Cabinet Member for Finance, Assets and Investments
Minutes:
41.1 The Chairman welcomed Sir Christopher Haworth, Chair of CIFCO Capital Ltd, Henry Cooke, Director of CIFCO Capital Ltd, Mark Sargeantson, Director of CIFCO Capital Ltd, and Nigel Golder, Director of Strategic Asset Management at JLL to the meeting.
41.2 The Chairman invited Councillor John Ward, Cabinet Member for Finance, Assets and Investments to introduce paper BC/23/15.
41.3 Councillor Ward introduced the report which provided details of the trading activity for CIFCO Capital Ltd (CIFCO) for 2022/23, and PROPOSED the recommendations as detailed in the report.
41.4 Councillor Davis SECONDED the recommendations.
41.5 Councillor Regester asked whether CIFCO would consider using BREEAM (Building Research Establishment Environmental Assessment Methodology) to better assess environmental and energy standards, and potential for carbon reduction, in its portfolio of assets. The Director for Assets and Investments advised that currently EPC (Energy Performance Certificates) were used as they were a requirement for all Council properties and considered to be the most robust method of assessment, however they remain open to how best to measure the work being done to meet environmental standards.
41.6 Councillor Riley referred to the annual accounts and asked why they had not yet been filed. The Director for Assets and Investments advised that the accounts were awaiting final sign off and were expected to be published within the next month and confirmed that the details had been shared within the business plan.
41.7 Councillor Holt asked whether the board were comfortable with the current valuation of the portfolio, and also if they were confident that the portfolio was heading in the right direction in the long term. Sir Christopher Haworth provided assurance that the board were focussed on the security of the income and were not concerned about the fluctuations of assets in terms of the sustainability of the investments.
41.8 Councillor Holt then asked a question regarding the efficiencies of the properties and queried if enough finance was available to reinvest in existing properties to bring them to a standard where rental income could be maximised. The Director for Assets and Investments confirmed that the business plan set out short, medium, and long term approaches towards capital for reinvestment. In terms of improvements to sustainability of the properties, the portfolio was currently being worked through on an incremental basis.
41.9 In response to a further question from Councillor Holt regarding the number of empty void properties in Basingstoke, Nigel Golder advised that this was circumstantial, and 50% of the space had now been re-let at a higher rate than was previously received.
41.10 Councillor Parker enquired to what extent the rising interest rates have on CIFCO’s ability to provide income for the Council both now and in the future. The Director for Assets and Investments commented that debt repayments were made to the Council from CIFCO, and that a sensitivity analysis of rising interest rates had been carried out to assess the impact on the net income of the cost of borrowing increases. The Director for Corporate Resources added that some of the debt financing the CIFCO loan was at a fixed rate and would therefore not be affected by changes in interest rates.
41.11 Councillor Holt commented that with regard to the refurbishment of Council owned properties, the installation of solar panels was key and would be hugely beneficial to the Council and lead the way for other Companies to follow.
41.12 Councillor McCraw drew Members attention to the CIFCO summary update on page 82 of the report, and the five-year cashflow update, and noted that the net yield had risen steadily throughout the past five years. Councillor McCraw commented on the high level of scrutiny undertaken at Overview and Scrutiny Committees since the inception of CIFCO and expressed his support for the report.
41.13 Councillor Regester agreed with Councillor Holt’s comments regarding the installation of solar panels on properties and felt that the benefits to tenants would encourage them to remain in the properties longer term.
41.14 Councillor Ward thanked the Director for Assets and Investments and the non-executive directors of the CIFCO Board for their time and effort to ensure that CIFCO delivers its promises.
By a unanimous vote the motion was CARRIED
It was RESOLVED:
1.1 That Council notes CIFCO Capital Ltd trading activity and performance for the year to 31st March 2023.
1.2 That Council approves CIFCO Capital Ltd’s 2023/24 business plan for adoption by CIFCO Capital Limited.
Supporting documents: