Joint Pensions Committee - Tuesday 25 March 2025, 7:15pm - Wandsworth Council Webcasting

Joint Pensions Committee
Tuesday, 25th March 2025 at 7:15pm 

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An agenda has not been published for this meeting.

Thank you.
Just in case there's anybody listening, welcome to this meeting.
My name is Councillor Marshall, chair of the joint pension committee.
Members of the committee, please can you announce yourselves as I call your names.
Councillor Caddy.
Good evening.
Mr. Craigie.
No, sorry, she's going to be slightly late, I understand.
Councilor Dickie Demme.
Councilor Gasser.
Good evening.
Good evening.
Councilor Pridham.
Good evening.
I have had apologies from Councilor Sarah.
We have a number of officers present who will introduce themselves when they address the
committee.
Minutes of the 7th of January 2025.
Anybody got any comments on those?
No?
Accepted.
Thank you.
Disclosable pecuniary interests.
Have anybody been fortunate enough to acquire any of those recently?
Nope.
Okay.
No interest to declare.
Item three, the pension fund cash budget for 2024 -28.
And Paul, please do the honors.
Thank you, Chair.
So the paper that you have before you is an annual paper.
Whilst it says it's a budget, if you recall, this is quite a notion already.
We primarily use this as a cash flow modelling tool to help show you are we going to have
sufficient income coming through to meet our ongoing requirements.
The reason for that is if you look on page 13 where we've actually got all of the relevant
cash flows. You'll note that we continue to be, draw more from our pensions, paying
out to our pensioners than we gain from getting income from contributions, whether that be
through employees and employers. And that differential is only going to continue to
grow because the number of people in pensioners grow and the number that are currently in
employment stay static or reduced. So if you look at the estimates you will see
that we're continually looking to basically have some deficiencies within
that. However when we've compiled our investment strategies we've built a lot
of it around yield generation as well as growth generation. So you'll note that
our return on investments actually deliver substantial amount of income
coming through it and that's where we've looked at risk profiling and types of asset classes.
We've moved in towards private debt, we had real assets like commercial property and infrastructure
that weren't built around getting growth, i .e. having building on greenfield and get
taking on development risk and getting a little bit of excess return.
We went for funds that delivered us with substantial number of income so that we can offset that
differential.
And we do it on a three -year rolling plan just to see is there likely to be any significant
changes that we'd need to make in relation to our yield.
And it's quite timely this time around, bearing in mind that we're coming up for a triennial
valuation and also then that was built into the asset allocation review to see do we want
to look to change our assets.
And you'll see from here, bottom line, we are continuing to deliver excess income from
our returns, even after we reinvest some of that money.
So when we come to looking, do we need to make any drastic changes in relation to our
asset allocation to meet our cash flow requirements, this should hopefully give you that assurance
that we don't.
So that's the primary aim of this paper.
Obviously you'll see that there's some assumptions that have been made and detailed
higher up in the paper that lead us to coming up with these calculations.
So I think that's probably it as an introduction.
I'll open it up to questions.
There was a bulk transfer last year.
I think it was for one of, I think it was linked to one of the Richmond, an employer,
one of the large Richmond employers that's been on the cards for a while.
It took a few years to actually agree and the money got transferred over to Hillingdon
so it went from us over to Hillingdon.
so that was the big chunk difference.
Liabilities went as well.
No.
Yeah, so most of the assets that we have to have different share classes, either distribution
or reinvestment.
So there might be a timing issue when we can do it, but that's why we do these flows so
that we can switch.
Question from me, just page 10.
The books had a bullet point under paragraph 3 where you say no estimate is made for a
couple of things for the cash flows associated with hedging exchanges and it doesn't include
estimated drawdowns and you give the reasons why those haven't been included.
So I guess a couple of questions is, one is why would you not, for example, put in just
a sort of prudential estimate for that at the sort of very conservative end of the what
you expect?
And secondly, just to put people's minds at rest in case they're worried about this, what
What are we talking about here in terms of numbers in relation to the overall fund?
Is this in any way significant?
Okay, so I'll answer that in two parts.
Drawdown should normally be coming, bearing in mind that if we're investing in a new asset,
i .e. from the drawdown element, it means in theory we've been investing in something else
as well.
So the reason why there's no cash flow model in is because if, for example, it's private
debt currently the money might well be multi -asset credit so you would be
selling multi -asset credit to fund your your debt. Where we are slightly
overweight in cash which we've been running for a little while for that for
that particular reason so that's why that's not included because it isn't a
cash movement it's selling one asset and buying another asset for for the drawdown.
On hedging we can't predict it we're not doing this as a as an investment tool
this is a cash flow model in it should in theory be neutral because sometimes
Sometimes you'll do better, sometimes you'll do worse.
So we don't think it's right to put in into a cash flow modelling tool hedge when we're
doing it on the bottom line.
If you're talking about how much it could impact, substantially.
You saw big swifter movements when you get certain budget announcements that
trigger the markets that could have a significant impact on the you know the
valuation of sterling against other global markets. We've seen the triggers
happen quite heavily. That is one of the reasons why we don't hate well sits up
done on a 90 -day basis we don't put it all on one you know on one go it's
spread over three tiers, so one -third, one -third, one -third,
to try to temper that risk of there being big, huge swifts.
And if there were to be huge changes,
we've got liquid assets that we can draw down from
to compensate, because that's why we've done it
on a three -split basis.
I guess I'll just give you some comfort.
Sorry, come to you just a second, Councillor Allen.
But just give me some comfort if you could give me some sense of what potential numbers
we're talking about.
What's the biggest volatility we've seen arising from these movements?
I can't remember off the top of my head, but it is going to be circa 100 million when you
had that chart.
Like I said, when you had statements that were made in the not too distant past, when
you saw bond prices and everything else within and sterling fall substantially.
You know, we went down to, I mean, Tony, you might be able to say how far we went down to
on the dollar versus the pound, but it was close to parity at one point, wasn't it?
Yeah.
Yes. I mean, so we were like 1 .6. We went all the way down to like 1 .2, 1 .25. So, you know,
I mean, I mean, but I think, yeah, I mean, we, when we did get down towards parity in 2022,
But I think the key thing to remember is that the reason we're hedging the currency risk
because that enables us to invest more overseas.
So whilst we may lose money on the hedge, on the other side we've made money by holding
that currency overseas.
So whilst, yes, it creates cash flows, the reality is that you can ultimately meet those
cash flows if you don't have enough cash by selling the equities that you've made a profit
on.
That's why we don't budget for it because you've got that compensating movement.
So I understand that, but just putting this very simplistically, you said 100 million
is really towards the top end of the swing that you might expect, which is a very small
proportion of the fund value overall.
We're not talking about a tsunami that's going to sweep us away.
We are talking about a few percentage points, low single figures percentage points changes
in the fund money at absolute worst.
