Issue - meetings

Appendices 2 - 8 to the report are in the private section of the agenda at Item 17.

The Cabinet Member for Finance, Performance and Core Services presented a report on a proposal, as part of the Council’s Investment and Acquisition Strategy (IAS), to enter into an investment arrangement with an Institutional Investor and Travelodge Hotels Limited (Travelodge) regarding a new hotel development in Poplar, east London. 

The Cabinet Member explained that the successful delivery of the IAS was integral to the future provision of services to local residents as the Council had to find new, innovative sources of funding in the light of the Government’s continued cuts to public funding.  The hotel investment proposal, together with the Welbeck Wharf purchase discussed earlier in the meeting, were just two examples of how that would be achieved.  The Cabinet Member outlined the finances associated with the Head Lease and Sub-Lease arrangements, which were detailed in an exempt appendix to the report, and confirmed that while there were risks associated with any investment, the due diligence and risk analysis work that had been undertaken showed the proposal in a very positive light. 

Cabinet Members spoke in support of the proposal and it was suggested that the Council should encourage similar investment opportunities in the future.

The Cabinet resolved to:

(i)  Approve Option B1, as detailed in Appendices 2 and 3 to the report, as the preferred option in respect of the Council’s participation in the proposed investment arrangement;

(ii)  Subject to (vii) below, agree to the Heads of Terms between the Council and the Institutional Investor as detailed in Appendix 5 to the report;

(iii)  Subject to (vi) and (vii) below, agree that the Council enters an Agreement to Lease with the Institutional Investor and Travelodge Hotels Limited on state aid compliant market terms;

(iv)  Subject to (vi) and (vii) below, agree that the Council enters a 50-year Head Lease with the Institutional Investor on state aid compliant market terms;

(v)  Subject to (vi) and (vii) below, agree that the Council grants a 35-year sub-lease with an option to renew to Travelodge Hotels Ltd;

(vi)  Delegate authority to the Chief Operating Officer, in consultation with Director of Law and Governance and the Cabinet Members for Finance, Performance and Core Services and Regeneration and Social Housing, to negotiate final heads of terms, final commercial and lease terms and agree the contract and ancillary legal documents to fully implement and effect the proposals set out in the report;

(vii)  Authorise the Director of Law and Governance, or an authorised delegate on her behalf, in consultation with the Chief Operating Officer to execute all the legal agreements, contracts and other documents on behalf of the Council; and

(viii)  Delegate authority to the Chief Operating Officer to incorporate a special purpose vehicle (whether a company or Limited Liability Partnership) if, in the Chief Operating Officer’s opinion, that would be necessary (such incorporation to include such shareholders or member's agreement as may be required).