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Songbird Profit Declines After Asset Sales Cut Rental Income

Songbird Estates Plc., the property company that controls the Canary Wharf financial district in east London, said full-year profit fell after 2010 asset sales contributed to a drop in rental income.

Underlying profit before tax fell to 4.6 million pounds ($7.4 million) from 28.8 million pounds a year earlier, the London-based landlord said in a statement today. Adjusted net asset value per share fell to 190 pence as of Dec. 31 from 194 pence on June 30.

Songbird has a 69 percent stake in Canary Wharf Group Plc, which has been expanding outside the business district of the same name. The company is involved in joint ventures to develop an office tower known as the Walkie Talkie at 20 Fenchurch Street in the City of London financial district and to redevelop most of Royal Dutch Shell Plc’s London headquarters near Waterloo railroad station.

“Although demand for high grade office space across London has reduced largely due to broader economic uncertainties, supply has remained relatively constrained,” David Pritchard, Songbird Estates’ chairman, said in the statement.

Canary Wharf paid 90.4 million pounds to acquire control of Wood Wharf, a 16.8-acre (6.8-hectare) site close to its existing office district, the company said in January. That’s part of its strategy to “diversify its tenant base and its activities,” Pritchard said in the statement. It’s also considering an office and residential development on its Newfoundland site, which was previously expected to be a hotel and serviced apartments.

Canary Wharf Group’s investment portfolio was 96.5 percent rented at the end of the year, Songbird said, up from 96.1 percent at the end of the previous year.

Bank of New York Mellon Corp., the world’s biggest custody bank, renewed its lease for office space at One Canada Square in the business district for eight years from 2014, Canary Wharf Group Plc said in January. That reflects a trend of global economic weakness prompting tenants to extend their current leases or move into existing buildings rather than paying more for new space, according to a February report by London-based consulting firm EC Harris LLP.

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