Birmingham City Council is to boost its privately owned Propco with up to £100M of equity backing, as it moves to exploit the council’s vast portfolio of land and buildings.
The move is likely to lead to the largely dormant, council-owned property company stepping up its work. This will likely mean more aggressive site assembly and Propco playing a more active role in redeveloping council-owned sites.
The council’s ruling cabinet agreed this week to allow the £100M equity investment and to speed up the transfer of property assets to the reborn enterprise.
The council will also provide the company with a short-term injection of £500K in working capital to help draw up a business plan.
A new independent chair will be recruited to lead the process.
The decision signals a ramping up of efforts to make the best of council assets. The aim is to improve returns, including allocating £65M to support the council budget, but also to achieve more significant regeneration benefits.
The city council owns a sprawling portfolio of assets. Earlier this month it announced the disposal of the 178K SF office building at One Lancaster Circus, Queensway. JLL is advising on the disposal of the 1.3-acre site that is now surplus to council needs.
The council-owned property business has been in existence since 2017 but has largely failed to make an impression. The original aim was to “[retain] strategic land holdings to lever future growth benefits due to the development of HS2 and airport proximity,” a report to councillors said.
Modest progress came to a grinding halt in 2020 when the rules changed to prevent councils using loans from the Public Works Loans Board to generate investments in the way the council had planned for its property company. Since then the hunt has been on for an alternative way to fund the business. The council hope they have now found it in the form of a well-funded enterprise that will cut out the middleman in the development process and yield the council an extra share of the returns. In the process, they limit the opportunities of private sector developer-intermediaries.
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