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Investor Walks Away From Deal To Build £1B City Skyscraper

An investor has walked away from a deal to build 1 Undershaft, rendered here at the centre of the City of London's skyscraper cluster.

An investor due to buy a stake in what would be London’s second-tallest building and take over the £1B development of the scheme has walked away from the deal.

Listed Singaporean company Perennial Real Estate said last week that it had chosen not to exercise a call option to buy a 20% stake in the Aviva Tower in the City. The move was first reported by React News.

The 320K SF, 28-storey Aviva Tower is set to be knocked down and replaced with a 1.4M, 73-storey tower that will be look up to only the Shard on the London skyline. Planning consent was received for the scheme, called 1 Undershaft, in November 2016.

On the same day, Perennial entered a call option with the scheme’s owner, a company called Aroland Holdings. That company is owned by Perennial Chairman and shareholder Kuok Khoon Hong and Indonesian businessman Martua Sitorus. Perennial said it would buy a 20% stake in the Aviva Tower at a valuation of £330M and take over the development of the new tower.

The call option expired on 31 July, and Perennial said it would not be extended. It said it made the decision because the “timing of the redevelopment of Aviva Tower is uncertain”.

In its annual report for 2018, it said it was closely watching how the negotiations around Brexit were influencing the London market and the demand for office space.

If the proposed scheme is delayed by the exit of one of its investors and development manager, it will be one of the first and one of the largest Brexit-related casualties in the London office market, where in general demand has held up well and new supply is limited. According to CBRE, 60% of London’s office development pipeline is already pre-leased.