Agenda item

Disposal of Council Assets in Wolverhampton, Bradford, Gosport and Basingstoke

Decision:

(a)  Agreed to the disposal of the Wickes, Wolverhampton asset and to delegate authority to the Executive Director of Property and Housing, in consultation with the Lead Member for Financial Oversight and Council Assets and the Executive Director of Finance and Commercial, to enter into the contract and other legal  documentation in connection with the disposal in accordance with the Heads of Terms appended at Appendix 3.

 

(b)  Agreed to the disposal of the Euroway Bradford asset and to delegate authority to the Executive Director of Property and Housing, in consultation with the Lead Member for Financial Oversight and Council Assets and the Executive Director of Finance and Commercial, to enter into the contract and other legal documentation in connection with the disposal in accordance with the Heads of Terms appended at Appendix 4.

 

(c)  Agreed to the disposal of the Odeon, Basingstoke asset and to delegate authority to the Executive Director of Property and Housing, in consultation with the Lead Member for Financial Oversight and Council Assets and the Executive Director of Finance and Commercial, to enter into the contract and other legal associated documentation in connection with the disposal in accordance with the Heads of Terms appended at Appendix 5.

 

(d)  Agreed to the disposal of the Waitrose, Gosport asset and to delegate authority to the Executive Director of Property and Housing, in consultation with the Lead Member for Financial Oversight and Council Assets and the Executive Director of Finance and Commercial, to enter into the contract and any associated documentation in connection with the disposal in accordance with the Heads of Terms appended at Appendix 6.

Minutes:

The Lead Member for Financial Oversight & Council Assets introduced a report that sought approval for the disposal of four property land assets.  This was the first in a series of reports to future meetings as part of the asset disposal programme.

 

The first recommended disposals were four out-of-borough assets as follows:

 

·  Wickes, Wolverhampton.

·  Euroway, Bradford.

·  Odeon, Basingstoke.

·  Waitrose, Gosport.

 

The proposed asset sales had been subject to due diligence and reflected the best consideration reasonably obtainable for the disposal of the assets.  The disposals would generate net savings to the revenue budget and a capital receipt which would be used to reduce borrowing and the Council’s Minimum Revenue Provision (MRP).

 

The appendices to the report were in Part II of the agenda.  The Cabinet considered all matters relating to the report in the public part of the meeting without disclosing any of the exempt information.

 

The Lead Member stated that these four assets had been bought purely to generate investment income.  The four assets were acquired for a total of £31.8m between 2017 and 2019.  The assets had been most recently valued in September to reflect current market conditions which showed a combined value of £26.6m which was £5.2m below the acquisition price due to a fall in value for the Gosport and Basingstoke assets.  The assets had delivered rental income since they had been purchased.  It was recognised that asset values changed over time and there would be variation in the performance of assets in an investment portfolio.

 

There was a risk to the Council in retaining assets which may further diminish in value in the future.  Disposal would reduce any financial risks to the Council from future volatility in property markets and rising borrowing costs.  The Council’s advisors, Avison Young had recommended disposal of the four assets.  The Cabinet welcomed the fact the asset disposal programme was now bringing forward sites for decision as this was a key part of the Council’s recovery plans.

 

Councillors Smith and Strutton addressed the Cabinet.  Councillor Smith asked about the justification of disposing of two assets for less than the purchase price.  The Lead Member reiterated the reasons given in the meeting and in the report as to why disposal was recommended and reminded Members that these were part of a portfolio of investment assets that would come forward for disposal some of which had increased in value and others which had decreased.  Councillor Strutton raised concern about the initial decision making process to acquire such assets as highlighted in the Commissioners comments.  The Leader stated that if the external auditors did investigate and make any recommendations on the purchases they would be properly considered at that time.

 

At the conclusion of the discussion the Cabinet agreed the recommendations to dispose of the four out-of-borough assets.

 

Resolved –

 

(a)  Agreed to the disposal of the Wickes, Wolverhampton asset and to delegate authority to the Executive Director of Property and Housing, in consultation with the Lead Member for Financial Oversight and Council Assets and the Executive Director of Finance and Commercial, to enter into the contract and other legal  documentation in connection with the disposal in accordance with the Heads of Terms appended at Appendix 3.

 

(b)  Agreed to the disposal of the Euroway Bradford asset and to delegate authority to the Executive Director of Property and Housing, in consultation with the Lead Member for Financial Oversight and Council Assets and the Executive Director of Finance and Commercial, to enter into the contract and other legal documentation in connection with the disposal in accordance with the Heads of Terms appended at Appendix 4.

 

(c)  Agreed to the disposal of the Odeon, Basingstoke asset and to delegate authority to the Executive Director of Property and Housing, in consultation with the Lead Member for Financial Oversight and Council Assets and the Executive Director of Finance and Commercial, to enter into the contract and other legal associated documentation in connection with the disposal in accordance with the Heads of Terms appended at Appendix 5.

 

(d)  Agreed to the disposal of the Waitrose, Gosport asset and to delegate authority to the Executive Director of Property and Housing, in consultation with the Lead Member for Financial Oversight and Council Assets and the Executive Director of Finance and Commercial, to enter into the contract and any associated documentation in connection with the disposal in accordance with the Heads of Terms appended at Appendix 6.

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