M&G Said in Talks to Fund $503 Million City of London Tower

(Bloomberg) -- M&G Real Estate Ltd. is in exclusive negotiations to fund construction of a skyscraper planned for London's financial district after financing from Hong Kong investors fell through, according to people with knowledge of the matter.

The terms of the deal would value the plot for the 40 Leadenhall office project, nicknamed Gotham City, at about 400 million pounds ($503 million), said the people, asking not to be identified because the negotiations are private. M&G stepped in after an agreement with a group of four Hong Kong property companies, including C C Land Holdings Ltd., fell apart, they said.

Nuveen, the asset-management unit of the Teachers Insurance & Annuity Association of America, will continue to oversee the development, they said.

Representatives of M&G Real Estate and Nuveen declined to comment. A spokesperson for C C Land Holdings didn't immediately reply to a request for comment outside of normal business hours.

Funding the 40 Leadenhall project would be a big bet on the future of London's financial district, which has been clouded by Britain's looming exit from the European Union. And for a U.K. firm to make a commitment of this size is a departure from the trend for overseas investors to dominate London's office market.

The surprising resilience of demand for office space in the British capital ahead of Brexit has led more developers to take the plunge and start projects without lining up tenants in advance. At the same time, some overseas investors -- notably in South Korea -- are starting to get cold feet, opening the door to U.K. firms.

The 40 Leadenhall project, which is close to the Lloyd's of London insurance market, is among the largest planned office buildings to be given approval in the U.K. capital. The building will have some 910,000 square feet (about 84,500 square meters) of space and 34 stories.

To contact the reporter on this story: Jack Sidders in London at jsidders@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Patrick Henry, Lucca de Paoli

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