Agenda item

The Portfolio Holder for Economic Development and Income Generation introduced the report and advised that the commercial investments provided a vital income for the Council so that services were maintained.  He drew attention to the recommendations which noted the resilience of the property investment portfolio so far in the context of the COVID-19 pandemic.  Progress in acquiring new investments was on track and rent collection was in excess of 98% which was a tribute to the team.  The net return being achieved was slightly below the target of 7% but the income target of £3.35m p.a. was on track to be achieved. 

The Commercial Property, Land and Development Manager advised that additional liaison with tenants, some temporary rent concessions and allowing flexibility on the payment pattern had meant that the quarterly rents collected had been between 95% to 98%.  One tenant had broken their lease early and that space would be marketed and re-let, and one other lease had not been renewed at another property in Bristol.  Trafalgar House in Taunton was now fully let and the lease on the Ralph at Marlowe was restructured to the advantage of both the tenant and SSDC. The investment market had been strongly affected by the lockdown period during 2020 but it was now recovering.  Industrial and distribution investments had generally gained in value, the office sector had weakened slightly and the expectation was for a one-time reduction in demand, high street retail had weakened considerably and the expectation over 4 years was a 50% reduction.  Other retail sectors were faring well as were out of town sites.  A recent acquisition was a leisure facility on the south coast and due diligence was being progressed on a food production facility and a data centre in the Midlands.  A battery storage scheme in Fareham had also been acquired.

The Chairman of the Scrutiny Committee said that disappointment at the progress on the Marlborough development had been expressed at their meeting and the Commercial Property, Land and Development Manager had subsequently circulated a briefing note for them on the development. He said they had been impressed with the level of rent collections under the circumstances and the Commercial Property, Land and Development Manager had answered their questions on points of detail.

The Portfolio Holder for Finance and Legal Services said the income derived from the asset investments was essential to keep council services funded.

At the conclusion of the debate, the Chairman thanked the Director for Commercial Services and Income Generation and her team for their work in progressing the Council’s investments.  Members were content to note the report.