Summary
Unconditionally acquired as part of a package, the joint venture parties, Cadugan Developments Ltd & BHP, made a strategic decision to dilute risk on the larger project by targeting firstly, an alternative land use to offices and secondly, a pre let / sold agreement.
BHP was aware of the occupational requirement of Travelodge and terms were agreed for a 102 bedroom budget hotel. An application for a change of use was granted by delegated powers and the refurbishment of the existing building was completed to the agreed Travelodge specification.
The investment was forward sold during the refurbishment to KS Habro, a Danish consortium, who completed their purchase upon practical completion of the refurbishment.
Business Case
STRENGTHS
- Package acquisition with 2 other buildings
- Existing floor plates could be converted to a hotel use with ease
- Dilapidated nature of the building assisted in planning negotiations
- Travelodge had been seeking an additional hotel in Bracknell for 5 years without success
OPPORTUNITIES
- Hotel strategy diluted BHP’s exposure to the Bracknell office market
- Possibility of a pre-let development, subject to obtaining a satisfactory planning consent
- Possibility to utilise the existing frame without significant alterations
WEAKNESSES
- Lack of success with hotel strategy would require a further office refurbishment
- Recent occupation by the Met office diminished argument for change of use to hotel
- Car parking allocation was less than desirable
THREATS
- Planning risk
- Negative investor perception of Bracknell
- Massing was greater than that desired by Travelodge