£400m City of London Tower Soon To Rise From M&G
M&G Real Estate is discussing the funding of construction to build a skyscraper for London's financial district, Business Times SG reported. The skyscraper's creation will be funded by investors from Hong Kong after negotiations fell through, according to reports from people with inside knowledge. The deal would create value for the plot where the 40 Leadenhall office project is located.
The Leadenhall office project is also known as the "Gotham City" project and will likely cost somewhere around $682 million, insiders have shared. They have requested anonymity on the basis of privacy of the negotiations.
It is known, however, that M&G stepped in after deals with a group of four Hong Kong property companies-including C C Land Holdings-failed to materialize. Instead, Nuveen will be involved in the project. Nuveen is the asset-management arm of the Teachers Insurance & Annuity Association of America.
The 40 Leadenhall project will be a big boost in the near future to London's financial district. Recent events hang heavily on the area, including the unpopular "Brexit" or the departure of Britain from the European Union.
It is also unheard of for a UK firm to make a commitment of this size, at least since overseas investors have normally dominated the local office market.
It is interesting to note that M&G Real Estate and Debenhams have recently ended a dispute regarding the British retailer's company voluntary arrangements (CVA). These have effectively driven out investors but kept the company up and going, according to Reuters.
Debenhams was also locked in a dispute in June with former shareholder Sports Direct over a restructuring plan misunderstanding. However, in the case of the CVA dispute with Debenhams, the latter's chairman Terry Duddy said that M&G recognizing the necessity for the CVA was a great thing, and called upon Sports Direct and CPC to do the same.
Debenhams is in the process of restructuring using these CVAs, which will allow their retailers to offload unwanted stores, thus offloading unwanted stores and securing lower rents on other stores, among other activities.
The surprising resilience of the demand for office space and other spaces have M&G taking the right decision, ahead of other developers who are waiting to see what the "Brexit" aftermath might look like. Perhaps, this is a step toward the right direction and could be the move which convinces other investors to take the risk.