A mainland commercial property portfolio owned by the Isle of Wight council will make the authority more than £1.8 million a year.
Figures revealed to the authority’s audit committee on Monday provide an update on the Isle of Wight council’s £35.1 million commercial property holdings — stretching from Southampton up to Manchester.
Some of the council’s tenants are big-name brands like Stagecoach and online fashion retailer, In The Style.
Going by current market estimations, the council says, should the four properties be sold now, they would make a profit of £6.25 million, less the costs of sales.
18 per cent growth
The commercial property acquisition fund — the authority’s name for its mainland property portfolio — increased by nearly 18 per cent in the year between 31st March 2021 and 31st March 2022.
The council has its properties valued at the end of every financial year and sees how much their worth has grown.
Council pocketed £902,000
With current leases in place, the council can make £1,821,560 a year from the rent of all the units, but that could increase as contract negotiations for a couple of businesses are due later this year.
In the 2021/22 financial year, the Isle of Wight council earnt £1.64 million from rent, but had to pay debt costs of £738,000 meaning the authority pocketed £902,000.
Borrowed to purchase property
The authority was able to borrow up to £100 million to buy property, but the government funding has since stopped, and the government is now cracking down on local authorities further investing in commercial properties as it is seen as taking risks with the public money.
Demand for industrial space however, has hit a record high, the council reports, following from a growing trend last year and has led to unprecedented rates of retail growth over the past 12 months.
No new properties
The investment strategy has now settled into a management phase, the council says and is not looking to acquire any more properties on the mainland.
The council says the mainland portfolio provides a significant income stream that cannot be quickly replicated on the Island, but Island-based opportunities are evaluated to ensure investment is not done at the expense of the Island.
This article is from the BBC’s LDRS (Local Democracy Reporter Service) scheme, which News OnTheWight is taking part in. Some alterations and additions may have been made by OnTheWight. Ed
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