After spending over £35million buying commercial properties on the mainland, the Isle of Wight Council has decided not to get anymore.
The commercial property acquisition strategy was approved by the council in September 2017, with a borrowed government fund of £100million to buy investment assets.
From 2018, the council purchased 4 industrial estates — in Salford, Oxford, Kent and Southampton — with units to let, at a total cost of £35.1million. The estates each cost between £3.5million (Southampton) and £10.8million (Salford).
Tenants across the property portfolio include In The Style, an online fashion company, Stagecoach UK and Metabo UK.
Rental income from the tenants received by the council in the 2020/21 financial year was nearly £1.8million. On top of this, property values have increased, the council say, anywhere from 2% to 14% since they were acquired in 2018.
In a report going to the council’s audit committee next week, the Isle of Wight Council has said now, however, it is no longer looking to acquire more investments properties. The funding for the property acquisitions has also been withdrawn, with the government stopping the scheme for local authorities to find and fund investments.
Officers said with a stop of acquisition activity, the immediate focus for the portfolio was to manage the impact of the coronavirus pandemic on existing assets and tenants, with a ‘continued focus’ on cashflow security and debt management.
The demand for space, however, hit a record high in 2020, with the pandemic stimulating the warehouse space, with increased online retail activity encouraging e-commerce businesses to expand.
The strategy was part of the council’s medium-term financial strategy to generate income which the council is trying to find more ways to do, following the impact of COVID.
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