Page last updated at 19 August 2016 at 11:57
The Council’s innovative approach to buying commercial property over the last seven years has helped to ensure that we can continue to invest in our community and at the same time protect our frontline services.
Black Horse House
By March 2017 we will have secured £200 million worth of assets throughout the borough. Within this, our property assets provide a significant annual net income of around £5.5 million which has been used to maintain budgets and protect frontline services.
At the same time, the investment in our community has provided a range of job opportunities for local people such as around 500 new jobs associated with both the development and the operation of the Hilton at the Ageas hotel.
As a public sector organisation, the Council takes advantage of having access to finance at low interest rates currently below 1%. This money is then invested throughout the borough giving a good financial return ranging from 4%-10%.
All purchases are subject to a thorough financial business case, and risk assessment and expert advice sought – all purchases must provide the Council with a good financial return and provide a good contribution to achieving community investment and economic regeneration, including investing in businesses likely to create jobs for local people.
Council Leader, Cllr Keith House said “Our investment in property and the financial return we gain from this has meant that we have been able to protect frontline services and continue to invest in our local economy and community. Far from being a cost to tax payers, this initiative generates significant income for the council with the return on investment more than covering the cost of borrowing.”
The Council is playing a key role in investing in its community that is providing facilities for local people to use as well as business premises that provide jobs and opportunities.
We have focussed on buying property with blue chip tenants such as banks, hotels and high street retailers. Each deal is carefully considered on its own merits and we receive external valuation advice including the property value, asking price and the expected rental yield. It’s important that we address risk management issues and always seek the best professional advice and willingly pay the fees associated with each deal. In addition we have our own officer expertise through the designated Chief Financial Officer and the role of internal and external audit.
The Council property acquisitions ensure there is more income coming to the council than the cost of servicing that debt. Key to this strategy is that each purchase must provide a good financial return at an acceptable risk and provide a cost effective contribution to achieving community or council priorities such as supporting local businesses, economic development or regeneration.
Ageas Bowl and artists impression of new Fleming Park Leisure Centre
Our Property portfolio
Its innovative approach to property management now means the Council is landlord to a high profile mix of businesses including B&Q, Lloyds Bank, Wetherspoons, Matalan, Halfords, Pets at Home, Costa Coffee and Travelodge as a result of the freehold purchase of land and buildings over the last seven years .
More recently, the Council has acquired the Ageas Bowl home of Hampshire County Cricket Club that includes an 18 hole golf course and the recently opened Hilton at the Ageas hotel. This investment will return an annual surplus to the Council. This superb facility provides around 500 employment opportunities, contributes around £50 million to the local economy and is a real community asset for all local residents to enjoy.
The Council’s investment will rise from around £102 million to £140 million with its investment in the new and exciting Fleming Park Leisure Centre. The state of the art facilities will provide top quality sport and leisure facilities and at the same time the project will incur no revenue cost to the Council as the cost of the investment is more than matched by the rental income. The Council is planning to invest in the construction of a M&S Foodhall in Eastleigh that will be leased by M&S as another example of an ‘invest to save’ project.
Wagon Works and Travelodge and Omega House Offices
Who regulates the Council's borrowing?
The Government has set out a framework within which all councils must operate. This framework limits the Council to only borrow the amount which it can afford to repay. Our medium term budget strategy is agreed at Cabinet and Full Council and goes through a scrutiny process.
Why does the Council borrow more than other similar local authorities?
The Council has ambitious plans to provide the best possible facilities for its residents across the borough. In order to fund these long term projects the Council needs to borrow money because it does not have sufficient resources to meet the capital cost.
Channon Retail Park, Woodside Avenue