Last week it was revealed that Isle of Wight council’s £35m commercial property ownership off the Island has been profitable over the last year, despite the Coronavirus pandemic.
Cllr Stuart Hutchinson, deputy leader and cabinet member for resources, spoke about the council’s borrowing for commercial property investments – intended as a way of propping up their income.
Investigated tenants in property hot spots
Cllr Hutchinson said,
“One of the decisions we took was to be extremely cautious with that money because we didn’t want to be in a position of getting a loss rather than a profit.
“We chose investments in areas which are property hot spots. Meaning there is little chance of a void.
“We also investigated all the tenants in those properties to see that they were all long-term sustainable, profitable companies and that we had good sound leases.
Hutchinson: “We’re actually in a profit situation”
The cabinet member explained the IWC was in a profit situation from the investments made. He explained,
“Taking that approach has proved effective – we haven’t had them revalued recently, so you might see a dip in its capital value because of the pandemic but generally it’s holding up – and we have been fortunate to bring in revenue every year from the rents that we have been charging and that is ongoing, so we’re actually in a profit situation from those investments.”
Why not invest on the Island?
Looking closer to home, Cllr Hutchinson spoke about why the IWC had not invested more on the Island,
“We are constantly asked why don’t you invest on the Isle of Wight? Much as we’d like it to be, the Isle of Wight is not a property hotspot.
“We have investigated in a couple of opportunities on the Island, and decided not to invest, and one of them where we subsequently said ‘no that’s not going to be a sound investment for us’ has proven to be exactly the case.”
More investment unlikely
Cllr Hutchinson said the Government has screwed down the opportunity for investment so tightly that although they have a strategy of allowing up to £100m investment, they’ve used about £35m, the likelihood of them being able to earn any more from that is zero at the moment.
News OnTheWight has asked the IWC for details of all the investments as part of that £35m portfolio and will update readers once we hear back.
