Uncertainty raised over value of sale of partly built Peterborough Hilton Garden Inn

Uncertainty surrounds how much money Peterborough City Council will recover from its investment in the construction of the partly-built Hilton Garden Inn.

Doubt has been raised by administrators Teneo about the final figure of any payment to the council following the collapse of the hotel’s developer, Fletton Quays Hotel, in October 2023.

The council provided a £15 million loan in 2017 to the developer to kickstart the construction of the nine-storey hotel, on the banks of the River Nene.

With interest that amount has grown to £17 million, and say the administrators, the interest is still mounting.

But in a progress report on the ongoing administration of Fletton Quays Hotel, Teneo states: “Based on current information, we do not expect there will be sufficient asset realisations to repay the first ranking secured creditor (Peterborough City Council) in full...”

The council took the developer into administration after a prolonged period in which no construction work was carried out.

The local authority has since explored a range of ideas for completing the hotel, including tackling the work itself and then operating the hotel as a business with a view to selling it after several years’ trading, during which it would provide an income stream for the council.

Instead, the council has opted to open talks with a third party, the identity of which has not been revealed, which is keen to buy the building and complete it as a hotel.

It is known the council is keen to get back as much money as possible.

But a council spokesperson said: “We are limited to what we can say publicly at the moment as negotiations are ongoing."

Recovering as much of the money as it can is likely to be a high priority to the council as it battles to ensure it balances its budget in the next financial year in the face of a £23 million spending gap.

A draft budget that is about to go out to public consultation has controversially flagged up the possible ‘mothballing’ of Peterborough’s iconic Lido swimming pool to save £400,000.

The consultation document also warns that the council’s reserves are ‘incredibly low’ and forecast to dip below £10 million, down from £70 million at the end of 2022/23.

While the money lent to the hotel developer was borrowed by the council from the Government’s public works loan board, it still has to be repaid in full regardless of the value of the proceeds from the sale of the building.

Cecilie Booth, the council’s executive director of corporate services and Section 151 officer, has previously told the Peterborough Telegraph: “That loan will have to be repaid by the council whether the hotel carries on or not.

"So if we were to accept a £12 million offer we’d still have another £5 million of the loan that we have to repay.

"And that would have to be repaid by taxpayers because we’d have no other income to service that debt.”