THE American investment bank Morgan Stanley has been hired as financial adviser to a George Soros-backed consortium that is bidding for the Inland Revenue and Customs & Excise property portfolios.
Morgan Stanley is also expected to take a big stake in the consortium called Mapeley, owned jointly by Soros Real Estate Partners and Fortress Investment Corporation, an American real-estate investment trust.
The presence of a heavyweight investment bank has added credibility to the Mapeley offer. Morgan Stanley's role is also likely to include providing interim finance as well as potentially securitising part of the portfolio.
The two other shortlisted bidders are Servus, which is backed by Nomura and NatWest, and Trillium, whose partners include Regus and Whitehall, the Goldman Sachs property vehicle.
The successful bidder will manage and own buildings occupied by the two government departments. The contract involves an initial investment approaching �220m and is worth more than �2billion over the deal's 20-year life.
Mapeley is also eyeing other potential deals in which companies want to offload property holdings. JP Morgan, an American investment bank, is currently talking to several companies prepared to take control of its 11 London buildings totalling 1.2m sq ft.
A number of retailers and British clearing banks, including Lloyds TSB, are studying similar proposals.
New accounting standards will result in long leasehold commitments being put in a company's balance sheet as liabilities.
Analysts say this will finally give companies an incentive to outsource their property interests.
Mapeley is also looking to provide incubation units for start-up internet and technology ventures and in return for rent it will take a stake in the company.
(c) Times Newspapers Ltd, 1999.
Not Available for Re-dissemination.
By John Waples.