James McGinlay, Assistant Director for Sustainable Communities, briefly introduced the report and drew the task group’s attention to the further detail on property assets set out in the appendix to the report.

James McGinlay and Howard Joy, Property Management and Review Officer, provided additional information in response to questions:

• Approximately 150 lease renewals and rent reviews remain to be completed this year.
• Each property will be reviewed as they come up for lease renewal and an option appraisal will be presented to the Property Asset Management Board for decision whether to dispose of, keep or invest in. Options will be determined by the nature of the leases.

Members explored the distinction between capital values and asset valuation as well as the comparability of estimated yield. James McGinlay advised that the best measures of performance are void and debt levels.

Howard Joy confirmed that he properties listed on the schedule are those that are owned by the council and generate a rental income for the council. Members expressed interest in receiving information about opportunities to develop and/or increase income streams from sites that are not on the schedule. James McGinlay assured members that there were active discussions at the Property Asset Management Board and elsewhere regarding potential developments, including as part of the council’s regeneration work. The acquisitions strategy and the land and property strategy would also address these issues.  James McGinlay cited the development of the Local Authority Property Company as an example of an innovative approach to asset management.

In response to a question, James McGinlay said that giving the management of the portfolio to a third party company had been explored a few years ago and rejected as not being cost effective. He added that other London boroughs who have used third party asset management companies have found this to be expensive and that it failed to yield the desired results.

James McGinlay said that there had been a change of emphasis in recent years away from disposals being the default option towards a more productive and aggressive sweating of assets, balanced against social aspects on a property by property basis. Specialist advice is commissioned where this is not available in-house so that the best commercial result can be achieved.