QUESTIONS BY THE PUBLIC IN ACCORDANCE WITH COUNCIL PROCEDURE RULES
The Chairmen of Committees to answer any questions by the public of which notice has been given no later than midday three clear working days before the day of the meeting in accordance with Council Procedure Rule No. 12.
Minutes:
107.1 None received.
QUESTIONS BY THE PUBLIC IN ACCORDANCE WITH COUNCIL PROCEDURE RULES
The Chairmen of Committees to answer any questions by the public of which notice has been given no later than midday three clear working days before the day of the meeting in accordance with Council Procedure Rule No. 12.
Minutes:
221.1 The Chair informed Council that a question had been received from Mr. Young, who was not present at the meeting. The Chair of the Council then read out the question.
Question to the Cabinet Member for Assets and Investments from Mr. Young:
“The Board of CIFCO Capital has lost over £8,000,000 since inception in 2017 until 31.03.20 according to the company's accounts. This is before COVID-19 really started to impact on property values. How much does the Board of CIFCO budget to lose in total impairments to 30.03.21 bearing in mind that at the March 2020 Rental Quarter Day 30% of tenants were experiencing payment difficulties and they expect the June 2020 Quarter Day to be more challenging?”
Councillor Busby, Cabinet Member for Assets and Investments responded:
The losses incurred by CIFCO to date have been in relation to the costs of setting up the portfolio- namely stamp duty and professional fees equating to approximately £3.5m and the reduction in the portfolio value.
The acquisition of a portfolio of property assets will incur costs, such as stamp duty and professional fees. These are typically in the order of 6.75% per acquisition. It is therefore anticipated that costs in the region of £6.75m will be accumulated as part of the total £100m investment agreed jointly by Babergh DC and Mid Suffolk DC. To date, costs of £3.5m have been incurred in acquiring the 14 properties owned by CIFCO and as such it is anticipated that a further impairment of £3.25m will be incurred until the fund is fully invested.
The portfolio was most recently valued on 31st March 2020 and as such this valuation reflects the high level of COVID uncertainty in the market at that point. Property values will fluctuate over time in line with the market and also as individual assets travel through the valuation curve-with the highest value being at the point that a new lease is granted, gradually reducing as the lease term reduces and then increasing again when a subsequent new lease is granted. It is not appropriate to predict property values in the future.
The cumulative reduction in values since acquisition equates to approximately £4.7m, representing approximately 8%. Over this time CIFCO has collected £5.5m of rental income from its tenants, with circa £4.2m being repaid to the Councils as capital and interest charges for the loans.
The board of CIFCO are carefully monitoring rent collection and have achieved high levels of rent collection in the market with over 75% collected in March and over 65% currently collected for the June quarter with further monthly payments expected over the remaining months of this quarter. In most cases CIFCO is expecting to receive the outstanding rental arrears however this may be over a longer period. The Board will continue to monitor this carefully to mitigate this impact and manage cashflow accordingly.
Note: Councillor Hurren joined the meeting at 5:55pm
221.2 As Mr. Young was not present at the meeting the Chair of the Council ... view the full minutes text for item 221