Another SSDC purchase
South Somerset District Council has Just spent another £5.95m of taxpayers money on an investment in a veterinary referral hospital. A new fighting fund (we are not allowed to know how much) was agreed at an SSDC meeting behind closed doors last week. The same secret meeting also agreed a newly relaxed set of rules for approving new asset purchases.
The latest acquisition is in Marlow Buckinghamshire. The Ralph was purchased for £5.95m as part of the Council’s commercial strategy.
SSDC describe the aim of the strategy as “to invest in a diverse range of assets and generate income which will mitigate a significant reduction in central Government funding.”
Unfortunately this is not a balanced asset investment portfolio. Nearly all the money is going into one asset type, ie property.
Although this latest deal should return a net initial yield of 7.09%, SSDC are now even more heavily exposed to a downturn in the property market. The referral hospital only opened its doors to the public in February 2019 so as a business is completely untested in the market adding to teh risk exposure of the council.
The 25,550 square foot property began life as a hybrid office and industrial building in 1989 and was occupied by Emerson Network Power. The Ralph then took the lease and spent £3.2M on fitting the site out to a high standard.