Hammerson plc has exchanged contracts on the sale of St Oswald's Retail Park, Gloucester, to a local authority for £54 million.

The 20,900 metre squared scheme, just to the north of Gloucester city centre, is the former cattle market site now 'retail and leisure space' with flagship tenants including Homesense, B&Q and Wren Kitchens.

According to the business the sale price reflects a net initial yield of 8.5 per cent, and is eight per cent below the 30 June 2019 book value.

Hammerson originally developed the site in 2005, and has since increased the overall number of units on the park to include a mix of retailers and brands.

So which local authority is the new owner?

Stroud District Council, Cheltenham Borough Council, Cotswold District Council and the Forest of Dean District Council came back immediately to say they were not the new owners of the St Oswald's Way retail park.

A spokesperson for Gloucester City Council, said: "The city council cannot confirm or comment on the speculation around the sale of St Oswalds retail park at this time."

Although it is possible the buyer could well come from anywhere in the country, of course.

Following this transaction, Hammerson has achieved £577m of disposals in 2019, exceeding its minimum disposal target, of in excess of £500m, for the financial year.

This includes the sale of a major stake in its Italie Deux flagship destination in Paris for £423m, announced in July, as well as additional retail park disposals.

David Atkins, Hammerson chief executive, said: "Despite a challenging investment market, we are successfully executing disposals in line with our priority to reduce debt and strengthen our balance sheet.

"These transactions also give us the flexibility to capitalise on the opportunities we see in the market, particularly with regards to our City Quarters pipeline, which is core to the future direction and success of our business."

According to RICs (Royal Institution of Chartered Surveyors) local authorities are looking to commercial property investment to help plug their funding gap.

Initially the principal aim was a long-term income stream.

As RICs points out, with some councils now forced to borrow funds to provide core services, such investments have become a near necessity rather than the activities of a few who thrive on risk and reward.

"The Local Government Association (LGA) voiced concern about the drying up of central government funding to councils in September (2019). With cuts of a further £1.3bn from council funding proposed in 2019/20, the LGA predicted that more than half the local authorities in England would receive no central government financial support at all," said RICs.

According to RICs the upward trend in local authorities investing has been dramatic. In 2014 an estimated £100 million was invested in commercial property.

In 2017 that figure was above £1,800 million, falling back a tad in 2018, but only to £1,000 million.

According to an article published in the FT councils are not meant to borrow to speculate, although there is no suggestion of that happening in the case of St Oswalds.

"The Government said in 2009 it was 'unlawful to borrow with the sole purpose of investing at a profit and without any spending objective'.

"However, the 2003 Local Government Act does allow councils to 'borrow in advance of need'."

The article quotes experts who warns, not without sympathy for the council's plight of the dangers of local authorities 'investing' in such a way, citing the difficulties experienced in the 1970s and 80s, when Hammersmith and Fulham council and the plight of the 127 councils which had almost £1bn on deposit with failed Icelandic banks.

Punchline says: This is an interesting one. We have tremendous sympathy with all local authorities trying to rise to the near insurmountable funding challenges they face. And it is great to see money being invested in our county. But it is public money and it is harder to understand why some transparency is not in order, especially when there appears to be no confidentiality agreement in place. So many millions of pounds are in one basket here in a commercial property market best described as uncertain.