Share

Church of England loses £40m on property investment

Church of England loses £40m on property investment
News

Church of England loses £40m on property investment

Finance | Vibeka Mair | 8 Feb 2010

The Church of England (CoE) has lost £40m from a failed investment in two New York apartment complexes, Stuyvesant Town and Peter Cooper Village, which collapsed after the US property bubble burst.

The Church Commissioners, who handle the CoE’s investments, made the deal in 2007 before the credit crunch hit. The investment was a partnership interest, along with other international partners.

However, the investment was struck by a sharp fall in residential property values, and a legal ruling that many apartment rents would continue to be regulated regardless of value or the income of residents.

The disastrous deal, which was part of the Church’s £1.3bn property portfolio, represents less than 1 per cent of its assets. The total value of the Commissioners’ assets at 31 December 2008 was £4.4bn.

A spokesman explained: "Like many property investments, the purchase of Stuyvesant Town was funded by a combination of borrowings and investors' cash. The investor's cash portion, or 'equity' was the first element to bear any loss. The value of the property fell to the extent that it covered only part of the borrowings - the rest of the borrowings, and the investor's equity, has been lost.
 
"Although the owners tried to restructure the borrowing arrangements, this was not possible, and the owner was unable to continue to meet the borrowing costs. In the circumstances, and in the best interests of the residents and lenders, the decision was taken to offer the property back to the lenders."

The Commissioners said they would look carefully at the lessons to be learnt from the loss. They said: “Stuyvesant Town (pictured) offered the opportunity to invest in a large residential complex in a major international city, with Tishman Speyer, a respected world class manager.

“In doing so we believed that the investment would provide strong financial returns and investment diversification. We undertook due diligence in conjunction with external professional advisers and fund managers, including an assessment of the indentified investment risks.”

The loss comes against a background of the Commissioners’ property portfolio outperforming its peer group by an average of 4.6 per cent every year over the last ten years and returning an average of 12.1 per cent each year. Its 'peer group' is the group of property investors measured by the Investment Property Databank, and principally includes UK institutional property investors – such as pension funds and insurance providers.

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Free eNews

2014 London Marathon on track to beat the £53m raised last year

18 Apr 2014

The 2014 London Marathon is on track to raise more than £53m for good causes and break the Guinness World...

No evidence of criminality at Tower Hamlets, say police

17 Apr 2014

The Metropolitan Police has said that there is “no credible evidence of criminality” following an...

Donations double in one day following Marathon runner’s death

16 Apr 2014

The amount donated to the National Osteoporosis Society, the charity 42-year-old Robert Berry was running...

Paula Sussex to be the next Charity Commission chief executive

17 Apr 2014

Paula Sussex, senior vice president, public sector of CGI, has been appointed the new chief executive...

Impact of welfare reforms felt by 95 per cent of Yorkshire charities

17 Apr 2014

A report published today which looks at the impact of welfare reforms in the region of Yorkshire and Humber...

Trussell Trust sees use of its foodbanks 'almost triple' in a year

16 Apr 2014

The number of people using the Trussell Trust’s foodbanks rose from 347,000 to 913,000 in a single year,...

'Technology can offer charities more than just online donations'

10 Apr 2014

Charities are focusing too much on using digital tools for fundraising instead of how technology can be...

Amnesty calls for 'full and frank disclosure' on alleged US surveillance

9 Apr 2014

Amnesty International has warned that alleged mass surveillance by the American intelligence agency NSA...

Virgin Money Giving launches app following year of growth

1 Apr 2014

Virgin Money Giving has launched an app for users after reporting that 30 per cent of traffic to its platform...

Join the discussion

 Twitter button

@CSFinance