Disposal of a property in Westminster 

Report: 10
Date: 15 December 2011
By: Director of Resources on behalf of the Commissioner

Linked to exempt item 21

Summary

This report requests Members approval to dispose of the freehold interest in TPHQ / Canon Row (Curtis Green Building), Victoria Embankment SW1A 2JL following an open market tender.

A. Recommendations

That Members:

1. Approve, subject to security provisions, the disposal of the freehold interest in a freehold property in Westminster at the value and to the bidder identified in Appendix 5 (Exempt) 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,
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) Change 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. The property is a large building on Victoria Embankment in central London within the Government Security Zone (“GSZ”). It was originally opened in 1940 and used as offices since. The ground floor was converted to police station use with front counter and custody provision, and was used as such from 1985 to 1992. There has been no public access to the building since 1992. The building totals 52,286 square feet on a net basis from ground to seventh floor. In addition there is a lower ground floor car park and a further two levels of basements. Internally, the accommodation is mainly cellular offices on the upper floors with extensive storage and plant rooms in the basement and sub basements.

3. Under the corporate real estate programme, the previous occupiers of the building have been re-accommodated within other MPA / MPS buildings in Central London. The building is surplus to requirements.

4. The surrounding buildings are all occupied by central government departments including the Department of Health in Richmond House to the west, Ministry of Defence to the north and Parliamentary Estate in Norman Shaw North to the south. With the location of the building (detailed in exempt Appendix 2); the MPA’s obligations to adjoining owners and proximity to the Parliamentary Estate, the MPS have been in regular contact and discussion with both Parliamentary Estate and the MoD. Details in regard to those discussions can be found in Appendix 3 (Exempt).

5. The property was openly marketed in a campaign between September and November 2011. Knight Frank as agents acting on behalf of the MPA have provided an independent valuation and have placed advertisements in the national property press and relevant local press. Knight Frank also hosted details of the property on their website and distributed particulars of the property to interested parties. In total, over 60 different parties inspected the building with most interest from residential developers proposing conversion to large flats. Interest was also shown from hotel developers / operators. Bids for the property were invited to be received by the agents no later than midday on 4 November 2011.

6. 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.

7. In total 28 eight bids were received by the deadline. The results of the 28 bids are shown in Appendix 4 (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). The top ten highest bidders were invited to submit their best and final offers by midday on 14 November 2011. 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 5 (Exempt).

8. With external advice from Knight Frank, Property Services recommend Members approve the sale of the property to the party identified in Appendix 5 (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.

9. Property Services consider the disposal of the freehold to the bidder identified in exempt Appendix 5 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 property available to all members of the public.

3. In the event of residential redevelopment of the site 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.

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 has the power to dispose of the freehold interest in Curtis Green Building by way of sale in any manner that is wishes (except in the case of a lease for less than 7 years) so long as it is for best consideration that can be reasonably obtained is contained in s123 of the Local Government Act 1972. Any disposal at less than best consideration requires the approval of the Secretary of State.

8. Property Services confirm within this report that the disposal of the freehold interest to the bidder identified within exempt Appendix 5 achieves best consideration that can be reasonably obtained in all of the circumstances, having followed an open and transparent marketing and tendering exercise and having sought professional advice from an independent Property Agent.

9. The recommendation in this report also supports the Authorities duty to achieve best value from the disposal of surplus property assets, which will assist the Authority to achieve a level of capital receipts sufficient to sustain the delivery of key policing services.

10. On the basis of the information contained within this report and discussions with Property Services, DLS are supportive of the proposed recommendations.

11. 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 by open market tender 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.

12. The disposal is subject to contract and external lawyers will be instructed through MetLaw (DLS) to complete the conveyance.

13. The appendices to this report 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).

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

Environmental Implications

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.

Abbreviations and acronyms

• DLS - Directorate of Legal Services
• GSZ - Government Security Zone
• MOPC - Mayor’s Office for Policing and Crime
• MPA - Metropolitan Police Authority
• MPS - Metropolitan Police Service

D. Background papers

• Request for Authority to Dispose of Additional Surplus Properties in 2011/2012 - MPA Finance and Resources - 23 June 2011

E. Contact details

Report authors:  Jane Bond, Director Property Services

For more information contact:

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

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