Tuesday, March 15, 2022

News: Principal terms agreed for two new restaurants at Forge Island

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Principal terms have been agreed for two new restaurants at Forge Island, joining the cinema and modern hotel at the Rotherham town centre scheme.

A head lease between the private developers, Muse, and Rotherham Council is also "realistically within reach."

Securing a funder for the scheme is also close.

The Council-owned site, which sits between the River Don and South Yorkshire Navigation Canal, will host a new leisure scheme with an 8-screen boutique style cinema, modern hotel, food and drink outlets and car parking.

Major hotel brand, Travelodge, exchanged a long-term deal last year to become an anchor tenant. This followed the news earlier in the year that boutique cinema operator, The Arc, had agreed to open its seventh site at the scheme.

To capitalise on securing the anchor tenants, Rotherham Council and Muse agreed to accelerate detailed designs that they say will increase the attractiveness of Forge Island to food & beverage (f&b) occupiers and provides the best opportunity of securing an early start on site.

An update to the Council states that: "The site has been marketed to occupiers and pre-let agreements secured with The Arc Cinema and Travelodge. Heads of terms have been agreed with two restaurants and solicitors are instructed to complete pre-let agreements with those parties.

"The two restaurant deals with solicitors are progressing satisfactorily with the principal terms having been agreed. Muse is continuing to market the remaining units which are attracting interest, giving rise to an expectation that further occupiers will commit to the scheme prior to opening."

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At the time of securing the approval of the planning board in 2020, developers anticipated that construction would begin in autumn 2021.

It looks likely that a start date will now be in October 2022.

So far the Council has completed the first phase of enabling works to allow the scheme to proceed, including demolitions to provide a clear development site, the construction of a fish pass and the construction of flood mitigation measures. The Council has further enabling works to complete prior to transferring the site to Muse ready for construction to start. Flood alleviation work is also underway, as is further work around the public realm and the creation of Riverside Gardens nearby.

Muse is currently working on detailed design in preparation for awarding a construction contract.

The council update adds: "In response to current market volatility and to limit risk pricing by contractors, Muse is working to appoint a contractor to engage during the design process and reach a negotiated price. It is considered that this approach is likely to produce the best possible price and greatest level of certainty around cost but would not prevent a further tender exercise being undertaken should an acceptable negotiated price not be achieved."

Legal discussions are also ongoing regarding leases and funding.

In 2019, a 250 year lease with Muse was proposed. The agreement included an option for the developer to ask the Council to take an over-riding lease of the scheme. Reducing some of the risks for the developer, this would involve the authority subletting and collecting rents from operators, which would generate an income stream to fund the head lease costs.

On advisement from Jones Lang LaSalle (JLL), who have indicated that the existing terms "continue to represent an institutional offer," variations are being proposed to a head lease "to enhance the investment value of the scheme."

One is to include an obligation that the Council inherits the site at the end of the lease term. The update explains that: "this reflects the operating approach of the investors likely to be attracted to the scheme, which are specialist annuity funds who prefer an income stream for a fixed number of years without the residual asset to manage at the end of the annuity period."

Another variation is to prepare the terms to move away from being linked to the Retail Prices Index (RPI) which is expected to be effectively phased out by the Bank of England.

Varying the length of the head lease (existing proposals are for the Council to take a 35-year head lease) could also "maximise the investment value" and the Council may have an option to adjust the head lease rent upwards if the lettings income increases sufficiently or, alternatively, to reduce the head lease rent by providing capital into the scheme.

On timescales the update says: "It is anticipated that Muse and the Council will agree heads of terms as described above with a funder during May 2022. Construction will start in October 2022 allowing practical completion and handover to tenants for fitting out by January 2024. At this point the Council’s head lease will commence.

"The exact details of the final head lease will be subject to commercial negotiation but agreement on the head lease is today realistically within reach. Muse has made sufficient progress such that the scheme is on the threshold of final design, is in progress to be fully costed and can be marketed to obtain full funding from institutions and therefore, subject to delegated approvals be built and let."

Forge Island website

Images: RMBC / Muse

4 comments:

Anonymous,  March 15, 2022 at 3:57 PM  

That’s good news to have two restaurants sign up for the scheme, hopefully there will be no more delays ! Any word on Weatherspoons opening up ?

Anonymous,  March 16, 2022 at 8:50 AM  

Weatherspoons is an awful company, sells substandard foods and is putting so many other pub/restaurants out of business.

Anonymous,  March 16, 2022 at 2:58 PM  

Iv never had a problem with spoons, there is definitely a need for it especially on match days, also not everybody can afford to go to expensive pubs these days!

Anonymous,  March 16, 2022 at 3:16 PM  

Cheap beer tho๐Ÿบ๐Ÿบ๐Ÿบ๐Ÿ˜œ

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