Rothchild property director says companies looking hard at outsourcing deals
The success of the BBC property partnership deal with Land Securities Trillium (LS Trillium) and continuing fears about an impending recession will put corporate PFI back on the agenda, according to the property director of a leading investment bank.

Corporate PFI, which involves the outourcing of property and facilities management, languished on the sidelines for the past year.

'Corporates in the UK are looking very hard at corporate PFI. The current economic climate is causing corporates to find a way of getting efficiency into their business,' said Stephen Dingle executive director of property at NM Rothschild.

It is now set to re-emerge, but it is likely to appear in a more subtle form. The corporate PFI model that 'was seen as a panacea a few years ago' has effectively changed.

The emphasis now is on finding 'bespoke' solutions, according to Dingle. 'I am 100 per cent sure, while the market is still young that it will stay this way. Cloning may happen when the market matures,' he said. But just adopting a bespoke approach is not enough.

Dingle believes that the key is for the property owner to know what it wants. 'It is important to be clear about what you want to achieve,' said Dingle.

One of the driving forces behind the success of the BBC's £500m, 30-year property outsourcing deal with LS Trillium, due to go live on 12 November, was that the BBC was clear about its objectives, Dingle said. This enabled the BBC to focus on 'the work it had to do in order to give the right information to the bidders, he added.

Agreeing the scope and objectives of the deal quickly ensures fairness and enables a shortlist to be drawn up speedily. However, there are limits to how quickly the whole transaction can be done — rigid procurement laws [in the public sector] make it difficult, but corporates can leave steps out,' said Dingle.

Early corporate PFI models often failed because of the time it took to process a transaction. Although the length of time it took to complete a deal had little to do with procurement laws, which are far less rigid in the private sector, companies' boards and shareholders often slowed the process, because they were unsure of the benefits.

'Many of them just could not persuade themselves that they were getting a good deal,' said Dingle. 'When in fact the main problem was not knowing what they really wanted,' he added.