Terms and conditions for the lease for the Waterfront Hotel

1240/5(4111)

WRITTEN QUESTION TO THE CHIEF MINISTER BY DEPUTY P.V.F. LE CLAIRE OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY 2ND DECEMBER 2008

Question

" W  o uld the Minister outline what performance conditions, if any, were written into the lease for the Waterfront Hotel and advise whether the lessees are meeting these conditions?

W  o u ld he further advise if it is now policy to direct those coming to the Island to do business with the

States to stay at this hotel, and if so are discounts offered which could affect any potential return to the States?"

Answer

The Waterfront Hotel sub-lease contains a number of performance conditions which the Lessee must comply with. The sub-lessee is meeting these conditions. Extracts of performance conditions from the sub-lease entered into between the Waterfront Enterprise Board Limited and the Waterfront Hotel Holding Limited (passed before

the Royal Court on 9th September 2005) are detailed below in italics.

I can confirm that it is not States policy to direct visitors coming to the Island to do business with the States to stay at this hotel. The States has secured a corporate rate at the Waterfront Hotel which is available for all States funded requirements. The hotel, however, has not been given exclusivity in terms of States business. States requirements for hotels vary and therefore a range of hotels and corporate rates are used as appropriate.

3. T E N ANT'S COVENANTS

T H E T ENANT COVENANTS with the Landlord as follows:

1. R E N  T ANDINTEREST
   1. T o pay the rentreserved by this Lease, free from any deductions andrightsofset-off,at the timesandin the mannerrequiredunder Schedule 3 andthe additional rents requiredby this Lease at the times and in the manner specified in relation to each ofthem.
   2. T o pay Interest on so muchof the rents,reviewed rents, andothermoneyspayableunder this Leaseas remain unpaidtwenty-onedays after they have becomedue from the date that they becamedueuntil the payment is receivedby the Landlord.
   3. T o pay Interest underClause3.1.2 for any period during which the Landlordproperly refuses to accept the tender of paymentbecauseofanunremediedbreach of covenant of the Tenant.

2. O U T GOINGS

1. T o pay all outgoings in respect of the Premises.

2. F or the purposesofClause3.2.1,'outgoings' means all rates(both foncier andoccupiers), water rates, water charges, sewage rates, sewage charges and all existing and future rates, taxes, charges, assessments, impositions andoutgoingswhatsoever (whether Insular,Parochialorotherwise) which are nowormayat any time be payable, charged orassessedonproperty or the owneroroccupierof property, but 'taxes' in this context does not include taxes imposedon the Landlord in respect ofthe yearly rentreserved by this Leaseor in respect of a disposalof its immediate reversion to this Lease.
   3. IN S URANCE

1. T o keep the Premises insuredor to procure that the Premises are insured with aninsurerapprovedby the Landlord (suchapprovalnottobeunreasonably withheld ordelayed) in the nameof the Tenant and the Landlord against loss ordamagebythe Insured Risks in the full replacement cost ofthePremises including coverfor the cost of demolition, shoringupandsite clearance, Architects', Surveyors' and other requisite professional advisers' fees in relation to the reinstatementof the Premises and third party andpublic liability risks and the loss of four years rent of the Premises.
2. T o payortoprocurethepaymentofthepremiumsforinsurancepromptlyas they becomedue and maintain in force the policies ofinsurance on the Premises.

4. T o produce to the Landlord a copy of the insurance policy whenever reasonably requested andthe receipt for the latest premiumorotherevidenceofrenewalandup-to-date details of the amountof cover.
5. N ot todo or omit to do anything wherebyany policy ofinsurance relating to the Premisesmaybecome void or voidable.

3.5 R E P AIR

3.5.1 F o l lowing the completion of the Development, well and substantially to repair (and where beyond economic repair to rebuild or renew), maintain, decorate and clean the Premises and to keep the same in good and substantial repair, (and if necessary as aforesaid rebuilt or renewed), maintained, decorated and in clean condition. PROVIDED ALWAYS that the Tenant shall not be obliged to rebuild or substantially refurbish the Hotel in the last ten (10) years of the Term unless it has been destroyed or substantially damaged by an Insured Risk.

8. A L T ERATIONS

1. N ot toerectany new buildingsor structures onthe Premises nor demolish nor removeany structure on the Premiseswithouttheconsentof the Landlord (suchconsentnotto be unreasonably withheld or delayed) PROVIDED ALWAYS that theTenantcan put up signage on the exterior ofthePremises and any building forming part thereof without thepriorconsent of the Landlord provided that the Tenant obtains any necessary consentunder the Planning Law.
2. N ot tomakeany material alterationsoradditionstoor affecting the structure or materially affecting the exterior appearance of the Premises without the consent of the Landlord (such consent not to be unreasonably withheld or delayed).

9. A L I ENATION

3.9.1 S ave by assignment of this Lease or sub-sub-letting or other arrangement permitted under the following provisions of this Clause 3.9 not to;

1. A s signorotherwise dispose of this Leaseorsub-sub-let the whole orany part of the Premises;or
2. Part with orsharepossessionor occupation ofthewholeofany part of the Premises;or
3. Grant to third parties any rights over or in the Premises.

