Borough council paid £21m to buy Sainsbury’s Oakley land
CHELTENHAM Borough Council paid nearly £21million to buy land Sainsbury’s is on in the Oakley area.
Last month, the authority refused to reveal how much it had paid or who it had bought the land in Priors Road from, saying the matter was confidential.
But after the Gloucestershire Echo submitted a Freedom of Information Act request, it has said it paid £20,724,000 to Hermes Property Unit Trust for the site.
And the council has also revealed that the purchase, which was the largest it has ever made for a single property, was one of four it has made in Cheltenham this year.
It bought office accommodation site Ellenborough House for about £17m, Caffe Nero in High Street for about £1.2m and office accommodation in Rodney Road for about £1.7m.
It is part of plan to boost its rental income from property it owns, in order to make up for the fact that is getting less money from the Government.
While the council has owned property, such as the Regent Arcade, for many years, it is looking to invest further in order to earn more in rent and help plug the gap in its finances.
Executive director of finance and assets, Paul Jones, said it was through a combination of borrowing and using some of its reserves.
The four properties have been added to the council’s property portfolio, which is worth more than £600m.
Its debt, or mortgage, on that is £112m - about £60m of which relates to its housing stock.
Mr Jones said the money would be paid back over varying periods, ranging from a year to 40 years.
But, crucially, he said the amount of money the council received in income from its properties was “significantly” more than the amount it spent on servicing its debt.
And the net income it would make per year on its latest four properties would be more than £600,000.
Councillor Rowena Hay (LD, Oakley), the council’s cabinet member for finance and assets, said investing in property was a risk worth taking and the money it generated would prevent the authority from having to cut its services. She said: “Rather than have cuts, we want growth. We need to be brave and bold to achieve that.”
Buying the Sainsbury’s site was a relatively low risk investment, she said, because it was a successful business likely to operate profitably for many years to come.
And if it did close as a supermarket, which the council did not want, it could use the land for housing.
She added that taking a risk with investment was a positive thing for councils and was happening up and down the country.
But the council, she stressed, was only investing in land in its local area something advised by the Government.
She said: “There was a time when councils were very risk averse. Now we have become risk aware.”
Asked if the council planned to make any more major property purchases, Mr Jones said: “There is nothing more in the pipeline at the moment but if the right opportunity came up, we would consider it.”
He added that since 2013, the authority had spent £40m on new investment. robin.jenkins@reachplc.com