Focus: Trillium is proving to be a hot property

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High above the City in an anonymous tower block overlooking the Barbican centre the telephone lines are humming red hot. On busy days there may be as many as 1,800 incoming calls and 3,000 outgoing ones. The bright young twenty-somethings who man the phones from 7am to 7pm never know quite what to expect. One moment it might be a complaint about a malfunctioning coffee machine, the next someone requesting an update on an entire office refurbishment.

This is a call centre. But it is a call centre with a difference. For one thing, the rents are some of the most expensive in Britain. For another, its staff hardly fit the profile of the typical call centre. A white-collar factory farm this is not. Most of the 40 or so employees are graduates, salaries, at about pounds 22,000, are double those in conventional call centres and the emphasis is not on the number of calls but the quality with which they are handled.

Manish Chande calls it his "staff greenhouse". After ripening for 18 months, the recruits from the call centre are encouraged to go into bigger jobs in other parts of the business.

The business in question is called Trillium, and Mr Chande, a Ugandan Asian whose family were thrown out during Idi Amin's purge is chief executive. Trillium was established 18 months ago to take over the ownership and running of the Department of Social Security's entire property estate of some 17 million sq ft and 700 buildings. The pounds 2bn, 20-year deal overnight turned Trillium into Britain's biggest commercial landlord with a portfolio four times the size of Canary Wharf.

Trillium provides everything from building management and maintenance to cleaning, catering, security and landscaping. Any member of the DSS staff can contact it on a single national telephone number - hence the call centre - and Trillium has to pay financial penalties if problems are not remedied within a certain time.

The Trillium management, led by Mr Chande and his long-time partner, the property guru Martin Myers, has a 12.5 per cent shareholding in the business. The rest is owned by the Whitehall Fund, a New York-based property investment vehicle in which Goldman Sachs has a 20 per cent stake.

"We have changed fundamentally the way property is looked at in this country," says Mr Chande, without a hint of false modesty. "We have torn up the Law of Property Act and created a supplier-customer relationship. In Britain there is an in-built fear among corporations about parting company with their property, like giving up a prized asset. But if owning and managing an estate is not your core competency, why do it?"

It is certainly a credo which the Government has taken to heart. Apart from the DSS estate, all the property of Customs & Excise and the Inland Revenue is on the auction block and the Department for Education and Employment's estate may also go the same way.

With his first-mover advantage, Mr Chande relishes the prospect of adding more government departments and some blue-chip corporates to his client list. Trillium is talking to Marks & Spencer, for instance, about running the facilities management at some of its stores.

Mr Chande was in school in England by the time the expulsions began in Uganda and although he remembers it as a very traumatic time, the treatment of his family at the hands of Amin has left no obvious scars. Except perhaps that Mr Chande was anxious to get on with life. He did not go to university, electing instead to train as a chartered account before moving into the property world.

Now 43, he is on the brink of making a second fortune. If everything goes to plan, Trillium should be floated within three years, making Mr Chande and Mr Myers rich men all over again. They have been together 14 years - "longer than most marriages", reflects Trillium's chief executive - having met at Arbuthnot Properties. The pair reversed Arbuthnot into Imry Property Holdings which they sold to Eagle Star and Prudential of the US for pounds 314m before later buying it back for pounds 1 when the business fell on hard times.

First, however, Mr Chande has to prove the Trillium model works. The company not only manages the DSS estate, which consists mainly of its network of benefit offices, but it also owns the property or the leases, having paid pounds 250m to the Treasury at the start of the contract. Any development gains have to split 50:50 with the Government, but all the lease liabilities rest with Trillium.

In its first year, Trillium made an operating profit of pounds 22m and, more remarkably, received a largely clean bill of health from the National Audit Office. Despite being a scourge of other such Private Finance Initiative- style deals, the NAO calculated that the DSS contract would save the taxpayer pounds 560m over its 20-year life. The only criticism it made was to suggest that rather than a pounds 250m up-front payment, Trillium could have been given the estate for a token pounds 1 in exchange for a lower annual rental. But Mr Chande says: "Making that payment made us honest. Every day we wake up and think about the pounds 250m. It engages the brain and keeps us focused. Not only is 60 per cent of Trillium's annual revenue at risk depending on how well we perform, but, if we were to fail consistently, the Government could step in and replace us, altogether, in which case the pounds 250m would be money down the drain."

Having bedded down the DSS contract, Mr Chande wants to persuade the department to modify incentive arrangements and move away from a "box ticking" approach. "We want the department to start thinking in terms of customer satisfaction rather than clipboards," he says. "We will benchmark ourselves. If satisfaction levels go down then we will be penalised but if they go up we will be incentivised. It would be a bit like going on a train journey and then paying at the end depending on how good the service had been.

Trillium's DSS contract and the fact it already has an infrastructure in place off which to leverage should make it a front-runner for the other government estates being sold off. But competition for the Customs & Excise/Inland Revenue contract will be tough - the other bidders are Nomura and the real estate fund run by George Soros. Mr Chande is also conscious that the Government might not want to put too many eggs in one basket.

But Trillium has clearly bulked up with a view to winning. It has gone from two staff and a cubby hole two years ago to 600 staff and 40 offices now. "We have first-mover advantage, which is vital," says Mr Chande. "So many businesses become fat to the point where you start seeing the bulges over the trousers. We have to keep moving because if we don't push the business we will lose it."