Northamptonshire County Council, advised by PwC, have accepted a sale and leaseback of its One Angel Square headquarters to Canada Life Investments for £64m.
The sale and leaseback of this building will help the council fund the transformation of services and the transformation of governance in the county in partnership with district and borough colleagues.
Following last year’s financial close, which depleted the council’s reserves, new financial challenges have been added to the already very difficult budget position.
Last month the council announced that it was pausing the process of the sale and leaseback of One Angel Square. In light of the Best Value report it was considered that time was needed to reflect and take further soundings prior to making a decision on the sale.
Having done this and following strong recommendations from the chief executive and chief finance officer on the financial impact of not proceeding it has been decided it is right to go ahead with the sale. The sale and leaseback agreement would be for 35 years.
Cllr Matthew Golby, Leader of Northamptonshire County Council said:
“We believe that this transaction is effective in leveraging the council’s assets and covenant allowing us to maximise the benefit of very competitive pricing at this point in the market.
“I am confident that the transaction will provide the funding required to enable the transformation programme to set the council on a strong future trajectory.
“The advice received is that this deal represents very good value for money for taxpayers of the county and generates more money than the construction costs of the building.
“While this kind of deal may be less usual in the public sector the lease back arrangements being entered would be seen as standard finance practice in the private sector.
“Put bluntly without this sale far more service cuts would be required and the process of reorganising local governance in the county would be carried out against a backdrop of unsustainable cuts to the very services the new councils would be created to run.”
Ainsley Moore, PwC Real Estate Advisory Leader, said: “The council has taken advantage of strong market appetite to release capital at a very attractive rate in a very competitive process between a range of long term investors.”
Michael White, Canada Life Investments Property Investment Director, said: “The Fund is very pleased to enter this transaction with the council. The long term rental stream is an ideal match for income annuity liabilities. It is another good example of private and public sectors working together in mutual benefit.”