UPDATE 1-HSBC to make $367 mln gain from Metrovacesa deal

(Adds detail, background)

LONDON, Dec 5 (Reuters) - HSBC (HSBA.L) will make a gain of 250 million pounds ($367 million) from the repurchase of its European headquarters in London after property firm Metrovacesa MV.MC failed to refinance a loan secured on the building.

In a statement on Friday the bank said it had agreed to pay 838 million pounds for the landmark skyscraper at 8 Canada Square in London's Canary Wharf business district, a week after the ailing property firm said it would look to sell the asset back to the bank.

The gain will be recognised in its income statement for the second half of 2008, HSBC said.

Its shares were trading up 0.1 percent at 710 pence by 0924 GMT, outperforming a 1 percent fall in the FTSE 100 Index .FTSE.

The announcement brings to a close more than a year of speculation concerning the future ownership of the building known as the HSBC Tower.

Metrovacesa bought the property in a record-breaking sale-and-leaseback transaction worth 1.09 billion pounds at the peak of Britain's debt-fuelled property boom in May 2007.

A gain on the sale was not recorded in last year's accounts, however, because the medium-term funding of an 810 million pound bridging loan on the sale had not been finalised.

Under the terms of the deal, HSBC had agreed to lease the building back for 20 years at an initial annual rent of 43.5 million pounds, representing a net initial yield of 3.8 percent.

The purchase was funded by Metrovacesa via a cash equity injection of 280 million pounds and the bridging loan of 810 million pounds provided by HSBC, subject to syndication into a term facility.

But the Spanish firm has struggled to refinance its short-term debts in tight credit markets and amid a sharp readjustment in UK property values. Metrovacesa is now under the control of its creditor banks after a debt-for-equity swap deal was concluded this week. [ID:nL4695158].

"Clearly the market has deteriorated significantly since we agreed the sale in spring 2007," said David Hodgkinson, group chief operating officer at HSBC Holdings.

"It was important to work with our client, Metrovacesa, to resolve the funding issue which had arisen. 8 Canada Square is a landmark building, and this transaction is in the best interests of both parties and HSBC shareholders," Hodgkinson said. (Reporting by Sinead Cruise, editing by Will Waterman) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)