Land Securities Group PLC announces that its property outsourcing business Land Securities Trillium has reached agreement in principle with Mill Group, a privately held group of companies, to form a 50/50 joint venture company, Investors in the Community Group Limited. The new company will expand key parts of Mill Group's existing business and build on the ongoing collaboration between the two organisations involving a joint bid for Leeds City Council's £250m Building Schools for the Future ("BSF") project.
Land Securities Trillium has identified the BSF programme as a key strategic opportunity and it is expected that the Government will invest up to £2bn per year in BSF projects over the next decade. Mill Group's Investors in the Community ("IIC") programme is regarded as a leader in the BSF and community Public Private Partnership ("PPP") markets. In addition to the joint bid on Leeds, the IIC programme is already shortlisted for three other BSF projects with an anticipated value of circa £350 million.
Under the agreement, Mill Group will inject its procurement and scheme management operations into the joint venture company, together with its existing and potential pipeline of new PPP projects. Land Securities Trillium will also acquire a 20% share in Mill Group's current fund asset management business. This administers the one private equity and two institutional funds that have invested in the existing IIC schemes. Land Securities Trillium intends to use the new company to deploy capital into this target market and will have the right to co-invest alongside the active IIC fund.
The Board of Land Securities believes that there is substantial synergy between the activities and expertise of both companies. Land Securities Trillium's financial resources and strong track record of property development and management of large property portfolios on behalf of major public and private sector customers are highly complementary to Mill Group's knowledge and experience. The combination will provide a compelling new offer to public sector organisations seeking long-term investment in the improvement and delivery of community services and regeneration initiatives.
Mill Group originally created its Investors in the Community programme to invest in education and healthcare facilities that deliver real benefits to local communities. Since formation, it has built a strong track record of providing award-winning, socially responsible education, healthcare and community projects, with the completion of some 30 facilities. It now manages a portfolio comprising ten secondary and six primary schools with a value of about £140m and eighteen local authority and community health sector facilities with a capital value of in excess of £280m, mainly held through the two institutional funds referred to above.
The consideration payable by Land Securities Trillium will total circa £20m, depending on certain deferred payments relating to the joint venture company's performance over a three year period. Following the completion of the transaction, Land Securities Trillium will be entitled to a 50% share of the joint venture company's future revenue and profits.
Ian Ellis, Chief Executive of Land Securities Trillium, commented: "This new venture will not only accelerate our strategic move into the BSF marketplace but also substantially increase the potential scope of projects that both organisations can now target.
By combining Land Securities Trillum's financial and operational strengths and Mill Group's existing expertise and market-leading position, we are confident that we can develop a new and compelling offer to meet the growing appetite for specialist PPP provision and capture a meaningful share of the BSF market."
David Toplas, Chief Executive of Mill Group and IIC, commented: "We are delighted to be expanding our Investors in the Community programme through this partnership with Land Securities Trillium. This will provide us with additional support and expertise in areas such as property outsourcing and regeneration