Plans to invest public money in the “safe haven” of commercial property to provide funding for front-line services will continue under the re-elected Lib Dem district council.

South Somerset District Council has to date invested £39million in eight commercial investments, comprising a mixture of retail, offices and residential properties.

The council is currently earning a return of £1.75million a year, which is being used to fund regeneration projects in Yeovil, Chard and Wincanton, along with other public services.

If a further five properties – which are currently under offer – are purchased, the annual return will rise to £2.84M by the end of 2020.

An update on the council’s existing investments came before its district executive committee in Yeovil on Thursday morning (June 6).

Councillor John Clark, portfolio holder for economic development, said the council had so far invested around £39M of the £75M it had originally allocated for those purposes.

These are the properties in which the council has invested money to date:

  • Marks & Spencer, Yeovil (£7.65M): the council’s investment in this property is linked to the company having a long-term lease. Despite recent announcements about store closures – as M&S moves more towards food and home delivery – the Yeovil store has “not been affected” by any of these announcements.
  • Wilko, Yeovil (£4.23M): the store is covered by a covenant, with Wilko holding the tenancy until 2025. Robert Orrett, the council’s commercial property, land and development manager, said: “There are no indications from Wilko that there is any intention to leave Yeovil. With the sale of Glovers Walk and regeneration of this area of town on the horizon, we expect that this will remain the case for the foreseeable future.”
  • Residential development of former care home, Marlborough (£4.29M): The development – consisting of three new homes and 15 apartments – is nearly completed, despite the winter weather and issues with the existing building extending the construction period. The council expects the whole complex to be completed and sold off by the end of 2019, which “should generate a healthy receipt”.
  • Battery storage facility, nr Taunton (£9.84M): This facility – which allows the council to store power and sell it back to the National Grid at peak times – was completed in April and will be fully operational later this year. A recent valuation judged the site to be worth more than the costs of setting up the project, with Mr Orrett expecting its value to “have significantly increased” once it is actually up and running.
  • Units 1 & 2, Dunball Industrial Estate, Bridgwater (£2.82M): this site, purchased in January, is the council’s first investment in the industrial property sector, which is “the best performing sector” in the commercial property market. The proximity of the site to Junction 23 of the M5, coupled with the construction of Hinkley Point C, is expected to generate a healthy return.
  • Linden House, Bristol (£2.75M): The council purchased this property in February to take advantage of the “historically low availability” of offices in the central Bristol area. The offices have been occupied by Galliford Try PLC, a major housing developer, since 2007.
  • GoCompare offices, Newport (£4.66M): this building – also known as Imperial House – was chosen for its close proximity to Junction 28 of the M4 and was refurbished back in 2013. The council believes the abolition of Severn Bridge tolls will lead to greater trade between south Wales and Bristol, which will lead to more demand for office space and thereby “an upturn in rents locally”.
  • Bell House, Milton Keynes (£2.925M): the most recent acquisition comprises 10,695 sq ft of “grade A office accommodation” over four floors. The property has “four good tenants” and was purchased below the asking price following negotiations. The rent levels are expected to rise in the coming years as a result of the improving transport links in the area, including the new railway line linking Oxford and Cambridge

The council also has “a headlease interest” in a new hotel and retail development – but as of Friday (June 7) it has declined to reveal the nature or location of this investment, as well as how much money was involved.

Mr Clark said the council’s investment team considered around 50 different investment opportunities each month – but the Income Generation Board only approves one or two of these cases once due diligence has been undertaken.

He said: “We’re very fortunate to have some of the best national expertise in this area on our team.”

Mr Orrett that investing in property would provide a steady return to fund the authority’s services.

He said: “The property investment market remains a robust market.

“Commercial property investment is seen as a safe haven, and so the appetite for investors to put more money into property has been sustained.

“We need to get a new opportunity under offer each month to keep on track, and we’ve managed to do that.

“A further five investment assets, totalling £17.5M, are under offer, which will increase gross income to £2.84M in 2020.

“By 2020 the portfolio is expected to deliver a gross return of 7.03 per cent.”