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Council Blames Lower Income on Aggressive Competition

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

Cambridge County Council has blamed aggressive competition and coronavirus for a drop in income associated with its student housing investment.

The council admitted that half of the drop in overall investment income so far this year of c.£1million is attributed to Brunswick House student accommodation.

In autumn last year the same committee, that recommended the purchase in 2018, was told that an under achievement on the PBSA was partially to blame for income dropping below target.

Earlier this year the committee was told that a new competitor in the market and their aggressive marketing was to blame for the council not posting the returns it had expected on the £38m investment in Brunswick House.

Councillors are also now questioning the assumption that bookings will be fulfilled in September, due to the decision from Cambridge University to move to remote lecturers in the new academic year.

The asset was built in 2012 and was purchased from Apache Capital Partners at a net initial yield of 4.76%. At the time, 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 added they had acquired "high-quality purpose-built student accommodation asset with its exceptionally strong occupancy track record and defensive income profile".