16. The Home Office still owns three freehold properties in central London, Horseferry, Abell and Cleland Houses. Abell and Cleland Houses, occupied by the Prison Service headquarters, required upgrading and the condition of Horseferry House was poor. The Home Office decided to dispose of the properties itself as the prices tendered by bidders as part of a PFI deal were not considered to offer good value for money.
17. Given recent decreases in the commercial property market in central London, the value of the properties is probably now less than estimated by the Home Office at financial close of the PFI deal in 2002.28 The Home Office did not think that it would have got a better deal by selling the properties to AGP. The price offered by AGP was around £35 million compared to the Home Office's valuations of £50 million at the time and £68 million at financial close. Since then, the Home Office had not had the buildings valued but it expected their values to be above the price offered by AGP.29
18. The Home Office has not yet decided what it will do with the freehold properties. In the short term, accommodation will be needed for staff who do not move to Marsham Street and keeping some of the freeholds is one option. The Home Office was also considering whether the buildings could be sold and better value for money obtained by renting in central London or elsewhere. In any case, the Home Office said that it expected to sell the freeholds eventually.
28 C&AG's Report, para 11; Figure 2
29 Qq 14-17