• Home
  • About
  • 151 IMPACT AWARDS
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

Impact Awards –>
  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Leicester adds direct property investment to new treasury management strategy

0
  • by Colin Marrs
  • in 151 News · Development · Treasury
  • — 23 Feb, 2017

Photo (cropped): zaphad, Flick.

Leicester City Council is to use £10m of its accumulated minimum revenue provision (MRP) for direct investment in commercial property.

The council, which approved its 2017/18 treasury strategy this week, has given itself room to use the cash to buy properties in an attempt to beat the returns offered by banks.

The strategy will also involve selling under-achieving assets already owned by the council, with the proceeds reinvested in better quality buildings.

Mark Noble, head of finance at the authority, told Room151: “Any money advanced will be from our existing cash balances, which range from £160m to £230m at any given time, and are currently essentially held with banks or lent to other public sector bodies as part of our treasury strategy.”

Noble emphasised that the council, unlike many others around the country, will not borrow in order to make the property acquisitions.

He said: “The cash is essentially available because, like many authorities, we are unable to use accumulated MRP to repay debt due to punitive premium rates. The rates we are achieving on invested cash are minimal.”

Property purchases will be targeted in Leicester and the surrounding area, Noble added, with potential regeneration benefits.

Criteria for acquisitions will include the expected return, security of income, the potential for capital appreciation, and the fit with the council’s target portfolio.

Noble added that the council will continue to make sales of under-achieving assets it holds, with proceeds reinvested in better quality property.

The £10m allocation is part of a wider £65m property investment strategy, which also includes a maximum of £15m which can be invested in investment manager CCLA’s Local Authority Property Fund.


Commenting on the strategy, John Kelly, client director at CCLA, said: “CCLA supports spreading the portfolio — cash rates will stay low and are a poor match to rising inflation.

“Sensible investment can be a substantial benefit to local authorities.  However, after very strong returns from the sector in recent years the property cycle is maturing, which means that the potential for capital growth has reduced and that risks are edging higher.

“For CCLA this means broad diversification at the regional, sector and asset level.

“Also a focus on quality assets where active management can provide returns better than those from the sector as a whole.”

Another strand of Leicester’s drive will allow £20m to be invested in “new opportunities”.

Noble said: “Unlike the investment property proposal, it is proposed that the council’s investment will also be expected to secure economic development benefit for the city.

“Apart from commercial property, where there is a long tradition, we would not want to invest in local economic projects for no reason other than a financial return.”

He admitted there could be some overlap with the £10m commercial property investment strand, but said that “the focus here is more on responding to opportunities where we can get involved for a return, rather than the much more managed process envisaged by the local investment fund”.

A final £20m has been earmarked for the council’s existing The Leicester City Investment Fund, designed to encourage business growth, job creation, development and regeneration in the Leicester area.

Loans of between £500,000 and £4m are available to eligible companies, and an investment of the latter amount has been agreed to create new office space which will be leased to Hastings Insurance.

Get the Room151 Newsletter

Share

You may also like...

  • News round-up: JV popularity, animal welfare, business rates, London CIV completes launch News round-up: JV popularity, animal welfare, business rates, London CIV completes launch 21 Apr, 2016
  • CIPFA stars shine at awards CIPFA stars shine at awards 2 May, 2019
  • Tough times ahead for Northamptonshire’s new s151 Tough times ahead for Northamptonshire’s new s151 7 Aug, 2019
  • Greece Update: 48 hours to satisfy creditors Greece Update: 48 hours to satisfy creditors 23 Jun, 2015

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 days ago

    Impact Awards: Cheltenham’s tech hub and Hackney’s recovery from cyber attack: The CCLA/Room151 Impact Awards spotlight  finance teams with a direct impact on their local communities and the environment. This week we explore Cheltenham Borough Council’s… dlvr.it/Rxg53h pic.twitter.com/iH8oGKOfSs

    Room151 3 days ago

    Collaboration the key to district recovery post-pandemic: Regeneration and economic growth will depend on districts’ ability to secure funding and work with public and private partners, argues Sanjiv Kohli. Covid hit us in March 2020 and immediately[...] dlvr.it/Rxb4VK pic.twitter.com/FiMynEQVPU

    Room151 1 week ago

    Impact Awards: Liverpool’s cafe culture and Warrington’s investment in homes: The CCLA/Room151 Impact Awards showcase  finance teams with a direct impact on their local communities and the environment. This week we spotlight Liverpool City Council’s… dlvr.it/RxJsKb pic.twitter.com/dEYpaz6HP0

    Room151 1 week ago

    Doing something in #localgov #finance for housing or regeneration? Check out the 'Place Shaping' category room151.co.uk/impact-awards/… sponsored by @31tenConsulting in the CCLA/Room151 Impact Awards. #timetoenter !! pic.twitter.com/dU99vE6Wws

    Room151 1 week ago

    Doing something in #localgov #finance for Adult Social Care & Health? Check out the ASC&H category room151.co.uk/impact-awards/… sponsored by Fundamentum Social Housing REIT in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 1 week ago

    Doing something in #localgov #finance for the environment? Check out the 'carbon management' category room151.co.uk/impact-awards/… sponsored by @ACSLLP in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 1 week ago

    So what are the seven categories for the CCLA/Room151 Impact Awards? Here they are room151.co.uk/impact-awards/… #localgov #finance #outcomes

    Room151 1 week ago

    Why should LGPS be concerned about rising inflation?: The impact of the coronavirus pandemic, lockdown and wider economic uncertainty created  deflationary pressures which raise important considerations for the Local Government Pension Scheme writes… dlvr.it/RxF7Fs pic.twitter.com/JlcjROBIpz

    Room151 1 week ago

    JOB ALERT: LPFA Finance Director vacancy: London Pensions Fund Authority Finance Director and s151 Officer Competitive salary and benefits The largest Local Government Pension (LGPS) provider in London with around £6.5 billion of assets and 135[...] dlvr.it/RxBdJP

    Room151 1 week ago

    Richard Harbord: Further signs that local government finance is failing: The crisis in Liverpool and a fix for education budgets are further indication that local government finance is in need of a root and branch review. Even for those students[...] dlvr.it/Rx9PSV pic.twitter.com/sAanC2gEyu

    Room151 2 weeks ago

    Impact Awards: Finance helps launch school meals company and support business during lockdown: The CCLA/Room151 Impact Awards will showcase the way finance teams have a direct impact on their local communities and the environment. This week we spotlight… dlvr.it/RwnlF4 pic.twitter.com/AJhne1MVG4

    Room151 2 weeks ago

    "This work has made a vital, practical contribution to ensuring people have been supported through the pandemic." #impact #151awards #covid #s151 room151.co.uk/treasury/impac… #impactcasestudies #councilfinancemakesadifference

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Easing impact of revaluation could undermine business rates devolution
  • Next story News round-up: Birmingham’s CEO departs, council property sales rocket, settlement slammed, Norther Powerhouse bond

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.