THE UK insurer Prudential has pulled out of a deal to buy a major new office block at Mount Street Bridge in Dublin 2 over the price being sought by Nama.

Prudential walked away despite months of protracted negotiations after the two estate agents acting for Nama refused to lower a previously agreed price of over €27 million.

However, one source close to the negotiations said last night that the Nama agents were still hopeful of securing a sale of the block to a US fund for around the same price, which would give a yield of 7.25 per cent.

The sale of the relatively new building, which is rented by Bord Gáis, would have been the second major disposal by Nama of an Irish investment property. Last year, the agency secured €99 million from Google for a high-rise block built by Treasury Holdings beside Grand Canal Dart Station.

The eight-storey office building, One Warrington Place at the junction of Lower Mount Street and Warrington Place, was offered for sale last September following the transfer of the Anglo Irish Bank development loan to Nama by the promoter David Arnold of investment group D2 Private.

The 5,211sq m (56,103sq ft) block is occupied by Bord Gáis at a rent of €2.1 million per annum, equating to a lower base rent of €392 per sq m (€36.50 per sq ft). The 25-year lease provides for rent reviews every five years and includes a break clause in year 10.

As part of the the planned sale to Prudential, Nama had apparently agreed to offer vendor funding of up to 70 per cent of the loan to value at a premium of 2.5 or 3 per cent above the standard bank rate.

The landmark block had been expected to set a record for rents in the city when it was launched early in 2008.

The highest rent in Dublin at that stage was €700 per sq m (€65 per sq ft) for a suite at the upgraded Department of Justice building at 75 St Stephen’s Green.