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Council-owned property investment firm CIFCO's performance and plans under scrutiny

A council-owned property investment firm’s performance and future plans will be scrutinised next week.

CIFCO, which is owned by Mid Suffolk and Babergh councils, will present its third annual business plan to councillors, detailing performance over the last year and its strategy for the coming year.

CIFCO’s directors said they had felt the impact of Covid-19, but were confident the firm could weather the storm.

Mid Suffolk District Council, Endeavour House (36660357)
Mid Suffolk District Council, Endeavour House (36660357)

In 2019/20, the councils received £1.633 million net income from CIFCO – the equivalent to 10 per cent of the councils’ annual staff costs or a 13.5 per cent Council Tax increase.

In the past year, CIFCO has acquired two properties, taking its portfolio to 14. The company’s board considered 80 properties in the same period.

Meanwhile, the report said CIFCO had collected more than 70 per cent of the March 2020 quarter rent due, but expected the June quarter to be ‘more challenging’ as a result of Covid-19.

Sir Christopher Haworth
Sir Christopher Haworth

CIFCO Capital Ltd was established in 2017 to generate income through property investment, to offset cuts in funding from central government.

Since CIFCO’s launch, almost £3 million has been reinvested into the councils.

Monday’s joint overview and scrutiny committee will consider CIFCO’s performance business plan. Subject to approval by full council meetings in July, the plan would provide a framework for trading over the next 12 months.

Last year, the councils approved the CIFCO fund being increased from £50 million to £100 million. So far, approximately £60 million has been invested by CIFCO. Within this year’s business plan, the timescale within which to invest the remaining £40m has been adjusted from April 2021 to October 2021 due to Covid-19 market impact.

Sir Christopher Haworth, CIFCO chairman, said: “We are closely monitoring CIFCO’s performance and while we predict the next quarter to be more challenging, we still expect rents received to exceed any borrowing costs that need to be covered by the councils.”

CIFCO accounts for the year ending March 31 show a loss of £3.5 million, made up of one-off acquisition costs for the two new assets and a re-adjustment on the value of the whole portfolio. This loss would only be realised if the investments were sold in the current market. Despite any fluctuations in the value, these are long terms investments which continue to deliver regular rental income.

Cllr Peter Gould, Mid Suffolk District Council cabinet member for assets and investments, said: “The aim of our investment through CIFCO is to deliver a source of income for the long term rather than being forced to make reductions to our services.”​

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