Swiss Re Sells "Gherkin" as HSBC Mulls London HQ Sale

Both Swiss Re and HSBC are reacting to the current state of the London commercial property market by arranging deals which cash in on their prime real estate.

Swiss Re has agreed the sale of its City of London office building known as the "Gherkin" for 600 million pounds ($1.18 billion) in a transaction to an IVG Immobilien affiliate, the company announced Monday.

The company is set to make a book gain of around 250 million pounds on the deal which is expected to be finalized this month, a spokeswoman for the company said. Half of which would be accounted for in the company’s 2007 income statement and the other half would be booked over a period of 20 years, she added.

Swiss Re will remain a tenant of the “Gherkin” at least until 2031, occupying 50% of the property's rentable space, according to IVG.

Hong Kong-based bank HSBC said on Monday it was also considering a proposal to sell its London headquarters, the 45-storey HSBC Tower in Canary Wharf, and lease back the property in a deal that could raise just over 1 billion pounds.

A spokeswoman for HSBC, Vinh Tran, said the bank had no intention to vacate, but was looking at a plan to sell it and then rent it back for 15 years.

"Demand for property in the U.K. is quite good and we're reviewing the matter," Vinh said. "There's a proposal to sell and lease back for 15 years. Everything is under discussion at the moment and no figures have been confirmed."