3.9.2.1 Not to assign the Lease without the consent of the Landlord given by way of the participation of the Landlord in the relevant contract of assignment passed before the Royal Court which consent shall not be withheld or delayed in cases where the Tenant has established to the reasonable satisfaction of the Landlord that the assignee;

1. is s olvent and respectableproducingproperand substantial financial and otherreferences;and either
2. is o f sufficient financial standing proven to the satisfaction of the Landlord (acting reasonably) to enable it to dischargeall the obligations imposed upon theTenantby this Lease; or
3. p r o vides a guarantor or guarantors who are of sufficient financial standing proven to the satisfaction oftheLandlord (acting reasonably) to guaranteethedischargeof such obligations bythe intended assignee the termsof such guarantee to beasthe Landlord shall reasonably require provided that the Landlord shall not be obliged to accept more than three (3) guarantorsat any time who together dischargetherequirementof financial standing contained in this sub-clause.

3. In all cases of assignment the intended assignee will be required if the Landlord so demands to covenant directly with the Landlord in the relevant contract of assignment to perform all the covenants and conditions in this Lease and imposed upon the Tenant including the covenants contained in this Clause
   9. and without prejudice to the generality Clause 3.10 throughout the residue of the Term.
4. N ot to sub-sub-let or licence the whole or any part of the Premises without the consent of the Landlord to be given by the Landlord's participation as a party in the contract or agreement of sub-sub-lease or licence in the terms of the draft participation clause (or as near to it as may be reasonable in all the circumstances) which forms Schedule 6 and which consent shall not be withheld or delayed in cases where the sub-sub-lease or licence is of the whole of the Premises and the Tenant has established to the reasonable satisfaction of the Landlord that the sub-sub-tenant or licensee is or has entered into a management agreement with an internationally recognised international Four Star (which expression for the purposes of this clause 3.9.4 only may also include any higher grade) hotel operator or hotel management company or is a part of a chain or group that is an internationally recognised international Four Star hotel operator or hotel management company ("Four Star Hotel Operator") (save if a lesser grade than Four Star is applicable under Clause 3.10.2 in which event such lesser grade hotel operator or management company, chain or group shall apply) and the Tenant has;

1. E s ta blished tothereasonable satisfaction of the Landlord that;
   1. th e i ntended sub-sub-tenant or licensee is solvent and respectable;and
   2. is o f sufficient financial standing proven to the satisfaction of the Landlord (acting reasonably) to enable it to dischargeall the obligations imposed upon itby the sub-sub-leaseorlicence;or
   3. provides a guarantor or guarantors who are of sufficient financial standing proven to the satisfaction of the Landlord (acting reasonably) to guarantee to the Tenant the discharge of the obligations of the sub-sub-tenant or licensee under the sub-sub-lease or licence the terms of such guarantee to bein such termsastheLandlordshallreasonablyrequireprovided that the Landlord shall not be obliged to accept more than three (3) guarantors at any time who together discharge the requirementof financial standing contained in this sub-clause;or
   4. is and will remainthroughout the termof such sub-sub-lease a wholly owned subsidiary of the

Tenant.

2. P r o ducedto the Landlord full details of the proposedsub-sub-leaseor licence together with any other transactionancillarythereto;and

3. P r o duced to the Landlord a draft of the proposed sub-sub-lease or licence for the Landlord's commentand approval (which approvalshallnotbeunreasonably withheld or delayed).

3.9.8 E N F ORCEMENT OF SUB-SUB-LEASE

1. Not without the consentoftheLandlord(such consent not to beunreasonably withheld or delayed)to vary the terms or waive the benefit ofanycovenant on the part of a sub-tenantorlicenceeor condition contained in a sub-sub-leaseor licence of the Premises.
2. Not without the consentoftheLandlord(such consent not to beunreasonably withheld or delayed)to accept a surrenderofanysub-sub-leaseof the Premises.
3. D i l igently to enforce the covenants on the part of a sub-tenant or licencee and the conditions contained in a sub-sub-leaseofthe Premises and (if so required by the Landlord) to exercise bywayof enforcement any power of cancellation contained in a sub-sub-leaseorlicence.

10. U  SER

1. To use the Premises as a Four Star (or if the Tenant so desires, a higher grade)hotel (with not less than one hundredand ninety-three (193)bedrooms) and conference centre with ancillary facilities (which facilities mayinclude, but not be limited to restaurants, retail units,health complex, entertainment venueand ancillary support services, provided that there shall be nomore than two restaurantsor two retail units)operated by aninternationally recognised international operator andprovided that any health and leisure facilities shall beconductedprincipally for bona fide guests of the Hoteland will allow only a maximum of TwoHundred(200) subscriptions or club membershipsat any one time to persons whoare not guests at the Hotelandshallnotbemarketed or promotedintheIslandforthe purposes of attracting subscriptions ormembership from bona fide residents of the Island. PROVIDED ALWAYS that nothingin this clauseshall prevent the health and leisure facilities being promoted (in a manner consistent with the restrictions containedabove)in literature availablewithin the Premises to membersofthe public.  Any membership or subscription arrangements which areputinplaceinrespect of the health and leisure facilities shallbe bona fide membershiporsubscriptionarrangements which (i) in their substantive effect donotinanywayresemblearrangements for the use of facilities under which the facilities in question are available for use by the public atlargeand (ii) (without prejudice to the generality of (i) above) involve periodsofmembership which in allcases are ofnot less than twelve (12) Monthsunless terminated by membersorsubscriberson giving not less than one(1)Month's notice.
2. If at anytimeafterthe period oftwenty-five (25) years from the CommencementDate it is agreed by the Landlord andtheTenant that the useof the Hotelas a Four Star isnotviable the Hotelcanbe used as a

