After spending over £35million buying commercial properties on the mainland, the Isle of Wight Council has decided not to get anymore.
The commercial property acquisition strategy was approved by the council in September 2017, with a borrowed government fund of £100million to buy investment assets.
From 2018, the council purchased 4 industrial estates — in Salford, Oxford, Kent and Southampton — with units to let, at a total cost of £35.1million. The estates each cost between £3.5million (Southampton) and £10.8million (Salford).
Tenants across the property portfolio include In The Style, an online fashion company, Stagecoach UK and Metabo UK.
Rental income from the tenants received by the council in the 2020/21 financial year was nearly £1.8million. On top of this, property values have increased, the council say, anywhere from 2% to 14% since they were acquired in 2018.
In a report going to the council’s audit committee next week, the Isle of Wight Council has said now, however, it is no longer looking to acquire more investments properties. The funding for the property acquisitions has also been withdrawn, with the government stopping the scheme for local authorities to find and fund investments.
Officers said with a stop of acquisition activity, the immediate focus for the portfolio was to manage the impact of the coronavirus pandemic on existing assets and tenants, with a ‘continued focus’ on cashflow security and debt management.
The demand for space, however, hit a record high in 2020, with the pandemic stimulating the warehouse space, with increased online retail activity encouraging e-commerce businesses to expand.
The strategy was part of the council’s medium-term financial strategy to generate income which the council is trying to find more ways to do, following the impact of COVID.
How is this able to happen?rename Island of Corruptness.
WTF, this isn’t investment for the island is it…. so the council had put up our council tax to buy mainland estates, you couldn’t make it up. Corrupt is to small a word for this….. Sell it all and put the money into the Island for Christ sake, is it that complicated?
You can’t make it up! What about investment into island infrastructure, reinvestment in the high streets, our sea fronts? The island has been raped of elegance and yet the Isle of Wight Council has the audacity to invest on the mainland! I would love to see where the profits are reinvested or are they lining some Councillor’s deep pockets? Makes me angry.
What was the interest rate on the loan
Looks to me like all the pieces are in place for a finger burning session. When they try to cash in these investments and they turn out to be scrap, the Officers/Councillors responsible will have moved on. A different batch of Officers/Councillors will say it wasn’t on ‘their watch’ but we’ll have a review and produce a waffle document called ‘Lessons Learned’ so it can’t happen again. Yawn!
Was the funding ringfenced for investment opportunities? What are the repayments? £1.8m income per year sounds good, but what is the balance after costs on these investments? Some more detail would complete this story.
Okay, so if the council are , or could be earning a profit, will our council tax drop back down..?? Not bloody likely…
Unbelievable. I don’t think we are allowed to make posts with only one word, but I honestly can’t think of anything else to say. Speechless.
So £100 million was granted , but only £35 million has been spent. And the rest of it is/went where? Anyone see the issue here?
This is fairly normal really, its supposed to be long term income generation and done by almost all councils.
Would be better if they were island properties, but its not supposed to matter as its for income, not assistance.
In fact, arguably its better for it not to be the island as then another island firm (potentially) will benefit from being the landlord of our own assets, plus an income from external assets.