Swansea Council has acquired two major multi-storey car parks in the centre of Swansea.
The council has bought from the UK's biggest car park operator, NCP, its car parks located in Orchard Street and the Kingsway.
The value of the deal has not been disclosed, but is understood to have been around a £5m.
Under the deal NCP will continue to operate and maintain the car parks, but will pay an annual rent to the council.
The council said the deal would provide a return on investment due to the new rental income it will receive from both car parks, alongside the continuation of ground rent payments from NCP.
The leases with NCP are for at least the next 19 years.
The council wouldn't confirm the value of the rental deals it has struck with NCP for the two sites.
However, it has confirmed that their acquisition has been funded through its borrowing powers with the UK Treasury's Public Works Loan Board, which provides long-term repayable interest to councils at low interest rates.
The cost of interest on the loan and capital repayments will be more than offset from the new rental income from NCP.
The deal also puts the council in a much better position of potentially demolishing the car parks in the future to make way for new commercial developments.
The Kingsway and Orchard Street car parks provide 328 and 512 car parking spaces respectively.
The council's cabinet member for service transformation and business, Clive Lloyd, said: "We already own the freehold on these NCP sites; now we’ll get a better return which equates to a net return of 7%.
As the rental streams are linked to a combination of compounded and Retail Prices Index (RPI) increases, there is also guaranteed rental growth.
“It’s long-term, secure income and that’s excellent news for our council tax payers. This new money will go straight into us continuing to deliver top class services at a time when our funding from central government continues to fall.
“The deal reiterates the council’s confidence in Swansea city centre. Investing in two strategic, prime sites shows the public and other investors that we want to drive people to our city centre and make it a thriving location for business, leisure and living.”
This is the second deal in the council’s ongoing property investment strategy. Over the summer the council acquired a 43,000 sq ft industrial property on Swansea Enterprise Park, let to logistics firm DHL.
The strategy’s new income will help the delivery of council services. Local authorities across the UK have seen significant drops in Government funding and Swansea Council is aiming to partly redress this by becoming increasingly commercial."
Under the deal the council doesn't have control over NCP's car parking charges.
Property consultants JLL advised the council on the NCP acquisition.
Director at the Cardiff office of JLL, Justin Millett said: "This is great news for Swansea, securing the future of some core car parking facilities.
“Just as importantly, the council acquires an impressive, long-term return on investment for local taxpayers.
“Local authorities across the UK have spent around £4bn on commercial property assets in the past five years with their primary focuses including regeneration and the replacement of lost government funding to protect frontline services.
“JLL is pleased to support Swansea to select the right investments and to achieve maximum value. Alongside the council, we remain on the lookout for further investment opportunities in the Swansea area.”
Property consultants Knight Frank acted for the vendor in the Swansea NCP deal.
