Capita to realise value of Severn Trent property portfolio

06 April 2016 3 min. read

Capita Real Estate has been tasked by Severn Trent to manage its property portfolio, with the aim of realising its maximum value through the management, sale or development of its assets. The eight year contract for Capita’s services is valued at £8 million. The water company seeks to generate in the order of £400 million over a period of five years.

Severn Trent was a UK local water authority founded 1974. In 1989, it was privatised. The company provides water to around 7.7 million people throughout the Midlands of England. Changes within the water supply landscape have seen a number of its former sites fall from use, including large waste water treatment plants and entire office blocks, through to small pumping stations across Gloucestershire and South Yorkshire. These sites represent considerable potential real estate value that the company is now seeking to leverage for capital returns.

The company recently announced hiring Capita to undertake management, promotion or liquidation of sites in the company’s 7,000 strong portfolio spanning the UK. The contract, which spans eight years, is valued at £8 million, and sees Carter Jonas brought in to manage the rural side of the contract. Additional fee income may be generated through gainshare agreements on specific high profile sites.

Capita to realise value of Severn Trent property portfolio

The consulting firm is tasked with maximising the value of Severn Trent’s assets, and will work closely with the company to identify, categorise and leverage the value of redundant assets. According to initial estimates, a range of sites will be sold directly by private treaty or at auction – while for sites with considerable development potential, planning consent will be sought, with the combined portfolio to offer up an estimated 10,000 new homes across the region.

Jeremy Day, Head of corporate sector at Capita Real Estate, remarks that the firm is looking forward to working with Severn Trent on the management of its wide property portfolio, with a keen eye to realise up to £400 million over the coming five years. He adds that “This is an opportunity to harness the vast range of property expertise across Capita Real Estate, from the day-to-day management of properties to the strategic development management of key sites across the Midlands.”

Ted Pearce, Head of property for Severn Trent, says that “Maximising the value of our substantial asset base is crucial to ensure that we can continue to operate and invest in new technology and infrastructure. Capita will play a key role over the next eight years in ensuring that our diverse portfolio delivers the best possible value for Severn Trent. This programme could provide as many as 10,000 much needed new homes for the Midlands, delivering real value back to the region and water customers.”

Other redundant industry sites that Capita Real Estate recently sold, on behalf of National Grid, are a 7.6 acre warehouse in Dartford, and a 20 acre former gas holder site in Gloucester - both sales were completed in January of this year.