Wheatley Group becomes 50-50 joint owner of City Building Glasgow

wheatley_groupWheatley Group has today confirmed it will progress plans to deliver its repairs and maintenance service through a new joint venture (JV) with Glasgow City Council.

Heads of terms have been agreed that will lead to Wheatley - parent company of Scotland’s largest social landlord Glasgow Housing Association (GHA) - becoming a 50-50 joint owner and partner in City Building Glasgow, the council’s wholly-owned subsidiary.

The new £2.7 billion partnership between Scotland’s largest council and the country’s biggest social landlord will secure 2000 jobs and more than 2000 apprenticeships as well as sustaining employment for disabled workers for the next 30 years.

As well as delivering a £33 million a year (excluding VAT) repairs service for Wheatley, the JV will be responsible for GHA’s £27m annual capital investment programme and the city council’s own repairs, worth £30m annually.

Gordon Sloan, chair of GHA and a director of Wheatley Group, said: “Our number-one priority is to ensure our tenants and factored homeowners continue to receive in the years ahead an outstanding repairs service and the new JV gives us the best opportunity to do that.

“GHA and Wheatley have a strong and productive record of partnership working with City Building and Glasgow City Council and we look forward to building on that excellent platform in the years ahead.”

Councillor Frank McAveety, leader of Glasgow City Council, said: “This deal is a hugely important step that secures jobs, apprenticeships and training places, and future investment for the city.

“It will guarantee 30 years of work, worth £2.7billion, in challenging economic times and generate a further £225million for the city’s wider economy every year.

“Wheatley Group’s investment demonstrates how our partnership has worked over the past 13 years and the group’s complete confidence in City Building to continually deliver the quality and service they expect.”

City Building won what was then GHA’s five-year repairs contract, with an optional four-year extension, in 2009. The extension was exercised by Wheatley, GHA’s (new) parent organisation in 2013.

Last year, with two years of the contract to run, Wheatley’s Strategic Development Committee commissioned an independent options appraisal, looking at everything from procuring a new tender and bringing the service in-house to exploring the possibility of a JV.

Campbell Tickell, independent consultants specialising in housing and regeneration management, were appointed to lead the review, supported by a panel of advisors, comprising:

  • top UK property managers Savills, who appraised repairs service delivery and the commercial environment for repairs contracts in Wheatley’s operating area;
  • Big Four accountants PwC, who conducted a complete financial assessment;
  • leading Scottish law firm Shepherd and Wedderburn, who focused on all possible legal issues;
  • and respected corporate advisors Spence and Partners, who studied all pensions matters.
  • In December, Wheatley Board approved a recommendation from Campbell Tickell to take forward two options - taking the service in-house and forming a JV with City Building - for further examination.

    At a meeting on February 24, Wheatley board then accepted the Campbell Tickell recommendation, accepted by Wheatley’s Strategic Development Committee, to “proceed to detailed due diligence and negotiation of the joint venture with GCC”.

    Campbell Tickell’s report and risk analysis concluded a JV offered Wheatley a range of critical advantages, including its ability to;

    • build on an established record of strategic and working relationships with City Building and the existing high level of operational integration;
    • lower the overall risk of failure or an adverse impact on the quality or continuity of service delivery;
    • avoid the need to incur millions of pounds in start-up costs;
    • provide opportunities to incentivise the workforce and develop a culture that would lead to further improvements in performance and efficiency;
    • benefit from cost pooling and management efficiencies;
    • introduce state-of-the-art systems, reduce overhead costs and move towards a multi-skilled workforce;
    • and benefit from City Building senior staff’s commercial skills and experience.
    • Wheatley Group chair, Alastair MacNish, said: “The independent review concluded a joint venture was the best means of providing a truly top-class service to our customers and communities. We are totally committed to improving an excellent repairs service that is already achieving 93 per cent customer satisfaction, whilst gaining maximum value for money.

      “In the months ahead, we will work through the detail of how the JV will operate, aiming to have everything in place to proceed in 2017.”

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