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CIFCO continues to generate income for councils to reinvest

Babergh and Mid Suffolk’s commercial property investment company CIFCO generated £2.5m in net income to support the council finances last year, reports published this week show.

This means that since CIFCO Capital Ltd was established jointly by Babergh and Mid Suffolk District Councils in 2017, it has generated a net income for the councils of £11.5m.

Babergh and Mid Suffolk District Councils borrowed a total of £99.2m during previous administrations, to invest in its commercial property portfolio.  This now comprises of 21 properties, based in the eastern region and beyond, split across industrial, retail and office sectors in order to balance risk.

Income from CIFCO is designed to cover the loan repayments, plus generate additional income on top for the councils.  Reports going before the councils’ joint Overview and Scrutiny Committee later this month show how income from CIFCO made up a significant part of the councils’ finances in 2022/23 – 9% of Mid Suffolk’s total income and 11% of Babergh’s.

However, they also show that the company made a £10m loss during 2022/23 following a 12% decrease in CIFCO’s portfolio value overall, due to the commercial property market responding to high inflation and increasing debt costs.

CIFCO chairman, Sir Christopher Haworth, said:

“The whole market has seen capital values decrease, but we are still outperforming the industry benchmark and have a robust portfolio and business plan in place that will see us continue to generate income for our shareholders. 

“We also continue to identify opportunities to improve the quality and sustainability of our existing properties – so we are not only creating rental income growth but also reducing the environmental impact of our portfolio.”

Cllr John Ward, cabinet member for finance, assets and investments at Babergh District Council, said:

“CIFCO continues to generate money for the councils – providing much needed income that we can use to help our residents at a time when many other councils are struggling to balance their books.

“Similar to the £6.7m profit made by CIFCO in 2021/22, last year’s loss is as a result of fluctuating property prices which have no day-to-day impact unless we were looking to sell the portfolio.  These properties are a long-term investment for our council, and they continue to pay dividends.”

Cllr Richard Winch, cabinet member for housing and property at Mid Suffolk District Council, said:

“We want everyone to be assured that we are committed to strong governance, risk management and oversight of CIFCO operations so we can ensure we can deliver the best possible outcomes for our residents.”

While CIFCO is the councils’ commercial property arm, the councils also invest directly in property in the districts for regeneration and housing delivery.  This has included the acquisition of the former Aldi unit in Stowmarket, now PureGym, and the former NatWest in the town's marketplace - now leased to the John Peel Centre.

Mid Suffolk has also invested in Gateway 14 in Stowmarket and the transformation of its former headquarters in Needham Market into affordable housing. 

In Babergh, examples include Borehamgate Shopping Centre, employment land in Hadleigh and the redevelopment of its former council offices in Hadleigh.

The councils have also built or acquired 572 new council houses in the districts over the last eight years.

CIFCO’s performance for the last financial year and its business plan for 2023/24 goes before joint Overview and Scrutiny Committee on August 21 ahead of going to both Full Councils next month.

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