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M&G said to be in talks to fund £400m City of London tower

London

M&G Real Estate 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 (S$682 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, fell apart.

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

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 UK 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 British firms.

The 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 UK capital. The building will have some 910,000 square feet of space and 34 storeys. BLOOMBERG