Suffolk council spends £5.5m on trade park - in Coventry
- Credit: Google Maps
A Suffolk council has continued to invest taxpayer cash in property elsewhere in the country - by snapping up a trade park 120 miles away in Coventry.
However, despite criticism from opponents who say "people will resent their money being sent to Coventry”, Mid Suffolk and Babergh district councils say the move will bring in £300,000 a year in rent - money that can be ploughed back into public services at home.
The Pilot Trade Centre in Coventry is 19th property added to the portfolio of CIFCO Capital Ltd, the councils' property investment company.
In January, it spent £5.7m on the Basingstoke Business Centre, which is 140 miles away.
Its portfolio also includes a building housing a hair salon and GP surgery in Nottingham city centre and West Park House in Southampton, which is let to a law firm - as well as sites housing an M&S and a Wagamama restaurant.
The purchase has been made using £100m of taxpayer cash, with £15m more of commercial investments due to be agreed before March 31.
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CIFCO's model of borrowing public money and investing it in commercial property is not unique to Suffolk – but it is controversial.
Reacting to the latest purchase in Coventry, John Matthissen - Green and Liberal Democrat shadow portfolio holder for investments at Mid Suffolk council - said: "I am sure the people of Coventry will welcome this investment in their local economy.
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"I know, however, from many comments from constituents and others locally that Mid Suffolk people will resent their money being 'sent to Coventry'."
But Babergh District Council leader John Ward said: “The income that CIFCO provides is helping us to weather this global crisis and continue to provide the essential services residents rely upon.
“Our draft budget for 2021-22 reflects some of the difficult decisions we face, but without the income we receive from CIFCO, we would be in a far worse position.”
The firm’s 2019/20 accounts revealed “significant” losses, with CIFCO losing £3.5m in its financial year.
That was partly because Covid-19 has hit the value of their investments.
Even before then, it had been losing money - aggregate losses in net income (money left over after debt and income is repaid to the councils) stood at £8m since CIFCO’s 2017 launch, latest accounts showed.
CIFCO puts this down to the costs of buying properties, including stamp duty and fees.
Mid Suffolk Liberal Democrat leader John Field added: “It’s difficult to see why the cabinet persist in the view this company is making money. When are they going to stop?”
However, the councils say CIFCO has brought in £4.5m of net income to both authorities - £1.5m of that the first three quarters of this year alone, at a time when the coronavirus pandemic has significantly affected other ‘traditional’ income streams.
Mid Suffolk District Council leader Suzie Morley said: “The virus has affected almost every business, but it is testament to CIFCO’s careful risk management and expertise in balancing its portfolio, that rent collection levels remain above industry averages and repayments continue to be made in full.
“The income from CIFCO’s completed portfolio will be invaluable in supporting the district’s post-Covid recovery, while its portfolio provides a legacy of properties for the benefit of residents for years to come.”