No, there is no, I can't give you assurance at for absolute worst as to what the markets
will do because like with any hedge it's uncapped.
If sterling continues to fall our losses continue to fall.
However that will be compensated by the gain that we have in our assets.
So, bearing in mind we've got assets, sub -assets like our equity portfolio in our passive mandates,
we can get access to that cash within a week.
So what you've lost in cash terms which we have to pay for our hedge, we've gained in
the value of our assets.
So the assets have gone up so you can sell your assets to pay for those losses.
But those losses are uncapped potentially.
But then those gains would also be in the same way.
But to put the risk management in place, that's why we do the hedge over three consecutive
periods.
It's not all on one.
They're 90 day hedges.
But we don't do all 90 days in one go.
They're spread over a three month roll.
So it's one third in month one, one third in month two, one third in month three.
So, only one -third of our liability accrues at any one time.
I don't quite understand.
Page 11, the second point about transfers, and on the table on page 13, about halfway
down you've got 45 million.
I don't understand what that is.
Thank you.
Okay.
On the transverses in general, what specific point are you saying?
Is it lower than budgeted, suggesting that the low value last year was not indicative
of a change in behaviors?
Does that mean?
Page 11, projections for 24, 25, the second bullet point.
In the out term in the previous year we had obviously transfers out was 60 million and
that's I think referred to before so that was a bulk transfer that came
through originally estimates this time around were you know we're looking at
the transfers out this time were 13 .3 in comparison with with 13 .5 but I think
what we look think you're looking at is a subtotal of a regular cache down the
bottom is slightly higher coral whether there's anything extra that you wanted
to add to that I think what you're looking at is on take because you then
go to the appendix A don't you I think you're referring to on table 13. Yeah the 45 million.
Where when you're looking at so we're looking at transfers out in 2023 -24 the transfers
out were roughly 60 million that was an unusual amount because what we referred to earlier
when I think it was Councillor Craigie raised the point it had a large bulk transfer that
skewed our average numbers so that would so that's why that's come through this
time no that's in total that's the trance so the the overall sort of trance
as you look at the 45 no I see what you're saying now the 45 million below
that particular line no it might be a type which is why I'm looking at coral
at the moment to see whether or not I think there's a typo there that's a regular number.
Lovely, okay.
So on page 11, transfers in are lower than budgeted, great, suggesting that the low value
last year was not indicative of a change of behavior.
Yeah, I don't understand that sentence.
You mean the high value?
No, it's transfers in.
I don't know, anyway.
So the original estimate was 10 million and what's come in is 8 .9.
When we look at our average numbers for what we're purporting to be, it's our best guess
that we don't know what transfers are likely to come in, we don't know whether or not you're
going to have personnel that will move to come in.
So it's done on an average sort of basis which we come out with.
But we've actually come in quite, it is coming in lower, so it's 11 % lower than what it was on average.
But to be honest with you, those particular numbers are never right, they change every single year.
Because all it takes is for, if you've got a chief exec come in and transfers his pension in, it's going to have a huge spike on those numbers.
Similarly if we have one who goes and leaves and takes their pension with them.
So the real numbers and that's why I was trying to say these are quite notional
and the real crux of where to look at is down the bottom to see are we having
sufficient netting off the differences between what's coming in and what's
going out including our investment returns income to see do we need to do
anything significant on our investment strategy to ensure we've got sufficient
money in the budget to pay the pensioners every month.
I think I've interpreted what it means.
The normal amount of transfers is expected to be that.
Do we know the estimated out turn and approve the pension fund budget and note the projected
budgets?
Maybe one question from me. Given the cash flows are really positive and you've worked on that for a few years, when it comes to the asset allocation conversation in...
I think there will be a host of areas that we want to revisit and look at.
I think what this highlights is that we don't need to focus on income.
However, you know, whilst it depends upon which line you wish to use, on one sense we
We are generating substantial cash, but that is reinvested.
If you think about equities, the biggest returns you get on equities is by reinvesting your
dividends back in.
If you net that off, we haven't got that much comfort.
We're looking at 7 million, not the 35 million, because most of it we are already reinvesting.
That goes back to some of our credit mandates as well.
We can reinvest those as well.
So I wouldn't have comfort that we are kicking out loads of cash and so therefore we can then go into a lot of growth based stocks, illiquid things and tie it all up.
Illiquid you can do because a lot of that income is coming from our liquids, it's coming from our private debt, it's coming from our infrastructure that are illiquid.
But we haven't gone into development style investments in those private markets.
We have gone into yield generating ones to give us this comfort.
We get a liquidity premium, whether you think when base rates are old, risk -free rates are
as high as they are, whether or not you still wish to have, whether you think that is sufficient
enough to keep your money in the liquids.
That will be discussion in that whole portfolio sort of decision.
So hopefully that answers that question.
Thank you for that, Councillor Craigie.
Going back to my original invitation to the committee.
Are all those items approved?
Thank you very much.
So item 4, training policy and update.
This is the paper you all look forward to.
So this is the review for what we've put in in regards to the training requirements.
I'm not going to say really too much on this.
You know it's something that I myself and the Chair has raised several times about the
importance about making sure you keep up to date with your training provision and requirements.
I can only say this is going to become more onerous.
The government have been very clear in their intention, in the direction of where they
are seeking to do.
If this was a private scheme, the people sitting around the table will more likely be properly
qualified trustees who have got substantial amount of training and
experience behind them. This is a 3 .2 billion pound pension fund, large asset
on behalf of the authority, so which is why we place a lot of emphasis on that
training and the government have recognized that. Historically it's not
been a statutory requirement, we know it's going to be, the primary legislation
isn't there yet. It's from they haven't given us any indication they're going to
change what they've said but they were clear when they looked at the good governance code
when they looked at the fit for purpose documentation training is going to become a statutory requirement.
Exactly what what you need to do and where it goes I'm afraid this will be the probably
at the lower end of the requirement but we will change this strategy once we get further guidance
about what we need to do but we think at the moment this is pragmatic we've got
the online training that you can do and regularly refresh yourselves combined
with individual activities that you do whether it be in your own private
environment working environment or through other mechanisms that are
through the LGPS family so I think that's probably it as a general
overview and if there's any particular questions I might feel them or throw you
open to my training officer, Coral, over in the corner.
So it says the preferred option is
to watch the full package again and do it all again.
That's preferred, not required.
Yep.
Just.
I have downloaded all the presentations from that.
And I put them on a SharePoint site.
They should be sharing it with me.
But if not, I can email them individually
So if you prefer, I know it doesn't suit everyone's learning style to watch a video,
so if you prefer just to have those sent, I'm more than happy to email them around.
.
If there are no more questions, then do we approve the training strategy and agree the
indicative training plan?
Thank you.
Quarterly investment report, item 5.
So again this is the paper that you see every meeting.
