Supplementary A - London Borough of Hillingdon
Supplementary A - London Borough of Hillingdon
Supplementary A - London Borough of Hillingdon
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PPI 2A, B and C<br />
Internal Rate <strong>of</strong> Return for<br />
A. Industrial property<br />
B. Retail<br />
C. Agricultural<br />
In view <strong>of</strong> the very limited number <strong>of</strong> properties with a total value <strong>of</strong> £5m in this indicator, it is not<br />
considered useful to set targets for IRR which in any event may be subject to market forces over<br />
relatively short periods <strong>of</strong> time. Instead, these properties should be individually reviewed to<br />
determine whether there is a cost benefit or other reason for retention rather than disposal.<br />
NUMBER<br />
OBJECTIVE<br />
2 A, B & C<br />
To demonstrate the justification in financial terms, for retaining a nonoperational<br />
– investment portfolio. It will ensure accountability for<br />
investment decisions illustrating the financial advantages and<br />
disadvantages <strong>of</strong> holding/disposing <strong>of</strong> assets in the portfolio.<br />
DEFINITION IRR calculated in accordance with DCF techniques based upon a 10<br />
year projected cash flow period or the remainder <strong>of</strong> the existing<br />
property interest, whichever is the shorter.<br />
INDICATOR:<br />
Overall average internal rate <strong>of</strong> return (IRR) for each <strong>of</strong> the following<br />
portfolios: (a) Industrial, (b) Retail, (c) Agricultural investment<br />
property.<br />
2002 2003 2004 2005 2006<br />
Industrial 7.41 8.36 9.81 8.75 12.48<br />
Retail 7.01 10.71 8.84 10.97 9.44<br />
Agricultural N/A N/A N/A N/A N/A<br />
The DCLG National PPIs are being phased out after 2005/06 and will be replaced by new PPIs<br />
devised by The Association <strong>of</strong> Chief Corporate Property Officers in Local Government. These<br />
indicators were produced under the National Property Performance Management Initiative.<br />
(NaPPMI). These will be analysed for the year 2006/07 and reported in September 2007 in the<br />
Performance <strong>of</strong> Property report. An analysis was done <strong>of</strong> these indicators for 2005/06 and these<br />
were reported to Cabinet member in September 2006 in the Performance <strong>of</strong> Property report.<br />
PPI 3<br />
Total Strategic Annual Management Cost per sq. m. in GIA for the property portfolio.<br />
Cost GIA Cost/s.m<br />
Actual 2002/03 281,249 116,845 2.41<br />
2003/04 277,044 105,094 2.64<br />
2004/05 259,209 107,657 2.41<br />
2005/06 276,590 113,397 2.44<br />
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