City of London property deals fall through in funding crisis

Key property deals in the City of London are falling through as funding dries up due to the worldwide credit crunch.

Sellers are struggling to complete deals as liquidity in the banking sector has virtually dried up. Values are also falling.

German fund manager SEB has pulled out of buying ING Real Estate's 88 Wood Street development. It had agreed to buy the scheme last month for around £180 million but has been unable to secure the necessary funding in the current poor economic climate.

It is the second time a sale has fallen through on the building. Atlantic Property Partners had offered £190 million but that deal also fell through.

The 17 floor iconic building, designed by leading architect Lord Rogers, was bought by ING for over £230 million in 2006.

Nearby Signa Deutschland's plans to buy UBS Global Asset Management's Milton Gate development on Moor Lane have also collapsed. The German closed-ended fund manager's funding arrangements fell through.

Signa, which had offered around £150 million for the 200,000 square foot scheme is trying to arrange a new financing deal in the hope that it still might be able to complete but the deal is open.

Paul Dennis-Jones, UBS asset manager, said that a deal was agreed, but the crisis in the European banking sector this week meant Signa's agreed financing arrangement with its funders fell victim to the liquidity crisis.

'We have withdrawn the papers and are pursuing enquiries and having discussions with other interested parties,' he said.

UBS is thought to be keen to sell Miltongate, which is held in its £1.8 billion Triton Property Fund, to ensure that it meets any redemption calls.