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‘Prudent investment’ boosts funding for council services

Published on Tuesday, September 6, 2022

2 minute read

Leicester's Royal Arcade

MORE than £8million was generated for Leicester City Council last year by the industrial units, office space, shop units and other commercial land and property that it owns.

Gross income of £8.34m (£5.86m net) is the headline figure in a new Corporate Estate Annual Report, which sets out the performance of the council’s extensive investment portfolio over the last financial year.

The report shows that income from commercial land and property continues to boost the funds available for vital council services, representing 2% of the council’s net revenue budget in 2021-22.

Leicester’s varied portfolio is spread across a number of sectors and investment types, with security prioritised over yield to ensure risk is kept as low as possible, and with the city’s long-term economic prosperity a key strategic aim.

City Mayor Peter Soulsby said: “The city council has invested in land and property for generations – and that prudent investment and sound management of the corporate estate portfolio over the years continues to bring benefits to the city today.

“Last year, income from our corporate estate provided a much-needed boost of nearly £6million to the city’s general fund – which meets the cost of the city’s most valued council tax-funded services including street cleaning, refuse collection, parks, pothole repairs, libraries and community centres. As funding from elsewhere diminishes, the income generated by the council’s corporate estate portfolio will become increasingly important.

“Today, the council is still the largest land and property owner in the city and it will continue to invest in land and property as a means to generate sustainable income streams that support our local priorities, our local communities and the local economy.”

The annual report shows that the council’s corporate estate portfolio comprises 378 commercial sites in the city and county, with a total valuation of £123million. Its value was boosted in November 2021 by the purchase of the Haymarket Shopping Centre, whose value has since increased by 5%.

Gross income from the sites in 2021/2022 was £8.34million (£5.86m net) – a gross yield of 6.78% for the year ended March 2022. Although running costs have increased in line with the portfolio’s growth, this was a slight increase on 2021 (6.67%).

Of the council’s investment portfolio, the largest single sector by volume, value and income is the industrial sector – which includes sites such as the Boston Road units, the Willowbrook Workshops and Freemen’s Common Road. The industrial sector represents 33% of the portfolio, is valued at £41m and generated an income of £2.45million for the council in 2021/22.

The retail sector represents 30% of the portfolio, with a third of the shop units owned by the council located in neighbourhoods, while office space represents 21% of the corporate estate portfolio.

Areas outside these three core sectors – including farmland, grazing areas, car parks, advertising hoardings and even a former pub – represent 16% of the portfolio. Revenue from this sector was £2.1million in 2021/22.

The 2021/2022 Corporate Estate Annual Report is available to download from the council’s website