UPDATE: Morgan Stanley To Exit Canary Wharf Building Early

Songbird Estates PLC (SBDB.LN) said Thursday that Morgan Stanley (MS) has served notice to quit its Canary Wharf offices at 20 Cabot Square some 10 years early.

Songbird, whose main operating subsidiary - Canary Wharf Group PLC (CYWHE) - is the landlord of Canary Wharf, said that the investment bank will be leaving the premises with effect from the end of January 2010. The lease was due to run until February 2020.

No penalties are payable, a Songbird spokesman said.

The offices, comprising 345,500 square feet and six of the 10 floors of the building, are just one of three buildings currently occupied by Morgan Stanley at Canary Wharf.

Morgan Stanley dismissed any suggestion that the move was anything other than part of a long-term strategy to consolidate operations.

"This move represents part of our multiyear strategy to consolidate our space requirements in our two larger, wholly occupied buildings: 25 Cabot Square and 20 Bank St., our new European corporate headquarters," it said in an e-mailed statement.

The investment bank's premises at 25 Cabot Square, which it owns, and 20 Bank St. comprise 995,000 square feet in total.

A spokesman for the bank declined to comment on whether any job cuts were associated with the move. In November, Morgan Stanley announced a 10% cut in staff having already carried out a 10% cull over the course of the year.

Canary Wharf Group also owns the 30-floor high Lehman Brothers Holdings Inc. (LEHMQ) building at 35 Bank St. A Songbird spokesman said that the rental was underwritten by American International Group Inc. (AIG) for four years from any default and that Nomura Holdings Inc. (NMR) had taken on a two-year tenancy for 150,000 of its 350,000 square feet.

After Morgan Stanley has left 20 Cabot Square, Canary Wharf Group's investment portfolio would be 95.7% let, Songbird said. The rental from Morgan Stanley equates to 3.8% of the Group's total rental income and constitutes 4.3% by area of the Group's investment portfolio, it said.

Company Web site: www.songbirdestates.com

-By Marietta Cauchi, Dow Jones Newswires; [phone]; [e-mail]

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary. You can use this link on the day this article is published and the following day.