Growth of council’s investment arm generates £6.7m profit

The property arm of Babergh and Mid Suffolk District Councils company CIFCO made a £6.7 million profit last year and generated £3.7m in net income for the councils to plough back into services, councillors were told this week.

This means that since CIFCO Capital Ltd was established jointly by the two councils in 2017, it has not only maintained its debt repayments in full but also generated net income last year of £1.7m for Mid Suffolk and £2m for Babergh, bringing the total net income received by the councils by the end of the last financial year to £9.25m.

In reports presented to Babergh District Council on Tuesday, October 25 and Mid Suffolk District Council last night (Thursday, October 27), councillors heard how the company’s accounts for 2021/22 showed a £10m increase in the value of the company’s portfolio of properties – with the portfolio valued at £94m.

The last financial year marks the first full year of trading for CIFCO since completing the acquisition phase of the portfolio, which is now comprised of 21 properties, based in the eastern region and beyond, and split across industrial, retail and office sectors, effectively balancing risk.

Despite fears that the pandemic would leave CIFCO exposed, the company cites rigorous risk management and a diverse portfolio for helping them weather the impact of Covid and collect a higher proportion of rent from their tenants than the industry average – with the company now realising £5.3m per annum in rental income and low void rates across the portfolio, with vacant units quickly re-let.

CIFCO Chairman Sir Christopher Haworth said: “The ongoing recovery from the Covid pandemic, has certainly brought challenges – and there’s no doubt this will continue with the current market uncertainty, but we continue to work with our tenants to ease any ongoing problems and this is reflected in strong quarterly rental recovery, well in excess of the market norm. We have a robust portfolio and business plan in place that will see us continue to generate income for our shareholders, as well as identifying opportunities to improve the quality and sustainability of our properties – not only creating rental income growth but also working hard continually to reduce the environmental impact of our portfolio.”

Capital investment in the portfolio last year included a £460,000 refurbishment of units at an industrial estate in Harlow, with installation of solar panels to improve both the value of the asset and its sustainability, with CIFCO committed to further enhancements across the portfolio.

Councillors on Babergh and Mid Suffolk’s joint Overview and Scrutiny committee reviewing CIFCO’s performance and business plan back in June agreed unanimously that it was robust, with Babergh District Council approving next year’s plan by 15 votes for and 1 abstention on Tuesday, and Mid Suffolk District Council approving it by 16 votes for and 15 against last night. Minutes and recorded livestreams of all meetings are available on the councils’ website.

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