£500m dive in value of Canary Wharf properties

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Songbird Estates said its properties were worth £6.73 billion at the end of June compared with £7.27 billion six months earlier, a fall of 9.6%, as pressure mounted on London's bruised property market.

It slumped to first-half losses of £469.9 million compared with profits of £466.4 million a year ago.

The firm, landlord to some of the biggest victims of the credit crunch including Bear Stearns and Lehman, admitted it has been hit hard by the "rapidly unfolding financial markets crisis".

Office values across London have fallen nearly 30% in the last 12 months.

Songbird said it was too early to estimate the full impact of Lehman's failure on its business but remained hopeful that many of its Docklands-based bankers will return to work following the takeover of Lehman's European business by Japanese rival Nomura.

Lehman employed 4000 staff at 25 Bank Street in Canary Wharf although only 2500 at most are likely to be taken on by Nomura.

Songbird company secretary John Garwood said: "Nomura are going to be taking on the investment banking operations in Asia and Europe, and they have said that a significant majority of the jobs are going to be kept.

"We can only assume that they will need a significant amount of space in the Lehman building."

Lehman's lease, which was due to run for another 25 years, had been at £41 per square foot but was due to go up to £53 in November. As part of the deal, there is a four-year insurance policy should Lehman default, underwritten by AIG — the insurance giant bailed out by the US government shortly after Lehman collapsed.

Despite the market turmoil and loss of jobs across the banking sector, Canary Wharf was still 99.7% let at the end of June with average lease terms of about 18 years.

Songbird let 200,000 square feet of space in the six months, and has since struck a deal with JPMorgan to build its new £1.5 billion European headquarters at Riverside South.

Adjusted net assets per share tumbled 30.7% to 149p, primarily as a result of the fall in the value of its office skyscrapers.