Six months on from the last report of how profitable the Isle of Wight council’s mainland investments are, their Audit Committee will be receiving an update at the end of the month.
Papers for the meeting on 27th September reveal that across four mainland investments, the net return (including debt costs and service charges) for 2020/21 was £0.928m.
£35.1m investment
Acquired in 2018, Isle of Wight council spent around £35.1 million on the four investments outlined below.
This included all the costs associated with purchase; Stamp Duty Land Tax, land registry fees, surveyor’s fees, legal expenses, due diligence and agreed costs to Portsmouth City Council (PCC).
The properties
The four investments:
- Olympic Court, Salford, Greater Manchester – acquired March 2018 for £10.8m;
- Network Oxford – acquired October 2018 for £10m;
- Access 4:20, Aylesford, Kent – acquired April 2018 for £8.6m; and
- Nursling Industrial Estate, Southampton – acquired November 2018 for £3.5m.
Consistent income
Papers for the Audit Committee state that rental income across the four investments has been consistent. Although some tenants delayed payment in July 2020, all rent has now been collected and no tenants are in arrears.
The eight tenants currently in occupation are:
- Salford, Greater Manchester: In The Style Fashion Ltd – Mettler-Toledo Safeline Ltd
- Oxford: Nedschroef Ltd – Stagecoach Group
- Aylesford, Kent: Betterstore Self Storage Properties III Ltd – Eriks Industrial Services Ltd – Go Installations Ltd – One unit is vacant
- Nursling, Southampton: Metabo UK Ltd
The council is not looking to acquire any further investment properties and will continue to hold and actively manage these assets in the short to medium term.
Costs incurred
The council incurred costs of £0.073m relating to service charges which includes the management costs agreed under the strategic partnership with PCC of £0.06m and services provided by managing agents of £0.013m.
Other operating costs incurred were £0.046m. The council incurred debt costs of £0.738m and contributed towards the commercial property reserve of £0.024m. This reserve will be used to fund potential lost rental income and future property related costs.
Income from investments
The papers reveal the cumulative net income (excluding debt costs) to the council for the year to 31st March 2021 amounts to £1.666m, which represents income of £1.785m less costs of £0.119m.
For the period between 1st April 2020 and 31st March 2021 this represents a return of 4.74 per cent.
The net return (including debt costs and service charges) for 2020/21 prior to the reserve transfer was £0.928m, which represents a net yield of 2.64 per cent.
Why not invest on the Island?
Earlier this year before the election, the then-Conservative Cabinet member for resources, Stuart 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.”
