Southwark Council has bought Courage Yard on Shad Thames, near Tower Bridge, which it will redevelop to generate income for frontline services.
The office, retail and residential square, on the site of the former Courage Brewery, close to Potters Field Park and the council’s own headquarters on Tooley Street, was purchased for £89 million, with a yield of 5%, from Columbia Threadneedle.
It is made up of seven buildings, one of which is the headquarters for global tech company ZPG Ltd, and it is the second time the 0.89-ha freehold property has been on the market since 1989.
Southwark Council uses a variety of sources to maintain the value of the portfolio and its returns through recycled capital receipts, internal borrowing and – where appropriate – external borrowing from the Public Works Loans Board; this will continue to be the case for Courage Yard. The investment will generate around £5 million per year in revenue, which the council will put towards vital services.
Councillor Victoria Mills, cabinet member for finance, performance and Brexit, said: “Income we receive from our commercial property portfolio is essential to help support our highly valued public services in this time of decreasing government funding.”
Over the years, Southwark Council has acquired commercial assets to generate revenue. Mills said: “Projects are chosen based on being in Southwark and the size and resilience of their revenue return, which can then be used to support our frontline services.
“Over recent years, a number of properties the council owns have been sold to help finance our substantial capital programme or we have developed them to deliver new council housing. This has reduced our income from commercial assets.
During 2017, Southwark Council bought four properties in the borough with an established rental income of over £2.18 million a year. In March 2017, three office buildings in Bermondsey.
Mills added: “We believe that Courage Yard will be another valuable asset for the council.”
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