A consortium led by Skanska and Innisfree has signed a contract with the Barts and The London NHS Trust for the financing, design, construction and operation of St Bartholomew's Hospital in the City of London and The Royal London Hospital, Whitechapel in the East of London under the UK Government's Private Finance Initiative. Skanska is investing GBP 48 million in the Publice Private Partnership project - its largest ever - which will secure a construction contract of around GBP 1 billion.
The signing of this contract enables the project to proceed towards the final stages of financing and reach financial close - which is anticipated by the end of this month. Once financial close has been achieved, the project will be included in Skanska's order bookings.
The Barts and The London PFI redevelopment is the UK's largest hospital project under a Public Private Partnership and will be Skanska's largest ever construction project.
The consortium project company is named Capital Hospitals and is owned by Skanska, Innisfree and Equion. The contract agreement, which lasts for 42 years, means that Skanska will:
- receive a construction contract amounting to around GBP 1 billion;
- receive a hard facilities management contract which following completion of construction is valued at about GBP 7.5 million per year;
- invest GBP 48 million (including GBP 8 million in mezzanine finance), corresponding to a holding of 37.5% in the project company.
In cooperation with its investment partners, Skanska Infrastructure Development will manage Capital Hospitals.
Skanska UK will undertake the design and construction assignment on the two sites, which covers a built area of 270,000 square meters. This comprises new construction and refurbishment of some of the existing facilities; Skanska UK will also be responsible for facilities management services for the 42 year contract period. Preliminary work has begun and the first phases are scheduled to be completed by 2010. All construction will be completed by 2016. The hospitals will remain in operation during the entire construction period.
The Royal London will be the largest new hospital in the UK. St Bartholomew's will be transformed into a Cancer and Cardiac Centre of Excellence. The combined facilities will provide a total of up to 1,248 patient beds.
Barts and The London NHS Trust will continue to make all decisions on clinical management and development, with patient care provided free at the point of delivery just as it is now.