Treasury and Resources Department
Ministerial Decision Report
Sale of 10 car parking spaces at Castle Quay Phase 1 by SoJDC.
- Purpose of Report
To enable the Assistant Minister to consider approving the sale of the 10 car parking spaces at Castle Quay Phase 1 by the States of Jersey Development Company (“SoJDC”).
- Background
The Assistant Minister received a letter dated 10th November 2017 from the Finance Director of SoJDC requesting that the Assistant Minister confirm by Ministerial Decision that SoJDC may sell its car parking interest in the Castle Quay development for £415,000.
SoJDC had previously, in a letter to the Assistant Minister dated 31st May 2016, set out the desire of the Board to sell various investment properties which sit outside of the Company’s core business and which would be used to support cash-flowing the Company’s core development activities.
P.73/2010: “Property and Infrastructure Regeneration: The States of Jersey Development Company Limited”, in its Appendix 7, sets out the “Protocols for the Transfer of assets to and from the States of Jersey Development Company.”
The principles contained in this state, “The States of Jersey (“SoJ”) is establishing SoJDC as a development company. The prime purpose of SoJDC is to deliver regeneration projects to provide the best socio-economic benefit to SoJ. This will be in the form of enhancing the value of existing properties through refurbishment, the development of new properties, infrastructure and public realm. Regeneration assets may be retained by the Public (SoJ) or disposed of to realise capital proceeds. Property held by either Jersey Property Holdings (“JPH”) or SoJDC will be consolidated within the SoJ accounts.”
Principles to guide policy on holding assets in the future were set out in Section 8 of P.73/2010. This included:-
- “Once developments have been completed, they should be sold in the open market or if there is a strategic reason for long-term ownership by the States, transferred to SoJ at market value.
- Where assets are sold into the market, they should be subject to an independent valuation to ensure best value is being achieved.”
Each of the investments held by SoJDC at the time P.73/2010 was approved by the States, were listed in Appendix 5 of P.73/2010 and a strategy for disposal identified. In the case of the ten car parking spaces, these were purchased during 2011 for £250,000 i.e. after P.73/2010 and therefore not covered by Appendix 5. As a non-strategic asset, sitting outside SoJDC’s core development, they believe these parking spaces should be sold with the proceeds being used to support cash flowing the Company’s core activities.
- Current request
The investment is held by way of a 999 year lease granted on the 26th November 2010. The lease is subject to a peppercorn rent which has been paid.
The investment is currently subject to a license agreement between SoJDC and the Ports of Jersey for the benefit of bona fide marine traders. The license is granted to expire on the 31st July 2020 and is subject to a mutual rolling 6-month break option. The commencing rental was £21,500 from 1st August 2015 and the current passing rental is £23,704. The rental is subject to an annual increase of 5%. The investment has been offered to Ports of Jersey but they have declined to make an offer.
SoJDC then proceeded with BNP Paribas Real Estate (“BNP”) to market the 10 parking spaces. BNP’s advice was to seek offers in excess of £350,000, noting that the highest amount paid for a single car parking space near the centre of town was £40,000 in 2016.
Following a marketing campaign in October, five interested parties contacted BNP, one making an offer at the asking price and the four others stating they were interested to make an offer and wanted direction whether SoJDC would direct BNP to seek best bids. As a result best bids were sought of which the highest offer was £415,000 being £41,500 per space which exceeded the previous known record for a car parking space. The highest offer was from a private investor, whose identity SoJDC have provided to the Treasury and Resources Department. BNP recommended that this offer be accepted. The investment in the car parking spaces was carried at a value of £300,000 in the 2016 Annual Report and Accounts of the Company.
- Recommendation
The Assistant Minister is recommended to approve the sale of the 10 car parking spaces at Castle Quay for £415,000, as requested by SoJDC. This is subject to there being no objections after the 15 day “grace” period required under P.73/2010 in order to allow for sufficient transparency and scrutiny.
- Reason for Decision
The Assistant Minister’s approval is in accordance with section 13.1 of SoJDC’s Memorandum of Understanding and the requirements in Section 12 of P.73/2010.
In accordance with the desire of the SoJDC Board to sell various investment properties which sit outside of the Company’s core business and which would be used for pre-development costs on the company’s next developments.
- Resource Implications
There are no financial consequences for the States of Jersey.
Report author : Head of Shareholder Relations | Document date: 3rd January 2018 |
Quality Assurance / Review : Head of Decision Support | File name and path: L:\Treasury\Sections\Corporate Finance\Ministerial Decisions\DS, WR and SD\2018-0003 - Sale of 10 car parking spaces located at Castle Quay Phase 1 by SoJDC |
MD sponsor : Director of Treasury Operations & Investments |
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