Under Jo “We’re Not Stupid” Negrini, Croydon Council last month paid £29.8million to buy the Croydon Park Hotel – nearly £5million more than the asking price when the property was put on the market just weeks earlier.
Under new ownership: the Croydon Park Hotel
Negrini, the council’s chief executive, reckons that the Croydon Park Hotel can make £1million a year for the Town Hall’s stretched coffers.
Trade press magazine Property Week reports that Croydon Council agreed a price with owners Evans Randall Investors that is £10million more than they paid for the hotel when they acquired it less than five years ago.
Evans Randall had put the hotel on the market in June this year for just £25million.
When Croydon Council announced the deal, it refused to state what price had been paid to buy the hotel. Property investment traders contacted by Inside Croydon suggested then that £20million might be towards the top end of the hotel’s value.
Croydon Council has used money borrowed from the Government’s Public Works Loans Board. Any money that Croydon might make from entering the hotel business will have to first pay off the loan and its interest.
The hotel, the council stated, will be “part of its drive to seek innovative ways to generate income for frontline services”.
The council’s press release said that the hotel purchase “is expected to generate around £1million net revenue per annum, helping to protect local services for residents. The purchase supports the council’s financial strategy as well as its aim to invest in the borough where possible”.
In 2017, the hotel’s owners sold it after it had made a loss in the previous six months’ trading.
This large-scale purchase by the local authority, using millions of pounds of public money, has never been discussed publicly by elected councillors in the Town Hall.
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Paid too much for Croydon Park? There’s a surprise!
There’s a way the Council could save a lot of money and that’s by amalgamating all departments into one MegaDepartment called WASTE with some departments
Waste Services : waste £3 million over new ill thought though and inefficiently implemented recycling scheme
Waste Finance: our money by overpaying for inappropriate investment in hotel
Waste Planning: our money for silly, vanity projects that spoil the town and enhance the lives of no one
Waste Building: our money trying to be property developers and never developing anything
Waste Resources: by giving planning permission to unnecessary residential developments which eradicate the last vestige of greenery in the town centre and which degrade the environment
Waste Time: by setting up communications systems with the Council which ensure you can never contact them
If they do they they will, for once, be able to assert that all Departments are being 100% successful!
Reblogged this on sed30's Blog and commented:
Why am I not surprised
The more you look at it the more irrational it seems. The rationale of the Council providing the private sector service of hotel accommodation for visitors seems to go further than any nationalisation ever proposed in this country. Surely no one would be so stupid to do this unless they have an ulterior motive or are just plain corrupt? It simply cannot be for the reason that is stated of increasing the councils revenue stream.
So it made a loss 6 months prior to 2017. Croydon Council must be confident of a turnaround in profitability as they will need about £600,000 to cover interest on capital cost and together with their forecast of £1 million net profit gives £1,600,000 minimum turnaround. Best of luck with that as the operator/leasee may just walk away if losses continue. It may be that they have the site value in mind as I understand the former Taberner House site sold for approx £20 million.
Nobody wrote to or went to see the external auditors? Especially if – as you suggest – this property was bought for more than best consideration as measured by the market price at the time.