COUNCIL COULD MAKE 2 MILLION POUNDS WITH GROSVENOR LEASE DEAL

5 Sep 2006 

LIVERPOOL City Council could benefit by more than 2 million pounds if it agrees to hand over the lease for the Paradise Street project to developer Grosvenor 12 months earlier than originally agreed.

Grosvenor has asked the council to extend the original January, 2009, completion date for the spectacular £920m retail development.

It wants more time to complete part of the scheme along The Strand, comprising a four-star hotel and apartments. It is still seeking a planning partner for the two buildings and has yet to gain planning permission.

However, the company insists it is still on track to complete the key retail element of the scheme in early 2008 - the year of Liverpool's Capital of Culture celebrations.

In a podcast interview for the Daily Post's thebusinessweek.co.uk website, project director Rod Holmes also said Grosvenor had asked the city council to hand over the lease for the site 12 months earlier than originally agreed.

Under the present agreement, the city would not hand over the head lease until one year after the whole project had been completed.

But Grosvenor has now asked for it to be handed over 12 months after the completion of the retail part of the scheme, as long as all the other elements were also finished. The council is currently considering the request.

Mr Holmes said: "It would not cost the city anything.

"In fact, it benefits the city because under the terms of the lease it is entitled to at least 5% of the rents we take. The earlier the head lease is granted, the earlier the city can start collecting its share of the ground rents.

"The head lease would still not pass to us until everything had been done. There would be no risk for the city and no exposure."

Grosvenor wants to lease earlier so it can persuade its backers to put in extra money and resources to make sure all elements of the scheme are completed.

Currently the retail core, which is being anchored by John Lewis and Debenhams, is more than 55% let and Grosvenor is confident it will be fully let by the time it is due to open. It comprises 1.65m sq ft of retail floorspace.

Grosvenor hasn't publicly stated what it is charging retailers for the space, but one property expert told the Daily Post that annual rental income from the scheme could be as much as £45-£50m, giving the city council a cut of more than £2m.

Mr Holmes also admitted pledging to complete the retail core by the first half of 2008 had put his team under intense pressure.

He added: "When we first signed up to the project, there was no Capital of Culture. We think it is wonderful for the city and for us and it would be a great pity if 40 acres of the city centre was still a building site in 2008.

"We are working hard to get it done early, but there does have to be a balance. We can work miracles, but we can't work miracles all over the place all of the time.

"Perhaps if it had been Capital of Culture 2009, it might have taken a little bit of the pressure off us." By Tony McDonough, Daily Post

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