Liverpool sets out £50m investment strategy
Liverpool City Council’s cabinet will next week be asked to approve the city’s proposed Commercial Property Investment Fund plan, aiming to invest an initial £50m in rent-generating property.
Of that first £50m, 50% is to come from Public Works Loan Board borrowing, and the other 50% from capital receipts.
The strategy, as set out by report author and head of commercial property investment Stephen Kirk, states: “The CPIF Strategy has nothing to do with local operational and/or regeneration property investment or treasury management.
“It is about taking advantage of the council’s low cost of borrowing and investing for the long term in low risk commercial property assets in order to generate financial returns, which can then be used to support the ongoing provision of essential services.
“The strategy is to acquire a diversified portfolio of low risk commercial property assets, financing the acquisitions through a combination of prudential borrowing and capital receipts.”
Liverpool’s fund, which will focus on existing built stock rather than development, will invest in properties across the UK, with no more than 35% of it committed to any single region and no more than 25% in any single town or city.
The move to build up an investment portfolio follows several other local authorities in recent years, with Warrington being among the more notable buyers in the region.
Liverpool’s fund will target lot sizes of £5m to £15m, with net initial yields of 5% to 7%, primarily in offices, retail and industrial – although alternative asset classes will be considered.
The CPIF report said: “LCC will invest in suitable commercial property assets which meet the pre-defined criteria and minimum required matrix scoring, with a view to assembling a diversified portfolio designed to produce additional revenue income to support council services.”
The report asks that delegated authority on investment decisions be granted to an officer, rather than going to cabinet, for the sake of timeliness. The officer will consult with the head of commercial property investment on minor decisions, and a CPIF board, comprising the mayor, chief executive and head of legal, on major decisions.
A separate strategy is to be developed for LCC’s existing local property portfolio, considering further rationalisation and/or new property acquisitions locally where appropriate. The council said that preparation of this strategy will take place in parallel with a turnaround project currently being undertaken by the finance department of its property & asset management services team.