West Lindsey District Council has spent £5.5 million on a gym and a lingerie factory in Sheffield as part of its plan to generate new income streams.
The authority has invested in two freehold properties and will collect rent from individual businesses.
The first, on Penistone Road, is occupied by Better Gym. This was bought for £2.455 million, with a rent of £164,000-a-year.
The second, a unit on Drake House Crescent, is being leased by Panache Lingerie. This set the council back £3 million - the rent will be £275,000-a-year.
The move follows last year’s controversial £2.35 million Travelodge hotel purchase in Keighley, West Yorkshire.
This is now bringing in £159,430-a-year for the council.
WLDC Governance and Audit Committee chairman Coun Giles McNeill took to Twitter to say he was ‘pleased’ to see the additions to the council’s portfolio.
He added: “We’ve made investments of just shy of £8 million and are generating a return of £598,000 p.a. (7.58 per cent) far better than the return of 0.43 per cent we were earning on our investments in 2012.”
The council has put aside £30 million to build an investment portfolio, which it says is part of a financial plan to combat the future loss of government money.
WLDC strategic lead for people and governance, Alan Robinson, said the potential income from rent and future resale ‘will enable further investment in West Lindsey to support services, economic regeneration and growth’.
Mr Robinson said: “This income is vital in providing much-needed revenue for the council, supporting the continued provision of services in West Lindsey.”
And he said the council followed a ‘stringent set of guiding principles’ when it invests, including a 14-point scoring criteria looking at factors such as the condition of the property, tenant financial standings, yield return and proximity to the district.
WLDC executive director of economic and commercial growth, Eve Fawcett-Moralee previously told the Rasen Mail the council had been looking at commercial investments to buy a ‘safe income stream’.
She added: “All councils are looking at ways of gaining income. We’re investing money to get a return.
“That money comes back to the council, hopefully at a surplus, which can then be invested in [other] things.”
West Lindsey District Council leader Coun Jeff Summers said the authority had started external investments in order to buy an income stream to replace the revenue support grant from the government.
Coun Summers said: “The alternative is to make redundancies and cut services.
“I don’t want to see them [services] cut and I don’t want to make redundancies.
“It’s been referred to as gambling with council’s money but that’s definitely not the case.”
And Coun Summers said WLDC considered ‘many offers’ before making any decisions.