RBS set for £60m hit on office sale

ROYAL Bank of Scotland is set to take a £60m hit in its bid to sell a central London office complex to a residential developer.

According to Estates Gazette the bank paid private investor Zak Gertler about £90m last month to buy the freehold of its 180,000 square feet of offices in two buildings on Pentonville Road in King's Cross in order to extricate itself from a 30-year lease. This is double the amount previously reported.

RBS is trying to sell the premises to a housing trust for about £30m. The bank acquired the 14-storey offices, known as KX200, in its takeover of NatWest, and had tried for more than a year to assign its lease or sub-let.

Its lease ran for 60 years from 1974 and cost RBS more than £4.5m a year. The rent was expected to reach £5m next year.

A source close to RBS explained: 'It is losing £60m-odd on the investment but was faced with another 30 years paying rent for a building it did not want. The landlord would never have accepted a surrender, so buying the building was the only way out.'

RBS failed to attract office occupiers even with huge incentives, said the source. 'Having bought the freehold RBS was able to tear up its lease and offer housing associations or developers vacant possession. That is where the only interest is coming from.'

Late last year, Shaftesbury Housing Association put in an offer, but the deal fell through. It is now under offer to another housing trust.