Urban Splash sees losses and debts increase
Manchester-based regeneration specialist Urban Splash has posted another set of gloomy figures which show an increase in losses to £15.4 million
This 65 per cent rise in the company’s net losses for the year ending 31 March 2012 - the loss was £9.3 million in 2011 - comes as the award-winning outfit confirmed an increase in net debt levels of £8million to £242.4million in its latest accounts.
Urban Splash, which recently parted with long-standing directors Nick Johnson and Guy Jackson (see AJ 18.10.2012), also moved from a positive net assets position of £4.9million in 2011 to net liabilities of £17.4million in 2012. Over the same 12 months its worksforce shrank from 142 to 117 and a ‘revaluation of its commercial properties’ showed a reduction in value of £6.9million in 2012 from £10.3 million in 2011.
However the company, which has worked with some of the country’s best and up-and-coming architects, did see its turnover increase 16 per cent from £29.1million in 2012 to £33.6million.
In a statement which accompanied the figures, Urban Splash chairman and co-founder Tom Bloxham said: ‘The general economic malaise and downward pressure on valuations has had an impact on our commercial property portfolio, while the continued lack of availability of mortgage finance has acted as a barrier to potential homebuyers for our residential portfolio.’
He added: ‘We are currently engaged with all our funders in negotiating new bank facilities for the medium term [the company owes HSBC £90.6million] however this process has not been concluded at the time of siging these financial statements [5 December].
Speaking to the AJ in October, Bloxham told the AJ: ‘Things have been very hard since 2008 and architects and developers have borne the brunt of the pain. It has been difficult to do anything outside the capital, especially for developers like us with real ambition.
‘The missing element of most [stalled] schemes is funding. This is oten based on end-users, so getting a public or strong private sector covenant to commit to a scheme for a long period makes it much easier to fund. You are not going to see a scheme on the scale of Fort Dunlop being built speculatively for many years.
You need to get the viability right, but that is increasingly hard outside the south east – even then you still have to fund it. So we are looking at different models, such as renting out apartments rather than selling them. We are also looking at a different type of student housing – not making places to cram a load of bodies in, but designing and building better accommodation to attract young people to the country.
Developers will make things happen through funding relationships with new partners and by collaborating with long-term investors. The public sector also has to be more innovative in how it uses assets and finances schemes, such as taking long-term leases on property.
Urban Splash has changed the way flats look over the last 20 years but new-build housing hasn’t changed much. We’d like to look at housing typologies next. Many people looking to buy a house don’t even consider a new-build; they are always looking to buy Victorian or Georgian. There are financial reasons for wanting to change. With schemes like, say, Timber Wharf, you have to build all 200 flats before you move the first person in; if you build houses, you just build a row or maybe even just a one-off.’
Previous story (AJ 03.09.12)
Urban Splash battles in choppy waters
Award-winning Manchester-based developer and regeneration specialist Urban Splash insists it is on target after posting substantial losses and abandoning a number of key schemes
Despite posting pre-tax losses of £9.3 million and debts of £234.4 million in its latest accounts, Manchester-based developer Urban Splash has insisted the company’s future is certain and has vowed it will continue working with the UK’s best architects.
The company report shows a drop in revenue from £34.5 million in 2010 to £29.1 million in the year to March 2011 and an increase in net debt from £221 million to £234.4 million.
Because £213 million of the debt is repayable and funding has not been secured, auditor Deloitte warned there was a ‘material uncertainty’ surrounding the company in the firm’s report, released in June.
But Urban Splash founder Tom Bloxham has countered that the company’s developments are selling and letting well. He said: ‘Current sales are on or above target and over 90 per cent of the homes we own are currently let.
‘This currently produces an [annual] income of £4 million (up from £2.1 million last time). Our void rates also reduced from 36 per cent to under 9 per cent.’
A number of Urban Splash’s developments have been cancelled or are on hold. They include the Reiach and Hall-masterplanned Irvine Harbour development in Ayrshire, which has yet to start on site three years after plans were submitted, and the Birnbeck Pier and Island scheme in Weston-super-Mare, which was sold by the company three years after Bristol-based Levitate won an Urban Splash design competition to develop it.
