THE mystery building bought by Warrington Borough Council close to the town centre has been revealed.
warrington-worldwide can exclusively reveal that the council has acquired the DW Sports building with the rental income from the existing tenant being seen as a good investment.
The purchase was made following a joint report by leader of the council Terry O’Neill and corporate finance chief Russ Bowden, to the council’s executive board that the opportunity had arisen to acquire the property, which will bring another town centre asset into council ownership and open an opportunity for future regeneration.
The two councillors recommended that the council acquired the property – although the exact financial implications were not been revealed in their report.
They said the council would be seen to be acting proactively and taking leadership, investing in the town to promote economic development.
The council agreed to set up a strategic property acquisition fund in 2012.
A Warrington Borough Council spokesman said: “We bought the leasehold interest of the property in September. DW Sport will continue as the tenant, responsible for the site and paying the Council a rent. There are no plans to change this.
“We already owned the freehold so we have merged the interests which is good value for the Council. Rental income is an investment and, in the longer term, we may seek to work with DW Sport over regeneration of the site.”
A planning application involving the building will be heard at next week’s planning committee, involving a new gated entrance access onto Academy Way.
The DW Sports building which has been acquired by Warrington Borough Council
3 Comments
Who funds or where does the money come from for the property acquisition fund?
Either from WBC’s own cashflow or it borrows the money. WBC is able to borrow money at very low interest rates, with the rent that it receives from DW paying that interest and possible giving it some annual income that it could spend on services. The long term expectation is that there will be capital appreciation on the property….commercial property portfolios have risen in value substantially in recent years….indeed Alan Sugar of AMSTRAD and The Apprentice series has derived most of his wealth from commercial property. It is often asked if WBC is able to borrow so much money, why can’t it do that to fund the services that it is reducing or stopping providing, that is a good and valid question, the answer is that local government legislation prohibits such borrowing to fund day to day services, however as previously mentioned, if it borrows money for capital expenditure and then generates some income, it can spend that income on its day to day services. It should also be noted that if the income from that investment does not cover the interest on the loan, then in order to pay that interest, money that might be used to provide day to day services will have to be “diverted” to pay the interest. Hope that helps answer your question, albeit that I can’t say if it is a good deal or not for Warrington residents, as I am no longer involved with Council decision making, having retired last May. There is nothing to stop residents from contacting their local Borough Councillor to ask about such investments.
Thank you for the explanation Paul.