-bear said...
Sold for 1.1 billion, agreed leaseback at 43 million per year. That makes a yield of 3.9% ...what a crappy investment and what a good deal for HSBC
11. uncle tom said...
Of all the major banks, HSBC do seem to have the best brain cells, EXCEPT that having found a mug to pay over the odds for their tower block, why did they spoil the sting by lending them the money to buy it?
HSBC would have much bigger smiles today, if Metro had borrowed the dosh from Barclays..
12. d'oh said...
UT - I'm not convinced that it was a bad move lending the money themselves. They have much more control over the contracts - end up retaining ownership of the building etc. and I'm sure any "loss" can be written off for tax purposes.
13. icarus said...
So HSBC is now looking for a greater fool to buy and lease back, but in this article Andrew Leach gives the impression that this will be difficult since, because of the credit crunch, 'the appetite for major property deals (in the City) has dried up'. But three weeks ago the same site (thisismoney) carried an article by Hugo Duncan under the banner 'Sheikhs pouring oil riches into the City', in which he quoted a consultant who said 'there is now more interest in (buying offices) in the City, particularly given the opportunities in terms of pricing' (i.e.recent big falls of 10%-20%). Oil money (sovereign funds), Duncan writes, has scented blood and has moved in. St Martins, Kuwait's UK property arm, plans to invest another £3 billion in London's office market, mainly in the City. He goes on to talk of a resulting 'near unprecedented amount of building activity' going on in the City.
14. iguana said...
These sale and lease back arangements are almost always a tax dodge, to make it work they need to demonstrate to HMRC that there is an economically viable reason behind the deal. If as I suspect the credit crunch has put paid the the sham of viability, the tax dodge fails.
I am peronally really very sad, and intend to cry uncontrollably..........with laughter!!!!!!