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Babergh and Mid Suffolk’s commercial property investment company CIFCO continues to generate money to be ploughed back into the districts, reports published this week show – with more than £1.26m in net income raised last year.
This means that CIFCO Capital Ltd has now generated a net income of more than £12m for Babergh and Mid Suffolk District Councils, since being established jointly by councils in 2017.
During previous administrations, the councils borrowed a total of £99.2m to invest in its commercial property portfolio. This now comprises of 22 properties with 83 tenants, based mainly in the eastern region, strategically split across industrial, retail and office sectors in order to balance risk.
The cost of the loan repayments to the councils is then covered by income received from CIFCO, with further net income on top making a regular and significant contribution to the councils’ finances.
A report going before the councils’ joint Overview and Scrutiny Committee later this month, shows how high inflation and interest rate rises have hit commercial property values nationwide. As a result, the value of the CIFCO portfolio has decreased 2.58% since March 2023. However, the report also details how CIFCO is outperforming the rest of the market – with rental arrears consistently below 5% and empty properties representing just 3.4% of the portfolio compared to a market benchmark of 8.3%, thanks to a combination of company expertise, and the quality and diversity of its assets.
CIFCO is also investing in the reducing the environmental impact of its portfolio, with 50% of its properties now holding an EPC rating of C or above – and it is on track to meet its target of ensuring all properties have a C rating or above by 2027.
CIFCO chairman, Sir Christopher Haworth, said:
Cllr John Ward, cabinet member for finance, assets and investments at Babergh District Council, said:
Although CIFCO, as the councils’ commercial property arm, is set up specifically to generate revenue for the councils, both Babergh and Mid Suffolk also invest directly in property within the districts, to help regenerate towns and communities and to provide social housing.
Previous acquisitions in Mid Suffolk have included vacant units in Stowmarket town centre, including the former Aldi unit, which is now PureGym, and the former NatWest, now leased to the John Peel Centre. It has also invested in Gateway 14 in Stowmarket and the redevelopment of its former council offices in Needham Market delivering affordable and market homes.
Examples of acquisitions within Babergh include Borehamgate Shopping Centre, employment land in Hadleigh and South Suffolk Business Centre as well as parts of the Chilton Industrial Estate in Sudbury.
The councils have also built or acquired 624 new council houses in the districts over the last eight years.
Cllr Richard Winch, cabinet member for housing and property at Mid Suffolk District Council said:
The report goes before joint Overview and Scrutiny Committee on May 13 ahead of going both Full Councils next month.