A new Land Securities Trillium joint venture has been selected for the long-awaited £1bn outsourcing of JP Morgan Chase’s UK leasehold portfolio.
The investment bank is expected to reach a final decision within two months on whether to outsource.
If it proceeds, LandSec Trillium will take on 30 UK properties in a joint venture with Geoffrey Lander’s Tricore Equity Partners.
The bank’s London leaseholds include 450,000 sq ft at 60 Victoria Embankment, EC4; 350,000 sq ft at 125 London Wall, EC2; 300,000 sq ft at 10 Aldermanbury, EC2; and 50,000 sq ft at Finsbury Dials, 20 Finsbury Street, EC2.
Outside the City, JP Morgan has properties in Bournemouth, Edinburgh, Essex and Glasgow.
Under the 20-year contract, worth in excess of £1bn, LandSec Trillium would accept Tricore’s new “risk sharing” model, as opposed to its previous “risk transfer” model: any savings the jv achieves for JP Morgan over baseline costs will be split 50:50 with the occupier, but the bank will not have to pay fees.
The joint venture will indemnify the occupier for 50% of any cost overruns.
Tricore – set up by former Nabarro Nathanson partner Lander and property consultant Jonathan Edwards last year – will handle corporate real estate matters.
Both Lander and Edwards have longstanding relationships with JP Morgan.
LandSec Trillium will handle facilities management, fit-out and office moves.
The deal is restricted to the UK, but JP Morgan’s European portfolio could offer LandSec Trillium the opportunity it has been waiting for to move into Europe with
an occupier.
The bank has been toying with the idea of capping its property risks via an outsourcing arrangement for the past four years.
Plans to transfer its property to Trillium and MWB were put on ice after its 2000 merger with Chase Manhattan.
References: EGi News 09/02/04
