Torbay taxpayers own Range store, pasty factory and Amazon depot

They've lost value, but bring in rents

Commercial property bought by Torbay Council in far-flung places across the country are earning the council millions of pounds in rent, but have lost £37 million in value since they were bought.

Over the past few years, the bay has bought a pasty factory in Cornwall, a cinema in Somerset and a warehouse for Amazon in Exeter as part of a large portfolio of property it acquired to make money to compensate for dwindling financial support from the government.

Critics at the time said it was a high-risk strategy and accused the council of ‘playing Monopoly’ with council taxpayers’ cash.

The practice was outlawed by Westminster early in 2020, preventing any new purchases, but Torbay's faraway holdings - worth almost £175 million - continue to make money.

The portfolio spans the south and west of England and was started in 2017 as a so-called ‘debt for yield’ project using discounted loans to buy property and collect rents from them.

The council’s scrutiny committee has been given a report on how the portfolio is doing in a ‘volatile’ market hit by inflation and rising costs.

Income from rents in the last year topped £13.5 million, nearly £800,000 more than when the properties were first bought. However, a number of tenants’ leases expire in the coming years, and the council is prepared to use its reserves to offer companies incentives to stay.

When the properties were bought, the total value of the portfolio stood at £212 million, but changes in the market mean it is now worth much less - with £174.5 million the latest figure published.

Officers partly blame the drop on the pandemic, with more people working from home and fewer using offices. A slump in the retail market and global economic issues are also blamed.

There was a suggestion that the council might sell some of the properties, but cabinet member for finance Cllr Alan Tyerman (Con, Churston with Galmpton) told the meeting: “Offloading them at a time in which capital values have fallen doesn’t seem a very sensible thing to do.

“When they were purchased, the idea was that we might want to sell, but the changes in the regulations mean that if we sell, we can’t replace that revenue.”

Cllr Chris Lewis (Con, Preston) added: “These investments bring in millions of pounds a year. If we hadn’t bought them we would have had to cut services by millions.

“This has been a real benefit to the bay.”

And Cllr Darren Cowell (Independent, Shiphay) said: “Without that money plugging the hole left by the reduction in government grant, some of Torbay’s services would be in a dire state.”

The contents of the property portfolio currently include: Wren Park retail centre at Torquay; shopping centre run by Tesco at Ferndown, Dorset; Gadeon House office block near the M5 at Exeter, let to EDF Energy; Fugro House office block at Wallingford, Oxfordshire; distribution warehouse London Medway in Kent; new Travelodge hotel at Chippenham, Wiltshire; Twyver House office block, Gloucester, let to the government; Woodwater House, Exeter, offices let to solicitors Michelmores; The Range, Torquay; food factory let to Proper Cornish Ltd in Bodmin, Cornwall; industrial warehouse occupied by Crown Records at Marsh Barton, Exeter; the national distribution centre for Chef Direct at Didcot in Oxfordshire; Amazon warehouse near Exeter and Odeon Cinema, Taunton.