Peterborough City Council launches bid to buy Sand Martin House as freehold put on the market

Peterborough City Council has launched a bid to purchase Sand Martin House at Fletton Quays after the current leaseholder signalled its intention to sell the freehold.

The council relocated its offices from both the town hall and Bayard Place to the £120 million Fletton Quays development in 2018.

The building was regularly used to host full council meetings during the pandemic due to the increased space available compared to the town hall.

At the time of the move, the council agreed a 25-year lease.

There are still around 20 years left of this to run but the freeholders, Legal & General Assurance (Pensions Management) Limited, have put the site on the market and has said that it has been contacted by “several” interested parties.

Due to the developments, an extraordinary cabinet meeting has been called on April 18 to discuss the recommendation of the Executive Director of Corporate Services that the council approve an additional capital budget to purchase the freehold.

The council has said that there would be “significant financial implications to the council for the remaining term of the lease” if the acquisition does not take place.

The proposed purchase would include the office and retail units at Sand Martin House and both the surface level and multi-storey car park.

A bid has already been made but is subject to a final red book valuation being obtained, cabinet approving the purchase and full council approving the modified budget.

The purchase of the property will require the council to borrow to fund the acquisition. If the purchase is approved by Cabinet, the necessary approval for the increase to the council’s capital budget will be requested at the next full council Meeting on May 22.

Council documents state that the costs of funding the borrowing for the acquisition have been modelled against the projected future rental costs for the remaining life of the lease.

These show that the rental costs would exceed the cost of borrowing for the next 20 years and would lead to a saving for the council in the next five years.

The price of the is currently being kept secret due to its commercially sensitive nature but Legal & General purchased the site in October 2016 for £5,500,500 plus VAT of £1,100,000.

The council also sub-lets office space in Sand Martin to the Construction Industry Training Board. The sub-lease was signed in 2019 and nets the authority around £700,000 a year with break options after three and six years.

Should the council complete the purchase, this agreement is expected to remain in place.