MD2935 Disposal of Non-Strategic GLAP Assets

1.1 GLAP has a diverse portfolio that includes several development sites, residential tower blocks, workshops, industrial buildings, offices and leisure facilities. A significant proportion of the portfolio has been inherited from defunct public bodies, including the London Development Agency and the London Thames Gateway Development Corporation.

1.2 Whilst these properties were acquired for either strategic or Mayoral objectives, due to prevailing events, they may no longer be required to achieve these aims or may have already achieved their initial objectives. These property assets can be categorised into four key areas:

• stand-alone investments outside the core regeneration areas of the Royal Docks, Greenwich Peninsula, and Barking and Dagenham

• properties acquired and let on favourable terms to support charities and social enterprises

• freeholds of developed sites, which are usually let on long leases of between 100 and 250 years

• small parcels of land left over from previous developments with no redevelopment potential, e.g., small, landscaped areas, verges and unused strips of land.

1.3 Analysis has been undertaken on the merits of retaining some of these properties. Based on the analysis, four properties have been selected for disposal, having met the following criteria:

• they do not hold any strategic value to meet the Mayor’s objectives, e.g., providing housing for Londoners

• they do not have any redevelopment potential in the short to medium term

• there are no charitable or social enterprise organisations that currently use the premises, and that would therefore be disadvantaged by disposal of the premises.

1.4 At Appendix 1 is a table that sets out background information for each of the premises, together with commentary on the type of property. Consultants (Montagu Evans) were engaged to assist in supporting the GLA to work up disposal strategies for each property. The work undertaken identified actions and plans to enable GLAP to obtain best consideration.

1.5 GLA officers have reviewed the work undertaken and considered the discussions that have taken place with interested parties. The below table sets out the properties and steps taken. Part 2 further sets out the commercial limits being set.

1.6 Within the above table, the phrase “special purchaser” is used. For clarity, this is a party that can afford to pay a price over and above the wider market value. This is because they have a particular connection to the property that makes it more valuable to them. Please note for the majority of assets the above is the case, and this is therefore the most appropriate way of ensuring best value for GLAP. With regards to the Bridgewater Road land this is a collection of three small sized areas totalling circa. 490 sq. ft. They hold negligible value because of their size and is a land title tidying up exercise.

Options

1.7 The below table sets out the options that GLA officers have explored in connection with each property. The highlighted and bold rows in the table are the preferred option for each property.

2.1. The efficient management of any property portfolio includes the periodic review of the portfolio contents, checking to see if it aligns with the wider objectives of the owners. The review allows decision-makers to decide on whether assets should be retained or disposed of.

2.2. The retention of assets that do not serve the wider objectives lead to unnecessary resource being required to manage them where the overall benefit does not align with the overarching aim.

2.3. It also leaves the owner open to risk and reputational damage in the event that anything was to occur at the property. Whilst this is an acceptable risk for those assets that deliver to the wider strategy, this should always be weighed against the benefits being delivered.

2.4. Disposing of these assets allows the GLAP portfolio to remain focused on the Mayor’s objectives; remove unnecessary resource being used to manage these assets; and enable a capital receipt to be received to GLAP.

3.1. Under section 149 of the Equality Act 2010, the Mayor and GLA are subject to the public sector equality duty and must have due regard to the need to:

• eliminate unlawful discrimination, harassment and victimisation

• advance equality of opportunity between people who share a relevant protected characteristic and those who do not

• foster good relations between people who share a relevant protected characteristic and those who do not.

3.2. The “protected characteristics” are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation, and marriage/civil partnership status. The duty involves having appropriate regard to these matters as they apply in the circumstances, including having regard to the need to: remove or minimise any disadvantage suffered by those who share or are connected to a protected characteristic; take steps to meet the different needs of such people; and encourage them to participate in public life or in any other activity where their participation is disproportionately low. This can involve treating people with a protected characteristic more favourably than those without one.

3.3. With 23-25 East Street, due to the nature of this asset and an occupier already being present within the property, the situation arose where a special purchaser scenario is applicable. As such, whilst GLAP could have marketed the property more widely, it was felt that the most suitable purchaser for the premises were the current occupiers.

3.4. It should also be noted that the occupier plans to continue trading out of the premises. Thus, this will not have an impact on any local residents or community members who may rely upon the services they provide.

3.5. For the properties being taken to the open market via auction, the public are free to bid for the properties in line with the auctioneer’s rules and procedures. Via this route, the GLA is attempting to make the properties as accessible as possible for those in a position to bid on the properties.