If you look on the table on page 26, it shows you the whole overall fund performance.
The fund in the 12 months, we're doing a return of 12 .4 against our peer group of 10 .5.
It has been slightly held back by some of those particular investments.
I think we've talked about some of our equity mandates, which are more detailed further
down on the paper, which shows you where some of those underlying funds are not delivering
against their benchmark.
But I think it shows you that our asset allocation is obviously doing well, because despite some
individual funds holding us back, our overall performance in the last 12 months has been
higher than our peer group, and over the three -year average, we are the average.
You'll note normally that I don't go against and try to compare us on league tables.
When we've set our strategy, we want to meet our own objectives.
Every fund has their own separate parameters that they need to look at.
They have different cash flow needs, they have different funding levels.
So our main aim is to ensure that we're delivering above our discount rate.
And in the last 12 months, it has been healthy.
Over the three years, like most funds, they've struggled because of the way that bonds and
other assets took a substantial hit in the last three years, which has had implications.
But even with that taken into account, we're only slightly behind the discount rate over a three year period.
So that's probably it for me.
I don't know whether or not you've got any particular comments that can give us in a
more positive way, but no.
I think as has been highlighted before, our managers, we do not pick.
They are selected by polling and that's been a position for a number of years now, which
means that if you wish to be invested in equity, which
ultimately as an open -ended fund and requiring of it,
we do need to be that way.
So the managers that we have are restricted
to those that sit within the pool platform.
And it's going to become even tighter in where we are.
It's more just their defense going up
to the end of the calendar year was, well,
it's the North American market technology, mega caps.
We're not exposed to that.
But the last thing that's been quite different,
so you'd hope it'd be some bounce back.
You would.
And you can see on page 33 onwards where they sit in regards
to their benchmarks.
Page 29, I just wondered if you could tell us a bit more about the first bullet point.
Schroder's have had some recent personal changes which may impact this position going
forward.
Can you tell us a bit more about that please?
So, what is this?
Schroeder's comment on the benchmark for the ninth consecutive month, showing under
performances.
Yeah, I mean that's, I mean, we don't meet our property managers very often, if I'm pretty
honest with you.
So, if a granular detail on those, if there's a particular angle, so this is the information
that we'll get from some of the funds.
So we can go back to them and try and get some more detail from you in regards to it.
But we know that like with anything, when you have personnel changes, that is normally
an indicative position and normally we would flag that to you.
Again, our ability to switch and change and control is limited, be it the property funds
are ones where they're not in the pool at the moment.
But we'd always, and normally, our consultants
quite obviously get alarmed when there's changes
in personnel, but the degree of where that is,
there's nothing substantial at the moment,
it's something to monitor though.
Is the short answer you think is gonna get worse,
it's bad and it's gonna get worse or not?
No, not at all on that.
I mean, it's, you know, Schroeder's are a, you know,
quite a large portfolio.
We've got another manager that's very large as well,
who will be talking to you shortly, which is bigger than
some of the issues that you've got when,
what we've had before.
So, they've got more staff and more abilities
in order to manage things.
But when there are changes, like with anything,
they may have a different style bias,
they may have different approaches that they wish
to bring to the market.
because if you have got personnel that are managing a portfolio, they may have differing
views on where they are.
So it's one where we may wish to invite them at some future point if you see performance
continuing as is.
We don't have to do anything until 31 March 2026.
We are concerned, not to say we're not, because at the moment the way that the SIV portray
multi -asset credit is a different view to us.
Their only other manager that they've got sitting on it is PIMCO, which has investment
grade investment.
So it's a different style bias to what we've got.
We've got investment grade, a large allocation to investment grades already.
And we will need to work with the SIV over the next 12 months to mitigate that issue.
So is all this information approved then?
Yep, thank you very much indeed.
We move on to the item six, the breaches policy.
I'm afraid you have an English teacher sitting here.
I can't fail to draw your attention to the fact that a patent would regard this as a
policy about trousers.
Just in case there's a headline right out there who wants to say something about Wandsworth
Pension Fund caught with its trousers down, this is actually about breaches, break infractions
under those nature.
Nothing to do with trousers.
Thank you.
On that note, I think I'll be very brief.
No pun there intended either.
So, yeah, so the paper is a standard.
It's just a basic update in, you know, of our breaches policy
to bring it in line with the regulator.
If you do have any particular questions on this, I probably would refer
to Martin who's more afraid with those issues.
.
.
Thank you very much.
I think this is actually a record for this committee and how quickly we have got to this
stage of the proceedings.
I am very pleased.
I would like to keep our guests waiting until late in the evening, but we have had to in
the past, not this time.
I'm going to ask Mr. Giallotti to introduce the proceedings, but thank you very much.
You're welcome.
Can you just give us your names before he...
I'm Laura Bomer, I'm the Manager of All
the
Bank.
Mr.
Chartier.
Okay.
Thank you,
So I think most of you will have known that for a considerable time,
we've had some challenges in relation to obviously the Naveen Property Fund.
We talked about the size of pension funds and property funds in particular just a
ago in one of the earlier papers and this sort of highlights the issue that
when you've got a small fund if you have a redemption it can all it can then have
trigger substantial impacts for other investors and that's clearly what
happened here with the with the Naveen fund. A redemption request was put in
which meant that it was no longer viable to maintain it in its existing format. So
to wind up the fund over a relatively short period of time.
Something that didn't seem to be in the best interest
of us bearing in mind that in the current climate,
if you're a forced seller, what are you likely
to get back in returns on those assets?
And secondly, that we're slightly
underweight in property anyway,
so we'd be wanting to reinvest that.
And with everything going on with pooling
and everything else, is it right and proper
that we go out and seek to do that?
and to sell and reinvest has substantial costs associated with it.
So I was tasked with trying to find an alternative solution.
So working with Naveen, we were able to identify originally three managers who were interested
in looking at this.
And Naveen did their due diligence on those three and chose Columbia Threadneedle as the
preferred partner. So then that still then meant that we had to agree price
point and be happy with with that and that was work that obviously Columbia
can talk to you about if you've got any particular questions from their
perspective but from us you will see from from the paper there was a hairline
cut to what the net asset value was sitting according to Naveen. I think
there were in total there were three different valuers that were had to be
Obviously, Naveen had their price.
Columbia Thread Needle thought these were worth a lot lower.
And then we had a third independent party as part of the process that,
fortunately, was strong enough to foresee that this could be a particular risk.
So there was measures built in place that if that happened,
an independent third party could be brought in and
to provide a solution by combining the three valuations to come to where they are.
So, that's what was carried out and to come to a particular price.
As you will be aware, obviously, I was delegated to decide and make decisions on as to how
whether this was appropriate.
There is the note you'll see in the pack from Mercer who will look at the suitability
of the fund within our portfolio.
