The council of Kensington and Chelsea are planning to launch a property portfolio worth over £220 million, divesting from shares held by the borough’s pension fund. The borough councillors have approved a strategy to increase property investment to 20% of the council’s £1.1 billion pension fund, up from the current investment of just 5%.
The new proposal would see the council divest from its global share portfolio by 9%, and utilise £78 million in cash in order to create the self-managed portfolio. Richard Wilson, the council’s fund manager, said that some of the investments the portfolio might include are “a retail park in Harrogate with a 15-year lease and a Travelodge in York, suitable for student housing”.
According to financial documents, Kensington and Chelsea’s pension scheme is currently in surplus, with some £800 million held in private equity. Only about £45 million of the Council’s pension fund is currently invested in property, the majority of which is managed by property group CBRE.
The overall value of the fund’s investments increased by £178 million, or 29%, in the last year, as shown by the pension fund’s 2016/2017 annual report.
According to the Financial Times, which first reported the new investment plans, the property portfolio was put forward by Quentin Marshall, head of private banking at Weatherbys and the chairman of the council’s investment committee.
The wealthy London borough, long a bastion of Tory support, faced something of a challenge from Labour at recent local elections following outrage over the Grenfell Tower disaster, however the Conservatives held on to 36 seats and kept their majority.
Following public anger over its failure to respond quickly enough to the Grenfell power, the Council announced a five-year, £220 million investment plan to build affordable housing in the area.