Copyright: David Lawson– Property Week April 1998
Think Victorian. Think Dickens. What could be a more enduring image of that worthy era and its underlying flaws than Barnardo's. But think again. When did you last see an orphanage?
Certainly not for more than 25 years. Social problems may remain but the old institutions have been closed and sold. Child care has moved into more intimate centres. In its place, the world-famous charity has quietly built a modern estate that dwarfs some of the biggest commercial property companies.
'We have more than 300 high street shops alone,' says Jim Pegg, head of property and facilities management. These raised more than 3m pounds last year, showing a 10% increase in trading volume. The total portfolio of around 850 ranges from schools, to family centres and project bases for community workers across the country.
It is a full-time job for a property staff of around 100 - most of them based at the Barnardo's headquarters in north-east London. This does not just involve simple upkeep, however. Shops and care centres are continuously opened or upgraded. Refurbishing a store in Brixton, south London, began to pay off on the first day of re-opening, when it took 5,500 pounds. In one week last autumn, the total take of all stores was more than 400,000 pounds.
Surplus assets are also let or sold with a fierce market rigour. Joint-venture developments are expected to turn profits of several million pounds a year - again putting Barnardo's ahead of some commercial property groups. In fact, the image of this venerable charity seems to have skipped an era, jumping from 19th century philanthropy to 21st efficiency. Now it has turned to new technology for help.
While the offices and care centres had been switched on to computers for some time, the growing portfolio was still handled with traditional card files. They have been tossed out as the job is transferred onto Skyline, the computerised property management system normally associated with major funds and public companies.
Pegg had been looking for a change for some time. 'Ever since we merged the architects and property group ten years ago we have realised we needed a more sophisticated approach to management,' he says. Informal advice has long been available from Norman Bowie, the investment specialist who has been a Barnardo's vice-president for many years. Former RICS president Roy Swanson has also been a trustee since 1989.
But it was a study of Barnardo's by Reading University's land management department which got things really moving. That led to assessment of about half a dozen computerised management systems over the course of two years before choosing Skyline. 'Most of these programs are too general and contain too many functions we do not want,' says Pegg. 'But we were able to develop Skyline to meet our needs, which lie somewhere between a charity and a commercial organisation.'
The program is very flexible, so a standard package could be adjusted to meet special needs, says Louise Denton of Fraser Williams, the software house which publishes Skyline. Potential government changes in the way charities are run also made it important to ensure the system can be reconfigured easily in future. In the meantime it will save time by automating procedures, give greater control on spending and provide easy access via a centralised database.
Barnardo's faces a particular problem because of its hybrid approach. As a charity, there are strict rules for financial reporting, but property is handled as in any private company. 'We treat all our property as a commercial asset,' says Pegg. 'We are effectively the freeholders and charge a rent to end users, reviewing them every five years.'
Those are mainly within Barnardo's, so the accounting takes place as an internal market. But there are also many outside tenants in surplus, non-operational space. This ebbs and flows as new centres release older space for letting, although all the Victorian property has gone except for the first Barnardo's residential centre, a listed village behind the current HQ.
The management team therefore has to handle a mix of freehold, leasehold, internally rented and open-market lettings. Pegg says it makes for an interesting life. He certainly has no problem recruiting surveyors and architects. 'It may attract people who like the idea of working for a charity, but we are also a highly professional team. People find no problem moving on within the industry,' he says.
One advantage is the specialist skills picked up designing, building and managing care centres. Barnardo's has developed enough of a reputation to be able to sell consultancy services elsewhere. It is advising on reconstructing family aid centres in Bosnia. But this expertise could prove a potent income generator closer to home. 'They could be well-suited to changes taking place in the welfare state,' says one health service analyst. 'As care centres are contracted out by government, there will be a huge demand for teams able to not only design and build but also advise on administration.'
For the moment, however, Pegg is excited by a more immediate new income-generator. A redundant care centre in Tunbridge Wells has been worked up for development into 65 homes and apartments. These will be sold to elderly occupiers, and the care centre renovated to suite their needs. It will be more than sheltered housing but less than a nursing home, with Barnardo's handing over care to its joint venture partner, Mansfield Green
The 5m pound project will be followed by another in Harrogate this year. These could be the start of a lucrative new trend expected to yield several million pounds in development profits each year. This might seem marginal compared with a total income in 1997 of 85m pounds and reserves of more than 115m pounds. But it is equivalent to the money raised by Barnardo's shops last year.
The developments projects also emphasise the commercial approach to asset management. They seem at first sight to be providing another element of social care by concentrating on the elderly. But Pegg admits that is only because this happens to be the economic return for the sites.