Agenda item

Appendix 2 to the report is in the private section of the agenda at Item 18.

The Cabinet Member for Finance, Growth and Investment presented details of an investment proposal in respect of the new Travelodge hotel development at the former Sanofi site, Rainham Road North, Dagenham.

The Cabinet Member referred to the principal regeneration objectives in terms of facilitating the wider regeneration of the former Sanofi site, bringing forward a key development site with planning permission for hotel use and A3 retail use, as well as contributing to the Council priority of ‘Growing the Borough’ through the creation of new jobs and amenities.  The proposal was also in line with the Council’s Investment and Acquisition Strategy, approved by Cabinet under Minute 72 (15 November 2016). 

The proposal had been negotiated by Be First on behalf of the Council and would involve entering into a Forward Funding Agreement with the owner of the site, Berkeley Square Developments, as well as development agreements and leases which would help to protect the Council’s construction and investment position.  The Cabinet Member referred to the options appraisal and the financial appraisal, detailed in an exempt appendix to the report, and suggested that the proposal was supported by a sound business case.  He also commented that having a stake in the development would enable the Council to add further impetus to the regeneration plans for the site and the wider area.

Cabinet Members spoke in support of the proposal and the Leader observed that the latest plans, together with the other initiatives such as the new film studios and London’s largest data centre, meant that the area now had the highest investment per acre in real estate in the country.

The Cabinet resolved to:

(i)  Agree to the acquisition of the freehold interest at Yewtree Avenue, Dagenham RM10 7XS (the Property, as shown in Appendix 1 to the report), subject to completion of further due diligence and to the principle of borrowing up to £940,000 plus stamp duty of £36,500 and fees of £110,500 within the General Fund from the Public Works Loan Board;

(ii)  Agree to the principle of borrowing up to £5,711,000 within the General Fund from the Public Works Loan Board to fund the development costs of the Travelodge development;

(iii)  Agree, subject to completion of further due diligence, to enter into a Development Agreement with Berkeley Square Developments to construct the development scheme on the Property;

(iv)  Note that the acquisition of the Property shall be subject to an extant agreement for lease which, upon acquisition, the Council would be bound to grant and agree, subject to completion of due diligence, a 25-year lease to Travelodge Hotels Limited on the terms set out in the report;

(v)  Agree to hold the Travelodge investment within a Special Purpose Vehicle (if legal advice indicated that to be appropriate);

(vi)  Agree that Be First, as agent for the Council, be authorised to lead the negotiations, including appointment and management of property, financial and legal advisors as required;

(vii)  Delegate authority to the Chief Operating Officer, in consultation with Director of Law and Governance and the Cabinet Members for Finance, Growth and Investment and Economic and Social Development, to scrutinise the due diligence reports, negotiate terms and agree the contract documents to fully implement and effect the proposals set out in the report (including a decision as to utilising a SPV); and

(viii)  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.