London, February 2 2005 — LAWFUEL – The Law News Network – White & Case acted for Land Securities Trillium, the property outsourcing arm of Land Securities Group PLC, in a precedent-setting property outsourcing arrangement with Barclays Bank PLC. It is expected that the deal will serve as a template for the future outsourcing of properties that are surplus to the requirements of the businesses that lease them. The number of such transactions is expected to grow as corporates across the UK rationalise their property portfolios and look to fix their property costs in order to meet financial reporting requirements more easily.
In the deal, Barclays handed over to Land Securities Trillium 14 office buildings, totalling 31,540m2, from its UK property portfolio. The transaction consisted of two elements: the sale of Westwood Business Park, Coventry (three buildings totalling 11,300m2) to Land Securities Trillium on a 20-year leaseback arrangement; and Land Securities Trillium taking responsibility for 13 short leaseholds in London and the South East that are surplus to Barclays’s requirements, subsequent to the rationalisation of its property portfolio in the region.
While the first element of the transaction is a conventional leaseback arrangement, the second represents a technical innovation in property outsourcing since the outsourcing of the responsibility for the 13 short leaseholds did not require any transfer of Title. Under the terms of the agreement Land Securities Trillium has been appointed as agent and assumed management responsibility for the leaseholds and Barclays made a capped payment to reflect the letting risk. This arrangement means that Barclays has been able to secure property cost certainty with regard to the leaseholds.
Commenting on the deal, London White & Case Real Estate partner David Cox said: “We are delighted to have advised Land Securities Trillium on this transaction. The deal was a bespoke arrangement created specifically to meet Barclays’s needs and we were asked to explore uncharted territory by our client and help develop a legally sound structure. It’s a testament to the strength of our growing team that we were able to answer all the questions that were asked of us and complete the transaction within an extremely tight time-frame: the deal team had less than six weeks to complete the transaction.”
The White & Case team advising Land Securities Trillium was led by partner David Cox, working closely with associate Sally Martin and other members of White & Case’s London real estate practice group. Partner Neil Woodgate and associate Chris Barrow advised on the tax aspects of the transaction, with partner Oliver Brettle advising on employment issues.
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