Agenda item

Treasury Management Mid-year review


The Committee were provided with a mid-year review update report on treasury management activity undertaken during the period April to September 2023; a third report reflecting on the annual treasury performance of the council would be brought to the Committee in June/July 2024. 


The Principal Accountant (Housing & Exchequer) advised that treasury activity, capital expenditure and forecasted interest rates as at 30 September 2023 were provided by Link in sections three and four of the report.


The Principal Accountant (Housing & Exchequer) provided Members with an update on the St Georges Centre transaction:


  • On 16 October 2023, the Council exited the legal arrangements with Aviva Investors relating to the St Georges Shopping Centre; as the original transaction date fell after the end of the mid-year period, the current position figures detailed within the report included the existing financial arrangement with Aviva Investors with the replacement PWLB loans incorporated into the revised estimate figures, where applicable
  • The revised estimates for capital expenditure was just under £53 million; £29 million would be funded from existing resources and there was a borrowing requirement of some £24 million with external borrowing being the majority. The duration of the loan on the borrowing would be decided in consultation with the Section 151 officer
  • Five additional loans had been taken on for the replacement of the Aviva transaction;
  • The amendments to the transaction deal were signed off by Cabinet on 11 September 2023
  • A graphical representation of the Council’s Liability Benchmark, post the Aviva transaction was shown at 7.9 of the report


The Principal Accountant (Housing & Exchequer) provided Members with an update on the Councils investment, property funds and multi asset funds:


  • Investments held as at 30 September 2023 totalled £50 million which was split between internally and externally managed funds.  All investments have been placed in accordance with the limits set out in the Council’s TMSS and it was confirmed that no breaches had occurred
  • In the 2016/17, £10m was placed in three Externally Managed Property Funds and In 2017/18, a further £10m was placed in three Multi Asset Funds. Capital value had gone up and down over the years, but they returned stable dividends, listed in the report, which had been higher than normal investment strategies
  • Capital values peaked in June 2022 as asset prices increased significantly but they had fallen in recent months given current economic uncertainties and funds had become less attractive to investors with better and safer returns available from banks
  • Due to the uncertainties, all firms were seeing redeeming requests; several months ago, the Council decided to protect its investment and applied for a redemption request for all funds in the account. By early June 2023, Lothbury had received redemption requests from its investors totalling almost £700m
  • As Lothbury Property Trust is a small fund in comparison to others and with the level of redemption request it is unable to continue without significantly restructuring.  All redemption requests are currently being held and they commenced with an asset sale plan. At an investor meeting, other fund investors indicated that they did not want the fund restructured as a smaller refocused fund and so, Lothbury were currently exploring the possibility of merging with another fund
  • If a solution was not found and the fund had to terminate then there was a target to sell all assets by the end of 2024, but it was ultimately dependent upon market conditions and could take several years to receive the funds and result in capital losses to the Council. However, that eventuality was considered several years ago, and an interest reserve was set up in order to protect Council from future losses
  • Senior Council officers met with the managers of the fund on a regular basis


In response to the Chairs question, the Principal Accountant (Housing & Exchequer) explained that the graph at 7.9 showing the Councils liability benchmark was created by reviewing the capital programme, the investments the Council held, the loans held and what the Council thought would happen to the loans as well as general balances.


The Committee noted the report.


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