Thames Water dilutes property assets

The new owner of Thames Water is rounding up bidders for the company’s property portfolio. Australian bank Macquarie has split the estate into a £60m occupational portfolio and a £16.4m package of surplus buildings. The Aqua portfolios have been put up for sale as part of a raft of measures to pay down the debt used to finance Macquarie’s £8bn buyout of Thames Water last October. Other steps include imposing a pay freeze on managers. Clearwater Court, the water utility’s 90,000 sq ft freehold headquarters in Reading, is included in the occupational portfolio alongside two smaller offices in the town, Rose Kiln Court and Spencer House. They will be leased back to Thames Water on long leases at £3.2m pa, a 5% initial yield. But Macquarie, which operates as a private equity firm, wants to offload 100,000 sq ft of vacant and short-let properties in Reading. It will sell Gainsborough House and Blake House – which are both situated to the south of the town centre – with two-year leases to Thames Water that will allow the firm to come out sooner if necessary. The rent will be £1m pa. The vacant buildings are 3-4 and 5-6 Napier Court on Vastern Road, north-east of Reading. Thames Water’s profits fell by 24% to £133m in the six months to 30 September 2006, after a £60m increase in the cost of tackling leaks and renewing the mains network. Strutt & Parker is handling the property sale.