A move that was years in the making
By Catherine Woods, published 2 years ago in Finance & Banking.
Freehold or leasehold? Refurbished facility or new site? These questions were posed to Tungum FD Ian Johnstone as management decided whether to relocate the company.
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Eventually the decision was made to sell the freehold site the tubing and pipework systems supplier had operated from for the last 50 years. “It was a very old site and needed refurbishment,” Johnstone says.
“This has been a big issue for three to four years. We tried to get planning approval to sell some of it for housing. Planning consent was given and the land should have been released but the local council chose to leave it as employment land.”
Tungum opted to move to a leasehold property that the company fitted out to suit its purposes, partly because it was felt another freehold wouldn’t achieve the same capital appreciation.
Johnstone adds: “The justification to have freehold was that we could borrow money against it. Now, we’re borrowing less and using the money for productive reasons.”
The move has proven to be beneficial. Tungum wanted the site to reflect what it is – a modern engineering firm – and it seems to have done that. “We feel part of the reason we’ve been able to secure some long-term contracts is based on the modern facility we now offer to customers,” Johnstone says.
And, as far as he knows, the council still hasn’t given permission for the land to be used for residential purposes.
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