Investments

Greater Wellington has a significant portfolio of investments comprising:

Liquid financial deposits
Administrative properties (eg, depots)
Forestry and business units
Equity investments in the WRC Holdings Group (including CentrePort)
Rail rolling stock and related transport infrastructure

Greater Wellington's philosophy in managing investments is to optimise returns in the long-term while balancing risk and return considerations. It recognises that as a responsible public authority any investments that it holds should be held for the long-term benefit of the community, with any risk being appropriately managed. It also recognises that lower risk generally means lower returns.

From a risk management point of view, Greater Wellington is well aware that its investment returns to the rate line are exposed to the success or otherwise of its two main investments - the WRC Holdings Group (including CentrePort) and its liquid financial deposits. At an appropriate time in the future Greater Wellington believes that it could continue to reduce its risk exposure by reducing its investment holdings and using the proceeds to repay debt. The timing of these divestments will be in accordance with Greater Wellington's objective to optimise the overall return to ratepayers. It is important to appreciate that Greater Wellington's investments contribute approximately 12% to the total level of regional rates. In other words, regional rates would need to be 12% higher were it not for the contribution from Greater Wellington's investments.

Liquid financial deposits

Greater Wellington holds $33 million in liquid financial deposits as a result of selling its interest in CentrePort to one of its wholly owned subsidiaries, Port Investments.

Greater Wellington regularly reviews the rationale for holding these liquid financial deposits, taking into account:

General provisions of our treasury management policy, including Greater Wellington's attitude to risk and creditworthy counterparties.
Specific provisions of Greater Wellington's treasurymanagement policy to hold sufficient deposits or have committed funds available as part of its self-insurance of infrastructural assets
The rate of return from alternative uses of these funds
The requirement to hedge the $44 million debt within the WRC Holdings Group

Treasury management

Greater Wellington's treasury management is carried out centrally to maximise its ability to negotiate with financial institutions.

Greater Wellington then on-lends these funds to activities that require debt finance. This allows the true cost of debt funding to be reflected in the appropriate areas. The surplus is then used to offset regional rates.

Administrative properties

Our interests in the Upper Hutt and Mabey Road depots, and the Masterton office building are grouped to form an investment category, Administrative Properties. It is intended that the new Masterton office building will be constructed for around $6 million and owned by Pringle House Ltd.

Pringle House is a wholly owned Council Controlled Trading Organisation (CCTO) which currently owns the Regional Council Centre at 142 Wakefield Street, Wellington.

Forestry and business units

Greater Wellington and its predecessor organisations have been involved in forestry for many years, primarily for soil conservation and water quality purposes.

Greater Wellington currently holds 6,000 hectares of plantation and soil conservation reserve forests of which approximately 4,000 hectares are in the western or metropolitan part of the region, with the remaining 2,000 hectares in the Wairarapa.

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