Capita to realise value of Severn Trent property portfolio

06 April 2016 Consultancy.uk

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. 

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Ensuring data quality imperative for smart asset management

25 March 2019 Consultancy.uk

By implementing innovative Asset Performance Management systems, utilities firms can maximise their utilisation of assets and minimise maintenance costs across their portfolio. However, according to Louis Morgan of Smart Grid Forums, without securing quality management systems for the data which smart grids rely upon, companies risk missing out on the benefits of asset performance grids.

Smart asset management presents a major opportunity to professionals across the business spectrum. In this context, a new event hosted in London is looking to help smart-grid asset management professionals meet the needs of a changing energy industry with digital asset management. The first annual Grid Asset Management event is due to take place between the 14-16th of May 2019 at the Millennium Hotel in Knightsbridge, London.

The conference will bring together leaders and experts from across Europe, in order to benchmark their digitalisation roadmaps. In a piece posted on the Smart Grid Forums website ahead of the event, Louis Morgan, a Conference Producer at Smart Grid Forums, has outlined the importance of investing in innovative asset performance technology for utilities firms, which can help ensure long-term stability for assets management in the utility sector in the face of increased complexity  .

Ensuring data quality imperative for smart asset management

Traditionally, the decision to invest in a given asset was made on the basis of an expert’s judgement of the risks posed by its failure, having typically been assessed via a risk matrix or a similar qualitative method. After that, a decision would be taken as to whether it should be replaced. However, according to Morgan, as the pace of change and complexity increases, these methods can no longer provide the required level of certainty. Uncertainty about changes to consumption patterns and load profiles brought on by the energy transition produces a vast number of possible scenarios that investment planners must consider.

As a result, Morgan explained, “utilities are seeking to support their investment decisions with quantitative risk management methods, centralising expertise from across their operations into a consistent, numerical framework that accurately captures the risk posed by all kinds of asset failure to all stakeholders.”

Companies are doing this by turning to ‘smart grid’ utility management, or systems which work to invest in the maintenance and replacement of millions of assets spread across thousands of kilometres of network. However, this is by no means a silver bullet, and in the age of the smart grid, planning ahead is more complex than ever. To ensure the long-term stability of their grids, then, utilities must deploy standardised investment decision-making practises supported by advanced modelling capabilities.

Morgan elaborated that the best way of facing this problem is through the combination of condition, utilisation, reliability and demand data. In that case, risks can be quantified in financial terms and investment budgets can target the assets posing the highest total risk, thus deferring investment in lower risk assets and optimizing the long-term budget. However, decisions informed by these risk models “will only be as good as the data and the assumptions that support them”, meaning utilities must therefore find ways to improve the volume, variety, veracity and velocity of the data they employ in their investment planning models.

“This means digitalizing asset operations, rolling out sensors and implementing systems that integrate data from a range of internal and external sources in real-time,” Morgan expanded. “Utilities must also scour their business for expertise about different assets to ensure that their risk management frameworks accurately capture the true risks posed by asset failures.”

This is in keeping with a trend which goes well beyond utilities. Business leaders of all shapes and sizes are currently having to address how they manage data quality – as poor information being input into any automated system can essentially negate the efficiencies such systems bring to the table. To this end, robust data governance is critical.

Concluding his article, Morgan said, “It is clear that there is a great deal of opportunity for utilities to obtain significant business benefits from improving their investment planning capabilities. More accurate risk management, supported by a reliable data-driven method, will deliver better financial outcomes from investment activity... But to achieve these capabilities, a lot of work must be put in to establish the systems, processes and frameworks which underlie them. Utilities must also make difficult choices about how they quantify risk and the appropriate range of data to feed into their investment planning models.”

This topic will be tackled in-depth at this year’s Grid Asset Management 2019, a conference, exhibition and networking forum aimed solely at smart grid asset management professionals.