East Hampshire District Council’s foray into ever evolving world of UK property investment is in choppy waters as problems arise with one of its tenants.
Head of finance Craig Smith has warned that the council that Metro Inns A3 debt is “potentially uncollectable”
Metro Inns A3 ran a hotel at Liphook Services on the A3 under a franchise agreement from Metro Inns.
The hotel closed on July 24th 2017
Metro Inns spokesman Chris O’Neill said there had been long-running issues around the site.
“It’s a shared site, with three different parties paying for water, electricity, gas, maintenance and signage, which always causes a problem.
“It’s gone from us now, but East Hampshire District Council will have to do something with the building. The rent was too high and too much money needed to be spent. It’s a 30-year-old building and it had not been upgraded.”
An East Hampshire District Council spokesman said: “East Hampshire District Council’s property investment strategy is going from strength to strength with a value of £23 million and currently earning the council a very healthy 8.5% yield.
“We will continue to make investments which maximize our income so that we can continue to proactively invest in the area and improve quality of life for residents.
“It is unfortunate that we had to take possession of the Metro Inn on Monday 24 July. This was because the previous tenant fell into rent arrears and has now returned the premises to the council following a court order. The full details of the debt are commercially sensitive and cannot be released.
“The hotel is part of a site, which includes a Starbucks and other associated land, owned by EHDC since November 2014 as a long-term investment. Since that time the site has generated income for the council and has accrued capital value. The site has generated more income for the council than the equivalent investment kept in a bank.
“The hotel will remain closed while the council looks into the condition of the building and the future of the site.”
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