Babergh and Mid Suffolk District Council’s property investment management company, CIFCO Capital Ltd, has made six acquisitions in its first year which are generating an annual return of £1.4 million.
Each of the two councils has invested £25 million and has a 50% shareholding in CIFCO, which reports to two holding companies, Babergh District Council (Suffolk Holdings) and Mid Suffolk District Council (Suffolk Holdings).
A report going to Joint Overview and Scrutiny Committee shows that at the end of the first year’s trading, a total of £23,572,000 has been invested by CIFCO in six assets, generating a total of £1,410,466 in annual rental income.
Although the financial details are commercially sensitive, the report shows that 36 out of 46 potential assets were rejected. CIFCO submitted offers on the other 10 assets and acquired six.
CIFCO is on target to invest the full £50 million six months ahead of schedule. Once fully invested, the entire portfolio is expected to generate around £2.8 million a year.
The report also included details of the CIFCO board, which comprises two councillors Nick Ridley from Babergh District Council and Derrick Haley from Mid Suffolk District Council, plus three industry expert directors, not linked to the councils, who have a background in investment banking and property investments.
Councillor Ridley, who is also chair of Babergh District Council (Suffolk Holdings), said: “CIFCO’s portfolio has been set up in such a way as to minimise risks by spreading our investments across sectors and industries. It is paramount to get the best possible return on our investments for the councils, which is why every potential asset is thoroughly scrutinised and CIFCO has only gone ahead with a small number of potential acquisitions during its first year.”
Councillor Gerard Brewster, who is chair of Mid Suffolk District Council (Suffolk Holdings), said: “CIFCO has now been trading for a year and is already generating a significant amount of income from a growing portfolio of investments, which is reinvested into council services, replacing previous funding from the Government. We are on target to invest the full amount six months ahead of schedule.”