And as you'll see, it was positive in regards to that.
And I also engaged with my two other colleagues in other local authorities,
one of which included the Brunel Pool, who have got their own private managers
expertise in this, much more expert than myself,
to galvanize their views on whether this was in their best interest.
Following those conversations and the advice that we got from MRSA, I decided to vote in favour.
I think it was 98 % of people voted for in this particular vote, and of those who voted, 100 % voted in favour.
So it provided me certainly with reassurance in what I have done on your behalf.
So before I open it up to Threadneedle to see what we've moved into,
Is there anybody got any particular questions on the decision -making process to vote in
favor?
I think if that's the case, then we'll throw it open to Columbia to talk about our new
investment with them.
I'll just do a brief introduction before I hand over to James to do most of the talking,
but can I just check how long you would like us to limit our discussion to?
Well, brevity is always appreciated, but at the same time we would not want to sell our
our residents short and our members of the pension fund short may not be hearing you
out in full.
Well I know that you've had the papers so if there's anything that we don't touch on
that you would like us to touch on then you're very welcome to ask questions.
So I'll just give a few numbers in the headline.
In total Columbia Threadneedle is a global asset manager and we manage assets around
$515 billion across multiple asset classes.
Importantly for you, we run about 12 and a half billion across European and UK property
and we manage two open -ended balanced property funds that are held by
institutional investors, pension funds and LGPS like yourselves and they're
held broadly across the LGPS and the London boroughs. As Paul mentioned, the
Threadneedle Property Unit Trust or T -PUT is its nickname, is owned also by
Brunel pool as a default fund and so in terms of the pooling context we have
confidence that the fund has a long -term future and I think that that's important
for you. We are of course discussing with other pools and also with the London
Civ to ensure they're aware of people's investments and making sure that we work
with them on the pooling agenda where that's appropriate. We have a distinctive
approach to investing in property that is focusing on income which is the
primary driver of returns for property as an asset class.
So also potentially important for you if you need to take
income from the property fund in the future.
We're looking to capture increases in rental income
by being very active asset managers,
as well as deliver capital improvements on those properties.
So James Coke is the fund manager of T Push,
leads a team of people that have different responsibilities
in terms of delivering that return for you.
I am going to hand over at this point in time to James and then follow up with any questions that you might have at the end.
Thanks Moira, thanks Paul and thank you for having us. Pleasure to be here talking to you.
So rather than repeat anything that's been said, I just thought I'd give you a very high level overview of the Three Needle Property Unit Trust
which is ultimately the fund that the moving U .K. real estate assets that you currently have merged into.
effectively the two funds have merged.
That's resulted in a combined fund that has around 100 investors.
It has around a billion pounds worth of assets.
And I'll talk a little bit later as to how we've deployed that capital and
why we think there's strong growth prospects to come, both from the market,
but also from the fund and how we're positioned.
But high level, again, not wishing to repeat anything that's been said.
I think maybe one of the key facets of the fund is that while we are absolutely focused
on delivering financial returns, also written into the fund's prospectus is a focus on
delivering sustainable outcomes.
So that's environmental outcomes.
It's also social outcomes.
So what does that mean in practice?
It means we're very aware of things like boring things like energy performance certificates.
We have a net zero pathway and we manage assets
in a way that is designed to improve our buildings.
So not necessarily through knock down and redevelopment,
but more likely through refurbishments, repositioning,
you know, those sorts of initiatives.
And what that means is our standing assets then
tend to improve the rental tone,
so you're delivering greater income returns,
but also delivering environmental performance improvements.
And it's that alignment that we've been super strong on
and we will continue to manage on that basis
and that's the funds policy going forward.
The only other differentiator that I would perhaps highlight
is if you look at the way we manage our assets
relative to some other managers,
we as Moira said have a high yield bias
so that means we're throwing off around 4 .5 %
Net distribution, so that's net of all costs fees expenses etc.
And of course you got the growth that comes from property rental growth alongside that.
So it's four and a half net plus growth effectively.
Very high level view on the market, what's going on.
Actually I think property's had a fairly bad rep the last couple of years.
What's happened is we saw significant disruption through COVID,
real estate directly influenced by people's ability to move between assets,
places of work, places to shop, etc.
And then we saw a really strong rebound in 2021,
leading into the Ukraine war, interest rates moving out.
And of course, property real estate being a growth asset class.
we saw pricing falls across the board
along with equities and bonds.
But maybe the message I would like to leave you with
is actually that's all in the rear view mirror now
and maybe what's less well understood
is that property actually had quite a good year last year.
So total returns 12 months to December
were around 7 .5%.
So it's not an exceptional year
but it's a credible year in line with what property delivers
over the very long term.
So around about 5, 5 .5 % income and 2 % capital.
And going forward, we're very relatively optimistic that there are more positive contributors
to performance than there are headwinds now.
So we would expect returns this year to be at or in excess of those sorts of levels.
Why are we so sort of confident in that assertion?
If you look at the components that make up the real estate market, so industrials, offices, retail and alternatives, alternatives being things like leisure,
residential, student housing, that sort of thing, there are far more positive drivers of demand than there are negative.
Just for balance, let me start with the negatives.
Offices obviously continue to be challenged.
I think post COVID the hybrid working environment has definitely taken hold.
Adrogate demand for offices is down, but supply is also down.
We're building less offices than we had in the past.
So the market is sort of, it's definitely a tenants market,
but rents for good quality offices are still going up.
So it's not a disastrous picture.
But from our perspective, we've reduced our allocation to offices, so it's not a part of the market that we are particularly exposed to.
We still see selective opportunities for capital growth and of course you do get a big income return still from those offices,
those office tenants who remain in situ and still paying their rent quarter on quarter.
So it's not a basket case but still challenged.
Industrial on the other hand continues to go from strength to strength.
It's a part of the market that we feel very comfortable allocating outside sums of capital to.
That is the opposite to offices.
It had a very good COVID.
We all bought more stuff online.
All those occupiers, you know, seeing demand increase, increased their demand for more logistic space.
And we saw quite strong rental growth and strong capital growth come through that market.
Retail is traditionally a tale of two halves.
In town retail, I think, still has its challenges.
Strong high streets, you know, I'm local,
so there are some very strong high streets around here
where people continue to go and shop.
They're still very vibrant places,
but that's not the case throughout the UK.
So we're relatively selective on the high street,
but what we have seen go from strength to strength
is retail parks.
So out of town retail,
think about occupiers like B &M, Home Bargains, the Range, Aldi and Little, these type of
occupiers have gone from strength to strength. They continue to roll out
expansion plans and there continues to be a very favourable imbalance of supply
and demand in favour of landlords. So rents in this part of the market are
going up. And residential is an increasingly comfortable place I would
say for institutional capital to allocate.
We share that view, but it does need
to be professionally managed.
