The council is looking at off-loading all  the investments  made by the previous Labour administration including  a loss making retail park.

In a letter written to the Secretary of State, Michael Gove, in November  the Improvement and Assurance panel  reveals the position regarding the council’s  investment portfolio.

A £100 million was invested in commercial property which was meant to generate income to compensate for the ongoing costs of frontline services but deals made by the former Labour cabinet lead for finance Simon Hall, who resigned alongside the leader of the council Tony Newman in the wake of the council’s collapse, became loss makers.

The Penn report in to the council’s collapse revealed recently that Cllr Hall had to be dissuaded from other investments including buying an air hangar at Biggin Hill.

The council sold off another ‘risky’ investment Croydon Park Hotel at a £5million loss and now the new owners plan to demolish the hotel and replace it with a 39-storey block of flats.

In the panel’s latest report it says  that the Colonnades retail park on Purley Way is ‘close to or in deficit’.

The council spent £53 million on the Colonnades with the expectation of an annual income of around £1.4m net of interest and other costs.

An office block, Davis House, originally purchased by the previous Conservative administration,  is in a similar loss making situation.

Both are being  considered for disposal along with other commercial investments –  Vulcan Way in New Addington and Imperial Way in Waddon, which  the council paid £14 million for and are ‘generating a surplus at market’.

Due to the financial pressures faced by the Council and the need to reduce its debt burden a review of all assets has been ongoing with a number  identified for disposal. 

At the time of the letter, approximately £25million had been received or was due before the end of 2022 as a result of a number of minor property disposals and the conclusion of commercial arrangements over the site of the former Croydon Council Headquarters, Taberner House.

The council, in what was back in 2014 considered a first by a local authority,   invested £45million in Resonance, a leading impact investment manager and social enterprise. The fund leased properties providing affordable accommodation in the private rented sector for former homeless people.

On exiting the fund, the Council is expected to benefit from a capital receipt,  in excess of the original investment which would be used to offset borrowing costs which will support financial recovery. 

The panel says: “We have reported previously on an investment the Council holds in a Resonance property fund with two tranches of £30m and £15m made in 2014 and 2017 respectively. 

“The initial tranche was due to be redeemed in 2022 but the Council agreed to extend this by 12 months as exit conditions were deemed to be unsuitable at that time. 

“Having recently reviewed the performance of this investment the Council has now concluded that it no longer offers an acceptable rate of return and is in discussion about exiting the fund. “