Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

Decision Maker

Pension Fund Panel

Date of Decision

20 March 2009

Decision Title

Property Investing

Decision Reference

648

Report From:

County Treasurer

Contact name

Jon Pittam

Tel

01962 847400

Email

[email protected]

EXECUTIVE SUMMARY

1) Summary of Decision Area

    1.1. To agree the response to a proposal by Kent County Council for collaborative investing of pension funds.

2) Issues Covered in Report

    2.1. The report appends the letter from Kent County Council seeking a pension fund contribution towards a new fund to invest in property assets in the South East. The letter was circulated by the Leader at the last Panel meeting.

3) Recommendations

    It is recommended that:

    3.1. That Kent County Council be informed that the Hampshire Pension Fund is not interested in the proposal.

MAIN REPORT

1) Purpose of this report

    1.1. To respond to the Kent proposal, attached as Appendix 1.

2) Contextual information

    2.1. The proposal is set out in the Appendix.

3) Comments on the proposal

    3.1. The Fund already has two fully discretionary property mandates allocated to CB Richard Ellis (CBRE) and Aberdeen Property Investors for UK direct/indirect property and for European direct/indirect property respectively. Cash currently remains uninvested in the CBRE portfolio because of the current property market, so in theory £10m - £20m could be diverted into the Kent proposal.

    3.2. However, CBRE and Aberdeen have both been selected through full EU procurement arrangements and it would not be appropriate to alter these arrangements as CBRE, in particular, has the full power to invest in any indirect fund, such as that proposed by Kent. As CBRE are judged on performance the Panel could not require them to place cash with this particular vehicle, and it would need to be left to their judgement.

    3.3. The Panel has a long standing policy of avoiding direct investments in Hampshire because of real and perceived conflicts of interest. The whole issue of governance of the proposed fund and using local intelligence of Councils to decide on investment opportunities does not help resolve this conflict of interest.

    3.4. There are two conflicting areas of the proposed fund:

        · the fiduciary responsibility, as acknowledged, to maximise investment returns at an acceptable level of risk

        · to support the economy in the South East and promote infrastructure investment.

    3.5. There are clear risks in such infrastructure and regeneration prospects which do not resolve the conflicts of interest around determining the best property investments. There are other ways of promoting regeneration and infrastructure investments and pension fund cash should not be "raided" to do so, unless the existing fund managers regard such opportunities as good investment proposals in their own right, which they are happy to have their performance judged upon.

4) Conclusion

    4.1. On balance therefore it is suggested that the proposal needs further development and consideration, but in any event there are two opposing objectives which appear to generate conflicts of interest. It is therefore recommended that the Panel do not express an interest in discussing this proposal further.

5) Recommendations

    Please see Executive Summary for recommendations.

CORPORATE OR LEGAL INFORMATION:

LINKS TO THE CORPORATE STRATEGY

Yes

No

Hampshire safer and more secure for all

Corporate Business plan link no (if appropriate)

Maximising well-being

Corporate Business plan link no (if appropriate)

Enhancing our quality of place

Corporate Business plan link no (if appropriate)

OR

This proposal does not link to the Corporate Strategy but, nevertheless, requires a decision because a response is required to the Kent proposal.

OTHER SIGNIFICANT LINKS:

Links to Previous member decisions:

Title

Ref

Date

     
     
     

Direct Links to Specific Legislation or Government Directives

Title

Date

   
   
   

Section 100 D - Local Government Act 1972 - background documents

 

    The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report. (NB: the list excludes published works and any documents which disclose exempt or confidential information as defined in the Act.)

 

    Document

    Location

    None

  
   
   
   

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment:

    a) Equality objectives are not considered to be adversely affected by the proposals of this report.

2. Impact on Crime and Disorder:

    a) The proposals in this report are not considered to have any direct impact on the prevention of crime.

3. Climate Change:

    a) How does what is being proposed impact on our carbon footprint / energy consumption?

        · No specific changes.

    b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

        · No specific impact.