Council property investment company posts £3.5m loss

A property investment company set up by Babergh and Mid Suffolk district councils has posted a £3.5m loss for the last financial year.

CIFCO Capital set up by the two local authorities in 2017 to generate income through property investment, which could then ploughed back into council services.

Councillors are now being asked to consider CIFCO’s performance and business plan for 2020/21 at full council meetings next month.

CIFCO accounts for the year ending March 31 2020 show a loss of £3.5m which according to the council is made up of one-off acquisition costs for the two new assets, as well as a re-adjustment on the value of the portfolio as whole.

This loss would only be realised if the investments were sold in the current market.

Despite any fluctuations in the value, the council says these are long terms investments which continue to deliver regular rental income.

Over the last 12 months, CIFCO has acquired two additional properties taking the total number in the portfolio up to 14, located largely in the east of England.

And through CIFCO, the councils have benefitted from £1.633m of net income after costs in 2019/20.

The councils said this is the equivalent to 10% of the local authorities’ annual staff costs or a 13.5% increase in council tax.

‘The impact of Covid-19 has been felt up and down the country and while CIFCO is weathering the storm, we are aware of the demands in the current economic climate,’ said CIFCO chairman, Sir Christopher Haworth.

‘We are closely monitoring CIFCO’s performance and while we predict the next quarter to be more challenging, we still expect rents received to exceed any borrowing costs that need to be covered by the councils.

‘Our business plan is setting the parameters for investment over the next 12 months meaning we can move swiftly, invest wisely and continue to bring in income for the councils to support service delivery and aid the districts’ recovery post-COVID.’

Photo Credit – Geralt (Pixabay)