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Tue 28 Jun 2011 03:03 PM

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Real estate squeeze spurs Arab backers of London tower

Arab Investments signs up property group Brookfield to finish Pinnacle skyscraper by 2014

Real estate squeeze spurs Arab backers of London tower
On completion, Pinnacle tower will be the tallest skyscraper in the City of Londons financial district

Asset manager Arab Investments has appointed global property group Brookfield to complete central London's Pinnacle skyscraper by 2014, delivering prime office space to a supply-starved market.

The 945ft, 64-storey building, dubbed the Helter-Skelter, is just one of a slew of high-profile projects that blue-chip developers are racing to deliver in the City financial district.

"The Pinnacle is much further ahead in terms of the building work and the ongoing negotiations with prospective tenants about taking space in the building," said Khalid Affara, Arab Investments' managing director.

Arab Investments agreed on Tuesday that Brookfield would start the final phase of construction work at end-June, enabling completion "of the City's tallest building by 2014", he said.

It would be delivered into a market where there would be a shortage of top-end office space, Affara said. Arab Investments is owned mostly by investors from Saudi Arabia and Kuwait.

A spokesman for Arab Investments said the company was still
in talks with a consortium of banks about debt to fund the project.

"We put more equity in recently, but it (the debt)
still hasn't been finalised, but obviously it's moving closer towards
that," the spokesman said, noting the debt component of the 1 billion
pound development would be about 500 million pounds.

He declined to confirm or deny media reports that HSBC was
either in the consortium or leading it.

The number of prime office development projects started in London has more than doubled in the past six months, after many real estate investment trusts (REITs) put their plans on ice as the global financial crisis saw capital values and debt availability plunge.

Land Securities and Great Portland Estates plan to develop more prime central London offices, citing rising rents, while British Land was also positive on the outlook for rental growth.

Arabian Business: why we're going behind a paywall

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