Peterborough City Council set to take out £50m loan to fund acquisition of Sand Martin House

Peterborough City Council is planning to take out a £50m loan to fund the purchase of its offices at Sand Martin House.

The freehold of the offices, retail units, surface level and multi-storey car park were put up for sale by the site’s owners Legal & General Assurance (Pensions Management) Limited unexpectedly earlier this year.

The council moved into Sand Martin House in 2018- delivered as part of the £120m Fletton Quays Development - and signed a 25-year lease.

There are 20 years of the lease still left to run but the council was given the first opportunity to acquire the freehold once the owners indicated their intention to sell on the open market.

A purchase price has been agreed and the deal is due to be completed on May 31 but still requires the increase of the council’s 2023/24 Capital Programme to be approved by full council.

This matter is being put to the council at its annual meeting on Monday evening (May 22, 7:15pm).

Documents, which state that the funding has been recommended for approval by officers, note that a £50m increase in the Capital Programme is required to fund the acquisition of the Sand Martin House freehold. The additional capital requirement will increase the Council’s Capital Financing Requirement and be funded from borrowing.

They also state that the cost of capital is “significantly” lower than the cost of the council's current rent over the remaining life of the least and would, therefore, provide a “considerable” saving to the council.

The council has not taken the decision to disclose the exact price of the sale, stating that the need to retain the information outweighs the public interest in disclosing it.

Legal & General purchased the site in October 2016 for £5,500,500 plus VAT of £1,100,000.