Sutton's Investment Property Portfolio (IPP) has demonstrated modest growth over the 2024/25 financial year, according to a recent report. The portfolio, established to generate income for council services, saw a net income growth of 2.57%, indicating its continued contribution to the council's revenue budget.

The Annual Report - Investment Property Portfolio - Report states that property investments of over £80m had been made by the end of the 2019/20 financial year, generating over £5m in additional net revenue to support the provision of council services. At the end of March 2025, the total reserve fund was £4.534m.

The report also noted the sale of Oxfam House, Oxford Business Park, for £37.1m in March 2024. This sale resulted in a surplus over the acquisition price in 2016 of £28.9m, in addition to the net revenue generation during ownership. The capital receipt from the sale has funded transformation spend and the capital programme in line with the Council's Medium Term Financial Strategy principles.

The report outlined several key indicators used to monitor the portfolio's performance:

  • Total Return: The total return for the portfolio was 1.87%, reflecting localised market conditions and the nature of the portfolio.
  • Effective Return: The effective return, representing income receivable less costs as a percentage of capital value, increased to 3.70%.
  • Vacancy Rate: The vacancy rate saw an increase, with 3.53% of total rent uncollected due to vacancies. While levels are considered low relative to national indicators, the upswing will continue to be monitored with regard to market conditions and minimising void costs. A significant element of IPP vacancy is within the office sector.

Councillor Barry Lewis, Leader of the Council, acknowledged the importance of the IPP in generating revenue for council services. The committee agreed to continue monitoring the portfolio's performance and consider opportunities for investment, acquisition, and disposal as they arise. At present it is considered unlikely that any further acquisitions for the IPP will be made except within the borough and/or where a case exists for benefits beyond a financial return. The Asset Strategy Delivery Board will continue to keep the portfolio under review and consider opportunities for investment, acquisition and disposal.

The Annual Report - Investment Property Portfolio - Report provided a sector overview:

  • Retail: The retail portfolio remained fully let, with terms agreed with Lidl for a new store in the former Wilko unit and a new 20 year lease to Lidl has now been granted. At the time of drafting, fitting-out of the unit is expected to begin shortly and the store will operate alongside the existing Lidl store.
  • Industrial: Industrial properties continued to perform well, although a small number of business failures have arisen.
  • Offices: The portfolio's office space has reduced following the disposal of Oxfam House.
  • Leisure: Leisure portfolio properties are mostly subject to long leases with good security, reflecting consistent performance.

The last report presented to this Committee in October 2024 confirmed overall performance broadly in line with national comparators and overall a good spread of risk.