News: Services to be part of BT property transfer

News on 11 January 2001

Services to be part of BT property transfer

BT's property director Alan White has insisted that the £2bn sale of the telecoms company's portfolio (see News story) is more than just a property transfer and will include a "service element", bringing it close to the much talked about 'corporate PFI' model. "The only sensible way to service the occupier is to bring the two together," he said.

BT Centre in the City is part of the sell-off

White, who from the beginning of this year assumed responsibility for both property and services, confirmed details of the proposed deal. For the 70% of BT's portfolio termed operational, the company will retain the freehold whilst issuing a long lease, probably 116 years. BT will then take an initial 30 year occupation lease. The remaining 30% of the portfolio, excluding some highly specialist buildings, such as the BT Tower and satellite ground stations, will be sold outright with BT taking a flexible 'concession or licence', again for 30 years.

BT is planning to select a single preferred bidder, rather than a shortlist, in March of this year and Alan White expects a deal to be signed just three months later. He told i-FM that a 250-strong team had spent 18 months looking carefully at BT's estate and its options. To achieve flexibility and reduce the gearing of the business, the time was now right.

Commenting on the decision to pursue Project Jaguar (see News story) ahead of the property transfer, White said it was worth tackling the FM business deal alone and bidders for the portfolio would have to factor the Monteray contract into their proposals.

White says his team has been working for five years with BT's business units to understand their needs. Bidders for the portfolio will have to give BT specific occupation options in the early years of the 'occupational arrangement' with more general flexibility later. In return they will get a rather mixed portfolio, 'A' rated cashflow for up to 30 years and a significant property services business.

Front runners to bid for BT's portfolio are Land Securities/Trillium, Mapeley and Servus. It remains to be seen whether Carillion, a leading player in the Monteray consortium, will join forces with one of the bidders. If not it risks being downgraded to the role of sub-contractor.

Richard Byatt