Land Securities confirms demerger plan

Land Securities’ PFI and property outsourcing division is to become a “specialist separately quoted entity.”

Land Securities’ decision to demerge follows the completion of a strategic review, conducted by Citigroup bank, on whether the company should split into two. In its interim report the property development company announced that it believes it will be better served as three separate entities in the form of Trillium, it’s PFI and property outsourcing division, the UK retail division and a London office division.

The announcement follows months of speculation regarding the fate of Trillium, valued at £1bn, said to be undervalued as part of the wider property group. Value investor firm Laxey Partners, who bought 1% of Land Securities in August, is said to think that the company should sell Trillium.

According to the interim report Trillium has flourished since being acquired by Land Securities in 2002 with a 28% return of capital per annum. However the division’s growing PPP/PFI portfolio has led to a diversification of business operations from the property investment division.

Francis Salway, Land Securities chief executive, said, "For the most part the Group is already structured around operating these businesses as separate divisions so there will be minimal changes to jobs and roles.

"However, there will be a small number of new positions created and a small number of roles that are no longer required. In these cases, we will consult with individuals affected on a one-to-one basis and communicate with employees throughout the process."

The company’s interim results showed a drop in revenue of 10% down to £172.8m. It also reported £65m invested in PFI and a further £209m committed to acquiring more contracts with a debt facility of £568m.