Feb 07 - Technical Experts “Confirm GSD Understanding” Of £300 million Housing Estate Loan

Written by YGTV Team on 07 February 2017.

In lieu of answering tabled official Parliamentary questions in September last year, the Chief Minister offered to host a meeting with its technical advisers and Members of the Opposition in order to provide detailed information that had been requested on the £300 million loan secured over the six Government housing estates namely Moorish Castle Estate, Glacis Estate, Laguna Estate, Alameda Estate, Mid Harbour and Varyl Begg Estate.

The meeting was held yesterday afternoon at No 6 Convent Place the attendees being the Chief Minister Fabian Picardo, the Minister for Housing Samantha Sacramento, the Financial Secretary Albert Mena, the directors of Gibraltar Capital Assets Limited being James Levy, Charles Serruya and John Collado and legal adviser to Gibraltar Capital Assets Limited Peter Montegriffo, Roy Clinton and the Leader of the Opposition Daniel Feetham attended on behalf of the GSD.

The GSD says that during a “full and frank discussion” that lasted an hour and a half, the Government’s advisers revealed the following main points:

• The Minister for Housing had entered into a 31 year Tenancy agreement with Gibraltar Capital Assets Limited and that as a consequence all rental income from the six housing estates was in future assigned to the company and the Housing Agency effectively would collect rent on its behalf. 

• It was anticipated that rents would have to be increased by 3% every year for the next 30 years to meet the financing requirements and control over rent arrears would necessarily have to be tightened. 

• It was confirmed that the current annual rental income of around £3 million (in relation to the six housing estates) was insufficient to cover the annual interest bill of £11 million and that an unnamed Government company would be paying an amount to Gibraltar Capital Assets Limited to cover the shortfall and build up a sinking fund to enable repayment of the loan. 

• The Government denied that the existence of an option agreement that enabled loan note holders to force the Government to buy the loans in the event of a default amounted to a Government guarantee of the notes. The exact terms of the option agreements were not disclosed. 

• The loan is secured on the six housing estates by way of mortgage. 


Roy Clinton GSD MP with shadow responsibility for public finance said:

“We have had some technical questions answered but frankly the Government’s view that the entire transaction is not considered part of Gibraltar’s Public Debt due to its legal structure flies in the face of the logic that public housing estates have been mortgaged and the debt is in substance ultimately Gibraltar’s. In addition we still do not know exactly what this money will be used for by Government and neither can we see in Parliament what happens to it, this cannot be right given we are talking about £300 million of additional borrowing that this Government during the election campaign never even mentioned it was considering, despite Gibraltar Capital Assets Limited having been incorporated the day before the day of the General Election. This Government pledged to reduce borrowing and it has done the exact opposite burdening an entire future generation with £300 million of new debt and interest.”