Southend Council lost £1million after property firms investment

In October the council invested £29.968million in Lothbury Investment Management Limited and Patrizia Property Investment Managers LLP.

However, by December the investments had fallen to £28.817million, a loss of £1.151million.

Investors in Lothbury are waiting to see if a buyer can be found for the fund but if that doesn’t happen by March the fund’s valuable property assets will be sold off, with a return on those assets for the council.

At a policy and resources meeting on Thursday, Rob McMullan, Lib Dem councillor for Eastwood Park, questioned the council’s investment strategy.

He said: “The world has changed in the last couple of years. Two years ago interest rates were 0.5 per cent. Now they are around 5.25 per cent therefore we can see better rates of return in other areas.

“My question would be around the advice we are being given by our expert consultants as to whether or not they are keeping up with a market that is moving.”

In response, finance director Joe Chesterton, said the council worked with advisors who constantly monitor markets and give “red flag” warnings where necessary.

He added: “Overall the advice we are getting is where you need to stay put on these sort of funds at the moment. They are long-term property funds. If you do that knee jerk reaction and pull out of funds it costs you an absolute fortune to do it.”

Laurie Burton, Labour councillor for Blenheim Park, said: “I get what you are saying that we should stick in for the long haul and they will go back up but isn’t there a danger of – lets stay there and hope we might get it back – and actually what might be happening is property in London might be in permanent decline and it might be better to cut our losses now.”