Business centre boosts councils' income in Babergh & Mid Suffolk
It should generate £300k in rent a year.
Last updated 20th Jan 2021
Property investment company CIFCO Capital Ltd has invested £5.7m in a Basingstoke business centre, so future rental income can be invested back into Babergh and Mid Suffolk's council services.
CIFCO, which is wholly owned by Babergh and Mid Suffolk District Councils, has purchased the business centre, on Winchester Road. The property is set to bring in more than £300k in annual rent from its 14 established business tenants.
The purchase is the latest in CIFCO's acquisition programme, with approximately £85m out of the £100m agreed by councillors invested so far. The remaining funds are due to be invested by the end of March this year- six months earlier than the target agreed by councillors at both Mid Suffolk and Babergh District Councils last year.
The latest acquisitions bring the total number of properties in the CIFCO portfolio up to 18- and further diversifies its range of tenants to minimise exposure to any one sector, tenant or location.
CIFCO was established jointly by Babergh and Mid Suffolk Councils in 2017 to generate income through property investment to offset reductions in funding from central Government. Since its launch, CIFCO has brought in almost £4m of net income to the Councils, which has been reinvested into council services.
The returns received from CIFCO allow the councils to meet loan repayments, with extra income on top then ploughed back into council services - at a time when the coronavirus pandemic has significantly affected other 'traditional' income streams.
The virus has affected almost all businesses, however the diverse nature of its portfolio has mitigated the risks and rent collection levels remain above industry averages- with debt repayments to the Councils continuing to be made in full.
Babergh District Council leader Cllr John Ward said:
"The income we receive from the CIFCO portfolio is helping us to weather the storm through COVID-19, meaning we can continue to invest in local regeneration and meet the needs of our residents. As our draft budget for 2021/22 shows, without this long-term financial support, the council could be forced to make cuts to services at a time when our residents need us most."
Mid Suffolk District Council leader Cllr Suzie Morley said:
"CIFCO is continuing to make careful decisions about the properties it invests in, ensuring that there is a balance of risk with all its acquisitions: delivering a long-term income to support our council's finances now - and building a portfolio of commercial property as a valuable investment for our residents and communities for years to come."