I met with a company called PRIME today re the possibility of going for
PFI to build us a decent building.

The deal is - they build it following negotiation with HA, district
valuer, and agreement from the central gov bods in London.

We get notional rent to cover the rent - and this will probably be above
the figures that would reflect real rents locally (we are in a v low
property value area of rural N Wales) - the notional and actual rents
are agreed by the bods in London prior to the build.

We sign a binding 25 year lease.

We pay for running costs and maintenance.

The buildings they have done so far appear wonderful and low maintenance

My concerns are that we get tied in to ukp70k rent per annum - which is
ok if notional rent remains non-cash limitted and indeed, if it
continues at all.  I dont like the idea of no income and 70k a year to
pay out.

Cost rent produces similar worries of course but there is the equity
which over time will normally increase (ok not at previous rates) so
there is a chance of gain here - but the PFI and notional rent thing it
is all financial risk as far as I can see with no chance for gain (of
course, we do get to work in a luvverly building which I appreciate is a
huge plus).


Has anyone got any experience of PFI or PRIME?

What are the lists thoughts on the deal and risks?

Cheers


PS - the chap mentioned that there is 7.5pc payable by HA on top of rent
reimbursement to cover maintenance - I wasnt aware of this and got our
PM to briefly scan the Red Book but she couldnt find ref to it on a
quick look - we dont seem to get this anyway, our current notional rent
is from HA to Comm Health Trust who own the building and is just a paper
transaction - we pay the Comm Health Trust for maintenance so should we
be getting this 7.5pc on top?  All hints most welcome - cheers :-)
-- 
Jelly Bean

                        'When you get fed up surfing....
                                        .....go find some waves'


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