Site sale row may cost King's College £14m

August 9, 2002

King's College London stands to lose up to £14 million as its partner hospitals' trust digs its heels in over the potential sale of a prime Thames-side site to one of the world's richest men.

KCL, which owns the 0.7 hectare site known as "block 9", is considering two bids. The first was made by the Aga Khan, spiritual leader of the Ismaili Muslims, and is believed to be up to £24 million. The second is from Guy's and St Thomas's Hospitals Trust, which is offering in the region of £10 million.

Members of KCL's ruling council are privately furious at the trust, which they say showed little or no interest in buying the site, opposite the Houses of Parliament, until the Aga Khan's offer.

Some members feel the trust added insult to injury by taking a further eight months after learning of the Aga Khan's offer to make its bid while, all the time, lobbying hard for the land to be sold to it.

The matter, while purely a decision for the KCL council, has caught the attention of politicians. In a recent House of Lords debate, government whip Lord Davies of Oldham said it was not up to the government to dictate KCL's decision but it should be mindful of its obligations as a "responsible institution of higher education".

KCL's council approached property firm Jones, Lang, LaSalle in May last year asking the firm to value the land. KCL and the trust both knew the site was underused, containing one listed building that houses part of St Thomas's medical library.

A source close to the council said that it was made clear to the trust that the valuation had been sought with a view to disposing of the site.

He said that the college was perfectly within its rights to sell the land, which it has owned since 1998. He said it was, and continues to be, under serious financial pressure and so is seeking to rationalise its property portfolio.

The site was not put on the market following the valuation and the Aga Khan's offer, which arrived in August last year, was not solicited. The Aga Khan uses Jones, Lang, LaSalle.

But after the Aga Khan's offer arrived, alarm bells rang at the trust. The trust said it was not told of the Aga Khan's offer until October. A joint trust-KCL working party was set up and reported back early this year recommending joint development of the site.

The trust then started discussions with the Guy's and St Thomas's Charitable Foundation. The foundation, with total funds of £382 million, formally backed a bid of about £10 million on May 13.

KCL's council met again on July 2 to consider the two bids. Some council members, including KCL's principal Arthur Lucas, backed the joint development of the site while others thought the college had a duty to maximise revenue.

Divisions led to the decision being postponed until this October. A sub-committee has been set up and it is likely that an external consultant will be appointed.

Both the Aga Khan and the trust are continuing negotiations in a bid to secure the site.

The Aga Khan, who is understood to be planning a centre for Islamic art and history, is offering medical collaboration with Guy's and St Thomas's Hospitals Trust. The Aga Khan Development Network is the largest provider of private health services in the developing world.

KCL's council is concerned that a deal with the trust could involve the college paying for the refurbishment of the listed building so that it can transfer its school of nursing from Waterloo. This could cost KCL millions.

A KCL spokesman said it was committed to maintaining a strong relationship with the trust. He said: "It makes sense for a university to maximise its resources in times of financial pressure but in this instance there are issues of prime importance, which are not financially led."

A trust spokeswoman said it was implacably opposed to the sale of the site to an outside party.

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