So we're working with a lot of operational partners
in this space to look at where can we deploy capital
into residential opportunities that deliver
against local social agendas, but which will also
deliver a strong financial return for our scheme holders.
But very broadly, again, a very comfortable place
to deploy capital into, very low vacancy,
and high levels of rental growth.
So hopefully that's sort of the five minute view
of the market, but there are certainly more reasons
to be optimistic than negative.
Just to put some numbers on it as to what that means
for our allocation, we're currently allocated 27 %
to retail warehousing, so just over a quarter
of the fund in retail warehouse.
We have no exposure to high street retail, although we will inherit two assets from the Newveen fund,
which are good assets in their own right, and we'll asset manage those before deciding whether they're long -term holds for the fund or sales.
We are 18 % offices, so sub -20 % of the fund is in offices.
That's come down significantly from around 35%.
So you can see that we've been selling offices as it's become a more challenged market.
We are 44 % industrial, so just under half of the fund is industrial, and around 11 %
in alternatives including residential.
So hopefully that gives you a sense of the parts of the market where we've deployed capital
have got more structural tailwinds than structural headwinds, and therefore it's partly that
that's giving us a big boost, if you like, to returns in aggregate.
For those of you looking at the slide deck, that's slide 13.
Little pie chart there with the numbers on the right -hand side.
I just wanted to spend a couple of minutes providing a little bit more information on
responsible investment because I think I'm not here to talk about government policy.
I'm not here to give an opinion on our cousins across the Atlantic and the mood music.
But what I can tell you is we are committed both as a business and my team as the fund
management team to investing responsibly because we believe aligning environmental and social
outcomes also generates positive financial returns.
So this is not a philanthropic vision.
This is about delivering buildings
that will deliver a financial return,
and it's about delivering buildings
that are fit for purpose tomorrow as well as today.
Now that can all sound fairly grand and theoretical,
but if you turn to slide 22,
I just wanted to give one very tangible example
of what this means in practice,
and this is just one asset that we've done a lot of work to
that gives you an illustration
of how the team actually spend their time.
This is a retail park up in Selby, so it's near York, so it's not Mayfair, this is not
prime London, this is fairly representative of where we deployed capital.
We've acquired a number of units, so we've aggregated a position to build up a critical
mass in an area that we know and like.
The occupiers in this retail park include the food warehouse, which is Iceland, Homebase,
B &M and we've recently done a deal with M &S.
And that was quite transformational because M &S would have been in the press a couple
of years ago saying we want to downsize our high street footprint but they also want to
increase their footprint in out of town.
And it's a really good indicator of where retailers are focusing their portfolio and
how we as investors can benefit from that to the benefit of our unit holders.
So what we've done is we've agreed terms with M &S,
we spent a significant sum of money on building improvements
around two million pounds invested in this unit.
We have improved the EPCs significantly to take them both
to A and A plus and then on top of that we've gone full
cover solar panels so we're starting to introduce sort of
green infrastructure, green energy infrastructure on top
and we've sold that energy back to the food warehouse
So we're taking a financial return on that investment as well.
So that's the sort of thing that we're doing month in, month out.
And hopefully it gives you a flavor of the way in which your capital is put to work,
both to derive income returns, but also to give us a little bit of capital growth alongside
that.
In terms of financial performance, we're very proud to have delivered outperformance
relative to our benchmark over all time periods.
Last year I mentioned, this is slide 25
for those of you looking at the deck.
Last year we delivered a net return,
so that's net of all cost, fees and expenses of 7 .3%.
That is broadly in line with long -term return.
So we've been running this fund since 1999
and have delivered annual returns just under 7 % annualized.
So hopefully that gives you a flavor.
Maybe I'll pause there.
There's plenty more I can say, but also very aware of your time.
And happy to take any questions that you may have either on strategy, deployment, allocation,
returns, responsible investment, or anything else.
Thank you very much.
It's a very interesting presentation, and there's lots of interesting detail here.
I myself have got a few questions, but I'll just ask members first.
Councillor Arlen and then Councillor Gasser.
Just being nosy really.
Slide 21, you've got distribution warehouse in Wandsworth, where is that?
On the Garrett Road, Garrett Lane, just behind your holding.
Behind the Sargent's?
Yes, it's the multi -letter state that you guys run, I believe that's managed internally on the front.
Then there's the big old warehouse in the middle that's just been sold to Bloom who are going to do multi -story.
And then we own the bit behind.
Fantastic, thank you.
Yeah, we've been trying to buy the bit that Bloom bought but unfortunately they outbid us.
So, but yeah.
Yeah, thank you very much.
It was all very interesting. I'm not a property expert whatsoever but I was in a completely different meeting
where we were talking about investing, and then we're talking about central London offices
being very much in demand now, and a good thing to be investing in, but I'm not seeing
that in here quite so much.
Yeah, so the best way to describe offices is tenant demand, occupational demand, where
people want to occupy, has become much more discerning.
So basically, if you're going to downsize your floor plate, you can afford to pay double
the rent in square footage terms and you're not paying any more in absolute terms.
So what we've seen is people downsized, they're looking for better quality space.
So if you're in a good market, so the west end of London is probably the strongest market
in the UK, we do have assets there, but not many of them.
So it's sort of to get exposure rather than to go overexposed.
We have seen rental growth and we have seen on buildings that we've refurbished quite
significant rental growth.
There's an example on that, slide 21,
where Foley Street is the top example on that.
We've seen nearly a third of rental increase
on a lease renewal.
And that's a tenant who looked around the market,
decided that their options were very expensive
if they were to move, and they've
re -geared with us a rent that reflects the building quality.
So tactically, we still see you can make money from offices.
You can make money from central London offices.
Actually, you can make money from offices
in other parts of the UK, Edinburgh, Birmingham,
Manchester, Bristol, even locally.
And we've got offices in Wimbledon
that are doing very well.
But I think that the challenge with offices comes if you go
into what's previously maybe been called grade B
or substandard offices, it's those offices
where the tenants and the occupiers are moving out
to move into the better quality.
And if you look at the proportion of the market,
crudely speaking, your top 20 % of the market,
the best 20 % that's doing really well, the other 80 % is really challenged.
And the experience that we've had on our portfolio has been, okay, well,
if you're holding the bottom 80%, which is the majority of the market,
you've kind of got a decision to make.
Either you're going to invest capital to improve that,
to put it back in the top 20%.
And we've done that with offices in St Albans where we've refurbished and re -let and got
premium rents.
Or you're probably going to look at alternative uses.
So offices happen to convert pretty well to residential and other uses where there's
a greater need and that could work quite well.
Or as a last resort we would look to sell and divest and reinvest that capital into
other parts of the market.
And on this portfolio it's been a real mix across the portfolio of all three.
