URL: https://democratic.bracknell-forest.gov.uk/ieDecisionDetails.aspx?ID=4143

Decision Maker: Cabinet

Outcome:

Is Key Decision?: Yes

Is Callable In?: Yes

Purpose: To note the strategy for investment assets located outside of the borough boundaries and endorse recommended actions

Content: RESOLVED that   i.       The findings of the review of the out of Borough Investment properties are noted.   ii.     the recommendations to manage the portfolio to support the Council’s long term financial position are approved.   iii.    that any plans for out of borough asset disposal will come back to Cabinet for approval. i.       The Council adopted a Commercial Property Investment Strategy (CPIS) in November 2016 as part of an agreed transformation programme that set out to achieve recurring revenue savings of around £12m. Within this, the aim of the CPIS was to secure an additional £3m of revenue income to support core services through the purchase of commercial assets. Sums of £20m per year were initially included within the capital programme to support this objective. Subsequently the Council agreed to make available up to an additional £30m, recognising that this would be needed to achieve the targeted additional income after financing costs were factored in. It should be noted that local authorities do not borrow for specific capital proposals and therefore capital financing costs attributed to these purchases was only for illustrative purposes.   ii.     Six investment assets were purchased at an overall cost of £86.6m. All potential purchases were assessed against criteria including tenancy strength, length of lease, building age and quality and location. The assets are commercial, across diverse sectors and are located outside of the boundaries of Bracknell Forest in locations across England. These assets were specifically purchased to improve the council’s financial resilience and are not used for operational or corporate functions of the council. The assets are performance managed to ensure that they provide the maximum return to the council. The target £3m additional income (net of indicative capital financing costs) was first achieved in 2019/20 and has been increasing since, due to scheduled rent reviews, with over £28m income realised from this strategy. All tenancies are full repairing leases, meaning that the Council has not had to fund any capital repairs since the properties were purchased.   iii.    Since these properties were acquired, the Government has tightened the capital financing rules for local authorities. Commercial investment in property is now only permitted for local economic development or regeneration purposes.   iv.    The portfolio of six assets can therefore be held for revenue streams or sold at the most appropriate and financially advantageous time. The proceeds of sale cannot be reinvested to expand this portfolio.   v.     Overview of the Commercial Property Investment held outside the boundaries of the borough.   ·       The six assets in the portfolio are geographically diverse as they are located across southern and northern England. All assets are commercial and include office, out of town retail and logistics warehousing uses. ·       The office and business sector has performed least well, primarily impacted by post Covid flexible working patterns and the demand for HQ office accommodation being driven by the “flight to quality” including improved energy performance. ·       The market performance of the assets owned for warehouse logistics uses is improved. ·       Retail sectors have suffered in recent years but out – of - town retail often out – performs the high street retail sector generally.   vi.    As well as general market performance, there are a number of other threats to the revenue from the portfolio centred on expiry of the current leases to each of the tenants occupying each of the assets. If the council were to take no action to secure future revenue streams, then by 2031 the revenue would be greatly diminished.   vii.   It is, therefore, imperative that the council has a strategy to ensure that its revenue streams from its out of borough investment assets are maintained and at the highest rental value possible by setting asset management objectives for each asset and prioritising actions to be taken in each financial year. This corresponds with the council’s adopted Asset Management Strategy 2025-2030 where these assets are defined as “Resilience Enablers” (referenced in section 6.4 non-operational assets: Driving income and impact (see supporting information)).   viii.The strategy for the commercial “out of borough” investment property assets as “resilience enablers” is to:   i. Secure income streams and/ or capital growth ii. Dispose of each asset for optimum capital receipt.   The strategy also confirms that the assets will be managed corporately in collaboration with the corporate finance function of the council with support and analysis from external investment asset specialists.   ix.    In 2025, the council engaged external investment asset specialists to provide a strategic overview with recommendations for future asset management activity to maintain and improve income streams and further recommendations on the need for tenancy “re – gearing” and future disposal.   x.     Following this, in December 2025, Cabinet (16 December 2025) decided to accept the recommendation that the optimal time for disposal of one of the assets in the portfolio was now imperative and that the council should plan for its immediate disposal.   xi.    For each of the remaining five assets an asset management plan has been developed in alignment with the external advisor’s report. This suggests a range of options including re-gearing or renewing some of the leases, and the consideration of asset disposal at the right point of time, to maximise capital receipts and ongoing revenue streams.   xii.   Confidential Appendix A Asset Management Plans and Objectives provides.   ·       An overview of the portfolio of commercial investment property assets ·       A summary of the asset management plans for each of the assets in the portfolio. ·       The asset management activity that will be undertaken to execute the asset management plans for each of the assets 1)    The alternative options include.   i.       Divest strategy. A strategy to dispose of all assets in the portfolio. This would result in a realisation of capital and risk forgoing value added through targeted asset management activity across the portfolio.   ii.     Hold strategy. without an asset management strategy in place would result in the minimum asset management activity, reduced and eroded income over time with a high risk of limited income by 2031.   2)    The council has, as part of its overall asset management strategy, set targets for other commercial and some residential asset disposals to maintain levels of flexible use of capital receipts. The current market conditions result either in applications to purchase these assets being withdrawn or proceeding at lower-than-expected values. The view is that these assets would yield more capital if sold when market conditions improve and therefore the recommendations for each of the assets in the out of borough commercial portfolio could reduce the need to dispose of other commercial and residential assets in less than favourable market conditions. None

Date of Decision: February 10, 2026