External auditors label Peterborough’s £15m Hilton hotel loan a ‘significant risk’
Auditors raised concerns over Peterborough City Council’s Hilton hotel loan at a meeting on July 21.
The council’s audit committee met to review the external audit plan of Ernst & Young (EY), which will give an opinion on the council’s financial statements from the past year.
EY’s audit plan stated that there was a risk that the value of the Hilton Garden Inn hotel in Fletton Quays was “not sufficient” to cover the cost of the loan which would require an impairment, meaning the asset could no longer be worth what the company has on its books.
In 2017, Peterborough City Council agreed to pay a loan of up to £15m to the developer of the 160-bedroom hotel.
The development was significantly delayed due to a slowdown in the construction industry following Covid. Work on the building halted in March 2023 and the developer was eventually put into administration in October the same year.
Mark Hodgson of EY told the audit committee that the Hilton hotel loan was a “significant risk” and the audit plan woud review council management’s consideration of the valuation and recoverability of the loan.
Christine Marshall, the council’s executive director for corporate services and section 151 officer, noted that the current valuation of the loan was still under review.
She said: “This is something we’re still currently looking at and the auditors are aware of that. It is a conversation that will continue as the audit progresses.”
Efforts to sell the uncompleted hotel in October 2024 were scuppered after a preferred bidder withdrew at the last minute.
Peterborough City Council has been in talks with administrator Teneo this year around taking full ownership of the building.
At the same time, the authority is talking to a contractor to complete the building work.
With a conclusion not expected for some time, the unfinished building stands empty and vulnerable to the weather, meaning the asset could be worth less and the costs to complete may increase.
Peterborough City Council’s former section 151 officer Cecilie Booth was recently re-employed for 47 days at a cost of just under £9,000 following her resignation in March.
The council said it was to “ensure that there was continuity and support” in relation to the Hilton Garden Inn hotel project, which she had been overseeing in her previous role.