Council chiefs have agreed a deal for the borough to become the landlord of a hotel in Poplar
Barking and Dagenham’s cabinet members voted for a scheme which would see the local authority strike a 50-year deal with an institutional investor and Travelodge Hotels Ltd.
Under the plan, the council acts as the lessee, paying the investor a guaranteed annual sum but receiving a higher amount in rent from its tenant, the hotel chain, which it anticipates ploughing into services.
Cllr Saima Ashraf, speaking at a cabinet meeting on Tuesday, said: “It’s a no brainer. It’s another bold step. It’s a good investment.” The council’s cabinet finance chief, Cllr Dominic Twomey, explained the investor would carry all the risks and costs of the £90million construction of the new hotel in Oregano Drive due to open in 2021.
Travelodge would pick up the tab for operating the hotel, its maintenance and insurance under a 35-year lease agreement, he said.
The main risk to Barking and Dagenham centred on the council being locked into paying the investor even if the hotel went bust.
Cllr Twomey, presenting the plan, said if that happened the council could find another hotel chain or convert the site into housing.
But Cllr Evelyn Carpenter asked: “Is this too good to be true? You have painted a glowing picture and mitigated all of the obvious risks.
“What’s in it for the institutional investor? Why has it selected Barking and Dagenham? What’s behind all this?”
Leader, Cllr Darren Rodwell, said Barking and Dagenham’s leadership and reputation for being a stable pair of hands explained why the council was chosen.
Cllr Twomey said institutional investors wanted to minimise risks and get a safe return over the long term.
“We’re locked in. We pay them for the duration of the lease. What they want to guarantee is certainty for the scheme. We as a council would be around in 50 years’ time. They get certainty of payment.”
“I don’t think it’s too good to be true,” he said.
Under the deal the council gets a lump sum from the investor of £250,000 for housing and £500,000 for a sport and education facility.
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