Land Securities and BBC to reorganise their property partnership (UK)

In September 2001 the BBC entered into a partnership agreement with Land Securities' property outsourcing business, Land Securities Trillium (LST), to carry out the BBC's ambitious property redevelopment programme across the UK, provide the finance for the new construction and to manage a range of facilities management and other property services for the BBC.

The partnership has successfully delivered the 550,000 sq ft of new buildings at White City and work is well underway on construction at Pacific Quay in Glasgow and Broadcasting House in Central London. The new Pacific Quay building was 'topped out' on 22nd April and Phase 1 of the Broadcasting House redevelopment is nearing completion now. Radios 2 and 6 Music are due to move to the new facilities in September 2005 and the rest of Radio will begin to move in at the end of the year.

The outsourcing arrangement has, over the four years to date, saved the BBC over £30m out of the £109m cost savings projected over the 30 year life of the deal.

In March of this year, the BBC and LST restructured the financing of the completed White City development through the issue of a further tranche of low cost bonds. This resulted in the BBC reducing its financing costs by £60m, and LST realised a profit of £23m.

The construction programme is well underway and because the finance for it is now all provided by 3rd parties, the BBC and LST have been reviewing the ongoing nature of the partnership which now has two elements; construction and facilities management. LST offers facilities management services as a component of its overall offer, but not as a principal service. Therefore, both parties have agreed to restructure the partnership concentrating in the future on completion of the developments at Glasgow, Central London and other potential developments.

As a result of this mutual decision, the BBC will shortly begin a procurement exercise by placing an advert in the EU Journal, seeking bids from interested parties to provide the BBC with facilities management and other specialist property services for the next 5-10 years. The BBC expects to extend the range of property services outsourced in this exercise. These changes will help BBC Property deliver its £42m target which is part of Mark Thompson's pan-BBC Value for Money initiative.

Because LST does not offer an FM only service, it has decided not to participate in the re-tender process, but will manage the existing outsourcing contract until at least March 2006.

John Smith, Chief Operating Officer, BBC, said: "Without Land Securities we would not have achieved so much in reforming our estate and improving the quality of the services. We are very pleased to continue working together on our most important construction projects".

Francis Salway, Group Chief Executive, Land Securities, said: "We are delighted to have worked with the BBC to achieve a key strategic goal and look forward to progressing to the next stage of our relationship with them. Property outsourcing is, by definition, flexible and we are pleased to have agreed a restructured contract which meets the BBC's future property and facilities management needs".

Source: Land Securities

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