Agenda item

The report provides details of investments undertaken and the return achieved in the first eleven months of the current financial year.  It also makes proposals in respect of the Lothbury Property Investment Fund.

The report of the Director of Finance and Transformation provided details of investments undertaken and return achieved in the first eleven months of the current financial year and made proposals in respect of the Lothbury Property Investment Fund.

A full list of investments held on 30 November 2023 was attached at Annex 1 to the report and a copy of the lending list at Annex 2.  In terms of cash flow and core cash investments, £2,931,760 was earned in interest to the end of February 2024, which exceeded expectation when compared to the revised estimate for the same period.  This was due to the interest rates remaining elevated for longer than anticipated, and provided the authority with the opportunity to continue investing at the favourable rates currently available.

Members were advised that a forward deal for £3m with Close Brothers was agreed to commence in February 2024.  Since agreeing the deal, and due to the current investigation by the FSA into motoring industry loans, Close Brother’s long term rating had been downgraded, although the short term rating remained unaltered.  The situation would be closely monitored and any emerging information would form part of the treasury updates whilst the deal remained active. 

Thus far in 2023/24, the £5m investment in property funds had generated dividends of £136,970 which represented an annualised return of 3.65%.

The report outlined the current position of the Lothbury property fund.  On 28 March 2024, following a vote, it was resolved that investors could exchange their units into the new Fund.  Confirmation had been received from Lothbury that should the Council decide to disinvest at this time and not proceed to the new fund, there would be no exit fees payable prior to the deadline of 1 May 2024.  During discussion, given the significant regeneration plans the Council was progressing and the need to liquidate funds in the not too distant future, Members supported the recommendation that the redemption opportunity be registered in advance of the deadline of 1 May 2024.  However Members requested that prior to the final notification, consideration be given to the redemption of part of the units in the fund with the transfer of the remainder to the new fund.  It was suggested that delegated authority be granted to the Director of Finance and Transformation in liaison with the Cabinet Member for Finance and Housing and the Chair of the Audit Committee to consider and determine whether a partial redemption be appropriate.

In terms of medium-term investment, the diversified income funds had generated £191,930 up to 29 February 2024 which represented an annualised return of 4.92%. 

RESOLVED:  That

(1)      the treasury management update be noted;

(2)      delegated authority be granted to the Director of Finance and Transformation in liaison with the Cabinet Member for Finance and Housing and Chair of the Audit Committee to consider and determine whether a partial redemption of the Lothbury Property Fund be appropriate with the transfer of the remaining units to the new Fund; and

(3)      subject to the outcome of recommendation (2), the proposed redemption from the Lothbury Property Fund as explained at paragraphs 1.2.7 to 1.2.16, be approved.