Nomura's Canary Wharf exit triggers payout

By Sinead Cruise

LONDON (Reuters) - Nomura's (8604.T) decision to quit the Canary Wharf offices it inherited from Lehman Brothers by 2011 triggers a rental insurance payout of up to 224 million pounds for the owner of Britain's second largest business hub, sources familiar with the matter said.

The Japanese bank agreed on Friday to rent the new 525,000 square foot Watermark Place development on the banks of the River Thames, one source said, declining to give details on rental terms.

It will vacate about 350,000 square feet of space at 25 Bank Street -- the former Lehman European headquarters -- by March 2011, meaning Canary Wharf Group can collect on the AIG (AIG.N) insurance policy, a second source close to the situation said.

AIG has pledged to pay 53 pounds per square foot from the date of Nomura's lease expiry until 2015. This is about 10 pounds per square foot more than Nomura's current rent.

"The money was posted in December 2008 so is now ringfenced," the source said, when asked about the insurer's capacity to pay after a massive bailout which left the U.S. government holding 80 percent of its stock last year.

If it chooses, Canary Wharf Group can continue to draw down on the policy until an incoming tenant agrees to pay more, an unlikely scenario while office rents plunge and developers compete strongly to sign a smaller pool of prospective tenants.

The 97-acre Canary Wharf estate is famed for its dramatic, high-rise skyline, although in recent months it has become a symbol for Britain's financial sector turmoil.

While a wave of job-cuts among some of its key bank occupiers has sent shockwaves around the district, it remains close to full occupancy, according to Songbird Estates SBDb.L, Canary Wharf's AIM-listed majority owner.