Property Advisors to the Civil Estate (PACE) is set to become the first government agency to take advantage of last week’s relaxation of Treasury restrictions on Departments entering into joint ventures with the private sector.
The executive agency will shortly unveil plans to pilot a private sector partnership involving about 10 properties in central London. The announcement, which represents a marked departure from the organisation’s previous disposal methods, will take the form of an advertisement due out before 9 December in the Official Journal of European Community.
PACE will invite expressions of interest from developers and property companies, keen to form a joint venture aimed at finding entrepreneurial ways of accelerating the disposal of the empty buildings. The private sector partner will be expected to inject capital and be rewarded with a share in the savings which an acclerated disposal is expected to bring.
Until now, PACE has tended to concentrate on freehold sales and then used the proceeds to secure lease surrenders. But Property Advisors has a diminishing stock of freeholds which now account for only 20% of its portfolio – down from 38.6% in April 1996. In addition PACE has, on occasion, found it difficult to secure the co-operation of private sector landlords who are reluctant to lose a good covenant when a Government department wants to surrender its lease.
A large proportion of PACE’s vacant space – around 355,003 sq ft (3.8m sq ft) in 55 buildings – is in Central London as is some of its most difficult properties. Seven of the 10 buildings with the highest liabilities are also in London, as are 14 of the 15 largest buildings.
Jones Lang Wootton is advising PACE.
EGi News 05/12/97