So we've got some that we've kept refurbished and we've got some that we've converted to other other uses and held
So they've turned into residential assets and there have been somewhere
We felt actually someone else has better place to take this on and we're fairly
Open with ourselves where that's the case where the markets prepared to pay more than it's worth to us
That's a shell and we'll take the capital and reinvest
Do you use any leverage, carry any debt at all, and if so, how much?
No, we're completely un -leveraged. So those returns are comparable to other core, in inverted
commas, core real estate returns. Thank you. Second question, if I may, could
used as a quick run down of
uh...
here investors are that you know
cash is relatively low
which implies you're not expecting many unexpected redemption request so he
loved a cousins who don't sent it happened
that happened last i mean it's a bigger fund that's risk of that for stop but
but also in the context of an awful lot of retail facing
uh... property funds going under because
So it can't cope with your liquidity and should give you an edge, but what's your expectations
for redemptions and liquidity and things like that?
Yeah, really good question.
So if I give you the background, this fund topped out in terms of AUM at 1 .6 billion.
So it wasn't the largest fund in the index.
That's, we've never been focused on being the largest.
We focused on performance.
But to give you the context, we've then shrunk through a combination of market movements
and redemptions to around 850.
So we saw broadly 400 mil, I would say, of redemptions.
And I would say we settled all of our redemptions
on standard terms with no deferments,
no gating, no fund suspension.
That's really important to us because we have to accept
that we're not the asset allocator here.
You guys are the asset allocator.
You allocate to real estate and our job is to deliver you
what you need, which is yes, financial returns, but also
liquidity.
So redeeming investors were treated fairly alongside
investors who stayed in the fund.
And we were able to deliver liquidity to those investors
who needed to divest.
I would say, to summarize who they were, the vast, vast
majority were mature corporate DB schemes who were just going
to buy out, which is a shame.
because the comments we were having at the time were,
we really like property, we really like the fund,
but we don't need it anymore.
So it's sort of surplus to requirement.
Which we should probably take as a compliment
because we've delivered them the returns
to allow them to get in that funding position.
But they've just come to the end of their journey.
So what I would say is we've dealt with a lot
of the redemption pressure.
And as a consequence, if I look at the balance
of investors in the fund, to answer your question,
Yes, there are still some DBs, but they are majority underfunded and have committed to
us for the medium to long term.
On top of that, we have LGPS, so open DB schemes, similar to yourselves, who are looking at
a more balanced profile of growth and income.
And we believe real estate can continue to offer that.
More excitingly perhaps, we've diversified into the local authority pools.
So Paul mentioned Brunel, they will continue to increase allocations to T -Put.
And can to their benefit, potentially benefit from some of the other charge.
Because if you've got capital to allocate now, you can actually recycle units.
So you can get in at NAV minus instead of getting in at your traditional offer price,
which would be NAV plus.
So we're seeing a little trickle of right sizing of investors.
We are actively targeting then two demographics,
which means I get on a plane more than I would like.
But we're overseas talking to global institutional capital partners.
And similar long term horizons to what yourselves would see.
But coming at it from an office in Malaysia or Singapore instead of an office
in Wandsworth.
So similar risk return and longevity prospects.
And then finally DC.
So UK corporate DC is probably our number one growth prospect
because we see the merit in real assets for pension schemes
and DC schemes for liquidity reasons, very valid liquidity reasons traditionally,
have been under allocated to real assets and we believe real estate
has a positive contribution to make to those portfolios.
The one final demographic that we also target is,
I would say, the fund of funds model.
So we have a global wealth manager who has over
100 million pounds in T put and they behave
completely differently, which again,
acts as a really good diversifier because if some
pension schemes are selling, they can take a
contra cyclical approach and buy units.
So having their support on the fund is really helpful.
So hopefully that gives you a flavor of, you know,
this is not a fund that is set up to target
one single investor demographic.
We want like -minded, long -term institutional investors.
So there are no retail investors in this fund.
You can't put 1 ,000 pounds into this fund.
The minimum investment is 250 ,000, deliberately
to screen out retail investors.
But within that, we do want, and I
think it's beneficial to have a reasonable degree of investor
diversification so that you're not
overexposed to a single demographic doing
a single thing.
I've just got a few questions around the environmental things.
I'd love to just understand a little bit more about this chart on page 18, which shows this
portfolio, annual carbon intensity and this rather spectacular sort of break occurring
at 2030, which if I read it, it's because you sort of run out of opportunities to push
carbon intensity down unless you take some of the more radical measures, is that correct?
Yes, so slide 18, what that shows for people who haven't, if anyone hasn't seen this before,
is this is a pathway to operational net zero carbon.
So this is us trying to reduce the carbon that's emitted through the operation of our
buildings to zero.
Obviously, we're under a legislative target as an economy to get there by 2050.
We've run a number of analyses a number of years ago, actually, now 2021, 22, that basically
concluded that given there's a huge arbitrage between building improvement, environmental
improvement and financial improvement, you're better off financially as well as environmentally
accelerating that pathway and we've hence been confident enough to commit to achieving
that operational net zero carbon by 2040.
So that's enshrined within the fund documentation.
How we get there is a combination of measures which are tabled in that left hand side and
these range from the very simple, so changing your lights to LEDs, improving your insulation
around your buildings, putting secondary glazing on your windows, all the things that have
done in this building and others that are not rocket science.
Then you layer on top of that, you're degassing.
So you basically strip out gas from all of your buildings,
replace with electrification.
And the steep drop that you see in the graph on the right hand side is that
the combination of that effect combined with the decarbonization of the grid.
So as the grid switches from fossil fuels to renewables,
and we are more reliant on the grid and not reliant on gas,
the combination gives you a big impact in net zero carbon.
So that's basically how you're going to do it.
And then on top of that, you're layering on top your on -site renewables.
So I mentioned SELBI with PV's.
PV's you've got a range of options.
You can put three or four PV panels on the top, tick your ESG box and call it a day.
we've gone way beyond that and we want to contribute the power that that PV array can deliver
to take the pressure off the grid and allow us to sell the power back to the tenant.
So it's a combination of all those factors combined and the difference is the,
so where the line splits, the dark grey line at the top, that basically says if you did nothing to the portfolio
and only relied upon decarbonization of the grid,
that's roughly where the portfolio would land.
If you do all of the things that I've just mentioned,
that's the light blue line at the bottom,
which is the aspiration for the fund,
and it's the cumulative effect of those interventions
that are gonna get us to net zero carbon by 2040.
Thank you, that's very informative indeed.
Yes.
This is a really annoying and difficult question,
and you can feel free to say it's out of your control.
But we just had a discussion at the start
around decarbonization functioning well
on this kind of ESG measure,
but actually carbon emissions going up.
If a lot of the work is retail parks,
so taking from your high street shop
to a location that people are driving to by car,
do you measure kind of scope?
I guess what scope would that fall into,
scope two emissions or scope three?
Scope three?
