Loans Funding Dubai’s Investment in U.K. Property Breach Terms

Loans used to fund Dubai’s purchase of a 1930s London office block that’s leased to the U.K. government are breaching terms amid tumbling property values, according to Barclays Plc, the manager of the debt.

Istithmar, a unit of the government-owned Dubai World, bought the Adelphi building in 2006. Barclays made the 214 million-pound ($318 million) loan to a special-purpose company based in Liechtenstein set up to finance the property, and packaged it with other debt into a commercial mortgage-backed security called Indus (Eclipse 2007-1) Plc.

The borrower breached conditions which limit the amount of debt owed compared with the value of the property, Barclays said. Spokesmen for Istithmar didn’t return phone calls and e- mails seeking comment.

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