‘Under achievement’ ‘aggressive competition’ and now coronavirus blamed for drop in income from £38m county council’s student housing investment
- Credit: Archant
A triple whammy – the latest being coronavirus – has hit expected income for the county council from its £38 million acquisition of Brunswick House, a 251-bed student housing block.
The council has admitted that half of the drop in overall investment income so far this year of “around £1million” relates to the Newmarket Road, Cambridge, student accommodation.
A recent discussion on the loss of income took place among members of the commercial and investment committee.
Last autumn the same committee, that had recommended the purchase in October 2018, was told that by the end of October 2019 an “under achievement” on Brunswick House was partially to blame for income dropping below budget.
And earlier this year the committee had it explained to them that a new competitor’s “aggressive marketing” was to blame for the county council not showing the early returns it expected on the investment in Brunswick House.
Now Brunswick House is back in the spotlight, with one councillor questioning officers about the “assumption” that new bookings would be taken for Brunswick House from September onwards.
Minutes from the committee show that the councillor queries this “given that Cambridge University had indicated a move to remote lectures in the new academic year, which was likely to impact on that assumption”.
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Officers advised” that that part of the report on Brunswick House “was written before that announcement, and a significant number of Brunswick House students were from overseas.
“It was still unclear how the university’s plans would be implemented.
“Another member commented that tutor group type activity would continue as normal, which would imply students would still be resident in Cambridge”.
Brunswick House was bought from Apache Capital Partners who said at the time that the sale amount reflected a net initial yield of 4.76 per cent, a record in the UK for a direct-let asset student accommodation outside London/the M25.
Brunswick House, completed in July 2012 and comprising 231 en-suite cluster flats and 20 self-contained studio flats, is less than a 10-minute walk to Anglia Ruskin University’s Cambridge campus.
Jamie Snary, asset management director of Apache Capital Partners, said: “This sale to Cambridgeshire County Council is a great example of a local authority investing back into their local community”.
He said they had acquired “high-quality purpose-built student accommodation asset with its exceptionally strong occupancy track record and defensive income profile”.
Deputy chief executive Chris Malyon “advised” the committee that the impact of Covid-19 “was not as significant in the committee’s service areas, when compared to other areas of the council’s work”.