Royde House, Midvale Road, St Helier: Early Surrender of Existing Lease

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A decision made on 14 June 2019

Decision Reference: MD-PH-2019-0016
Decision Summary Title :	Royde House, Midvale Road, St Helier – Early Surrender of Existing Lease		Date of Decision Summary:	11 June 2019
Decision Summary Author:	Surveying Technician		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title :	Royde House, Midvale Road, St Helier – Early Surrender of Existing Lease including a Payment to the Landlord		Date of Written Report:	10 June 2019
Written Report Author:	Surveying Technician		Written Report : Public or Exempt?	Public
Subject: Royde House, Midvale Road, St Helier – Early Surrender of Existing Lease TLB 1900-01-01
Decision(s): In accordance with Standing Order 168 (1) (ca) the Minister approved, as recommended by Jersey Property Holdings, the cancellation of the existing lease of the above-mentioned property, and a payment to the landlord to allow the early surrender.
Reason(s) for Decision: To aid the CAMHS in their exit of the property in order to reduce the long term costs of staying in the lease until the end of the year.
Resource Implications: The financial implications of this decision are detailed in the accompanying report. There are no manpower implications in respect of this decision. When the transaction is concluded the fixed asset register and States balance sheet will be amended to account for the transaction.
Action required: The Minister hereby authorised the Director of Jersey Property Holdings to conclude any contract which is required to be concluded on behalf of the Public.
Signature:		Position: Deputy K Lewis Minister for Infrastructure
Date Signed:		Date of Decision (If different from Date Signed):

Royde House, Midvale Road, St Helier: Early Surrender of Existing Lease

DEPARTMENT FOR INFRASTRUCTURE

JERSEY PROPERTY HOLDINGS

Property Transaction for Ministerial Decision - Minister for Infrastructure

Royde House, Midvale Road, St Helier – Early Surrender of Existing Lease Including a Payment to the Landlord.

TLB 1900-01-001

Purpose

The purpose of this report is to:

approve terms for the payment to the landlord of the above-mentioned property (”the Property”)

Background

A designated PSSI building, Royde House has been leased by the Government of Jersey on behalf of the Children and Adolescent Mental Health Service (CAMHS) and Children and Family Services since 1 September 2002. The property has been leased from Arradon Holdings Limited. The basis of the 17 years has been a Heads of Terms document which identifies the tenant’s obligations; “An internal repairing, redecorating and insuring lease for a period of five years commencing 1st September 2002 with further option for the tenant to renew for a further period of three years at the rent passing. The tenant has an option to break the lease after two and a half years from the commencement of the lease upon giving six months prior written warning”.

Current Situation

The landlord has offered us a “discount for early surrender and absolvent from the requirement to reinstate, so as to receive a one-off payment of £90,000”. This was based on an outstanding rental of £55,875 and an estimate of between £40,000 and £50,000 to reinstate the property. An inspection was carried out in order to obtain a quote to effect repairs. This was similar to the figure set out by the Landlord of £40,000. It was felt that the discount offered (c.£10,000) was insufficient compensation for the Public handing the property back early. Some calculations were undertaken in order to compare the cost of an “early surrender” with that of remaining in the lease for the duration of its term. The following options have been considered.

Option 1 – Remain in lease - £92,772 - This is made up of the cost for two more quarterly rent payments (£49,062) the cost to reinstate the dilapidations (£40,000) and the continued running costs (£3,710).

Option 2 – Landlord’s Offer (Early surrender & payment) – £90,000 – This includes a discount for early exit.

Option 3 – JPH Counter Offer (Early surrender & revised offer) - £75,000 – This counter offer sought a more valuable discount reflective of the benefit to the landlord of having the property back early.

After some further negotiation the landlord made a final offer of £82,500. Property Holdings considered this to be a reasonable offer and felt able to recommend this to the Minister. During this period the third quarterly payment of £24,531 was made. The landlord was made aware of this and an updated offer was calculated to the sum of £57,969 to take account of this payment.

Recommendation

We therefore recommend to the Minister the settlement figure of £57,969 to be paid to the landlord of the property.

Written By: Surveying Technician

Signature

Authorised By: (Director/Assistant Director JPH)

Signature ………………………… 10 June 2019