Liverpool’s cabinet to vote on commercial property fund
0Liverpool City Council’s cabinet will meet this week to discuss approval of its Commercial Property Investment Fund Strategy, which will aim to invest an initial £50m in rent-generating property.
Liverpool cites the reductions in government funding, along with increasing demand for its services and rising costs as pushing it to seek alternative sources of revenue.
The fund will aim to invest in good-quality, low-risk commercial property, with transaction sizes of £5m to £15m, yielding 5% to 7%.
Assets will be bought across the UK, in order to achieve geographical diversification. The £50m will be funded 50% from capital receipts and 50% borrowing from the Public Works Loan Board.
The plan anticipates an annual distributable surplus from the fund once it is fully invested of £1.3m or more, and expects this figure to rise over time, in line with rental growth. At the end of the loan period of 40 years, the portfolio will be sold in order to repay the outstanding balance on the loan and to generate capital receipts.
The report to cabinet says: “A core principle behind the funds that it is a long-term (40 year) project that will generate sustainable and secure income streams for the council.”
