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UK: ABBEY PLANS �450M SALE OF PROPERTY.
Sunday Times
1 Mar 2000
ABBEY NATIONAL is preparing to offload its �450m property estate in a groundbreaking deal that could be emulated by other high-street banks and big non-financial businesses.
Abbey, which is being advised by Ernst & Young, the accountant, has short-listed two bidders to take over the ownership of its 760-branch network as well as its London head office and regional call centres.
The two bidders are thought to be Mapeley - a consortium backed by Soros Real Estate Partners and Fortress Investment Corporation - and Servus, which is headed by Nomura, the Japanese investment bank.
Abbey is likely to make a decision by the beginning of September and, if it proceeds with the plan, it wants it to be operational by the end of that month. The successful bidder will have to oversee the move of Abbey's headquarters from Baker Street to Euston.
Other banks - including Lloyds TSB, Barclays and Halifax - are examining similar initiatives. Analysts say banks need to release cash to fund internet ventures, which can be highly capital-intensive. Other organisations, including the BBC and Marks & Spencer, are now looking at ways to release capital tied up in property. Outside Britain, Germany's Deutsche Telekom has also hired consultants to review how it can maximise the value of its portfolio.
Abbey, one of Britain's biggest lenders, is also looking at other ways to cut costs. It revealed earlier this month that it was piloting a branch franchise scheme, under which branches could be handed over to local managers. If this scheme is rolled out over the entire network, it could remove �250m of running costs from Abbey's balance sheet. Abbey's property is split between freehold and leasehold assets.
The two Abbey bidders - Mapeley and Servus - along with Trillium, which is backed by Goldman Sachs, are also vying to take over the government's Customs & Excise and Inland Revenue estates.
(c) Times Newspapers Ltd, 2000.
Not Available for Re-dissemination.
SUNDAY TIMES 16/07/2000
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