Major private landlord to sell portfolio for £9 billion

Housing provider Annington, which owns 40,000 homes, is in talks to sell its portfolio for at least £9bn.

Some 95% of its portfolio is leased to the Ministry of Defence on a 200-year contract.

Sky News has reported that Annington’s parent Terra Firma Capital Partners is in talks with investment banks over an auctioned sale, with the company being valued at £9bn, accounting for debts of over £4bn.

The properties were originally owned by the Ministry of Justice, but they were sold and leased back in 1996 for £1.66bn – a move that has attracted controversy since.

Indeed, in 2018 the National Audit Office concluded that the Ministry of Justice is £2.2bn-4.2bn worse off over the first 21 years of the contract thanks to the sale, due to rapid increases to both house and rent prices that weren’t accounted for.

Annington was acquired by Terra Firma in 2012 from Japanese bank Nomura for a reported £3.2bn.

A stock exchange announcement by Annington Funding said: “The MOD will continue to pay rent at the current prevailing downward adjustment of 58.0% from open market rental levels until the dates on which the new rents become payable, which fall between 2021 and 2024. Upon these dates the MOD will pay rent with a downward adjustment of 49.6% from open market rental levels until the next Site Review.

“Annington and the MOD have also agreed that at the next Site Review in 15 years, the same agreed downward adjustment of 49.6% will be applied. This will avoid the need for a full Site Review at that time, and mean that the next full Site Review will take place between 2051 and 2054. This provides both sides with greater certainty and allows the parties to avoid a further costly and lengthy process in 15 years’ time.”

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