3.6. Relevant departments within the GLA were notified of and discussed the properties being brought forward for disposal. This was to ascertain if there were any other suitable GLA objectives or projects for these assets. The departments spoken with include relevant area teams, the Cultural team and the Regeneration team.

Risks and issues

Redevelopment potential for sites

4.1. In the past, 23-25 East Street has been included in wider development plans by the London Borough of Barking and Dagenham. They have requested that the contact details of the new freeholder be provided to them so that they can discuss a heritage project they are proposing in the area and confirmed that they have no interest in purchasing the asset. The property sits on a site of only 0.11 acres and it therefore has limited redevelopment potential in isolation. However, the upper floors could be converted to residential units; we understand that this is being considered by the current occupier as part of their purchase plans.

4.2. The other sites do not have development prospects, which has been noted in the table at para 1.6.

Management liability

4.3. The land adjacent to Gallions Reach is particularly vulnerable to fly tipping. The same applies to the parcels of land at Bridgewater Road. Disposing of this land to the adjacent occupier provides continuity to the area and a level of comfort, with the asset being transferred to an interested entity already established in the area. It serves their interests, and those of the local community, for them to retain control of this area to minimise the abuse of this land.

4.4. For the remaining properties there is also a continued management liability – be it statutory testing, rent collection or general landlord obligations.

Assets are not successfully auctioned

4.5. GLAP disposing of properties may more widely be seen as GLAP relinquishing liability on assets that it does not deem important. Subsequently, if properties are not disposed of and GLAP need to continue its management, the current occupiers may feel aggrieved at the route taken by GLAP. In order to mitigate this, communication with parties holding an interest in the land will be made before properties are taken forward for disposal.

4.6. This will enable these parties to lodge an interest in acquiring the property; and GLAP will provide an explanation as to its reasoning for disposing of the property.

Link to Mayoral strategies and priorities

4.7. Disposing of these assets will allow the reinvestment of these capital receipts to help support the Mayor’s objectives relating to the delivery of homes across London, including the London Housing Strategy and associated projects. Reviewing the GLAP portfolio through this work will result in a more focused portfolio, which aligns with the Mayor’s overarching objectives and strategies. In addition, the proposed disposal of land at Bridgewater Road is to the LLDC, part of the GLA Group.

Conflicts of interest

4.8. There are no conflicts of interest to declare from

5.1. The decision is seeking approval to dispose of four properties from GLAP’s Investment property portfolio, as listed in paragraph 1.5. As part of the asset management strategy review the properties were identified as not being strategic to achieving the Mayor’s strategic objectives and the sites did not have potential for redevelopment.

5.2. Options for the disposal of each site were appraised by an independent consultant (Montague Evans) and they have recommended options that would maximise the returns on the disposal of each site. Further details on the disposal of the properties are disclosed in paragraph 1.7 of the decision.

Taxation

5.3. The five properties that were identified for disposal are from the Investment portfolio, as such, gains on disposals will be subjected capital gains tax at 19%, if they are disposed by March 2023 (25% if disposed of after March 2023).

5.4. VAT must be charged on all disposals and the legal agreement must be drafted to allow VAT to be added.

6.1. Section 30 of the Greater London Authority Act 1999 (as amended) (GLA Act) gives the Mayor a general power to do anything that he considers will further one or more of the principal purposes of the GLA as set out in section 30(2):

• promoting economic development and wealth creation in Greater London

• promoting social development in Greater London

• promoting the improvement of the environment in Greater London.

6.2. In formulating the proposals in respect of which a decision is sought, officers confirm they have complied with the GLA’s related statutory duties to:

• pay due regard to the principle that there should be equality of opportunity for all people

• consider how the proposals will promote the improvement of health of persons in Greater London; promote the reduction of health inequalities between persons living in Greater London; contribute towards the achievement of sustainable development in the United Kingdom; and contribute towards the mitigation of or adaptation to climate change in the United Kingdom

• consult with appropriate bodies.

6.3. The GLA, in this case via GLAP, can deal with land, and so dispose of it, on the basis that doing so will further one or more of the principal purposes set out in section 6.1, above. The GLA also has the power to do anything that facilitates, or is conducive or incidental to, doing so.

6.4. Section 333ZC of the GLA Act stipulates that the GLA may not dispose of land held by it for the purposes of housing or regeneration for less than the best consideration that can reasonably be obtained, unless the Secretary of State consents.

6.5. The contents of sections 1-4 of this Mayoral Decision indicate that the decision sought of the Mayor falls within GLAP’s statutory powers and complies with GLAP’s obligations.

• Appendix 1 – Background Information to Properties
• MD2935 Part 2 - Disposal of Non-Strategic Assets