Royal Bank of Scotland is working on plans to outsource the bulk of its 3,000 properties.
RBS’s operational property — including high street NatWest and RBS branches, as well as offices — will be outsourced and the bank will also dispose of assets that have become surplus since it took over NatWest in 2000.
It is in the early stages of developing a structure for the deal, having just appointed the Ernst & Young team that made its name in outsourcing by advising Abbey National on the transfer of its portfolio to Mapeley in 2000.
However, sources said specialists Land Securities Trillium and Mapeley had already been sounded out about a complete outsourcing package, involving the transfer of freeholds and all lease liabilities.
Earlier this year, RBS began working on a strategy to dispose of only its surplus properties — worth around £200m — but one source said: “Since then it seems that RBS has taken a more bullish approach and will try to outsource operational property as well. It is one of the biggest banks and its decision could open the floodgates for some of its rivals, such as LloydsTSB.”
Last year, RBS awarded Nelson Bakewell and GVA Grimley two-year contracts to manage its UK property. It divided the UK into three regions, appointing Nelson Bakewell for the South East and Scotland/the North, and GVA Grimley for the Midlands. Both agents will be providing advice to RBS and E&Y but declined to comment.
RBS is presently buying its two City headquarters — the £240m 280 Bishopsgate, EC2, and £190m Premier Place, EC3 — and two sites at Aldgate Union, E1, earmarked for development by Tishman Speyer.
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RBS’s move comes as Cable & Wireless is reviving plans to outsource its 2.3m sq ft UK & Ireland property estate. |
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The UK’s biggest alternative telecoms carrier wants to sell and lease back 23 freeholds and long leaseholds worth £50m, with former MEPC directors Jamie Dundas’s and Robert Ware’s new company among five parties invited to bid. |
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Their Oxiana is up against outsourcing specialists Land Securities Trillium and Mapeley, as well as the Livingstone brothers’ London & Regional Properties, and a surprise bid from Arlington — aiming to make its first major move in the outsourcing market. |
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Under the 15-year contract, C&W also plans to transfer its liabilities for around 157 short leasehold properties, 50% of which are surplus, to its chosen partner. It pays £30m pa in rent. |
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The portfolio of offices, data centres and light industrial properties, but not phone masts, includes: |
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● 13 occupied office/industrial properties |
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● 71 occupied mixed office and technical properties connected to C&W’s network |
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● 43 unoccupied, mainly light industrial properties, supporting the C&W network |
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● 53 wholly sublet or vacant properties. |
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One source close to the deal described it as a “carbon copy” of the larger Abbey National outsourcing as it will not involve facilities management. |
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The move is part of the company’s plans to restructure amid tough trading conditions. Earlier this month C&W announced a worse than expected 18% slump in first-quarter revenues and flat sales in its core UK market. |
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Its turnover for the three months to 30 June fell to £798m, against £974m in the same period last year, while UK revenue came in at £406m, down from £423 last quarter. |
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Bids are due in late August and must feature specific proposals for C&W’s London estate, which includes its leasehold headquarters at 124 Theobalds Road, WC1. |
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The telecoms giant looked at plans to outsource its non-operational property across Europe four years ago, when it appointed GVA Grimley to manage its portfolio in the UK and Ireland. |
