Canary Wharf sale `within 10 days'

JOHN WILLCOCK

Financial Correspondent

Paul Reichmann and his investors' group are under growing pressure to sign a contract to buy Canary Wharf in London's Docklands within the next 10 days.

Sources close to the talks indicated last night that potential counter bidders have begun to emerge. Canary Wharf's owners declined to comment on whether rival bidders had made approaches.

A spokesman for the 11 banks, which rescued Canary Wharf three years ago following its collapse under Mr Reichmann's ownership, added that an announcement on the Reichmann bid could be made "within 10 days". It is now almost two months since the Canadian entrepreneur who originally built the massive office development made his first serious approach to the banks that now own it.

Mr Reichmann's pounds 700m-pounds 800m bid gained virtual exclusivity in the talks at the beginning of August this year when Prince al-Waleed bin Talal bin Abdulaziz, the billionaire nephew of the King of Saudi Arabia, joined his investors' group.

While the 11-strong consortium may have been split six months ago - between North American banks wishing to sell, and UK banks who wanted to hold on to Canary Wharf - the consortium spokesman said that the negotiations had led to a new unity between the banks, and "significant progress" had been made. He added that the banks would only be interested in a cash deal.

Mr Reichmann is keen to win back control of Canary Wharf, which he developed between 1989 and 1992. When the development went into administration it helped to bring down the rest of the Reichmann brothers' property empire in Canada, the US and elsewhere.

Analysts see the key to the development's success as the Jubilee Line extension which will connect Canary Wharf to central London by Tube. Completion is due on 31 March 1998. Property agents expect this totransform Canary Wharf's fortunes. It is shedding its 1980s white-elephant image, and three-quarters of the 4.5 million sq ft office space has been let. Recently, Trade Indemnity rented two and a half floors of the tower in Canada Square, while Reader's Digest is thought to be taking up another block.

If the banks get pounds 700m-pounds 800m for the project they will have covered their outstanding loans. Although Mr Reichmann has co-ordinated the investors' group, his own equity stake is thought not to be more than about 10 per cent. Prince al-Waleed is thought to be in for a similar figure. The biggest single investor is the US-based CNA Financial Corporation.