Councils’ commercial property arm makes £6m profit in 2021/22
Babergh and Mid Suffolk’s commercial property company CIFCO made a £6m profit last year – generating £3.75m in net income for the councils to plough back into services, according to a report published this week.
This means that since CIFCO Capital Ltd was established jointly by Babergh and Mid Suffolk District Councils in 2017, it has not only maintained its debt repayments in full but also generated an additional £9m in net income for the authorities.
In a report going before the councils’ joint overview and scrutiny committee next week, the company’s draft accounts for 2021/22 also shows a £10m increase in the value of company’s portfolio of properties – more than £3m above their original net purchase price.
The last financial year marks the first full year of trading for CIFCO since completing the acquisition phase of the portfolio, which now comprises of 21 properties, split across industrial, retail and office sectors, and based in the eastern region and beyond, in order to manage risk.
Despite fears that the pandemic would leave CIFCO exposed, the company cites rigorous risk management and a diverse portfolio for helping them weather the impact of Covid and collect a higher proportion of rent from their tenants than the current industry average.
There has been strong growth in the industrial sector, and although there is still some uncertainty in the office sector, several vacant units across the portfolio have already been re-let.
CIFCO Chairman Sir Christopher Haworth said:
“The last financial year has seen the beginning of the return to normality, following the unprecedented conditions of the previous year due to the pandemic. We have continued to work with our tenants to ease any ongoing problems and this has been reflected in strong quarterly rental recovery, well in excess of the market norm.
“A key focus for the Board during the year has been to identify opportunities to improve the quality of our properties, to create rental income growth but particularly to improve the sustainability credentials of the portfolio.”
This has included the £460,000 refurbishment of units at an industrial estate in Harlow, including the installation of solar panels.
The Board’s focus for the coming year will be on increasing rental income, and further improvements to properties within the portfolio, including carbon-reduction and energy-saving measures where possible.
Babergh District Council cabinet member for assets and investments, Cllr David Busby said:
“CIFCO continues to generate money for the councils – providing steady and much needed income for the benefit of both councils and our residents.
“Our communities are facing a cost-of-living crisis and need our services and help now more than ever. CIFCO is bringing in millions to help us deliver our services without reductions or cuts, and without putting any further financial burden on our residents. The councils showed courage and ambition in creating CIFCO in the first place – and our faith in the expertise and prudency of the CIFCO Board is now paying dividends.”
Mid Suffolk District Council cabinet member for assets and investments, Cllr Peter Gould said:
“It’s great to see CIFCO bringing in valuable, regular income to the council which, in turn, helps us to support our residents – enabling us to invest in local regeneration, economic growth and community support. As well as generating net income now, these properties also provide a legacy for future generations, and I am delighted to see the investment that CIFCO is now starting to make in environmental improvements to the portfolio.”
Following Joint Overview and Scrutiny, CIFCO’s draft business trading and performance report will then go before both Full Councils next month – Babergh District Council on July 19 and Mid Suffolk District Council on July 21.