The council of Kensington and Chelsea are planning to divest from shares held by the borough’s pension fund to launch a property portfolio worth over £220m.
The borough councillors, who include several City professionals, have approved a plan to increase property investment to 20 per cent of the council’s £1.1bn pension fund, up from the current investment of just five per cent.
Richard Wilson, the council’s fund manager, submitted a report last September which recommended the move as a means to “reduce the current funds risk and increase the diversification of investments within the whole pension fund.”
The new proposal would see the council divest from its global share portfolio by nine per cent, and utilise £78m in cash in order to create the self-managed portfolio.
Wilson gave examples of the kinds of investments the portfolio might include, such as “a retail park in Harrogate with a 15-year lease and a Travelodge in York suitable for student Housing.”
Kensington and Chelsea’s pension scheme is currently in surplus, according to financial documents, with some £800m held in private equity.
Only about £45m of the Council’s pension fund is currently invested in property, the majority of which is managed by property group CBRE.
The pension fund’s 2016/2017 annual report shows that the overall value of the fund’s investments increased by £178m or 29 per cent in the last year.
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, £220m investment plan to build affordable housing in the area.
An inquiry into the Grenfell fire opened this morning.