PORTSMOUTH City Council has spent £12.4m on a distribution warehouse in Birmingham to raise extra income.
The council revealed plans last July to buy up property – such as office blocks and supermarkets – as a way of generating income from the rent.
Up to £100m is set to be spent as part of the plans using borrowed money rather than being taken from the council’s existing cash reserves.
Councillor Donna Jones, the council’s leader said: ‘We’re trying to run the city more like a business and this is a part of it.
‘This is an excellent investment which will bring money into the council.
‘The main objective of the investment strategy is to generate income to offset some potential impact of spending cuts so we’re pleased to have made this latest purchase.’
The DHL parcel distribution warehouse is 102,000 sq ft and is close to the M6 Toll and M42 motorways.
The purchase is the latest in a series of buys the council has made as part of the £50m project which includes a £8m deal for a warehouse in Gloucestershire and the acquisition of a Waitrose supermarket in Somerset.
The funds involved in the Waitrose deal are yet to be revealed due to a confidentiality agreement made at the time of the purchase.
Plans for further property investments are already under way and the council says that more deals are expected to be completed in the coming months.
Councillor Sean Woodward, executive leader of Fareham Borough Council praised the city council’s approach to generating income.
He said: ‘It’s an approach that yields great reward.
‘I totally support the city council in its pursuit, however, it needs to be careful if it is purchasing the properties with borrowed money as it does have its risks.’
Fareham’s council has made purchases of its own in recent years.
The local authority has secured a handful of supermarkets and units.
These are a Tesco store in Poole, which was secured in a £1.26m deal, a store in Segensworth run by a contact lens manufacturer for £1.7m, a £825,000 deal for a Sainsbury’s in Eastbourne, another Sainsbury’s in Streatham for £1.3m and a Specsavers shop in Weymouth for £810,000.
Cllr Woodward has backed the deals,which total £5.9m, stating that they ‘were worth it’ for the council.