lower grade hotel provided it shall always be used as the highest grade possible in the economic environment

then current. In the event that the Landlord and the Tenant cannot agree whether or not the use of the Hotel as a Four Star hotel is or is not viable or the grade at which the Hotel shall be used the matter shall be referred to arbitration under Clause 6.

3. To open the Hotelforbusinessas soon as is reasonably practicable following the Certificate ofPractical Completion Dateandat all times thereafter to keep the Hotelopen for business and toconductthe Hotel Business from the Hotelin such a wayreasonablyas to maximise the Room Turnover as defined in Schedule 3.  PROVIDED ALWAYS that notwithstanding the provisionsof this Clause the Hotelor such part or parts thereof as may be appropriate can close during periods of refurbishment, re- development,repairorasrequiredbyanycompetentauthorityor for anyotherreasonbeyondthe control oftheTenant.

11. R E S TRICTIONSAFFECTINGUSEOFTHEPREMISES

1. Not touse the Premises for any noxious, noisy or offensive tradeorbusinessnor for any illegal or immoralactorpurpose.
2. Not to do in or upon the Premises anything which may be or grow to be a nuisance, annoyance, disturbance, inconvenience ordamage to the Landlordor to the owners, tenants and occupiers of adjoining andneighbouringproperties.

12. C O M PLIANCEWITHSTATUTESETC.

1. To complyin all respects with all statutes for the time being in forceandrequirementsofanycompetent authority relatingto the Premisesor anything doneinoron them bytheTenant, and to indemnifythe Landlord against liability byreason of failure tocomply with them.
2. To comply with all requirementsunderany present or future statute, order,by-lawor regulation as to the use or occupationof, or otherwiseconcerning, the Premises.
3. To execute with all due diligence all works to thePremises for which the Tenantis liable in accordance with this Clause3.12.
4. If the Tenant does notcomply with this Clause 3.12, topermittheLandlord after reasonable notice to enter the Premises to carry out such works, and to indemnify the Landlord on demand for the reasonable expense ofsodoing (including surveyors'andotherprofessionaladvisers'fees) with Interest on such expense, or so much of it as may from time to time remain unpaid, from the date ofexpenditure

until payment by the Tenant to the Landlord, such moneys to be recoverable as rent in arrear. The Landlord in exercising such rights shall do so on the terms set out in sub-clauses (a) to (j) inclusive of paragraph 3 (B) of Schedule 2.

5. To give full particulars to the Landlord of any notice or proposal for a notice, or order or proposal for an order, made, given or issued to the Tenant under or by virtue of any statute or regulation within ten
   10. WorkingDaysof the receipt ofany such bytheTenant,and if so requiredbythe Landlord to produce the notice, orderor proposal for a noticeororderto the Landlord.
6. F o r thwith to take all necessary steps to comply with any such notice or order.
7. At the request and cost of the Landlord, to make or join with the Landlord in making such objections or representations against or in respect of any proposal for such a notice or order as the Landlord (acting reasonably) may consider expedient.

13. P L A NNINGPERMISSIONS

1. Not without the consent of the Landlord tomakeany application under the Planning Law to develop the Premises (which consent shall notbeunreasonably withheld with regard to works permitted by the Landlord pursuant to Clause 3.8 ).
2. Not without the consentoftheLandlord (which fortheavoidanceof any doubt will beat its absolute discretion) to makeany application for the changeof use of the Premises.
   3. F o r thwith to give to the Landlord full particulars in writing of the grant of anypermissionunder the Planning Law.

3.17 N O T IFY LANDLORD OF MATTERS ADVERSE TO ITS INTEREST

F o r th w ith upon the Tenant having become aware of the happening of any occurrence or upon receipt of

information as to anything which may to the Tenant's knowledge be capable of materially adversely affecting the Landlord's interest in the Premises or in the event of the Premises becoming damaged to any material extent or destroyed by any cause to give full details to the Landlord.

3.19 NOT TO CAUSE LANDLORD TO BREACH HEAD LEASE

T h e T  enant shall not do omit suffer or permit to be done in at or in relation to the Premises anything which would or might cause the Landlord to be in breach of the Head Lease and the Tenant shall

indemnify the Landlord from and against all actions proceedings claims damages costs expenses or losses arising

directly or indirectly from anything done omitted suffered or permitted by the Tenant which has such effect.