PNB pulls out of EUR 323m London office deal

Malaysian fund Permodalan Nasional Berhad (PNB) has pulled the plug at the last minute on the acquisition of the Woolgate Exchange office property in the City of London. It is not clear why the deal did not go ahead at the negotiated price of about £270 mln (EUR 323 mln), which would have reflected a net initial yield of 5.5%.

The only official comment came from Capita Asset Services which was acting for the vendor. 'Following discussions between the receivers and the purchaser an agreement to sell and purchase the property was not reached,' Capita said in a statement to the Irish stock exchange.

A source with knowledge of the deal said it was unlikely the price was too high and suggested instead that PNB may have been suffering from 'indigestion' after having invested over £800 mln in London office assets in recent months.

Despite the collapse of the deal it is expected that other UK-based and international investors will be interested in acquiring the 32,000 m² Woolgate Exchange building, where German lender WestLB has its UK headquarters.

The property was acquired by Irish investor D2 Private for £325 mln in 2006. Anglo Irish Bank provided the financing and Credit Suisse went on to acquire the senior tranche. The asset is part of the commercial mortgage backed security (CMBS) known as Cornerstone Titan 2006-1.

Woolgate Exchange was put up for sale when D2 was unable to repay its loan last year.

Jones Lang LaSalle and Knight Frank are jointly marketing the asset.