Agenda item - Disposal of 54 London Road

Report of the Executive Director Economy, Environment & Culture

1)           That the committee authorises the disposal of the freehold of 54 London Road and that delegated powers be given to the Executive Director of Economy, Environment and Culture, Assistant Director Property & Design and Executive Lead for Strategy, Governance and Law to agree terms.

2)           That the committee authorises the retention of the net capital receipt to support the created investment fund, that includes the net capital receipts from 3 other completed property disposals, previously approved by this committee (11 Little East Street, 18 Market Street and 28 York Place).

3)           That the committee notes that the investment fund created will be used to acquire commercial investment property or properties, in accordance with the council’s Asset Management Plan, details of which will be presented to this committee with a recommendation when an acquisition opportunity has been identified.

90.1      The Committee considered a report of the Executive Director, Economy, Environment & Culture that sought authority for the disposal of 54 London Road.

90.2      Councillor Gibson stated that he had concerns as the council currently received a good income from the property and asked what interest rate the council would receive from the capital receipt on the sale.

90.3      The Executive Director, Finance & Resources replied that this would be subject to the base rates of the time and the size of the receipt received and would be subject to advice of the council’s investment advisors.

90.4      Councillor Gibson requested further clarification on the precise interest rate.

90.5      The Executive Director, Finance & Resource answered that base rates were currently very low so the return would likely be the same.

90.6      Councillor Gibson questioned that in terms of sequencing, and the current return, whether it would be better to borrow at low rates to purchase the new assets and sell the other assets subsequent to that.

90.7      The Assistant Director, Property & Design stated that the offer received was higher than market rate; the site was isolated and not of strategic importance and it was the view of officers to accept the offer.

90.8      Councillor Gibson stated that in general terms, he believed a more beneficial approach would be to buy an asset first and then dispose of assets when the opportunity arose so as not to suffer from the dip in income arising from a capital receipt receiving little interest.

90.9      Councillor Janio stated that he believed a better approach would be to accept suitable offers where they arose rather than wait to chance.

90.10   RESOLVED-

1)           That the committee authorises the disposal of the freehold of 54 London Road and that delegated powers be given to the Executive Director of Economy, Environment and Culture, Assistant Director Property & Design and Executive Lead for Strategy, Governance and Law to agree terms.

2)           That the committee authorises the retention of the net capital receipt to support the created investment fund, that includes the net capital receipts from 3 other completed property disposals, previously approved by this committee (11 Little East Street, 18 Market Street and 28 York Place).

3)           That the committee notes that the investment fund created will be used to acquire commercial investment property or properties, in accordance with the council’s Asset Management Plan, details of which will be presented to this committee with a recommendation when an acquisition opportunity has been identified.