Issue - meetings

Appendices 1 and 2 to the report (pages 213 – 269) are exempt documents.

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 an Aparthotel operator regarding a new hotel development in Aldgate, east London. 

The Cabinet Member referred to a similar project in respect of a Travelodge hotel development in Poplar that the Cabinet had approved by Minute 68 (11 December 2018) and outlined the key elements of the proposed agreements for the current proposal, including the liabilities and responsibilities of each party.  The Council had commissioned specialist property consultants to advise on the project and the due diligence and risk analysis work that had been undertaken showed that the proposal met the criteria and objectives of the IAS.  With regard to the Council’s responsibilities under the 50-year Head Lease in the event of the Aparthotel operator not renewing at the expiry of the initial 25-year Sub-Lease, the Cabinet Member confirmed that the development’s design would lend itself to a range of other possible future uses, including affordable housing, which significantly mitigated the Council’s risks in that respect.

The Cabinet resolved to:

(i)  Agree the draft Heads of Terms between the Council and the Institutional Investor as detailed in Appendix 1 to the report;

(ii)  Agree that the Council enter an Agreement to Lease with the Institutional Investor and the Aparthotel Operator on state aid compliant market terms;

(iii)  Agree that the Council enter a 50-year Head Lease with the Institutional Investor on state aid compliant market terms;

(iv)  Agree that the Council grant a 25-year sub-lease with an option to renew to a specialist Aparthotel operator;

(v)  Delegate authority to the Chief Operating Officer, in consultation with Director of Law and Governance and the Cabinet Member for Finance, Performance and Core Services, 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;

(vi)  Authorise the Director of Law and Governance, or an authorised delegate on her behalf, to execute all the legal agreements, contracts and other documents on behalf of the Council; and

(vii)  Delegate authority to the Chief Operating Officer, in consultation with Director of Law and Governance, to incorporate a special purpose vehicle (whether a company or Limited Liability Partnership) if considered necessary and appropriate, such incorporation to include such shareholders or members’ agreement as may be required.