In answer to some of the concerns which have been raised about the redevelopment of Queensbridge House the following letter has been received from the City Corporation. It is difficult to add to this at this stage.
"The City granted a Development Agreement to redevelop Queensbridge House, 25 Little Trinity Lane and the ground floor of Queens Quay dated 25 July 2007 for a capital sum plus a ground rent or capital sum if a Hotel scheme is built, plus up to a further £1m profit share and reflected the benefits of doing a composite transaction including the lease restructure of the adjacent Senator House. This agreement provided for the inclusion of Ocean House (10-12 Little Trinity Lane) owned by the controlling property company Resolution Plc to create a better entrance in a unified development spanning Upper Thames Street. The Development Agreement included an obligation to provide the Riverside Walkaway and within timescales to carry out the development.
It was considered that the sum received in 2007 would create an incentive to bring forward development of this site in a timely manner. It has however proved particularly difficult and expensive. Approximately 50% of the building is over three highways, it is interlocked with Queens Quay House a residential building, and is over three Scheduled Ancient Monuments. In addition, Resolution's development preparations were held up because they found themselves in breach of their loan to value covenants as development site values fell rapidly in the global and national recession. The situation was made more difficult in 2008/9 as their loan finance was initially provided by Lehman Brothers (now in administration) and had been securitised as part of a large package of debt. The bond holders wanted to call in the loan and after some time the developer bought the site back.
The Property Sub Committee on the 2 November 2010 approved variations to the agreement to allow a phased development in anticipation the developer would bring forward development and in particular the Riverside Walkway. This agreement was never signed as Resolution did a deal with hotel specialist (4c Hotels) to do the whole development resulting in a second hotel Planning Permission issued on the 20th March 2012.
The City have investigated creating the walkway through the existing buildings and concluded it would be better to facilitate it through the main development. This was mainly due to:- the possible limited time it would be open before development; the substantial cost in a period of financial restraint, without full accessibility due to different levels; the opposition to the temporary arrangement from the Fishmonger's livery company who are freeholders of part of the site.
We share your frustration with this long awaited development. Resolution, with 4c Hotels have been progressing the development although clearly not as quickly as originally anticipated by the City, despite constant chasing. They have now assured the City that they have an agreed, but unsigned building contract, they have a signed agreement with Templemark, who manage Queens Quay, to separate the buildings and provide funding for additional works as compensation for the disruption. They are finalising a syndicated loan from three banks to provide finance for the whole development. Two of the banks have given full credit approval with the third due on the 10th February. It is anticipated that the legal documents for the syndicated loan could then be in place within 8-12 weeks. Because we cannot give you any certainty on this timing we will keep you informed on progress.
The timescales within the existing development agreement to complete the development have expired and the City could take steps to terminate the agreement but this is not without complication. Resolution and 4c Hotels would undoubtedly challenge any termination to protect, not only the site price paid, but substantial costs associated with the development to date. A challenge could delay the development by several years. The developers are well aware that they require the City's consent to vary the existing agreement time periods to conclude their current funding and we are only prepared to recommend this to the Property Investment Board, once they have confirmed funding and they are ready and committed to start the development to avoid any further setbacks or delays. They have always said that they will bring forward the walkway element as early as possible in the development programme.
I do share your frustration that this development has not occurred as yet, however we are doing all we can to encourage the developer to achieve funding, commence and conclude the development within about 2 years.