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Case Study: BT

  • BT 1
  • BT 2
  • BT 3

In December 2001, Telereal Trillium entered into a 30-year strategic property partnership with BT plc. Involving the majority of BT’s UK estate, the £2.38bn transaction saw 6,700 properties, with a floor area of 59.2m square feet, acquired by Telereal Trillium.

The properties were sold to Telereal Trillium, subject to BT leasebacks, with a minimum lease term of 30 years. The contract arrangements included a flexibility regime that enabled BT to vacate properties over time so as to adapt to changing operational requirements. Drawing upon Telereal Trillium’s Strategic Asset Management skills, these flexibility arrangements have enabled BT to reduce the size of their estate by over 30%. Upon BT’s vacation of assets, Telereal Trillium seeks to realise value from the properties, often enhancing value by obtaining planning permission for change of use or redevelopment.  BT is aligned in this objective as value enhancements are shared between the parties.

As part of the transaction, Telereal Trillium also took on the rental risk associated with the BT properties held by way of rack rented leases. Telereal Trillium assumed circa £100m of rental liabilities for which BT pay a fixed annual payment, these arrangements adjusting over time as the leases expire.

The initial transaction was funded through a £1.8bn securitisation of the income associated with the Telephone Exchange estate whilst £400m of bank debt was raised against other network support properties and offices. The funding arrangements incorporated the unique requirements of this transaction including the vacation flexibility regime. The securitisation has subsequently been refinanced and the properties subject to the bank debt (along with other assets not previously financed) have been refinanced through the issue of BBB rated secured notes.

  • 6,700

    BT properties acquired by Telereal Trillium
  • 30%

    reduction in the size of the BT estate since partnership began