Long-term planning makes Gentoo stand out
In the latest of our series taking a closer look at some of the companies who made it into the Journal Top 200 we catch up with Sunderland-based housing company Gentoo. Journal deputy business editor Peter McCusker and Paul Woolston, senior partner of Top 200 sponsors PricewaterhouseCoopers (PwC) talk to its chief executive, Peter Walls.
LANDLORD and property developer Gentoo is almost 10 years into its current 30-year business plan. Results for the last five years of the plan show revenues rising steadily from £92m to £143m in 2009, but losses for each of the years of anything between £23m and £48m.
The Doxford Park-based not-for-profit business expects to go from the red to the black in the next few years and the books to be balanced by 2020.
This emphasis on long- term planning is one of a number of features which make Gentoo stand out from others in the recent Journal Top 200 list, in which it moved up from 57 in 2009 to 40th this year.
Gentoo, formerly Sunderland Housing, was created in 2001 as a standalone business to manage Sunderland City Council’s housing stock.
Unlike many arms-length management organisations it also took the council’s DLO (direct labour organisation) arm with its 300-strong workforce and this combination has seen Gentoo blaze a trail in the third sector. Gentoo chief executive Peter Walls: “Our first task was to instigate a plan to bring all of the homes we owned up to a good standard.
“This was major change for staff who went from constantly telling people that they couldn’t have this or that done, to saying this is what we are going to do, and this is how we are going to do it.”
To fund the programme and on-going works it borrowed £240m in bonds for 40 years and a £335m loan from a syndicate of banks.
On top of this it also has an additional £135m facility with the European Investment Bank to fund its modernisation and new-build programme.
With 30,000 homes in its portfolio it has a guaranteed income stream from the rents and its property portfolio is valued at over £900m.
Gentoo is ahead of schedule on its regeneration programme and over the years it has diversified in a number of new directions.
Up until three years ago the business was simply known as the Sunderland Housing Group but the unveiling of the Gentoo brand also marked a change in the structure of the business and its ambitions.
Along with the Gentoo group there were created subsidiary brands Gentoo Sunderland, Gentoo Construction, Gentoo Homes and Gentoo Ventures.
These divisions encompass a range of activities with Gentoo Sunderland managing its former council house stock; Gentoo Construction building and maintaining homes across the country; Gentoo Homes builds new homes and Gentoo Ventures acts is a property agents.
Walls is passionate about the Gentoo concept and is currently developing Gentoo Living and Gentoo Green.
Gentoo Living was created in 2007 with the aim of “inspiring and empowering communities”. It has helped 200 individuals launch their own businesses and works with schools and communities.
Gentoo Green is likely to be spun off soon as a stand-alone division and is aiming to capture a share of the renewable energy and energy conservation market. Walls says the key performance indicators in some of its divisions are the same as those in the private sector.
“Construction is expected to trade and make a profit. The Home division is expected to build homes and sell them at a market rate.”
But with its tenanted property arm there is a different dynamic at play, as it has no facility to increase prices with the Government setting rents through legislation.
Walls adds: “We know we have a fixed and continual income.”
Working in partnership with Sunderland City Council Gentoo recently secured £33.5m grant investment from the Homes and Communities Agency under their “Kick Start” initiative, designed to breathe life into stalled housing developments.
It is also developing the pioneering Genie mortgage product which allows first-time buyers get onto the housing ladder without the need for a deposit or mortgage.
Walls believes Gentoo will continue to evolve as the economy and society changes.
He added: “We will continue to be a creative and innovative business. As more people become unemployed with the looming cuts society will need to find ways of dealing with this.
“We will continue to work alongside community-based enterprises. We are able to fund some of these ventures from grants and some from within the group. We are creating something of a pseudo-public/private model to take the hard edge out of ongoing social reforms.”