The project is the redevelopment of a tight city centre site in a Conservation Area of Edinburgh. An existing underused 1960s office block will be demolished to make way for a 150 room Premier Inn “Hub” hotel.
The development is constrained not only by buildings on either side but by the main Waverley to Haymarket railway tunnels which run below the site.
In May 2014 our Developments division secured a deal to purchase the site for £4.5 million. The purchase was conditional upon Interserve being satisfied with the ability to construct the proposed hotel adjacent to the network rail tunnels. The condition was satisfied in October 2014 and Interserve Developments completed the purchase.
A full design team was appointed to design the proposed hotel to meet a BREEAM rating of Very Good.
In tandem with the due diligence being carried out in regard to the network rail tunnels, our Developments division worked closely with our Construction division to provide a fully costed design solution. The construction contract is c£9 million.
An occupational lease was secured with the hotel operator and a development funding agreement. Both the agreement for lease and the development funding agreement are conditional on planning consent and provisional premises license being granted by the local authority.
The funder will fund the initial land purchase of £4.5 million plus rolled up design costs of c£1 million and then fund the construction and design costs on a monthly valuation basis. The entire funding package is around £17 million.
Committee approval was obtained in February this year, consent will be issued this month and the Provisional Premises Licence will be obtained in April.
The final three tenants will vacate the existing office building at the end of May 2015 and our Construction division is expected to commence the demolition and construction works immediately thereafter.
The demolition is expected to take 20 weeks, with the construction a further 60 weeks.
The construction contract is let on a turnkey basis and the hotel is expected to be trading in November 2016.