North Somerset Council buys retail park for £38m
- Credit: Archant
Tens of millions of pounds have been spent by North Somerset Council to buy a Worle retail park, and the authority’s leaders hope it will generate much-needed cash for ‘local services’.
The council announced today (Monday) it has bought the North Worle District Centre – home to Sainsbury’s, TK Maxx, the Parish Pump pub and five smaller retail units – for £37.95million.
The council revealed its intention to buy an unnamed 12-acre site using money from a £50million bank loan in February, but it was unable to disclose details of the deal until today.
North Somerset estimates it will make around a £225,000 profit in the first year, rising to more than £400,000 in future – as it steps up its efforts to generate cash with Government funding to disappear in 2019.
Council leader Nigel Ashton said the authority ‘needs to find alternative ways of raising money’ with more central Government cuts looming large on the horizon.
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This is the council’s first purchase since it created a property investment fund in July 2017 when a £50million bank loan was agreed, and the authority has relied on the expertise of its speciality property investment and asset management advisors Montagu Evans in buying the site.
Montagu Evans’ head of investment Mark Girling said: “We are delighted to be involved with the acquisition of this prime, well-secured investment property on behalf of North Somerset Council.
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“The property, sitting on nearly 12 acres and forming the district centre of a densely populated and fast-growing suburb, is a hugely successful trading asset with 100 per cent of the rental income being secured on a single overriding lease to Sainsbury’s.
“The net yield of about six per cent provides a margin over borrowing costs and there is the prospect of value-added regeneration initiatives over time.”
For more, pick up a copy of the Mercury on Thursday.