Request for approval to dispose of 3 & 5 Penrhyn Road, Kingston Upon Thames, KT1 2BT

Report: 13
Date: 21 July 2011
By: Director of Resources on behalf of the Commissioner

Summary

This report requests Members approval to dispose of the freehold interest in 3 & 5 Penrhyn Road, Kingston Upon Thames following an open market tender.

A. Recommendations

That members

1. Approve the disposal of the freehold interest in 3 & 5 Penrhyn Road, Kingston upon Thames 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 16 December 2010, and
3. Note that the capital receipts from the disposal will support the 2011/12 Capital Programme.

B. Supporting information

1. The Corporate Real Estate (CRE) Programme 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 to ensure officer/staff roles are protected.

2. Penrhyn Road is a main thoroughfare through Kingston upon Thames, linking Richmond to the north with Surbiton in the south. The property is located on the corner of Denmark Road opposite Kingston upon Thames Crown Court. The property comprises two interconnecting 1980s office buildings totalling approximately 11,600 sq ft net internal area arranged over ground first, second and third floors. Internally the property comprises cellular offices. There are a small number of car parking spaces to the rear of the property. The property is surplus, has no front counter and is fully vacant and decommissioned.

3. The property was marketed in a campaign between April and June 2011. Knight Frank as agents acting on behalf of the MPA placed advertisements in the national property press and relevant local press. Knight Frank also placed a marketing board on the property, hosted details 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 10 June 2011.

4. All bids were invited 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 the purchaser subsequently sells the property on 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. The results of the five bids are shown in Appendix 1 (Exempt). 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). All bidders were invited to provide further information and submit their best and final offers by 12.00pm on 16 June. Because of the identified disadvantages to the MPA in accepting bids conditional upon planning, bidders were requested to ensure that second stage bids were on an unconditional basis only. The results of the second stage bids are attached in Appendix 2 (Exempt).

6. With external advice from Knight Frank, Property Services recommend Members approve the sale of the property to the party identified in Appendix 2 (Exempt). Should approval be granted Property Services will proceed with the completion of this matter and report the transaction in the next quarterly Estate Update Paper.

7. 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 from independent Property Agents.

C. Other organisational and community implications

Equality and Diversity Impact

1. In line with corporate real estate principles; maximising the use of space and minimising costs, it is essential that those buildings provided for longer-term use (enabling the release of surplus assets) are fit for use, compliant and provide suitable accessibility. Following an Equality Impact Assessment (EIA) completed at a strategic level and screenings undertaken on each property selected for disposal, looking at Equality and Diversity issues from both a community and MPS staff perspective for this site there are considered to be limited equality or diversity issues arising as a result of this proposed disposal. Any issues that do arise will be dealt with at a local level with the learning reflected within the EIA.

2. Private treaty disposals are open market sales making the properties available to all members of the public.

3. In the event of residential redevelopment of the operational sites, the provision of key worker or social housing accommodation at a site will need to meet the requirements of the Local Planning Authority, as and when granting planning consent for development.

Consideration of MET Forward

4. This paper aligns with the strategic intent of Met Forward section 7, Met Support - in particular the Estates Programme. The recommendation is to dispose of surplus properties to meet the Capital Programme budget and also deliver revenue savings.

Financial Implications

5. The 2011/2012 Capital Receipts budget is set at £40m. This budget is to be achieved through the disposal of operational and residential properties that are surplus to requirements.

If approved, the receipts generated from the disposal of the freehold will be allocated to 2011/2012 capital programme.

6. 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.

Costs to hold the property in the longer term have not been included within Property Services future budgets as approved within the 2011/14 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. On the basis of the information contained within this report and discussions with Property Services, DLS are supportive of the proposed recommendations.

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 this report, the recommended disposal by way of sale of the freehold is considered by DLS to be compliant with the MPA’s Standing Orders relating to Property disposals, set out in section 10 of Part E.

10. 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).

11. Members have delegated authority to approve the recommendations contained within this report under the terms of reference of this committee.

Environmental Implications

12.

Risk Implications

13. With continued general financial uncertainty and on-going difficulties in obtaining funding for both commercial re-developments and residential mortgages there is a risk that the sale will fail to complete and / or the purchaser will look to renegotiate the purchase price.

D. Background papers

• Request for Authority to Dispose of Surplus Properties in 2011/2012 - MPA Finance and Resources - 16 December 2010

E. Contact details

Report authors: Jane Bond, Director Property Services, MPS

For more information contact:

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

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