West Berkshire Council to sell off commercial property portfolio at a £7m loss

West Berkshire Council is planning to sell off its commercial property portfolio – at a £7m loss.

The council reported a quarter one forecast overspend of £6.3 million earlier this year.

So it is looking to bolster the coffers – by selling off up to £62m of investments it made a few years back.

But those investments, including supermarkets, commercial warehousing and even a bank and a petrol station up north, have fallen in value.

The portfolio currently generates around £1m to the council’s revenue budget and selling off the assets will result in a loss of net income.

But this, according to a report to the council executive, outweighs future high-cost capital financing supporting the council’s approved spending programme.

Total gross income generation is approximately £18 million.

The challenging economic environment has resulted in declining property valuations and as at March 2023 the portfolio was valued at £51.4 million, compared to a purchase value of £58.6 million – but the council spent £62m with purchase costs added in.

The recommendation to sell is based on the fluctuating rates at the Public Works Loans Board – where councils borrow money from.

Rates are now 5.7 per cent – compared to up to three percent when the properties were bought in 2018.

Council finance officers calculate that releasing £1million of capital receipts therefore avoids a capital financing cost of £75.5k against future annual revenue budgets.

It also has £2.3m of maintenance planned on the properties.

This decision to sell off the portfolio was made at a meeting of the executive on Thursday, October 2.