Industrial investment in Bridgwater snapped up by South Somerset District Council below asking price
Units 1 & 2 at Dunball Industrial Estate in Bridgwater have been purchased by South Somerset District Council for £2.82m, well below the marketed value of £3.025m.
The purchase forms part of the Council’s Commercial Strategy which aims to enable the council to be more commercial, business like and generate income whilst remaining focussed on our core purpose – to support and deliver for our communities.
The building provides 36,050 square feet of flexible industrial accommodation and has been tenanted by Trelleborg Sealing Solutions since its construction in 1983. The purchase was completed in January this year and was assisted by Bristol based investment specialists, Alder King.
There is development potential to the north of the site and with the development of Hinkley Point C, there will be an increasing demand for industrial property in the area, which the property is well positioned to benefit from.
Councillor Henry Hobhouse, portfolio holder for property at South Somerset District Council, said: “This property meets our aim of acquiring well located property with established tenants, where we can add value. We were able to acquire the property with a 7.51% net initial yield and with very little industrial property in the market in excess of 7%, I’m pleased that we have been able to acquire so well in Bridgwater.”
The asset joins Marks & Spencer and Wilko in Yeovil as tenanted units purchased by the District Council and adds to the growing and diverse portfolio of investments made.
Why is South Somerset District Council becoming more commercial?
The Council is currently operating in a complex financial climate, where between 2018 and 2022, it needs to deliver savings rising to £6 million per year. This is in addition to having to cut its costs substantially since 2010.
SSDC has sustained a 70 per cent reduction in its Government grant funding since 2010 and further reductions are likely in the future whilst demand for and costs of many services continues to rise. It became clear that SSDC needed to make the most out of its assets and look for new opportunities which could generate income to protect the wide range of services our communities receive and create opportunities to fund new projects.
It has seen the Commercial Services and Income Generation team given an on going annual income target of £2m for commercial investment income and great progress is being made.
This is about making prudent financial decisions which will create significant income to get the best results for South Somerset but still, where possible, supporting the local economy.
How does the council decide on where it invests?
Every decision that is made is being rigorously tested and checked. The Commercial Property Team is working to ensure that SSDC does not overpay for property due to the lack of supply, and is not exposed to undue risk, for example within the retail sector, where significant changes are currently occurring nationally.
A huge and diverse range of opportunities have been considered and rejected in the past year from a car showroom in Newcastle to an industrial estate in Poole.
Reasons for rejection can include the asking price not matching our valuation, unacceptable risk to income, non-compliance with our commercial aims and objectives, and over-exposure to a particular market.