Agenda item

A report was submitted that provided an overview of the current property market and informed Members of the individual property transactions relating to the Fund.

Investment activity had picked up since the summer and property was a popular area of investment at the current time.  The focus of most of the market continued within the industrial sector where there was huge demand.  The US viewed the UK’s industrial market as still quite cheap and good value and that was driving yields.  In the regions typical yields were sub 4% and in the London sub 3%.

The Fund remained underweight in property and CBRE continued to seek new good value assets.  Any new assets needed to be accretive to the portfolio.

Out-of-town continued to attract investment – typically retail parks where there was value.  Yields were coming in and values were going up.  Most of the Fund’s retail warehousing assets were coming up in value which was reflective of the current market. 

Overseas demand for offices in London was driving that sector although the rest of the UK office market was more subdued in terms of available stock and interest.  It was anticipated this would improve over the next three to six months.

The report as submitted was taken as read.  As at 30 June 2021, the portfolio comprised 28 mixed-use properties located throughout the UK, with a combined value of £280.63m.  There had been a 2.75% increase over the last quarter and the valuation was now approximately £288 million.

An update on asset management was provided as follows:

• A new 15 year lease to PureGym at Unit 1, Cirencester Retail Park had been completed.  The company had fitted out the unit and was now trading.
• The lease for Peacock stores at Unit 2, Cirencester had been surrendered and a new lease agreed with Hobbycraft.
• A new 10 year lease on Unit B at Acre Road, Reading had been completed with Active PCB, an existing occupier of Unit C on the estate.
• A 5 year lease with Halfords had been agreed at Congleton.
• B and M at Congleton had indicated that they would be renewing their lease in a year’s time and negotiations had started.  B and M was one of the larger retailers on that site.
• Rent review had commenced on the Unipart Unit in the Midlands and there was likely to be a sizeable increase in rent.

In relation to the arrears, the information provided was now out of date, since the meeting of the Teesside Pension Fund Committee had been held at a later date than originally scheduled.    All rent demands had been sent out on 29 September 2021.  The two companies that owed the highest amounts of rent were on payment plans and those plans were up to date. 

There were some tenants who had not paid rent since March 2020 and due to the current Covid restrictions on eviction it was very difficult to have any impact.  However, the restrictions were due to be lifted in April 2022 and CBRE would continue to press for payment.

On a positive note, the rent collection for this portfolio was ahead of all the benchmarks and also other Funds. 

ORDERED that the information provided was received and noted.