MONMOUTHSHIRE council will retain ownership of Newport Leisure Park for the time being, but selling the site could be considered when it is fully occupied, councillors have been told.
The county council carried out a review of the retail site at Spytty in September but decided against selling partly due to the value of the leisure park which was purchased for £21 million in 2019 as a commercial investment.
A performance review shows the site is bringing in a return on investment of just 1.02 per cent, which is below the minimum two per cent level the authority requires for commercial investments.
Occupancy levels have also fallen from 100 per cent to 97 per cent since the site was purchased.
A council report says the leisure park has been “badly hit” by the impacts of coronavirus, due to leisure and hospitality uses at the site.
A Frankie and Benny’s has closed and Pizza Hut – which also has a branch at the site – entered into a Company Voluntary Arrangement, hitting rental incomes.
At an audit committee meeting on Thursday, Cllr Mat Feakins asked when an “exit strategy” would be considered, adding that he would be against leaving the site.
“I think we have done incredibly well purchasing these assets and our portfolio spread is very good,” he said.
“They can stand up to any scrutiny and any challenge and I would be loathed for us to be forced to exit something which tends to be cyclical in any event.”
Debra Hill-Howells, the council’s head of commercial, property, fleet and facilities, said the authority has already reviewed the position of Newport Leisure Park.
“We considered what the potential costs of disposal would look like and the current market value of that asset given the reduction in the rent roll which we believe will be a short-term reduction,” Ms Hill-Howells said.
“The advice which has been taken by the investment committee and agreed is that at this current moment in time we hold on to this asset.
“We believe that this is a short-term cyclical problem, compounded by the pandemic, but the interest we have in the vacant unit suggests to us that there will still be a long-term interest in this asset.
“It’s much better for us to have a fully occupied leisure park with a healthy rent roll before we would consider any exit strategy.”
Funding provided by the Welsh Government means the retail site will still meet a £400,000 income target this financial year.
Castlegate Business Park in Caldicot, which the council bought in 2018 for £7 million, has also been impacted by the pandemic but its return on investment level is 3.57 per cent.
Income targets for Castlegate are expected to be met with no claims for Covid-19 hardship funding having been made from Welsh Government.