Agenda item

Aylesbury Vale Estates (AVE) had been formed in 2009 as a 20-year Joint Limited Partnership (JLP), following a 15-month full OJEU procurement process.   It was a 50-50 partnership between the Council and private investors who collectively formed Akeman Partnership LLP.  Akeman Asset Management provided the day to day management of the portfolio with the ‘Board’ meeting formally every quarter with more informal monthly interim meetings.

AVE was required to present a rolling three year business plan for comment and sign-off by the Council as 50% shareholder.  Cabinet received a report and accompanying business plan which set out the strategy for achieving the core objectives of AVE (as agreed in 2009), during the plan period.  The detail of the plan was focused on the first year i.e. 2022/2023.  The strategy for years 2023/2024 and 2024/2025, would be kept under review to enable new opportunities and challenges to be responded to.  The report also summarised the performance to date in the current financial year.

RESOLVED –

(1)               That the performance of AVE against the current Business Plan and for the current financial year be noted.

(2)               That the AVE Board be asked to consider the comments made at this meeting on their strategy and business plan, in finalising their Business Plan for 2022-25.

Aylesbury Vale Estates (AVE) had been formed in 2009 as a 20-year Joint Limited Partnership (JLP), following a 15-month full OJEU procurement process.   It was a 50-50 partnership between the Council and private investors who collectively formed Akeman Partnership LLP.  Akeman Asset Management provided the day to day management of the portfolio with the ‘Board’ meeting formally every quarter with more informal monthly interim meetings.

AVE was required to present a rolling three year business plan for comment and sign-off by the Council as 50% shareholder.  Cabinet received a report and accompanying business plan which set out the strategy for achieving the core objectives of AVE (as agreed in 2009), during the plan period.  The detail of the plan was focused on the first year i.e. 2022/2023.  The strategy for years 2023/2024 and 2024/2025, would be kept under review to enable new opportunities and challenges to be responded to.  The report also summarised the performance to date in the current financial year.

The report detailed the background to the formation of AVE that was now over 12 years old and performing well.  The starting portfolio had been valued at £36.1m.  The starting portfolio had been valued at £36.1m, with the purchase financed by non-interest bearing loans from each member of £4m plus two loans from AVDC.  Details of loans provided and arrangements for their payback were detailed.  The current outstanding debt was just under £33m in line with the agreed amortisation schedule.

The council’s and private investors net asset value of their ownership of AVE had now risen to £17.020m from the original £8m investment which showed an annualised return to investors once distributions and set up costs were paid, of 16.93% per annum.  The portfolio was usually valued annually but this had not happened in 2020 due to Covid. At the end of March 2021, the portfolio had been valued at just under £44m. This was a slight drop from the 2019 valuation, attributable to value impairment of the Hale Leys Shopping Centre. However, the value of the Centre was expected to increase, as footfall builds following the various lockdowns, supported by the signing of a number of new lettings.

The report provided a summary of the 2021/22 Business Plan and performance to date.  The overall aim for the past few years had been to produce a self-sufficient portfolio, not reliant on sales, which paid all AVE overheads, all amortisation and distributed £600,000 pa whilst still retaining an annual profit.  Information was provided on:

·                     That strategy in 2021/22, as approved by the Council.

·                     The sale of high value/low income assets for reinvestment in the portfolio through redevelopment of current sites.

·                     The Development of key assets and renewal/upgrade of industrial stock.

·                     Target Distribution – a distribution of £600,000 would be paid in March 2022 as forecast.

·                     The vacancy level across the main multi-let industrial estate which had remained very low over the last three years at between 0% and 2% despite the pandemic.

·                     Hale Leys Shopping Centre – which had sought to maintain current tenants whilst also continuing to diversify its offer with the New York Kitchen due to open in December followed by Wimpy UK.  Both these offers would create active frontage onto the High Street and be open beyond Centre opening hours helping to increase the revenue stream.

·                     The review of all non-core and category B assets, with a view to selling or developing them, where possible.

·                     AVE paying off expensive debt to reduce the cost of finance and reduce amortisation.  AVE has received a number of capital receipts from the sale of assets but agreed to retain some funds for re-development purposes. Paying off expensive debt has been deferred to 2023/2024 of the new business plan.

AVE’s objectives for 2022-2025, remained the same as the current business plan although there were some variations in the proposed strategy to achieve these:

·                     Reinvestment of sale funds into key development sites – Stocklake and Rabans Lane.

·                     Target a distribution of £600,000 pa increasing towards the end of the business plan as income increases particularly from the new commercial developments at Stocklake and Rabans Lane.

·                     Pay off expensive debt to reduce the cost of finance and reduce amortisation.

·                     Reinvest any excess funds to further enhance the income stream.

·                     Maintain current levels of occupancy within the main industrial portfolio.

·                     Hale Leys – maintain current tenants, let vacant units and improve further income stream.

In 2022/2023, the main focus for AVE would be on achieving planning approval for the Stocklake and Raban’s Lane development sites. This would enable the residential element of the Raban’s Lane scheme to be sold with outline planning consent and contribute to the area’s housing target. It would also enable AVE to proceed with the commercial developments at Stocklake and Raban’s Lane to generate a future income stream as well as generating employment opportunities.

Members were informed that the detailed business plan (confidential) set out a number of key assumptions about these specific development sites.  Achieving these assumptions would assist AVE to deliver other strands of the strategy including future distributions, paying off expensive debt and maintaining the current levels of occupancy in the main industrial estate.

AVE would also continue to review its non-core assets and community assets bringing forward any proposals for the council’s consideration. The sale of the two scout huts to the relevant scout club/association were good examples where assets of low value/income to AVE were sold for the higher benefit to the local community.  As the new Buckinghamshire Local Plan take shape, AVE would be keeping the portfolio under review to identify if any sites should be put forward under the call for sites stages of the planning process.

RESOLVED –

(1)               That the performance of AVE against the current Business Plan and for the current financial year be noted.

(2)               That the AVE Board be asked to consider the comments made at this meeting on their strategy and business plan, in finalising their Business Plan for 2022-25.