Agenda item

That the report be noted and the following recommendations be approved:

1.  To delegate authority to the Director of Housing Planning and Regeneration to agree terms with the existing tenant of Churchill Theatre, Trafalgar Group, to gift the Council’s freehold interest in the whole site alongside negotiating a reverse premium to be paid to Trafalgar Group on completion of the freehold transfer to enable the tenant to invest in the building to ensure a sustainable future for the building and to protect its future use as a theatre. With terms, once agreed in principle, to be subject to further approval by the Executive Committee.

2.  As detailed within this report, the existing arrangement is not sustainable as there are significant works required to the building if it is it have a future, and therefore the existing lease arrangement with Trafalgar Group needs to be terminated to enable the works required on the building to be undertaken which cannot be facilitated whilst the building is occupied and operational. It is therefore recommended that the Landlord’s Break Clause in relation to the lease held by Trafalgar Group is triggered which must be served on or before 1^st April 2024 in accordance with the terms of the existing lease providing a minimum of 24 months’ notice thereby terminating the existing lease arrangement as of 2^nd April 2026.

3.  Should Trafalgar Group confirm they are unwilling or unable to take gifted ownership (and a reverse premium) of the site, then it is recommended that the Executive Committee delegate authority to the Director of Housing Planning and Regeneration to openly market a 999-year leasehold interest in the site to secure a private developer to undertake the required redevelopment under a Development Agreement, with the 999 year lease only being granted, with vacant possession, on completion of the agreed scheme as agreed and stipulated within the Development Agreement. All offers received would be reported back to the Executive Committee for a Member decision to enable Member selection of a preferred bidder.

The site known as Churchill Theatre formed part of a larger property which also comprised Central Library and a number of ground floor retail units. The building was constructed as one in the 1970s, formally opening in 1977.  The site was owned freehold by the Council, with Churchill Theatre being occupied by Trafalgar Group on a lease dated 5^th September 2017 which expired on 3^rd April 2041. Central Library was occupied and operated by the Council’s library provider Greenwich Leisure, and the retail units were held on a long leasehold interest by a private third party.

Buildings of this nature were typically intended to have a lifespan of c. 50 years and as such, the building was now in poor condition, and many elements of the building and building fabric were considered end of life and beyond economic repair. Therefore, continuing with the existing lease arrangement with Trafalgar Group for the theatre element until its natural expiry in 2041 was not considered a viable option, as the extent of the works required to ensure a sustainable future for the building would not be possible whilst the building was occupied and operational.

The report primarily related to the Churchill Theatre element of the building, due to the lease arrangements that were in place and the commercial (i.e. non-operational / non-statutory) function of this element of the building, and the need to find a solution to the challenge of an end of life building, a limited pool of resources from which the Council must prioritise its statutory and operational needs, and the wider economic and cultural benefits that come with the presence of a theatre in the town centre. 

The report set out the Council’s intention for seeking a mutual agreement between the Council and Trafalgar Group to ensure a sustainable future for the theatre at the site, whilst simultaneously removing the Council’s ongoing liabilities for repairs and maintenance at the site.

The report had been scrutinised by the Executive, Resources and Contracts PDS Committee at its meeting on 17 October 2023 and the Committee had supported the recommendations.

RESOLVED: That the report be noted and the following recommendations be approved:

1.  To delegate authority to the Director of Housing Planning and Regeneration to agree terms with the existing tenant of Churchill Theatre, Trafalgar Group, to gift the Council’s freehold interest in the whole site alongside negotiating a reverse premium to be paid to Trafalgar Group on completion of the freehold transfer to enable the tenant to invest in the building to ensure a sustainable future for the building and to protect its future use as a theatre. With terms, once agreed in principle, to be subject to further approval by the Executive Committee.

2.  As detailed within this report, the existing arrangement is not sustainable as there are significant works required to the building if it is it have a future, and therefore the existing lease arrangement with Trafalgar Group needs to be terminated to enable the works required on the building to be undertaken which cannot be facilitated whilst the building is occupied and operational. It is therefore recommended that the Landlord’s Break Clause in relation to the lease held by Trafalgar Group is triggered which must be served on or before 1^st April 2024 in accordance with the terms of the existing lease providing a minimum of 24 months’ notice thereby terminating the existing lease arrangement as of 2^nd April 2026.

3.  Should Trafalgar Group confirm they are unwilling or unable to take gifted ownership (and a reverse premium) of the site, then it is recommended that the Executive Committee delegate authority to the Director of Housing Planning and Regeneration to openly market a 999-year leasehold interest in the site to secure a private developer to undertake the required redevelopment under a Development Agreement, with the 999 year lease only being granted, with vacant possession, on completion of the agreed scheme as agreed and stipulated within the Development Agreement. All offers received would be reported back to the Executive Committee for a Member decision to enable Member selection of a preferred bidder.