• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Portsmouth eyes borrowing boost to buy office development

0
  • by Jim Dunton
  • in 151 News · Treasury
  • — 13 Jun, 2019

Portsmouth City Council is set to tweak its treasury management rules to borrow an additional £70m towards the purchase of the city’s main office park. However, the figure is only a fraction of the purchase price.

A cabinet meeting on Monday is being urged to support the extension of the council’s authorised borrowing limit from £737m to £807m as part of its plan to buy the Lakeside North Harbour Business Park.

It is expected that the deal could reap the authority an overall financial return of up to £22m over 35 years.

Papers produced ahead of the meetings describe the potential purchase of the 48.5ha business park, around three miles north of Portsmouth city centre, as a “unique” opportunity to take control of “one of the most strategically important sites in the city”.

Last year the city spent £9m buying an office block in Manchester.

The papers stress that the purchase price of Lakeside North Harbour – which has almost 55,000m2 of office space, a 153-bedroom hotel, a Porsche dealership and 3.5ha development land – is “substantially in excess of £100m”, but the exact price is subject to a non-disclosure agreement.

Lakeside North Harbour was originally developed by computing giant IBM in the 1970s, but sold to property firm Highcross in 2005.

IBM still has a base at the campus, which the council said was occupied on a lease-back basis.

Monday’s meetings are being told that additional borrowing of the level required to buy Lakeside North Harbour was not envisaged when the current authorised borrowing limit of £737m was set as part of the council’s treasury management policy in March.

Additionally, the advice to councillors suggests temporarily increasing the council’s current limit for investing in money-market funds from £80m to £104m until the business park acquisition is completed or a decision not to proceed is taken.

It said the funds offered security and same-day access and were “very useful for holding cash that could be required immediately”.

Chris Ward, the city council’s director of finance and information technology – and its section 151 officer – said the primary aim of buying the business park was to support the authority’s regeneration aspirations and to help shape the city’s future development.

But he said the purchase had to be conditional on the investment “generating a reasonable financial return” that was sufficient to guard against a range of financial risks that could arise over the detailed 35-year financial cash-flow model the council was using to assess the opportunity.

“At this stage of due diligence, it is expected that the acquisition of Lakeside North Harbour will generate an overall financial return of £22m in cash terms over the 35-year period after taking account of all income received less all maintenance and borrowing costs,” he said.

“In today’s value, after discounting the effects of inflation, the overall financial return is estimated to be £14m.”

The report to Monday’s cabinet and full council meetings said that Lakeside North Harbour currently had an occupancy rate of 94% and that the £22m cash return projected would reduce to £18m if the cost of repairs was 5% higher than envisaged.

It said that the cash return would drop to £12m if occupancy was 90% and to £1m if occupancy was 85%.

But it noted that higher occupancy rates than the 94% “base case” occupancy, higher than 1% growth in occupational rents, increased lifespan for the buildings – or “radical redevelopment” could result in more positive returns.

The report said Portsmouth could complete the acquisition of Lakeside North Harbour before the end of this month if the borrowing changes were supported and authority to proceed with the purchase was delegated to s151 officer Ward and director of regeneration Tristan Samuels.

That authority would be subject to the support of the city solicitor and council leader Gerald Vernon-Jackson.

A full council meeting later on Monday is scheduled to endorse the approval.

Get the Room 151 Newsletter

Room151 Conferences & Events

Share

You may also like...

  • 30 names handed to CPS over Northampton Borough Council loan 30 names handed to CPS over Northampton Borough Council loan 11 Dec, 2018
  • LGPS Pools Roundup: Global equity fund, new chairmen, custody arrangements, provider frameworks LGPS Pools Roundup: Global equity fund, new chairmen, custody arrangements, provider frameworks 11 Jul, 2017
  • IFS: National debate needed to end ‘muddling along’ approach to council funding IFS: National debate needed to end ‘muddling along’ approach to council funding 29 May, 2019
  • Central banks, the age of populism and local authority investors Central banks, the age of populism and local authority investors 25 Oct, 2018

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 days ago

    All three days of #LATIF & FDs' Summit are available on our webcast channel gotostage.com/channel/room151

    Room151 5 days ago

    FDs’ Summit experts defend councils as MPs label property investment ‘risky’: As Room151’s FDs’ Summit conference explores local government’s investment in commercial property MPs once again lable it a “significant risk to government”. Once again MPs… dlvr.it/Rr7lZx pic.twitter.com/jPvcZjDAS4

    Room151 5 days ago

    Global macro outlook: Virus versus vaccine: Sponsored article: Salman Ahmed argues monetary policy, a global vaccine rollout and fiscal stimulus are likely to put “upward pressure” on bond yields. Much like the latter half of 2020,[...] dlvr.it/Rr60nt pic.twitter.com/qsymBWmKmV

    Room151 6 days ago

    ‘Chasing yield’ not the best strategy as negative rates loom: Recent speculation that the UK may be heading toward negative interest rates prompts questions for treasury officers managing local authority funds at LATIF. Speculation is rife that the UK… dlvr.it/Rr3Mrj pic.twitter.com/wtxYAB20PO

    Room151 1 week ago

    Will new public procurement rules offer the best commercial results?: The government has issued a green paper on reforming procurement rules. Helen Randall and Rebecca Rees examine the proposals and argue they may not go far enough. The Cabinet… dlvr.it/Rqtw6T pic.twitter.com/9GiVTkL08U

    Room151 2 weeks ago

    The vaccine may help settle cash flows but inflation remains a risk: Sponsored article: Lauren Sewell examines the prospects for long-term borrowing as Brexit settles and vaccines are deployed against Covid-19. On the 9th October 2019 Whitehall sent… dlvr.it/RqZXCr pic.twitter.com/PzgOZOGQ0k

    Room151 2 weeks ago

    ESG in liquidity: Sponsored article: Gavin Haywood looks at the integration of ESG in Federated Hermes’ money market funds. Federated Hermes has over 300 public sector clients invested in our AAA rated money[...] dlvr.it/RqZX5f pic.twitter.com/E87sBXsay8

    Room151 2 weeks ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 2 weeks ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 2 weeks ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 2 weeks ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 2 weeks ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 2 weeks ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 2 weeks ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 2 weeks ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 2 weeks ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 1 month ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story London LGPS pool appoints new chief investment officer
  • Next story Council beats Brexit deadline to approve multi-million investment fund

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK