To approve the disposal of part of the council’s portfolio of freehold ground leases at Rotherwas and appoint an external agent to undertake the marketing and disposal on behalf of the council.

THAT:

(a)        the disposal of that part of the council’s portfolio of freehold interests in various industrial sites currently subject to long leases (as identified in the schedule at appendix A and shown on the plan at appendix B) at Rotherwas be approved.

The majority of the portfolio is let on low ground rents and produces a low rental income stream.

Staff time in both estates and legal departments is required to manage the long ground leases and this could be better utilised on higher profile more valuable transactions.

The opportunity to realise a capital receipt would be lost.

The true value of this type of investment property portfolio is difficult to identify.  Public auction is considered the most appropriate method as it exposes the property to all potentially interested parties in a competitive bidding place and brings certainty and transparency that the maximum capital receipt has been realised.

The portfolio will be of interest to a national and possibly international market and hence the need to use a well-established firm to market the opportunity is necessary.

Do nothing and retain the portfolio.  This is not recommended as an opportunity to realise a capital receipt would be lost and continued staff resource will need to be utilised in managing the portfolio.

Market the portfolio internally.  This is not recommended as the maximum capital value is unlikely to be realised.

Negotiate sale terms direct with existing tenants for them to purchase the freehold interest. This would be attractive to some tenants but it is difficult to ensure best value is achieved without exposure to the open market, given the difficulty in assessing market value of these property interests.