The developer Arab Investments recently indicated that it is close to the ?650 million funding package required to continue construction on The Pinnacle, a 64-storey skyscraper in the City of London.
According to a Financial Times article, Arab Investments? equity investors are combining its funds with German, French and UK banks to enable progress for the project. There have been pledges of more than ?550 million in debt financing. In addition, there will be about ?100 million of equity from investors.
Like many other similar projects, The Pinnacle has suffered as a result of the financial downturn, with bank support becoming unviable. Despite this, the existing equity was enough to begin the initial construction phases.
Now that the downturn is showing signs of improvement, Arab Investments are taking the opportunity to obtain bank funding once again. The group for example used the MIPIM property conference in Cannes to approach banks regarding the project.
Khalid Affara, the managing director for Arab Investments, indicated that the group had succeeded in obtaining debt for more than the required funds. Its ?140 million facility with HSH Nordbank will probably be reduced and also injected into financing for the development.
Most investors in the project are based in Saudi Arabia and Kuwait.
A further favourable predictor for the project is the anticipated shortage of new office space in London over the coming years. Only three other towers are being completed, while the improvement of the financial sector will most likely result in a great number of new businesses seeing the light.
Even at this early stage, Mr. Affara mentioned that 500,000 square feet of the tower is already being discussed with potential tenants.
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