County council orders review into £120m lending to This Land
- Credit: Archant
Global property experts Avison Young has begun a two-month review of This Land Ltd.
Described as a “major multi -disciplinary property consultancy” Avison Young, will look closely at the council’s arm’s length property company.
As of this month, the council has advanced £119.702m to This Land, mainly in long term loans.
This Land chairman Steve Norris, a former Tory MP and minister, tweeted: “I’m delighted that TLL will be subject to an independent review.
“For too long the facts have been twisted by those with an agenda of their own.
“Good move which I and my board strongly support.”
County council chief finance officer Tom Kelly says This Land pays commercial rates of interest on the loans advanced and the expected net income receivable to the council from the loans in 2021-22 is £6.0m.
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The council holds security over the loans by way of mortgages on the properties This Land is developing “providing some risk mitigation”.
He says so far, this financial year, the company has repaid a loan, slightly ahead of schedule, of £2.04m and made interest payments totalling £1.06m.
For the 15 month period to March 31, 2021, the company made an operating profit of £791k.
“However, the company’s significant financing obligations to service loans from the council mean that there is an overall loss after interest and taxation of £3.3m,” he says.
“On the balance sheet, the company has net liabilities of £14m, an increase of £1.4m compared to the position as at December 31, 2019”.
Mr Kelly says This Land’s business plan “overall provides a pathway to commercial success”.
This Land has undergone significant changes in recent times with a scaling back of projects and has sold some of the assets transferred to it by the county council.
It is also involved in a litigation over its decision to sack a sub-contractor, Hadham Construction, who were commissioned to build three deluxe, steel framed homes at Ditton Walk, Cambridge.
This Land plans to defend its actions against Hadham and is looking to demolish the part-built homes and use new contractors to start afresh.
The council says the review will question whether the assumptions that This Land has made in its latest business plan are reasonable and deliverable.