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Mon 15 Nov 2010 07:02 PM

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Arab Investments seeks to lower borrowing to finish London tower

Developer behind Pinnacle tower seeking to raise additional money from investors, requires more than $804m

Arab Investments seeks to lower borrowing to finish London tower
On completion, Pinnacle tower will be the tallest skyscraper in the City of Londons financial district

Arab
Investments, the developer of the London tower known as the Pinnacle, is
seeking to raise additional money from investors, reducing the amount it needs
to borrow to complete the project.

The
company requires more than £500m ($804m) to complete the tallest skyscraper in
the City of London financial district, Khalid Affara, managing director of Arab
Investments, said in March.

Arab
Investments is in talks with Saudi Economic & Development Co and other
investors about providing “a substantial further equity investment,” Affara
said today in a statement.

If the talks are successful, the developer can move
ahead with work “more quickly and without signing up a major tenant in
advance,” he said.

SEDCO,
a privately owned Saudi Arabian developer based in Jeddah, and other investors
in the Pinnacle may buy as much as £150m in additional equity, the Financial
Times reported November 13, without saying where it got the information.

The
Pinnacle, which will have a height of 945 feet (288 metres), will cost
more than £1bn to develop, said Iain Lindsley, an spokesman for
Arab Investments. Sedco and the other investors have already put up around £400m of equity, while HSH Nordbank AG has provided loans of £140m, he said.

Relying
entirely on debt to finance the rest of the tower would require Arab
Investments to find occupiers willing to agree in advance to lease 40 percent
of the one million square feet (92,900 square metres) of space, Affara said in
March.

Tenants have so far leased about 200,000 square feet.

In
September, Arab Investments was in talks to lease as much as a quarter of the
tower to UK fund manager Schroders Plc, according to two people with
knowledge of the discussions. The company declined to comment about leasing
talks today.

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