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Optivo returns to surplus after refinancing
London housing association Optivo has returned to a surplus position a year after posting a technical loss due to refinancing.
In its results for 2018/19, the 43,000-home housing association said it made a surplus of £87.6m in the past financial year.
This was significantly up on the technical £50.7m loss it posted in the previous year. The loss last year was due to an accounting requirement after Optivo refinanced £440m of loans. Last year’s surplus was a decrease on the underlying surplus from 2017/18, which was £90m.
A few other organisations operating in the volatile London housing market missed housebuilding figures last year.
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Optivo, however, built 985 homes, slightly exceeding its target of 981. It also started work on 1,003, exceeding its target of 1,000.
The association aims to accelerate its housebuilding programme in the next few years, aiming to start work on 1,500 homes next year as it moves towards more land-led development. It also has an overall target of 4,850 starts over the next three years.
In its results, Optivo said that 85% of these homes will be affordable, with just 15% for market sale.
Sarah Smith, chief financial officer at Optivo, told Inside Housing that the market sale figure would actually be even lower, at around 10%, for the next three years.
She added: “In the longer-term, potentially, we’ll have to move towards outright sale. But that will be if the market is there – it’s not at all costs.
“At the moment, we’ve got no exposure on the outright sale programme and we took a conscious decision to derisk the programme and move much closer to social rent and affordable housing.”
This approach to focus on sub-market tenures, Ms Smith said, was part of the reason that it was able to meet its housebuilding target, as it has not experienced much of a negative impact from the housing market.
Ms Smith added: “It’s partly that, but also we’re not just London-based. Quite a bit of our development programme is also out into Kent and also a little bit in the Midlands.”
Optivo’s results reveal a slight improvement in the association’s cost per unit, which fell from £4,246 to £4,189. Ms Smith said that this was a sign that efficiencies achieved through the merger were starting to come through.
