A report has shed more light on plans for Lichfield District Council to purchase full control of a new cinema development within the next two years.
The local authority’s overview and scrutiny will discuss the proposals at a meeting this week.
The move would see the council insert a clause in the agreement with Evolve Estates, the owners of the former Debenhams building which is due to house the new multi-screen facility, which would agree to a future £3.5million buyout fee.
It follows a previous £5.7million agreement to help get the Limited Liability Partnership (LLP) joint venture off the ground in the first place.
A report to the overview and scrutiny committee by deputy leader, Cllr Andy Smith, said that Evolve Estates had sought the new buy-out commitment from the council.
Although the full details were redacted of exactly why the local authority’s partner in the development had wanted such a clause that would see the £3.5million deal concluded within two years, the report said the company remained committed to the cinema project and the broader city centre regeneration plans.
“Evolve Estates’ purchase of the Three Spires shopping centre has been a positive for the city and district. They are a very present landlord, aligned with the Council’s ambition to ensure a vibrant city centre shopping experience for residents and visitors.
“In the last twelve months we have seen long term vacant units on the site populated with brands such as Starbucks, Edinburgh Woolen Mill and latterly KFC.
“In October 2022, full council supported entering a joint venture with Evolve Estates to bring forward an ambitious place-shaping ambition for the district, to introduce a high-quality cinema operator and complementary food and beverage outlets to add to the already well-established independents the city enjoys.
“Due diligence undertaken proved for full council that Evolve Estates was the right commercial partner, with an aligned ambition for the site and understanding of the greater benefits the development would bring to the remainder of the city centre regeneration aspirations of the council.
“None of the above points has changed. Evolve Estates remain a committed partner, determined to deliver the cinema complex at the heart of their Three Spires estate – and this report seeks final sign off from cabinet, and a recommendation to full council, that we do the same.”
Cllr Andy Smith, Lichfield District Council
The report added that Evolve Estates was “not seeking payment for the value of the asset -the Debenhams building – it is putting into the LLP” as part of the clause.
It also identified that if the local authority did not seek to take up purchase option within the timescale then it could still be left with a bill to settle.
“If the council decides not to purchase Evolve Estates’ shareholding, then Evolve Estates will be entitled to sell its holding on the open market.
“In the event it did not achieve the pre-agreed price of £3.5million on the open market, then the council would fund any gap between its sale price and £3.5million.”
Cllr Andy Smith, Lichfield District Council
“Concluded the deal for a 25-year lease for a cinema operator”
Details have still to be confirmed about the operator of the new cinema, but Cllr Smith added that the deal was now in place with both the unnamed chain and the majority of the food and beverage units being created as part of the project.
His report added that agreement in the buyout clause was now one of the last remaining hurdles for the development.
“Several months of work by our partners in Evolve Estates has now concluded the deal for a 25-year lease for a cinema operator to move to Lichfield.
“The ability to exchange contracts with that cinema operator awaits only the conclusion of the LLP now.
“Alongside the cinema operator, Evolve Estates has successfully pre-let all but one of the food and beverage and leisure units that will be created within the centre.
“Again, exchange of contracts for these leases awaits only the conclusion of this LLP deal.
“If the LLP amendment set out is approved, then these contractual negotiations can be concluded and then work on site can commence to complete the development. Once completed, and associated obligations on Evolve Estates as development lead achieved, the development would ‘go live’ and the clock would start on the buy-out clause.
“At that stage, and assuming cabinet and full council decide to buy out Evolve’s shareholding, then the council will become the 100% owner of the development, its risks and financial benefits.”
Cllr Andy Smith, Lichfield District Council
The report will be considered at a meeting of Lichfield District Council’s overview and scrutiny committee tomorrow (30th November).
