CIFCO acquires further properties to generate income for local councils

Property investment company CIFCO Capital Ltd has purchased three further properties this month totalling almost £10.5 million, to bring in future income for councils to invest back into local communities.

CIFCO, which is wholly owned by Babergh and Mid Suffolk District Councils, has purchased two neighbouring warehouse buildings on Cosgrove Way Industrial Estate, in Luton, for £2.475m, plus an office building in Epsom town centre, in Upper High Street, for £7.97m.

The industrial units are both let to building supplies company Wolseley UK Ltd, while the office building is home to Epsom and St Helier University Hospitals NHS Trust on a long-term lease – ensuring low risk returns for the councils at a time when Covid-19 is significantly affecting other traditional income streams.

The purchases are the latest in CIFCO’s acquisition programme, with approximately £70m out of the £100m agreed by councillors invested so far.  Further acquisitions are expected over coming weeks and months with the remaining funds due to be invested in full by October 2021 – as agreed by councillors at both Mid Suffolk and Babergh District Councils earlier this 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, almost £3m 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, and CIFCO is not immune, however the diverse nature of its portfolio has mitigated the risks, and rent collection levels remain above industry averages.

Babergh District Council leader John Ward said: “The income we receive from the CIFCO portfolio can already be seen within our districts, enabling us to invest in local regeneration and in meeting the needs of our residents. CIFCO is continuing to weather the storm through the careful selection of the properties it invests in – only progressing those that best meet the investment criteria and most benefit the balance and risk profile of the portfolio as a whole.”

Mid Suffolk District Council leader Suzie Morley said: “Like all local authorities, we are under unprecedented financial pressure to deliver services to our residents. The aim of our investment through CIFCO is to deliver a source of income for the long term rather than eventually being forced to make reductions to our services. Through these carefully considered investments, CIFCO will continue to bring in much-needed income to support our district’s recovery post-Covid.”

Pictured above is Upper High Street, in Epsom.

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