Developer writes to reassure 166 suppliers after splitting into three companies

Land Securities has written to 166 of its suppliers to reassure them that they have a future with the developer after its business was split into three companies last week.

The developer, which is one of the industry’s largest clients, also said it had no plans to scale back its development pipeline.

Steve McGuckin, director of projects at Land Securities, said the new structure, which is expected to take effect in a year to 18 months, would not derail a supply-chain shake-up called project RIO that he has been leading.

He said: “Project RIO remains a priority for the company as the reasons for embarking on this initiative remain, irrespective of any future changes in our structure.”

The main aim of RIO is to allow Land Secs to work more closely with its suppliers.

McGuckin added that the letter he had sent out was to “reassure people that there is a future for them”.

He said: “As far as we are concerned it is business as usual. We are not changing our pipeline.” Land Secs’ development programme is worth £2.5bn to 2012.

The firm’s suppliers this week gave a mixed welcome to the plan to split Land Securities into three: retail, London and Trillium, the property outsourcing business.

One said: “Pushing Trillium aside is one thing, but the retail and office businesses should really stick together.” However, a consultancy source said the market had been expecting the move for a while.

The break-up of the 63-year-old business came alongside a slump in pre-tax profit for the six months to 30 September to £375.2m from £1.17bn the previous year.