Build-to-rent developer reports second consecutive loss after being hit by building safety cost and problem job
London-focused build to rent housebuilder Telford Homes has fallen to a £193m pre-tax loss compounded by building safety write-downs and losses on its conversion of the Grade-II* listed Balfron Tower in east London.
The CBRE-owned housebuilder said turnover in the 2022 calendar year increased by 5% to £296m, but that it nevertheless fell to an £18.4m pre-tax loss, even prior to the impact of exceptional items. This compared to a £7.8m pre-exceptional profit in 2021.
However, the firm, which was bought by US-based real estate giant CBRE in 2019, said it was also hit by further exceptional losses which took the total pre-tax loss to £193m. This compares to a pre-tax loss of 14.2m in 2021.
Telford did not detail the full reasons for the writedown, or for the pre-exceptional loss, however, it said it had been hit by “building safety provisions, onerous build to rent contracts and the refurbishment of a listed residential tower”, understood to be the delayed refurbishment of the Erno Goldfinger social housing block.
The pre-tax loss is Telford’s third in the last four years, with the firm having only reported one pre-tax profit, of £1.7m in 2020, since having been taken over by CBRE. In that time it has now racked up over £205m of losses.
The firm said that total “building safety costs” incurred by the firm in the year were £143m, with £99.9m incurred as an exceptional “building safety provision” as a result of signing the government’s building safety contract in March this year. Telford also reported a £21.5m “impairment” charge on its work in progress.
Telford is understood to have been hit by a subcontractor failure on its flagship Balfron Tower scheme.
The housebuilder recorded £169m of equity on the balance sheet but its “going concern” statement in the accounts said Telford was “dependent on CBRE Group providing additional financial support”. Staff numbers reduced in the year by 15% to 285, the accounts showed.
A spokesperson for Telford declined to answer further specific questions on the cause of the 2022 loss, but said in a statement: “Telford Homes’ financial performance in 2022 was impacted by the macro-economic environment, particularly elevated inflation, and reserves taken on future remediation work associated with the Government’s Building Safety Pledge. We continue to see long-term secular trends that benefit the build-to-rent market in the UK and are also exploring other attractive residential sector growth opportunities.”