Spelthorne council has borrowed £30m to refinance two property deals completed last year, as March’s total Public Works Loan Board borrowing tipped over £1bn.
The authority, which 18 months ago made the record commercial property deal by a council, borrowed £30m in 50 separate loans.
The money will pay off the initial short-term borrowing from other local authorities which financed the two deals.
Terry Collier, Spelthorne’s deputy chief executive, told Room151: “We made the initial purchases with cheap short-term borrowing and are now fixing it at longer term durations.
“Repayments will be made on a tranched basis, with one loan being paid off each year — effectively a blended annuity strategy.”
The first site covered by the deal is set to provide housing of different tenures — potentially through the council’s standalone housing company.
The second site saw the council acquire the freehold of a 4,000m² office building at Stockley Park in Uxbridge, currently occupied by two tenants.
Both deals are within the council’s local economic area, and are expected to provide income to fund council services.
Collier said that he was not concerned by the update to central government’s investment code for local authorities, part of which attempts to dampen large-scale borrowing by smaller councils for commercial investments.
He said: “These most recent acquisitions are quiet small compared to the existing portfolio.
“We are taking an interest in the issue of proportionality but we would argue we need to look in more rounded terms of risk and are in line with the guidance that suggests all decisions are underpinned by a clear strategy and risk assessment.”
In January, Spelthorne borrowed £170m to fund the purchase of an office building in Hammersmith, London, taking its total borrowing for commercial property acquisition above half a billion pounds.
Total borrowing by public bodies from the PWLB during March totalled £1.04bn, the highest monthly volume since December 2016, when £149m was taken out.
The largest amount borrowed last month was by Birmingham City Council, which drew down £50m in two separate loans.
Buckinghamshire County Council also borrowed £20m to help finance an energy-to-waste plant.
Cardiff Council took £20m to meet part of its capital financing requirement arising from overall general fund and housing revenue account capital programme commitments.
