Nomura's exit triggers AIG Wharf payout

JAPANESE bank Nomura&rsquo;s decision to ditch the former Lehman Brothers office and house its 3,600 employees in the City will trigger a rental insurance payout of up to &pound;224m for Canary Wharf.<br /><br />As City A.M. revealed yesterday, Nomura has signed a deal to move into the riverside complex Watermark Place in 2010, meaning it will vacate the 350,000 sq ft space at the Wharf&rsquo;s 25 Bank Street.<br /><br />Canary Wharf is protected from rental defaults for a four-year period by US government-backed insurance giant AIG. Under the agreement, AIG pays &pound;53 per sq ft when a rent default occurs. The funds are currently protected in a separate bank account held at Bank of New York Mellon. If a new tenant moves in at a lower rent, AIG will pay any shortfall.<br /><br />Commercial property values in the UK have plummeted 44 per cent since the market&rsquo;s peak in June 2007, meaning rents will have dropped below the &pound;53 per sq ft mark.<br /><br />A source close to the talks said: &ldquo;It&rsquo;s a bit of a blessing in disguise. If the terms were drawn at the bottom of the market, it would be a lot less, but the payments will actually outperform the space occupied by new tenants.&rdquo; Despite Nomura&rsquo;s departure from the Wharf, in the next year it will be adding a 9,000 employees to its population with the opening of new offices by Moody&rsquo;s, State Street, KPMG and Fitch Ratings.