Agenda item

Report CSD21021A

The London Borough of Bromley investment portfolio comprised an investment fund totalling 21 assets with a total value of circa £73m which currently generated in the region of £5.3m pa.  The purpose of the report was to appraise Members of this Portfolio’s performance within in the context of the national impacts on property currently being experienced as result of the Covid Pandemic together with other economic factors.  In addition, the report provided details as to the governance around the management of the portfolio.

In opening the debate, the Chairman highlighted the value of the report as it enabled Members to understand the position of the Council’s investment.

Prior to the meeting Officers had circulated further clarification as to what was meant by the term ‘moral obligations as a public sector landlord’ with the Head of Estates and Asset Management confirming that this has been interpreted to mean that the Council had the right to invest in any business which was able to legally operate within the UK.  The Chairman indicated that his belief was that there should be a focus on a public interest test rather than a ‘moral obligation’ as a public interest test would be more objective.

The Committee had a lengthy debate around the issue with a number of Members expressing opposing views.  Members suggested that the obligation of the Council as a public sector landlord went far beyond a public interest test and that the Local Authority did have responsibility in terms of its property ownership.  However, the Vice-Chairman, in support of the position advanced by the Chairman, stressing the importance of considering the key purpose of the Council’s property portfolio which was to maximise return in order to fund the services the Council provided to its residents.  The property investment portfolio was primarily a financial arrangement.

In response to a question, the Head of Estates and Asset Management explained that rental yields had increased as a result of the fall in capital value.  The Committee noted that statutory valuations were due to be completed by March 2021.

Members noted that the procurement process for a professional investment provider was underway and once the process had been completed the process of 6-month rolling reviews would commence.  The Strategic Plan would be developed after the initial review had been completed.

The Portfolio Holder for Resources, Commissioning and Contracts Management suggested that it would be helpful to establish how the Property Investment Advisory Board will feed into the existing decision making processes to ensure that work was not duplicated and that the best use was made of officer time.  The Committee asked that the Property Division work with the Portfolio Holder to identify the best approach going forward.

The Committee noted that the income reflected in the report focused on specific properties and was not reflective of all the Council’s investment properties.  It was suggested that that a further update on this, and any further reductions in rent, be provided to Members following the meeting.

A Member stressed that overall, the Council’s property investment programme had been ‘outstandingly successful’ and had delivered exactly what it was required to deliver.  However, in recent years there had been a downturn in the retail sector and it was now important to identify alternative revenue streams for the Council, particularly in respect of an industrial strategy.  In response the Director of Finance explained that going forward the priority for the investment fund and the growth fund would be for housing and economic recovery.  In terms of the property portfolio, it would be prudent to undertake a review of the portfolio in order to identify whether there were any opportunities to add value and as such whether any changes were required.

RESOLVED: That the report and the comments made by the Committee be noted.