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UK: LLOYDS TSB TO LOOK AT SHEDDING ITS PROPERTIES.
The Times
19 Nov 1999
LLOYDS TSB is considering outsourcing its entire property portfolio in a ground-breaking deal that would be modelled on the Government's Private Finance Initiative.
The bank held talks this week with leading property outsourcing groups. The Lloyds portfolio is made up of more than 3,000 properties, including some 2,500 branches, likely to be worth well over �1 billion.
Malcolm Beadle, head of central properties at Lloyds, said: "We invited in a handful of the major players in the field to discuss our property options. It's part of an ongoing review to increase shareholder value. The PFI is the only model of this kind of deal. It is certainly something that needs exploring."
The Prime project, the �2 billion transfer of the Department of Social Security's estate to the private sector, provides the blueprint for such deals. The concept is designed to free an organisation to concentrate on its core interests and, in return for the payment of an annual fee, leave property matters to specialists, who buy control of the property for a fixed number of years.
The private sector has tried to reproduce it in a non-government context, for instance with the ICL portfolio, but the complexity of such deals has meant that none has been signed so far.
Goldman Sachs, which won the Prime contract through its Trillium vehicle, is understood to be among the groups in talks with Lloyds, according to Property Week, the real estate magazine.
The others are thought to be the Servus consortium, backed by Nomura; Citex, a firm backed by the US bank Donaldson, Lufkin & Jenrette, and Mapeley, which includes George Soros's Quantum Realty Fund.
Nomura's Principal Finance Group, headed by Guy Hands, is known to have approached NatWest for a property deal, as well as its likely predators, in the battle for control of NatWest.
Lloyds has also asked the property groups to come up with proposals for less far-reaching property options, such as a facilities management contract.
The bank embarked on a sale-and-leaseback programme of 700 branches at the time of the Lloyds-TSB merger in 1995. It has been told that it would still be possible to include these branches in any deal. Mr Beadle said that Lloyds would decide in the new year whether to proceed.
(c) Times Newspapers Ltd, 1999.
Not Available for Re-dissemination.
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