Council to sell 50% stake in research park

The council acquired a 50% stake in the life sciences research park in 2017 as an alternative means to generate income in the face of diminishing funding for local councils. It is one of seven property assets in a high quality £250m commercial investment portfolio that has been purchased using in the main external borrowing. The loans are repaid from the rent paid by the tenants, who also pay the running costs of the properties. This profit brings money into the council which helps to pay for the important services it provides to residents and businesses.

The council agreed last year that should market conditions be right it would look to sell one or more of the assets.

The council bought the 50% share of Chesterford Research Park for just over £47 million and has invested a further £16 million in refurbishing and rebuilding some of the 11 main buildings on site. In addition, work has started on another very large building, that will house up to 16 companies, and the first phase of a solar farm. A second similar sized building is planned to start in the autumn.

Although there was a significant downturn in many commercial asset markets in late 2022, the life science market continued to thrive and suffered almost no downturn at all. This has led to the Chesterford Research Park asset now being worth far more than the £63 million the council has invested in it. Indications in the market are that life science assets are approaching their peak value and therefore now is the right time to sell.

The sale of the 50% share in the Park would still mean that the remaining portfolio of six assets would be worth many millions more than the loans outstanding against them. As required by local authority guidance, the sale proceeds will be used to reduce the council's short-term borrowing on other assets in the portfolio and, with it, reduce exposure to fluctuating interest rates.

Cllr Neil Hargreaves, Portfolio Holder for Finance and the Economy, said: "The whole basis of the portfolio has been as a commercial asset for revenue return, with the intention that assets were bought and sold at the right times to benefit the council's financial interests. Now is the right time for the council to cash in on the success and huge growth in value of Chesterford Research Park.

"Obviously, we will only sell if we get the right offer for this hugely valuable asset, as we have just agreed a balanced budget without needing to rely on any sale income. The decision to sell is a hard-headed business decision that will deliver the best financial benefit for residents and is not being done, as has been suggested by some, on a need to sell basis. The council takes external professional advice on all aspects of its commercial portfolio including from an independent member of the Investment Board who is an expert in this field."

Cllr Hargreaves added: "The commercial portfolio continues to be very successful and is worth substantially more now than the total sum paid. It has contributed over £14m, after borrowing costs, to support council services since 2019. It has also enabled us to spend £1m on the Covid business recovery programme, £1m on climate change initiatives and £450,000 on large-scale sports grants - without the commercial assets none of this would have been possible."

Residents can find out more about the council's commercial investment programme and its decision to sell the ownership stake in Chesterford Research Park at: www.uttlesford.gov.uk/council-investments. 

28 February 2024