Yeah, so I'm not saying, yeah.
It's not something you can control, but is that on your radar as a function of the monitoring
that you're doing in terms of the wider neighbourhoods that you are landlords for?
Yeah, so the answer is yes, we consider it, but then we have to accept that a lot of it
is outside of our control.
So scope three emissions in their broadest sense are reported.
I would need to double check what precisely we report and what is considered out of scope.
We can come back to you offline with what that looks like.
It's part of our annual report.
I can easily circulate copies of that post this meeting.
In terms of where we're focused, we are much more focused on two things.
Operational carbon, but then the embodied carbon part of it as well.
we're becoming much more aware of that.
And for those not up to speed,
that's basically the carbon that's in the building fabric.
So the foundations, the steels, the insulation,
all the materials.
And we've got quite a good record here
of looking at embodied carbon
and trying to optimize whole life carbon,
that's your embodied carbon and your operational carbon,
in what we're doing.
So put really simply, I've got a building,
it's some carbon that was made,
that's in the building when it was built.
I can either try and reuse that through a refurbishment
and deliver a building that may not be
100 % operationally optimized.
So take your windows for example.
I may not be able to replace them,
but I can put secondary glazing on them.
That might get me 90 % of the way there.
But it's a damn sight more carbon efficient
to put secondary glazing in than it is to knock the building down and rebuild the building.
And all of this is capable of being put into numbers and is becoming more and more what
we look at when we're looking at are we refurbishing this building or are we knocking it down.
And by and large, not all the time, but by and large, it's a lot more carbon efficient,
whole life carbon efficient to refurbish and retrofit than it is to knock down and rebuild.
So not saying there's never a case for development, but by and large, that's a big part of the
and we focus on refibs.
And just to quickly extend that question,
how about EV charging at retail parks?
Yeah, my personal view is EV is the future.
I'm not going to comment on it again, policy.
If you look at the sales, they've stabilized,
but they are still trending up.
I think there is the fear factor, if you like.
If you put your consumer hat on, where do I charge?
That's actually quite good for real estate,
and certainly for retail parks because the answer to where do you charge is your retail park because
most people will charge at home and then they'll be looking for convenience and it's far more
convenient to charge when you're shopping at your Aldi or your Lidl or your Tesco or your Sainsbury's
or wherever you shop than it is to make a special journey to what was a petrol station and is now
an EV charging station.
So we're looking very closely, very, very closely at how we roll that out at scale across
this portfolio because we think there is more benefit to doing a scale proposition than
there is to doing two charging points here and two charging points there.
But yes, certainly I would say within a five -year window, within a three -year window, and my
personal hope is within a much shorter time period than that, on this portfolio you'll
a significant roll out of EV charging.
Fascinating information here.
Can I come to you in just a second?
Thank you.
Just on the High Wycombe example there, you talk about tenant committed to purchase green
energy delivered direct to site.
What is that?
I presume it does come on a truck.
What is it?
That's your PV's again.
Solar panels.
Yeah.
That's page 23.
Yeah.
Yeah, you're going to get bored of hearing me talk about solar panels, I'm sorry in advance.
Thank you very much.
Talking about this out of town retail, what factors do you think are driving the move
towards it and to what extent do you think they're likely to persist for the next few
years?
I think it's from a retailer perspective,
it's a combination of convenience and cost.
So convenience because whether we like it or not,
out of town car born retail is more accessible and
is more convenient for doing bulk shopping.
For the majority of people, and here I would qualify for
the majority of people in the UK outside London,
because London does behave slightly differently,
the majority of people will still drive,
they will still do their weekly shop,
they will have 10 shopping bags,
they don't want to be getting on a tube,
or the train, or a bus,
they want to load their boot up and go home.
And that ultimately at its core
is what's driving retailers like M &S
from in town to out of town.
The cost side of the equation is because
In town retail traditionally got very big up in terms of rents going up.
We're talking way back here, way back to the 90s and early 2000s.
Think about the space race, think about retailers on big expansion programs,
new look, people like that.
Rents were very expensive and they haven't come down.
So if you're a retailer, you've seen the internet decimate your top line,
effectively and your cost base has remained elevated.
If you can reduce your cost base and optimize your real estate, so
it's coming, getting people to drive their cars to store.
It's also doing things like what we would term omni channel retailing,
click and collect is if you think about it.
Retailers love click and collect.
They want you to return your pair of jeans to store.
They want you to drive.
They want you to come in and they want you to buy something when you're there.
And so what you see is this interaction now.
The retailers have got it right.
They want a big presence, they want a lot of stock in their store, so
they want it cheap.
And they want you to turn up with your refund and swap it for something else.
So it's that model that is very forward looking
in terms of what retailers are expecting from their real estate.
And the other point, sorry, just to finish is we think about industrial and
logistics as being where most retailers distribute from.
But actually it's only one part of the distribution chain
which also includes the stores.
So, retail warehousing, you might find it's 75 % shop,
but 25 % of that will be stock.
And they can distribute from their stores
and use that as part of their last mile distribution hub.
And that's really actually important
for urban conurbations, London, here,
You know, there are retail parks, you know,
you'll all be aware of them,
you'll all probably shop at them.
They can deliver on vans to store
and you can go and collect from there.
So it plays into that model very, very nicely.
Can I ask about this GRESB thing you've got?
I mean, it's aberrably honest of you
to say that you're 59th out of 90,
which doesn't sound too impressive.
No.
And you've highlighted some of the things that you're going to do to improve.
Perhaps you could just expand on that a little bit about why you're there, whether that's
structural and what you're hoping to do to move yourself to a better place.
Yeah, absolutely.
So, page 37, for those of you with the pack.
And again, for those not familiar, GREZ is the Global Real Estate Sustainability Benchmark.
So, this is a, probably the simplest way to think of it is it's a relative return benchmark.
It takes a lot of different funds, puts them into benchmarks so
that you're comparing like with like, and then ranks them.
And the top performing funds get five stars and a high number out of 100.
And the poor performing funds get a poor number and
probably a lot of disinvestment.
Gresbe, I would say, as a methodology has its limitations.
You can score a lot of Gresbe points through building certification.
What that basically leaves the door open for is,
I would not go so far as to say abuse of the system, but
effectively you can get more growth points by doing surveys on your properties.
And our approach has been to not take that approach,
because we believe that actually if it costs you 10 ,000 or 20 ,000 pounds for
a report that is not doing anything,
that money is better invested in refurbishing
the actual building.
So we have prioritized what I would term
much more active interventions,
which is a polite way of saying,
doing stuff to our buildings,
than we have getting building certifications.
As a consequence of that,
and also you mentioned the question about,
is it a structural issue?
Partly it is a structural issue.
One, because we're not gonna chase points
by getting building certifications,
but also partly because it doesn't suit our investment style.
We typically have a higher number of slightly smaller buildings in our portfolio.
