London & Regional’s joint venture with Carillion is out of the running for insurance giant Aviva’s 6m sq ft portfolio.
Rival bidders Land Securities Trillium and Mapeley are still in talks for the £300m outsourcing deal. But discussions with L&R and Carillion have ceased, five weeks after full bid documents were submitted on 9 January.
Aviva’s decision is a heavy blow to the duo, which is intent on becoming a serious contender in property outsourcing, and further strengthens the dominance of LandSec Trillium and Mapeley in the sector.
Aviva, the UK’s biggest insurance group, invited Ian and Richard Livingstone’s private company to the table last year. L&R subsequently teamed up with construction services company Carillion.
“These bids are sometimes so prescriptive that it can stifle the creativity that private groups would be able to offer were they involved in developing strategy at an earlier stage,” said Adam Calman, joint head of corporate strategy in Cushman Wakefield Healey & Baker’s advisory group.
Aviva’s most pressing concern is a major construction project at its 400,000 sq ft freehold campus in Norwich. The site includes the listed Surrey House, which will be retained, and nine 1960s office blocks, which Aviva wants to refurbish or replace by the end of 2007.
The insurer would transfer the site to its chosen bidder and lease it back on a 25-year basis. With this under its belt, the chosen bidder would then get a bite at the rest of Aviva’s properties. “Phase two is the carrot,” said one source close to the negotiations.
Aviva is expected to lock itself into preferred bidder stage at the beginning of March.
Carillion is also bidding for the Bradford city council outsourcing deal, together with Mapeley and LandSec Trillium.
