The Llanelli Star reports that HDD (better known in these parts as Henry Davidson Developments) has sold the East Gate development in Llanelli to Ignis UK Property Fund for £14m, with further payments to follow when currently vacant units on the site are eventually let.
East Gate was developed by HDD in conjunction with Carmarthenshire County Council, and includes the Odeon Cinema, which is owned in turn by Terra Firma, a huge global equity group. It will be recalled that the council generously donated £20,000 to the money men so that the newly built cinema could be equipped with a 3D system.
East Gate is also home to the Red Room, the Scarlets' upmarket bar, which was opened thanks to £280,000 in "allowable expenses" kindly donated by Carmarthenshire County Council, and despite having more than enough of its own office space, the council decided back in 2011 to help HDD out by renting 21,000 square feet of office space in a deal which will cost us £5 million over 20 years.
Ignis is the asset management arm of what is now called the Phoenix Group, one of the largest UK insurance companies. Ignis manages a number of investment funds, and currently has around £66 billion in assets under management.
East Gate is the first venture by Ignis into the Welsh property market, and the Llanelli development sits a little incronguously alongside the fund's swankier holdings in places such as Richmond (Surrey) and Marlow (Buckinghamshire). It also owns Ocado's distribution unit in Hatfield. There's posh.
The Llanelli Star piece, which is presumably quoting a press release, says that the deal represents an initial yield of 7.41%. Ignis reckons that returns in the UK commercial property market will average around 11.5% next year, with strongest growth coming from office space at 13.8%.
East Gate clearly has some way to go before it reaches those dizzy heights, and we council tax payers can only hope that the rental agreement for the office space has clauses built in to protect us from any dramatic rent increases.
Before the deal went through, I wonder if any senior Council officers or Exec Board members met Ignis executives? If so, what was discussed? Against a background of seemingly unnecessary disbursement of public funds to an apparently attractive commercial venture, suspicious minds might wonder whether comfort was sought about a continuing obliging approach on the part of the Council. Or perhaps Ignis executives fall outside that favoured clique "known to officers", and they're on their own.
And guess what: they have just changed their status so their clients can (legally) avoid tax.
Time to check the councillors declarations of interest: such a pity officers don't have to declare their financial holdings.
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