Ground Lease in respect of land at Harrogate District Hospital

Award outcome

Description

The Harrogate and District NHS Foundation Trust ("HDFT") intends to enter into an Option Agreement with Noviniti Dev Co 15 Ltd ("Noviniti") giving Noviniti the right to call for a Ground Lease in respect of land at Harrogate District Hospital ("the Hospital") as the site of the refurbishment and extension of the exiting Hospital main entrance to crate improved and extended retail space and additional communal and circulation space ("the Potential Development"). The Option Agreement will be for an initial period of [39 weeks] (subject to extension). HDFT has had valuation advice and will grant the Ground Lease (which will be for a term of 45 years subject to earlier break rights) ("the Ground Lease") at a premium which reflects market value as advised by independent valuation advice. The Ground Lease does not contain any development obligations upon Noviniti and does not in itself permit Noviniti to undertake the Potential Development unless HDFT elects to grant a Licence for Alterations to Noviniti authorising it to undertake the Potential Development. The contractual arrangements are structured as a land contract within Schedule 2 paragraph 8 of the Procurement Act 2023 ("the Act") and underlying case law, and as such an "exempted contract" for the purposes of the Act and the Procurement Regulations 2024. Whilst the Option Agreement and Ground Lease contain no provisions authorising the Permitted Development, HDFT contemplates the possibility that it may choose to enter into further contractual arrangements with Noviniti at a point in the future (subject to separate HDFT authorisations) subject to terms being agreed between Noviniti and HDFT. If terms are agreed, then HDFT may authorise Noviniti to undertake the Permitted Development via a Licence for Alterations. At that stage, Noviniti and HDFT (together with other relevant third parties) would enter into an Agreement for Underleases leading to (inter alia) the construction of the Potential Development and the grant of underleases to HDFT of parts of the completed Potential Development. In the event that HDFT chooses not to enter into further documentation with Noviniti, then HDFT will have a right to terminate the Ground Lease on the [second] anniversary of the date of the grant of the Ground Lease, provided that works to construct the Potential Development have not commenced . The Ground Lease is subject to a further break clause in favour of HDFT on the 40th anniversary of the date of grant of the Ground Lease. Noviniti will also have the right to break the Ground Lease at the expiry of the first anniversary of the Ground Lease. The arrangements between Noviniti and HDFT include a cost underwrite by HDFT of Noviniti's costs incurred in pursuing consents and design development capped in accordance with an agreed schedule. Those costs are not payable in circumstances where Noviniti and HDFT enter into further documentation and Noviniti undertakes the Permitted Development. In circumstances where Noviniti does not undertake the Permitted Development, then the costs become payable by HDFT and in return Noviniti is obliged to assign the benefit of all reports and surveys undertaken and reliance rights from the professionals engaged by Noviniti.

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