Shrewsbury shopping centres deal 'still worth it' - despite £11.5 million loss in value
Despite losing a fifth of its value in a recent revaluation, the purchase of the Shrewsbury shopping centres was a good long-term deal for Shropshire Council, a top officer has said.
The council's finance chief, James Walton, added that the £11.5 million drop from an original value of £51m would not be passed on to taxpayers.
In January 2018, the authority purchased the Charles Darwin and Pride Hill shopping centres and bought out the lease of the council-owned Riverside Shopping Centre from Standard Life.
Mr Walton told the council's audit committee that council assets’ values “fluctuate” regularly, but the town centre investment was still more profitable than the interest the money would have accrued in the bank.
A report before the five-member committee said: “Following a revaluation of the shopping centres as at March 31, 2019, a revaluation loss of £11,476,000 has been included within expenditure in commercial services.”
Audit committee member Councillor Chris Mellings asked: “Does the drop in value have any implications for our revenue stream going forward?”
Mr Walton said: “The way the accounts work in local government, the impact of that doesn’t get written off within the revenue account.
Renegotiated
“There is a statutory override so we don’t have to charge this loss to the council taxpayer.
“We own a lot of assets whose values fluctuate.”
He said the rents paid by some shopping centre tenants had been renegotiated and reduced.
“In terms of that return, in the short-term, although less than we would have hoped, it is still better than the return we would have got had the money stayed in the bank,” Mr Walton said.
“There was no borrowing involved in the purchase of the shopping centre.
“We didn’t buy it purely as a financial investment. It was also for the purpose of economic regeneration.
“The advantage of that is that we can expect that investment to increase its returns.”
The £11,476,000 revaluation loss formed part of the £20,436,000 increase in expenditure between 2017-18 and 2018-19, partly balanced out by a £7,254,000 increase in income.
In total, Shropshire Council ended 2018-19 with a £167,000 underspend on a gross budget of just over £562m.
