Council to borrow £50m to buy office

Peterborough City Council is planning to take out a £50m loan to fund the purchase of its offices at Sand Martin House.

The freehold of the offices, retail units, surface and multistorey car park were put up for sale by the site’s owners Legal & General Assurance (Pensions Management) Limited unexpectedly earlier this year.

ThecouncilmovedintoSand Martin House in 2018 – delivered as part of the £120m Fletton Quays Development - and signed a 25-year lease.

There are 20 years of the lease still left to run but the council was given the first opportunity to acquire the freehold

once the owners indicated their intention to sell on the open market.

A purchase price has been agreed and the deal is due to be completed on May 31.

The council agreed to a £50mincreasetoitscapitalprogramme at last week’s full councilmeetingtobuythebuilding’s freehold, although both Labour

and Liberal Democrats added caveats to their support. Lib Dem leader Cllr Christian Hogg (Fletton & Stanground) said having no break clause in its lease of Sand Martin House had “come back to bite us” as its rent would have continued increasing were the council not able to buy the freehold.

“We need to get away from these grandiose schemes that deliver fantastic newspaper headings but don’t really develop into what they say they’re going to,” he said, adding that the councilisnow“makingthebest ofabaddeal”.LabourleaderCllr Jones added that he supports Cllr Hogg’s comments.

Documents stated that the cost of capital is “significantly” lower than the cost of the council's current rent over the remaining life of the least and would, therefore, provide a “considerable” saving to the council.

The council has not taken the decision to disclose the exact price of the sale, stating that the need to retain the information outweighs the public interest in disclosing it. Legal & General purchased the site in October 2016 for £5,500,500 plus VAT of £1,100,000.

Sand Martin House at Fletton Quays.