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Councils’ commercial property arm continues to generate income for districts

Babergh and Mid Suffolk’s commercial property company CIFCO made a £6.7m profit last year and generated £3.7m in net income for the councils to plough back into services, councillors heard 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 net income last year of £1.7m for Mid Suffolk and £2m for Babergh, bringing the total net income received by the councils by the end of the last financial year to £9.25m.

In reports presented to Babergh District Council on Tuesday and Mid Suffolk District Council last night (Thursday), councillors heard how the company’s accounts for 2021/22 showed a £10m increase in the value of company’s portfolio of properties – with the portfolio valued at £94m.

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, based in the eastern region and beyond, and split across industrial, retail and office sectors, effectively balancing 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 industry average – with company now realising £5.3m per annum in rental income and low void rates across the portfolio, with vacant units quickly re-let.

CIFCO Chairman Sir Christopher Haworth said:

The ongoing recovery from the Covid pandemic, has certainly brought challenges – and there’s no doubt this will continue with the current market uncertainty, but we continue to work with our tenants to ease any ongoing problems and this is reflected in strong quarterly rental recovery, well in excess of the market norm.

“We have a robust portfolio and business plan in place that will see us continue to generate income for our shareholders, as well as identifying opportunities to improve the quality and sustainability of our properties – not only creating rental income growth but also working hard continually to reduce the environmental impact of our portfolio.”

Capital investment in the portfolio last year included a £460,000 refurbishment of units at an industrial estate in Harlow, with installation of solar panels to improve both the value of the asset and its sustainability, with CIFCO committed to further enhancements across the portfolio.

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 – 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:

CIFCO is 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 at a time when many other councils are struggling to balance their books. 

“We are in uncertain times, but commercial property continues to hold up well, and with prudent debt management we can ensure that, as well as generating net income now, these properties also provide a legacy for future generations.”

Councillors on Babergh and Mid Suffolk’s joint Overview and Scrutiny committee reviewing CIFCO’s performance and business plan back in June agreed unanimously that it was robust, with Babergh District Council approving next year’s plan by 15 votes for and 1 abstention on Tuesday, and Mid Suffolk District Council approving it by 16 votes for and 15 against last night.  Minutes and recorded livestreams of all meetings are available on the councils’ website.

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