The document, posted on the government’s website, also says that the Jersey Development Company are planning to take out a £28.5 million loan to construct the new IFC6 building and that a financial services firm could take on 72% of the block for a term of 18 years. Land to the north of the Radisson Blu Hotel is to be used as security against the loan.
The ministerial decision adds that even if the JDC fails to lease the remaining 28% of the floorspace in IFC6, over the 18-year period there would still be a £93,868 revenue surplus per year.
The JDC plan to retain the building for eight years after it is finished and, post-completion, will refinance the development through a longer-term 15-year loan with a view to eventually selling it.
‘If these buildings [the rest of the IFC project] are not constructed, then IFC6 will have to incur the complete cost [of the remaining proposed IFC development], reducing the profit on the development.
‘[The government] should… ensure they are comfortable with the potential impact on profit if later buildings are ultimately not delivered,’ the ministerial decision said.
It continued: ‘However, if additional office buildings are not constructed due to a lack of demand, the remaining buildings will be built out as residential buildings for which there is significant demand and for which underground parking will be required.’
The decision also says that the JDC could enter into a finance agreement with HSBC to build IFC6 – split between a development loan and a revolving credit facility, which enables an organisation to withdraw money, repay it and then withdraw it again when needed.
It added that it was suggested that part of the Waterfront complex, ‘Key Opportunity Site 2′, described in previous JDC publications as ‘the area to the north of the Radisson Hotel up to and including Jardins de la Mer’, be used as collateral against the loans.
‘The professional valuation undertaken for the bank [HSBC] would indicate that this would allow the release of the Key Opportunity Site 2 land as security but would have to leave in place the Waterfront [underground] car park and KOS 1 (where buildings IFC2, IFC 3 and IFC 4 are proposed to be constructed) which would allow SoJDC to progress with the development on the KOS 2 land, where Les Jardins car park is situated,’ the document says.
In September, it was revealed that the Simon Sand Quarry in St Ouen’s Bay was to close, with already-elevated construction costs rising even further with materials needing to be imported.
The IFC6 decision says that the cost of the building had not been immune to those price rises, with the construction partner contract increasing by an estimated £1.3 million.
