3 Thames Road Newham - residential Agreement for Lease

A Contract Award Notice
by LONDON BOROUGH OF NEWHAM

Source: Find a Tender
Type: Contract (Works)
Duration: not specified
Value: £105M

Sector: CONSTRUCTION
Published: 23 Dec 2021
Delivery: not specified
Deadline: n/a

Concepts

Location

3 Thames Road, Royal Docks, Newham E16 2EZ

Geochart for 1 buyers and 3 suppliers

London Borough of Newham

R Blue Regen TR

Pension Insurance Corporation

+−

Leaflet | Map tiles by Stamen Design, under CC BY 3.0. Data by OpenStreetMap, under ODbL.

1 buyer

London Borough of Newham London

3 suppliers

Description

The Contracting Authority proposes to enter into an Agreement for Lease with a developer and a proposed landowner under which, if the developer develops 161 residential units (comprising a mixture of private rent, discount market rent and London affordable rent units) at 3 Thames Road, Newham by an agreed longstop date, the Contracting Authority will take a 50-year lease of the property, with an agreement to purchase the reversion at the end of the lease term.

Total Quantity or Scope

Additional information: The total value of the procurement referred in 11.1.7 above does not take account of inflationary rent increases during the 50 year lease term.

Award Detail

1	R Blue Regen TR (London) Reference: 032254-2021-1 Value: £104,950,000 [share] Awarded to group of suppliers.
2	Reef Estates (London) Reference: 032254-2021-1 Value: £104,950,000 [share] Awarded to group of suppliers.
3	Pension Insurance Corporation (London) Reference: 032254-2021-1 Value: £104,950,000 [share] Awarded to group of suppliers.

Renewal Options

The Contracting Authority will have an option to purchase the freehold reversion from the landlord for £1, at the end of the 50-year term of the Lease. The landlord will also be able to require the Contracting Authority to purchase the freehold reversion for £1, at the end of the 50-year term of the Lease.

CPV Codes

45211360 - Urban development construction work
45211300 - Houses construction work
45211340 - Multi-dwelling buildings construction work
45211341 - Flats construction work
45211350 - Multi-functional buildings construction work
45215214 - Residential homes construction work

Indicators

Options are available.

Legal Justification

The Contracting Authority (CA) proposes entering into a conditional agreement for lease (AfL) with R Blue Regen TR Limited (Developer), Reef Estates Limited (Guarantor), and Pension Insurance Corporation Plc (proposed Landowner, a pension fund which will own the Site). Under the AfL, if the Developer develops 161 residential units (the Development, a mixture of private rent, discount market rent (DMR), and London affordable rent units) at 3 Thames Road, Newham (Site) by a longstop date, CA will take a 50-year lease of the Site, acquiring the reversion on lease expiry. The AfL will be conditional on the Landowner completing Site acquisition, and on a resolution for supplemental planning consent for intermediate affordable homes to be used as DMR homes. The AfL won't require the Developer to carry out the Development, although it specifies that if the Developer starts the Development, it mustn't depart from a specification in the AfL. If the Developer doesn't complete the Development by the agreed longstop, or departs from the AfL specification, CA can terminate the AfL and not take the Lease, or still take the Lease. If the Developer practically completes the Development by an agreed longstop, the supplemental planning consent having been issued and in place for an 8-week lead-in period, CA takes the Lease. CA pays an £8,200,000 premium (Premium) to the Landowner, on Lease grant, then £1,935,000 annual rent (index-linked). Under a separate funding agreement between the Landowner and the Developer, the Landowner will fund the Development, including paying a profit to the Developer if the Developer completes the Development and CA takes the Lease. If the Developer fails to complete the Development or becomes insolvent, the funding agreement will give the Landowner funder's rights to step into the AfL and complete the Development. If the Landowner then completes the Development by a longstop, CA still takes the Lease. If the Landowner steps into the AfL as above, CA will, as a deposit, pay an advance payment of the Premium to the Landowner. If the Landowner steps into the AfL but doesn't finish the Development by a longstop, and/or departs from the AfL specification, CA can terminate the AfL and not take the Lease, the Landowner repaying the Premium to CA, or CA can still take the Lease. For the above reasons, CA considers that the AfL does not constitute a public works contract under the Public Contracts Regulations 2015, but is an exempt land transaction.