Delancey and KKR negotiate rare RBS loan buy in Dublin

Unusually, bank agreed to sell loan, rather than bank HQ building itself

Royal Bank of Scotland’s Ulster Bank has sold the loan securing State Street bank’s Dublin head-quarters to Delancey and KKR. Initially, the deal was planned as a straight real estate sale with a €105m asking price as RBS rarely chooses to sell loans.

But during the process the bank agreed to sell the debt  on the asset, rather than the building, which came with an adjacent site in south Dublin docklands, because the buyers preferred to buy the loan at the same price as the property.

“They knew this would make them faster than everyone else, so they’d win,” said a source on the selling side. Some €1bn of capital was estimated to have been chasing the deal, given the tenant’s strength, from bidders including Kennedy Wilson, which reached the final stage, and Hines.

The 165,000 sq ft 78 Sir John Rogerson’s Quay generates €7.8m in rent a year on a 25-year lease from 2009 with a 10-year break option.

It was put on the market by receivers advised by Savills in August after the collapse of the scheme’s developer, Liam Carroll’s Danninger Group. Ulster Bank financed the project. RBS has sold a couple of Irish assets and is starting to exit the market on an asset-by-asset basis, as it is in Germany.

It is hoping to sell a shopping centre in Hamburg by the end of the year – part of the Pegasus office and retail portfolio it took control of from MSREF in 2010 and decided to sell in May this year. Of that portfolio, a few smaller assets, some of which are redevelopments, remain.

Meanwhile, a team within  the bank has been assembling more granular portfolios of  German properties for sale. A source said these included “sensible” assets such as offices in Dusseldorf and Frankfurt.

Its general strategy is to sell assets rather than loans because it can deliver better returns to its shareholders that way. There will be no further major loan portfolio sales in  the UK, the bank said.