That's a positive, gives us a pricing advantage,
and also gives us liquidity and diversification benefits.
But it does mean if we're going to get building certifications, we need more of them.
So it's comparatively more expensive for us,
which is more of your capital invested in bits of paper and less invested in the buildings.
So we subscribe to Gresb because I do think it's best practice.
I think it has a lot of positive characteristics and it allows comparisons across funds.
But we are not going to chase a Gresb score by getting more building certification.
And I've been very open with all of the investors in TIPA.
As a consequence of that, I think TIPA will have a ceiling on its Gresb score.
If you consider there are 12 points for building certification,
We will have some but not all, so in crude numbers, we're working out of 90 instead of 100.
And so our 73 out of 90 is probably a fair reflection of everything else that we're doing on our portfolios.
So you get scored for data coverage, you get scored for
year on year improvement in energy consumption and carbon emissions.
If you look across the metrics,
we're actually doing pretty well,
but we're being dragged down by the building
certification which always lets us down.
Thank you, that's a very convincing answer, thank you.
Just to follow up with the number of people
in the strength of energy change
and improvement by less than a benchmark.
So why is that here?
So the honest answer here, we did a lot of work
onto this, because it's not, you know,
we've gone up, the benchmark's gone up by more.
And when we looked at it, it's because we've sold
a lot more offices.
So your offices tend to be landlord managed.
So you tend to have a very high proportion of data
collection on your offices.
But that shouldn't be a reason to hold them if structurally
they're going to be more challenged from a performance
perspective.
And actually, I think that's a really good illustration of
probably the balance that we have to
strike as fund managers.
You're always trying to weigh up what is the best overall
result for the fund and for investors.
And sometimes it does mean you're going to lose a little bit over here, but you should
be in our view net positive overall.
So we've taken the financial advantage of divesting from offices, but we've had to accept
our coverage has dropped a little bit.
What I would say is this is not me sitting here making excuses.
We'd love to come back and present in a year, two years, whatever it may be, whenever we're
invited.
You'll see that we're pretty proactive.
and so we're not saying we're not doing any better than 73.
Actually, we've got a big project on at the moment
to see if we can improve our data coverage
in a more systematic way,
and actually we think we've found a way to,
with the tenant's consent, go through the,
it's not the national grid,
but it's effectively the national data provider
for energy data, and improve our data coverage that way.
So we're looking at different ways
to improve our intelligence in this space
without necessarily buying it.
Just very quick on the cash position,
just looks modestly high, 8 .7 % against the benchmark.
So yes, so cash position, that is way back on slide 10.
And yes, I think, so maybe to finish the,
To bring you right up to date, we've obviously been through the period of redemptions.
We have also been selling offices as I've described.
We are now in a sort of quite a fortunate position because it's quite a good time to be buying assets.
And we can afford to very selectively reinvest that cash into assets that we think will be positioning the fund best for the next cycle.
And I've mentioned residential, which is an area
where we only have a 10 % allocation.
That is one of the parts of the market
that we are looking to increase allocation.
We've got two assets under offer to purchase at the moment.
One of them is a residential care home.
So that's playing into what I would say
is the retirement demographic.
So strong demographic tailwinds in that space.
But it's an NHS partnered,
home effectively.
So it's serving a local need at a price point which we're very comfortable is underwritten
and is very affordable.
The other asset that we are looking at and we're in due diligence, so both these assets,
there's no certainty we're going to buy them but it just illustrates the sort of things
that we're looking at, is another residential scheme up in Leeds and that would be for a
combination of social needs that Leeds City Council has identified it needs a building
for.
So we're working with Leeds City Council to see if we can structure something to deliver
buildings that we would repurpose with Leeds to house these facilities.
And again, Leeds City Council would be the tenant in that example.
So if I look at it from a pure TIPA investment lens, I'm looking to derive a financial
financial return, I've got a strong covenant paying a financial rent, but those type assets
also have a social aspect that we want to continue to deliver to align, as I said earlier,
those financial returns with what the fund's capital can do to deliver social outcomes.
A couple of questions. First is on the waste figures on your table on page 36. So you've
got to target 100 % diversion of waste to landfill, I mean from landfill I guess you mean. And
the percentages you've got don't look very good. They don't look anywhere near 100%.
Is that because that's out of your control?
Sorry, this is page 43 no
36 that table environmental data
So I'm under waste at the bottom target 100 % away from landfill I assume
The figures don't look very good. And is that but I mean in London well here we don't send anything to landfill
So it's quite surprising to me that that much seems to be going to landfill
Well, it looks to be improving on the diversion of waste from landfill.
But it's still pretty great, isn't it?
The issue here is the metrics on the right -hand side are actually telling you something slightly
different and I apologize.
Having looked at this with a fresh pair of eyes, it could be clearer.
So actually the figures on the right -hand side denote coverage.
So that is just where we are receiving data on where our waste is going.
That is not the percentage of waste that is going to landfill.
I don't want to misquote your figure here, but again, let me take that away and I can
come back specifically on how much of our waste has been diverted from landfill, which
is I believe the figure to be either 100 or just shy of it.
And the reason I can say that with the reason
with the growth confidence is because we have a policy
in place with our managing agents
and it is standard procedure therefore for us
that waste does not go to landfill.
Now we put that policy in place a number of years ago.
Okay, that's interesting.
Maybe with recycling, is that misleading as well?
Yeah, it's the same.
So the figures in that bottom gray row,
that is actually just looking at waste consumption.
So how much waste is being consumed by the portfolio?
The problem with that statistic is, again, in the interest of transparency,
as our data coverage is going up, it looks like our waste consumption is going up.
But we want to get to a position where we've got 100 % coverage
and then we'll have meaningful data that we're reporting like for like year on year.
How much is going to a certain level?
Yeah, I don't know.
And I've got another question which may not be for you actually.
We were talking earlier on about the emissions reduction paradox and yet you seem to be doing
really well on emissions reduction.
So is this the exception that proves the rule or should we be doing more on property because
that seems to be a better way of reducing emissions?
No, since that paradox was in relation to listed equities and carbon footprint and it's
because carbon footprint is a, you normalize the carbon emissions by the amount invested.
All of the property stats here are quoted per meter squared so you don't have that inflation
impact.
I think that's been an absolutely fascinating discussion.
That's actually really rather a high point in terms of discussions that we've had of
this nature.
Of great interest to the committee members, I'm sure you can see.
So thank you very much indeed.
Thank you for having us and be delighted to answer any questions offline or come back
Well, if you drop your details, actually, I have got a question I'd love to ask offline.
of an unrelated matter so I won't take other committees time but if I can pick up your
details from Mr. Jorthi.
Yeah, great.
Okay then.
Thank you.
Appreciate the invitation.
Thank you so much.
Have a good evening.
And members, thank you very much indeed.