Spelthorne nears £1bn in borrowing for property acquisitions
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Photo (cropped): Nick Miller, Flickr, CCO
Spelthorne Borough Council has taken its total sum borrowed from the Public Works Loan Board for property investment close to £1bn.
The council announced this week that it has borrowed more PWLB cash to complete the purchase of three office buildings in Uxbridge, Slough and Reading for a total of £285m.
The council said that its relentless drive to borrow for property investment is aimed at enabling the authority to become financially self-sufficient due to reductions in central government funding.
Ian Harvey, Spelthorne council leader, said: “This purchase fits well with our strategy to provide secure revenue streams which help us fund important services for our residents, avoid cuts, and help us deliver various projects to provide much-needed additional housing in the borough.
“Once again we have demonstrated that ‘Spelthorne means business’.”
In January, Room151 reported that Spelthorne had passed half a billion pounds of borrowing from PWLB for commercial property acquisitions with the purchase of a £170m property in Hammersmith.
At that stage, the total sum borrowed by the council for commercial property stood at £623m.
Since then, it has taken a £30m loan to refinance a number of property deals completed previously, and an office block in Staines.
Spelthorne’s purchase this week of The Charter Building in Uxbridge, The Porter Building in Slough and Thames Tower in Reading for £285m takes the total amount borrowed through PWLB for property acquisition to just under £950m.
In the past, government officials have raised concerns that borrowing taken out by councils should be proportionate to their size.
Speaking this week, council leader Ian Harvey said: “Our approvals and due diligence processes are extremely robust and our approach restrained, prudent and risk-averse. We have comprehensive treasury management and borrowing strategies.
“We only purchase if an investment generates a significant and sustainable annual revenue stream to support the services we provide to residents.
“We use external advisors of the highest calibre to help us with all aspects of the process and have invested in a newly-hired, highly-skilled property team within the council to both support purchases and manage our growing property portfolio.”
Howard Williams, cabinet member for finance, said: “I would also like to reiterate that the council does not speculate with taxpayers’ money.
“We walk away from ten times as many opportunities as we investigate and only take on property investments that stand up to the closest of scrutiny, the most thorough due diligence and the most expert independent analysis.”
He said that receipts from property investments were already supporting services including housing and local infrastructure projects including a light rail proposal.
In September 2016, the council launched its property acquisition strategy with a loan of £377m from the PWLB.
This was spent on acquiring the BP Campus in Sunbury — believed to be the biggest ever commercial property deal by a local authority.
