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Council moves into commercial investment

Sutton council has kicked off its move into commercial property investment as a means of stemming funding cuts with the purchase of an office complex.

The council has bought the long-leasehold interest in Cantium House in Wallington, Sutton, from Palmer Capital-backed Cantium Developments for £6.5m – an 8% yield.

The fully let 37,000 sq ft office block commands a rent roll of £575,000 pa.

The council said the deal would provide it with the higher returns required to offset government spending cuts while ensuring the borough continued to provide office space in the face of a tidal wave of residential conversions.

Councillor Simon Wales, lead member for resources, said:  “This is a smart decision to make a strategic and prudent investment at a time when the return from bank interest rates is low. Making the most of every penny is absolutely crucial when there are unprecedented cuts to council funding by central government combined with increased pressure on services.”

Sutton council was advised by Vail Williams.

Author: Jack Sidders, EGi