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Babergh District Council-owned investment company could borrow another £50 million to invest in property outside Suffolk

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Babergh and Mid Suffolk District Council headquarters at Endeavour House, Ipswich. (6786830)
Babergh and Mid Suffolk District Council headquarters at Endeavour House, Ipswich. (6786830)

A council-owned investment company, which has come under fire for acquiring sites outside Suffolk, could borrow another £50million to invest in more property.

Cifco Capital was formed by Babergh and Mid Suffolk district councils as a means of investing in properties, such as industrial estates, office blocks and retail.

The two councils both invested £25 million by the end of 2018, which is expected to generate around £2.8 million a year in income for the councils.

First draft budget proposals have revealed plans to borrow another £25 million each for Cifco to invest.

Concerns had been raised that investing in retail firms was risky given the volatile nature of the commercial property sector.

Critics pointed to the likes of BHS, Debenhams and House of Fraser as signs of the risk.

But investment bosses said having a broad portfolio brought in income for projects like the Hamilton Road quarter in Sudbury, and a mix of retail and commercial helped spread the risk.

Emily Atack, assistant director of assets and investments at the two councils, said: “When they are making the decision, they are very much looking at that balance, and it is right for the portfolio to have retail as part of a balanced portfolio.

“To mitigate the risk, we need a balanced portfolio.”

The councils said they recognised concerns that all but one acquisition to date had been made outside Suffolk, and said the rural nature of the county meant opportunities were limited compared to urban areas.

But the Green group at Mid Suffolk said it was a riskier proposition than investing in residential property.

Andrew Stringer said: “Investing in new local housing would have less risk, more certain income and no need for an increase in tax.

“By building homes for sale, the same money could fund successive developments where they are needed, and contribute to meeting our housing land target.”