CIFCO forward plans on table after £100million spend
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Community leaders are set to discuss controversial property investment company CIFCO’s strategy for the next 12 months following its completion of its £100million acquisition programme.
CIFCO - which is wholly owned by Babergh and Mid Suffolk District Councils - says it has brought in more than £5.4m so far to help fund services and projects for residents.
The policy is said by some council leaders to be highly necessary to help future finances, but some councillors have criticised the uncertainty and unpredictability of having so much money tied to the property market.
Over the next few weeks CIFCO will present its fourth annual business plan to councillors, detailing its performance over the last year and its strategy for 2021/22.
Last year alone, CIFCO brought in £2.29m to be ploughed back into services for residents, with the net income produced described as “a significant contribution to the councils’ budgets”.
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The company has spent £100m on 21 properties, a range of commercial uses, including industrial, retail and office space to minimise exposure to any one sector, tenant or location, a long-term investment, creating a legacy for future generations generate a return to be ploughed back into council services to offset reductions in funding from central government.
CIFCO chairman Sir Christopher Haworth said: “This year has been an extremely challenging one for all of us, and the pandemic has been difficult for some of our occupiers.
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"Some tenants have been lost and we have worked hard with others, as a responsible landlord, to ensure their continuing ability to trade successfully.
"Overall, the portfolio has held up well, due to the work of the board and professional team, the quality of the assets and diversity of the portfolio. Rent collection on a quarterly basis has been well above industry norms and the company has continued to make full debt repayment to our shareholders.”
David Busby, cabinet member for assets and investments for Babergh , said: “The sensible approach proposed for the next 12 months of trading means that despite the pandemic, we can look forward to further vital funding to help offset the financial pressure we are under in delivering services to our residents.”
The CIFCO accounts for the year ending March 31, 2021 show a paper loss of £4.4m made up of expected one-off acquisition costs of around £2m (including stamp duty and fees) as well as a re-adjustment on the value of the portfolio as whole.
However, this loss would only be realised if the investments were sold in the current market. The rental income is not affected.
Peter Gould, cabinet member for assets and investments for Mid Suffolk, said: "As with any investment, there will be initial, one-off costs and over time property values will fluctuate.
"But the aim of our investment through CIFCO is to deliver a valuable source of income for the long term, to benefit our residents and communities – and CIFCO is doing exactly that, generating more than £5m so far for our districts.”