Council property business seals deal on city centre GP surgery and hairdresser
- Credit: Archant
A Suffolk local authority’s investment arm has snapped up its 15th property for £2.9m.
Property investment company CIFCO Capital Ltd – which is wholly owned by Babergh and Mid Suffolk District Councils – has acquired a building housing a GPs’ practice and hairdressing salon in Nottingham city centre.
The purchase of the Upper Parliament Street site will provide “a healthy return” for council coffers, the councils said.
MORE – Fourfold rise in profit warnings across East of England as firms buckle under pandemic strainThe purchase brings the number of properties in the CIFCO portfolio to 15.
CIFCO’s aim is to provide a range of tenants in order to minimise exposure to any one sector, tenant or location – but properties are largely based in the East of England.
The two councils jointly launched CIFCO in 2017 to generate income through property investment to be ploughed back into council services in the districts, thereby offsetting central government cuts in funding – but there were fears the coronavirus pandemic might derail the project.
Since its launch, nearly £3m has been reinvested into council services.
Rental from the new acquisition will increase the £1.633m net income the councils received in 2019/20 for their existing properties.
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This equates to 10% of the councils’ annual staff costs or a 13.5% increase in council tax.
The returns allow the councils to meet loan repayments while providing extra income on top to plough back into council services, said Babergh and Mid Suffolk Councils.
“Despite fears that the coronavirus pandemic would leave CIFCO exposed, the company has succeeded in making all repayments to date in full, citing rigorous risk management and a diverse portfolio for helping them collect a higher proportion of rent from their tenants than the current industry average,” they added.
CIFCO is due to present its third annual business plan to councillors at full council meetings on Tuesday, July 21 at Babergh and Thursday, July 23, at Mid Suffolk, detailing its performance over the last year and its investment strategy for the forthcoming year – with industrial and office space as the main targets for investment.
The plan was endorsed by the cross-party Joint Overview and Scrutiny committee last month.
CIFCO chairman Sir Christopher Haworth said: “Our business plan is setting the parameters for investment over the next 12 months meaning we can move swiftly, invest wisely and continue to bring in income for the councils to support service delivery and aid the districts’ recovery post-COVID.”
Mid Suffolk Green group has reacted angrily to CIFCO’s latest purchase, which it claims puts council taxpayers at risk through exposure to uncertain markets and tens of millions in borrowed funds.
Councillor Rachel Eburne said: “The government has made clear that councils should stop this activity altogether, not just the use of Public Works Loan Board borrowing.
“Already CIFCO has racked up losses in excess of £6m and this new investment puts local council taxpayers at further risk. The public are behind us: the majority of our post bags are from people concerned about the irresponsibility of the council with these investments. ”
Fellow councillor Andrew Stringer branded it an “irresponsible distraction”, and argued councillors should not be diverted from important work at a difficult time.
“We need to concentrate our focus on showing leadership and helping local people. This shameless purchase will be seen by the public as subverting the motions to suspend further acquisitions.
He added: “Investment in the health service infrastructure is needed here in Mid Suffolk rather than more than 130 miles away. Stowmarket needs another health centre.”