Request for approval to dispose of Leytonstone former police station, 470 High Road, Leytonstone, E11 3HN

Report: 9
Date: 18 November 2010
By: Director of Resources on behalf of the Commissioner

Summary

This report requests Members approval to dispose of the freehold interest in Leytonstone Former Police Station at 470 High Road, Leytonstone, London, E11 3HN following an open market tender.

A. Recommendations

That members

1. Approve the disposal of the freehold interest in Leytonstone Former Police Station at the value and to the bidder identified in Exempt Appendix 2 following an open market tender;
2. Note the disposal is consistent with the approval in principle decision made by the Committee on 11 February 2010, and
3. Note that the capital receipts from the disposal will support the 2010/11 Capital Programme.

B. Supporting information

1. The Corporate Real Estate (CRE) SIP aims to i) ensure the MPS estate is fit for purpose and to enable high quality policing in London, ii) optimise the efficiency of the MPS estate, making best use of accommodation and disposing of assets where appropriate and iii) achieve cashable savings.

2. The former police station built in 1912 is situated on the east side of High Road, Leytonstone within a mixed used commercial and residential area. The main building is arranged over three floors with two smaller out buildings within the rear yard. Total site area is approximately 0.29 acres. The property was previously offered for sale in spring 2008 but no sale was finalised due to the rapidly changing economic outlook at the time and has remained vacant since this date. The property was occupied again by squatters for a period in October and November 2010. Completion of the sale will take place once vacant possession has been obtained.

3. The property was marketed in a campaign with one other MPA property between August and October 2010. A marketing board was situated at the property and advertisements were placed in the national property press and relevant local press. Strettons Chartered Surveyors as agents acting on behalf of the MPA hosted details of the property on their website and distributed particulars of the property to interested parties. Bids for the property were invited to be received by the agents no later than midday on 8th October 2010.

4. All bids were sought on an unconditional basis and subject to a standard five year forward-sale clawback clause, to enable the MPA to take benefit in the event that a purchaser subsequently sold the property at a price in excess of that originally paid to the MPA. Bidders were also advised to consider including provision for additional sales overage or planning clawback in their bids.

5. Five bids were received by the deadline for the first stage of the tender. The results of the five bids are shown in Exempt Appendix 1. The bids were then evaluated to determine which bids offered the highest value (taking into account any additional sales overage or planning clawback) from a credible purchaser (taking into account the availability of funding) and a shortlist of three were invited to submit their best and final offers. The results of the second stage bids are attached in Exempt Appendix 2.

6. All parties who were invited to make second stage bids were asked to provide proof of funding in order to assess the financial credibility of their bid and the likelihood of them completing the purchase. The party who bid highest in both the first and second round was of particular concern and, despite being approached on a number of occasions to clarify their funding position they were unable to do so. Their apparent lack of knowledge of the commercial property funding market was also a significant concern in regard to the likelihood of them being able to complete a purchase.

7. Accordingly, and with external advice from Strettons, Property Services recommend Members approve the sale of the property to the party identified in Exempt Appendix 2. They were the second highest bidder in the second round. The financial standing and ability of any bidder to complete a purchase has to be a factor in recommending a purchaser who can complete and deliver best consideration to the MPA. This means that, on occasion, the highest bidder may not be recommended. The bidding process makes all bidders aware that the highest bid may not necessarily be recommended.

8. The sale price that is recommended is significantly above the most recent independent valuation market valuation of the property.

C. Other organisational and community implications

Diversity and Equality Impact

1. There are considered to be no equality or diversity issues for the MPA arising as a result of this disposal. The building has been closed for three years and teams have previously been relocated.

Consideration of Met Forward

2. This proposal aligns with the intent of Met Forward Section 7 - Met Support - in particular demonstrating value for money, by disposing of surplus assets.

Financial Implications

Capital

3. The 2010/2011Capital Receipts budget is set at £22.3m as approved at the MPA Finance & Resources Committee meeting on 21/10/2010. This forecast is to be achieved through the disposal of operational and residential properties that are surplus to requirements.

4. If approved, the receipts generated from the disposal of the freehold will be allocated to 2010/2011 capital programme.

Revenue

5. The revenue costs related to the maintenance of this property based on 2010/11 costs are detailed below. Maintenance/repair works have been kept to a minimum.

Legal costs and subsequent securing/boarding up costs to secure vacant possession following occupation by squatters in October/November 2010 estimated at an additional £10,000 and will be met by PSD budgets. Operational policing costs are being met through local Borough budgets.

6. Costs to hold the property in the longer term have not been included within Property Services future budgets as approved within the 2010/13 Business Plan; a longer term hold will require funding to be provided through future business planning processes.

Legal Implications

7. The MPA powers to dispose of the freehold by way of sale are contained in s123 of the Local Government Act 1972.
8. Property Services consider the disposal of the freehold to the bidder identified in Exempt Appendix 2 achieves best consideration that can reasonably be obtained in all of the circumstances, having followed an open and transparent marketing and tendering exercise, and having sought professional advice. On the basis of the contents of this report, DLS are supportive of the proposed recommendation.

9. The MPA, in exercising its discretion to dispose of the property, must have regard to its obligation to do so fairly having regard to established policy and procedure. On the basis of the contents of the this report and discussions with Property Services, DLS consider the disposal is compliant with the MPA’s Standing Orders relating to Property disposals, set out in section 10 of Part F.

10. The recommendation is subject to contract, and external lawyers have been instructed through MetLaw (DLS) to complete the conveyance and to ensure the MPA’s interests are protected.

11. The appendices are considered to contain exempt information in accordance with paragraph 3 of the Local Government (Access to Information) (Variation) Order 2006, as it relates to information relating to the financial or business affairs of any particular person (including the authority holding that information).

Environmental implications

Risk Implications

12. This is a building which is surplus to operational requirements. If approval is not given there will be a risk that PSD will not be able to deliver the capital receipts budget for 2010/11. The preferred bidder is aware that a decision will be taken at F&R on 16 December 2010, however, there is a risk that if approval is not given, then the offer maybe reduced or the in principle agreement will be retracted.

D. Background papers

• Request for Authority to Dispose of Surplus Properties in 2010/2011 - MPA Finance and Resources - 11 February 2010

E. Contact details

Report authors: Neil Webster, Interim Director of Asset Manager, MPS.

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Send an e-mail linking to this page

Feedback