Citigroup European HQ in London Reportedly Sold for £1 Billion

Scotsman.com - July 2, 2007

Royal Bank of Scotland (RBS) was today understood to have sold one of its two City tower blocks in a deal worth £1 billion, marking the second-biggest property transaction ever seen in the UK and netting the Edinburgh bank an estimated profit of around £310 million.

Scotland's biggest company is said to have offloaded the landmark 25 Canada Square - currently the European headquarters of financial services giant Citigroup - to a joint venture group featuring PropInvest and former Dublin tax inspector Derek Quinlan's Quinlan Private group, whose other investments include Claridges Hotel, in London, and the Jurys Inns chain.

PropInvest, meanwhile, is run by Sheffield-based businessman Glenn Maud, who was said to have been one of the bidders for Swiss Re's flagship "Gherkin" building when it was sold earlier this year for £600m to an affiliate of German property group IVG Immobilien. It is thought that Mr Maud is putting around £500m of his own cash into the purchase.

Citigroup will remain in the 1.22m square feet, 45-storey building and has secured a further 20-year lease, paying £46.5m a year in rent for the landmark tower.

RBS bought 25 Canada Square and another smaller building at number 5 Canada Square four years ago in a deal worth £1.1bn. Lazard, which advised RBS on the deal, is thought to also be advising on the sale of RBS' smaller Canada Square property, which is currently let to Credit Suisse and sub-let to Bank of America - the group which RBS is trying to reach an agreement with on a carve up of ABN's US-based unit LaSalle.

It is unclear which proportion of the £1.1bn RBS originally paid was for 25 Canada Square, but the market value was £690m, according to details of the sale at the time, which also revealed the building charged annual rental income of £44.9m in 2003.

The smaller of the two buildings, 5 Canada Square was worth £327m on the market in 2003. It is thought that it could fetch £400m, taking RBS' total profit closer to £400m if and when the second building - which covers 515,000 sq ft - is sold. Sphere: Related Content