Urban Splash’s decision to demolish the Grade II-listed Ancoats Dispensary building at New Islington, Manchester, after more than a decade of inactivity is significant, given the firm’s ethos of preservation. The developer is known for taking on difficult sites and for having saved important buildings, such as Birmingham’s Fort Dunlop and Rotunda. The withdrawal of Regional Development Agency funding midway through restoration work on Ancoats Dispensary was given as the reason for the demolition. Urban Splash said the decision was made ‘… with great reluctance […] We have spent the last 20 years saving buildings and this episode saddens us deeply.’
“Unless you are naïve, you know stalled projects happen”
AHMM co-founder Paul Monaghan, who won the competition to design Urban Splash’s on-hold Bridewell Island scheme in Bristol said: ‘Unless you are naïve, you know [stalled projects] happen. Urban Splash is always very clear that it may take time to get some projects off the ground. At the time [of work halting at Bridewell], 50 per cent of my projects collapsed, so Bridewell was not a surprise. Urban Splash are not miracle workers.’
Monaghan, who has gone on to work with Bloxham on a new scheme in Brighton, also praised Urban Splash’s commitment to architecture. He said: ‘From my point of view, they are trying to maintain architectural standards. By far the easiest thing would be for them to do a banal project and put their name on it.’
Hal Currey, formerly of Flaq, now at Arup, who worked on Urban Splash’s delayed Morecambe Bay scheme, agreed. He said: ‘I have always enjoyed working with them. The conversations have been robust, but fair. They are still trying to push good architecture.’
Bloxham said securing the best UK architects through the competition process remained a cornerstone of the business.
He said: ‘We love architecture.Our track record and awards to date show that it’s something which separates us from other developers; it’s in our DNA.
‘Competitions have helped us find up-and-coming talents, such as Glenn Howells when he did Timber Wharf [in Manchester] with us a decade ago, and the more recent efforts of Gollifer Langston at New Islington.’ (The practice is now designing a bridge for the site.)
‘When the time is right, we look forward to hosting more design competitions and finding more new talent,’ Bloxham added.
Famed principally for large-scale projects like Park Hill in Sheffield and the Will Alsop-designed Chips housing development in New Islington, Manchester, which has been troubled with complaints about vandalism, quality of build and lack of security, Urban Splash has made a recent move into smaller-scale, new-build modular housing, which is fresh territory for the company.
A new Urban Splash scheme by Shedkm, a practice headed by Urban Splash chief Jonathan Falkingham, has won planning permission for 44 homes on a canal-side plot in New Islington, once home to the company’s ill-fated Tutti Frutti housing competition (AJ 15.03.12).Speaking at MIPIM earlier this year, Urban Splash director Nick Johnson said: ‘You don’t need the full funding in place to build houses. You need the land, but then you can build in phases.’
Urban Splash schemes
Saxton, Leeds: 2012 Housing Design Award-winner designed by Union North
Lakeshore, Bristol: Ferguson Mann’s overhaul of SOM’s 1970s former Wills Imperial Tobacco headquarters. Some elements still to finish.
Park Hill, Sheffield: Overhaul of iconic flats by Hawkins\Brown and Studio Egret West. Phase 1 completes this year
Morecambe, Lancashire: Urban Splash successfully rejuvenated the Midland Hotel and sold it in 2011. The proposed Flacq-designed redevelopment next door has recently been resubmitted for planning for the third time
Irvine Harbour, Ayrshire: The Reiach and Hall scheme has yet to start on site three years after plans were submitted
Manningham Mills (Velvet Mills): David Morley Architects’ penthouses remain unfinished on the otherwise completed project
East Wharf, Watchet, Somerset: Another David Morley scheme dating back six years.Future unclear
Bridewell Island, Bristol: The competition-winning scheme by AHMM has halted
Southport Marine Park: Urban Splash pulled out of jv with Sefton Council in early 2012
St Peter’s Seminary, Cardross: Urban Splash walked away from a project to redevelop the ruin with a Gillespie Kidd and Coia-designed scheme
Birnbeck Pier and Island, Weston-super-Mare: Sold three years after Bristol-based Levitate won a design competition