Councillor Gerard Brewster – Chair MSDC (Suffolk Holdings) Ltd
Additional documents:
Minutes:
12.1 Councillor Brewster introduced MC/19/16 Capital Investment Fund Company (CIFCO) Business Trading and Performance Report 2018/19 and said that the report compared the performance of CIFCO against the Key Performance Indicators (KPI) set out for the company. He summarised the main points in the report and the draft Business Plan for 2019/20, set out in the Confidential Part of the agenda as Appendix A. The Business Plan had been prepared by the Board of CIFCO in consultation with the Company’s financial advisors Jones LaSalle. It had also been approved by the Council’s Holding Company and endorsed by the Joint Overview and Scrutiny Committee and Babergh District Council on the 23 July 2019. The Business Plan formed an important part of the Governance of the Company.
12.2 Councillor Brewster MOVED recommendation 3.1 and 3.2, which was SECONDED by Councillor Meyer.
12.3 Councillor Mansel asked that Members voted separately on each recommendation, which the Chair agreed to.
12.4 Councillor Mansel asked for clarification for the business investment criteria on page 66 in paragraph 8, which had changed in the Business Plan from the one last year.
12.5 Emily Atack, Assistant Director for Assets and Investments, responded that the business investment criteria had changed in relation to the target yield based on the experience on the previous year’s market. The principles remained the same. Other changed related to the change in the kind of properties invested in by the Council. More investments were to be made in industrial and office properties due to the resent fluctuations in the retail property market.
12.6 Councillor Field asked for further explanation of the revaluation of the properties and the loss incurred to CIFCO.
12.7 The Assistant Director explained that the loss of £1.3M to CIFCO was a result of set-up costs, stamp duty and actual acquisition of properties. She detailed the relation between the management of the portfolios, acquisition of properties and the income to the Council.
12.8 In response to Councillor Field’s further questions, the Assistant Director clarified that the £1.5M was an income to the Council after the loan interests had been paid. The loss to CIFCO was a capital loss and did not affect the income to the Council as the income from the rents were not affected.
12.9 Councillor Stringer stated in the current Business Plan higher risk investments were no longer included, which was confirmed by the Assistant Director for Assets and Investments. She explained that the Board of CIFCO had made the decision to invest in lower risk assets, which had resulted in a lower yield in the property portfolio.
12.10 Councillor Otton referred to the Overview and Scrutiny Report and stated that the report indicated that the board of Directors were confident that there could be no drastic result of the a ‘no deal’ Brexit and that once Brexit was attained, the commercial property market would not be affected. She was concerned that it was yet unknow what effect Brexit would have on the property market and on ... view the full minutes text for item 12
Councillor David Busby – Acting Chair BDC (Suffolk Holdings) Ltd
Additional documents:
Minutes:
10.1 Councillor Busby introduced the report and explained that the performance for 2018/19 was set against the key performance indicators, which had been set out in the previous years’ Business Plan. The net initial yield for the first year of trading was 5.75%.
10.2 The draft Business Plan for 2019/20 was set out in the Confidential Part of the agenda as Appendix A and had been prepared by the Board of CIFCO in consultation with the Company’s financial advisors Jones LaSalle. It had also been approved by the Council’s Holding Company and endorsed by the Joint Overview and Scrutiny Committee. The Business Plan formed an important part of the Governance of the Company.
10.3 Councillor Busby MOVED recommendations 3.1 and 3.2, which Councillor Holt SECONDED.
10.4 Councillor Arthey asked for clarification of paragraph 10.5 on page 32, and the reference to £3,119,558.
10.5 Councillor Parker enquired which part of Appendix A was actually considered confidential.
10.6 Emily Atack clarified that the Business Plan contained details of the operations of the Business, and prospective tenants.
10.7 Councillor Lindsay asked how it would be possible to have a public discussion of CIFCO if the Business Plan was confidential.
10.8 The Deputy Monitoring Officer explained that the Business Plan would not be in the public domain and would remain unpublished and if Members required to discuss details of the Confidential Appendix the meeting would be going into a closed session.
10.9 Councillor Ward stated that in his personal view there had been a lot of criticism of CIFCO. It was clear that retail section’s return had not been as high as previously, and therefore the intention was to invest in office and accommodation units. Retail investment was a good strategy for the future.
10.10 Councillor McCraw suggested that since the Council meeting was live streamed on YouTube, a summary of the highlights of performance and returns of CIFCO should be provided to the Members.
10.11 The Chief Executive clarified that it was only the pink papers which were not available to the public and that the public pages 25 to 42, covered a lot of the questions raised in relation to CIFCO.
10.12 The Assistant Director – Assets and Investments then summarised the performance of CIFCO against the performance indicators as detailed in the report page 28. The rest of the report outlined details of the properties required. There was information from the Business Plan covered in the report to ensure the public had as much information as possible.
10.13 The report also outlined that CIFCO was to generate an income and that last year the net income had been £1.4M across both Councils. CIFCO had made a financial loss due to set-up costs, stamp duty and fluctuation in the property market.
10.14 Councillor McCraw stated that the portfolio value had been reduced, but that this did not have an influence on the amount the Councils received from CIFCO. He wondered how many properties were examined before a decision to purchase was made ... view the full minutes text for item 10