by Edward Simpkins
The Department of Social Security and Partnership Property Management have finally agreed the PRIME PFI deal to buy and run the DSS estate. The contract, signed on Christmas Eve, sets in stone the terms of the multi-billion-pound deal.
Last-minute negotiations focused on the penalties system should PPM fail to maintain the 1.7m m2 (18.2m sq ft) of accommodation to a high enough standard. John Mason, director of the PRIME project at the DSS, said: “The performance measurement system is at the cornerstone of the deal and our interests in this are not exactly convergent.”
The possibilities of penalties is crucial to Goldman Sachs-backed PPM. It is trying to obtain a credit rating for a bond issue based on income from the estate. Manish Chande, PPM’s chief executive, said he hopes to securitise the income with a £250m issue by April when the contract begins.
“We have bank financing at the moment and are continuing the process of bond securitisation, but it is still early days. I hope to be able to do it before the contract goes live.”
Mason said that he expects 20 to 30 development sites to be available immediately. Martin Myers of Imry, will take a more hands-on approach as PPM’s deputy chairman, overseeing the development possibilities arising from running the estate.
Chande added that he expects the contract to provide a model for other PFI schemes and that PPM is in the market to provide a similar service to large private-sector occupiers.
