Council establishes a property investment portfolio
Southampton City Council is adopting a new commercial approach by establishing a property investment portfolio. Like many other councils, we will look to underpin our financial security by making investments that will generate profits that can be used to reduce the financial impact of some of the ongoing budget savings.
Investing in commercial property offers us an independent stream of income that does not have any negative effect on any of the services that the council already provides.
So far we have secured three properties with combined deals worth £20.1m. These include two retail warehouse properties in Southampton on Winchester Road, currently occupied by Wickes and Halfords, and a modern office building in Cambridge with technology giants Nokia and Virgin Media Ltd already in place as long-term tenants. The existing businesses will be unaffected by the change in commercial landlord. Plans for further property investments are already being considered with more deals expected to be completed in the coming months.
Leader of Southampton City Council, Councillor Simon Letts, said: “Borrowing rates are currently low which means the council can use fixed interest loans to strengthen our property investment portfolio. We’re investing money in long term commercial investments such as the freehold of the Cambridge and Southampton based properties.
“The money we receive in rent adequately covers the money we are borrowing, which also provides a profit which we will use to support some council services.
“It is essential in these austere times that we invest public money prudently and it makes good business sense for us to look for new ways to generate much needed income for the council.”