Cabinet Member for Assets and Investments
Additional documents:
Minutes:
The Chair welcomed Sir Christopher Howarth - Chairman of CIFCO Capital Limited, Henry Cooke – Director of CIFCO Capital Limited, Nigel Golder – Director of Asset Management at JLL, and Helen Rumsey of Ensor’s to the meeting.
Councillor Gould introduced the report which detailed CIFCO Capital’s performance for the last 12 months and the proposed business plan for the next 12 months.
Councillor Gould informed Members that since its inception in 2017, CIFCO had provided the Councils with close to £5.5m of net income and had delivered approximately £2.2m to the Councils in the last financial year. This was testament to the strong management of the CIFCO portfolio.
The Business Plan takes a prudent approach to CIFCO’s financial management over the next few years ensuring the portfolio provides income to the Councils, and a creates a long-term legacy for the Districts to benefit from in the future.
Councillor Gould provided Members with details of some of the key points in relation to CIFCO’s performance.
Councillor Gould then MOVED the recommendations in the report.
Councillor Ekpenyong SECONDED the recommendations.
The Assistant Director for Assets and Investments responded to questions from Councillor Mellen on issues including the current value of the equity invested in CIFCO, the timescales for publishing the financial accounts, and the capital expenditure which has been made to improve the estate.
Councillor Mellen then asked how the Council would continue to fund its investment at the current rate over the coming years in the current inflation environment which could lead to higher interest rates.
The Assistant Director for Corporate Resources responded that advice was taken from treasury management advisors regarding the type of borrowing, and that the Council is currently benefitting from lower rates as a result of short-term borrowing.
In response to questions from Councillor Welham, the Assistant Director for Assets and Investments advised that the equity value could not reduce to lower than zero, and that no further funds would be required to be invested as equity. The Assistant Director confirmed that the low equity value would not affect how decisions are made.
Councillor Mansel asked for clarification regarding the categories referred to in paragraph 4.11 of the report. In response, Nigel Golder confirmed that the leisure sector was included under the section of the chart titled alternatives. The Assistant Director for Assets and Investments advised that this could be amended for future reports.
The Assistant Director for Corporate Resources responded to a question from Councillor Field regarding the percentage return figures and confirmed that these were comparable to the figures previously seen from CCLA and Schroder.
Councillor Field then queried whether it was a valid assumption that values would recover, particularly in light of the impact of the Covid-19 pandemic. The Assistant Director for Assets and Investments advised that it was expected that the value of the portfolio would increase. Nigel Golder commented on the robustness of the current investments, and the changes in the market following the pandemic.
Following a question from Councillor Amorowson, the ... view the full minutes text for item 26
Cabinet Member for Assets and Investments
Additional documents:
Minutes:
The Chairman welcomed Henry Cooke, Director, CIFCO Capital Ltd, Nigel Golder, Director Strategic Asset Management JLL, Helen Rumsey, Partner Ensors and Emily Atack, Assistant Director for Assets and Investments and Managing Director for CIFCO Capital Ltd.
Councillor Busby introduced the report and informed Council that the report detailed CIFCO Capital’s performance over the last 12 months and the proposed business plan for the next 12 months. The business plan is a fundamental part of CIFCO’s governance and ensures accountability to its shareholders. He particularly valued the contributions from the Joint Overview & Scrutiny Committee in June this year, which confirmed that in their view, the business plan is robust and they have sufficient confidence in the management of CIFCO.
Since its inception in 2017, CIFCO has provided Babergh with £3.5m of net income. £1.3m was delivered during the last financial year whilst facing unprecedented challenges as a consequence of the pandemic and certainly providing the Councils with much needed income at this time. CIFCO was able to withstand the challenges of the pandemic and continue to deliver income to the Councils and this is testament to the investment approach and strong management of the CIFCO portfolio since its inception, which has seen rent collection rates above the industry norm.
The business plan identifies that the challenges of the pandemic are not behind us and takes a prudent approach to CICFO’s financial management over the next few years, ensuring that the CIFCO portfolio continues to provide income to the Councils, running about a quarter of council tax, to support the delivery of services and projects locally as well as creating a long-term legacy for the District to benefit from in the future.
Councillor Busby then MOVED the recommendations in the report which Councillor Ward SECONDED.
Councillor Barrett queried why the recommendations in the Overview and Scrutiny report were for noting only.
In response, the Monitoring Officer informed Council that Scrutiny is not provided with pre-empted recommendations. It would be for Scrutiny to make their own recommendations once the review had been undertaken.
Councillor Lindsay asked about the deferment of the £1.5m for the next three years and what would happen if the money that was owed could not be paid back?
In response, Councillor Busby stated that it was the intention of CIFCO to pay each month and if they didn’t, interest would accrue.
The Assistant Director for Assets and Investments added that if the deferred income was not able to be paid back in three years time, then the amount would be added to the existing loan and would be paid back over a longer period and would incur accrued interest.
Councillor Lindsay asked how much the loan was and when it was scheduled for repayment.
In response, the Assistant Director for Assets and Investments informed Councillor Lindsay that the schedule of loan repayments was detailed in the report. The length of the loan would depend on when the asset was purchased with the average length of the loan being ... view the full minutes text for item 41
CONFIDENTIAL APPENDIX C - CIFCO CAPITAL LTD BUSINESS AND INVESTMENT PLAN 2021/22 (Exempt information by virtue of Paragraph 3 of Part 1)
Cabinet Member for Assets and Investments