Agenda item

To consider an update on WBC’s Property Investment Group (Contains Part 2 Sheets)

The Committee received and reviewed a report, set out in agenda pages 23 to 40 (the part 1 report was contained between agenda pages 23 to 30), which detailed the Council’s approach and practices within commercial property investment.

John Kaiser (Executive Member for Finance and Housing), Stuart Munro (Executive Member for Business and Economic Development), Graham Ebers (Deputy Chief Executive – Director of Corporate Services), Bernie Pich (Assistant Director – Commercial Property), Damon Emes (Head of Investment) and Bob Watson (Head of Finance) attended the meeting to answer Member queries.

Graham Ebers stated that the Council had agreed a strategy whereby Wokingham Borough Council would borrow funds to invest in commercial property in order to generate an income. WBC were neither the trailblazers nor the trailers for this type of strategy, and some other authorities had fully embraced this method in a much more aggressive manner. WBC were in the middle, in terms of ambition, and were working within the Council’s approved policy. Graham stated that he was personally responsible for discharging this policy, and worked closely with the Executive Member for Finance and Housing, the Executive Member for Business and Economic Development and key specialist Officers.

During the ensuing discussions Members raised the following points and queries:

·           Why was there no reference to capital gain within the report? Officer response – It was not possible to accurately predict capital gain. The team took a prudent approach to appraisal of income and performance and did not forecast or speculate with regards to capital growth over a term as it was not always clear how long the property would be in WBC ownership. No attempt was made by Officers to predict capital growth which would be measured by periodic re-evaluation.

·           What was the level of repayment of debt? Officer response – 0.67% was repaid every year, which equated to 10% of the debt being repaid over a 15 year period.

·           Had the team liaised with a variety of other Councils who were also operating within this space? Officer response – The Property Investment Group (PIG) had met personally with a selection of other authorities. In addition, Officers had been in contact with over 100 other authorities via conferences focussing on commercial property investment. Direct contact was often hard as authorities were naturally reluctant to divulge their specific strategies as it was a competitive market and expertise was very valuable.

·           When the report refers to delegated decisions, was this accurate? Officer response – The final decisions relating to investments were solely the responsibility of the Deputy Chief Executive – Director of Corporate Services (S151 Officer).

·           What was the strategy with regards to asset disposal? Officer response – The detailed management strategy involved both entry and exit strategies. There was not a high expectation of asset disposal in the near future.

·           Relating to agenda page 26, should the company details not be considered as part 2? Officer response – The post code and description of the companies would indicate who they were regardless of whether the full name was disclosed in this way. An individual could work out the information presented on page 26 using public records and specialist journals. As a public body, WBC was required to be more accountable than a private investment firm would need to be.

·           Had any Member been actively involved in local commercial property before becoming involved with the PIG? Executive Member and Officer response – Not that anybody was aware of. Any conflict of interest would need to be declared in the standard way as set out within the constitution.

John Kaiser commented that this income stream had become fully integrated within the Council, however there were plans to increase the reach of this strategy. There was a desire to use this strategy to provide services, for example kick starting regeneration projects within other parts of the Borough. So long as the properties generated the expected returns then social benefits could be reaped in addition.

At this point in the meeting the Committee passed a resolution in the following terms to move into a part 2 discussion: That under Section 100A(4) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A of the Act (as amended) as appropriate.

RESOLVED That:

1)     John Kaiser, Stuart Munro, Graham Ebers, Bernie Pich, Damon Emes and Bob Watson be thanked for attending the meeting;

2)     A further update on the Property Investment Group be considered by the Committee during the next municipal year;

3)     The Committee be kept up to date on any unexpected deviation of strategy or projected returns.