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Trust House too ‘focused’ to front

Readers of the Times-Age must wait for an indeterminate period of time for a long-promised interview with a Trust House [TH] representative regarding the performance of Wairarapa’s social housing provider and hospitality business operator.

Questions were raised about the organisation’s operations after it was reported on January 23 that TH had given its tenants notice that their rents would be raised by an average of 60 per cent on April 1.

Then-TH chief executive Charles Kaka said the notified hikes were in line with current market rents and were necessary to fund repairs, maintenance, renovation, and future development of the company’s housing stock.

Several questions related to this were submitted to TH by the Times-Age on January 31.

On February 1, TH announced it was putting on hold rent increases for the 189 tenants not receiving government accommodations subsidies “while a review of the Trust’s Housing Improvement Programme is carried out”.

The questions remained unanswered.

In an interview with Kaka – conducted on February 9 and published on February 18 – the then-chief executive said the rent rises were intended to partially cover the cost of a programme to refurbish TH housing stock for a total price tag of $50 million [around $100,000 per house].

Kaka also noted the trust has $20m in debt and will soon need to refinance.

The interview answered only some of the outstanding questions, but Kaka maintained there was no longer a need to answer any of them specifically.

The Times-Age did not agree with this assessment and following Kaka’s resignation – announced on February 13 – again requested responses to the initial questions, and several more prompted by the now-ex-CEO’s interview on February 23.

As noted in a February 28 article, the organisation’s board indicated it would prefer the questions be answered by its yet-to-be-appointed interim chief executive, on the basis that they involved operational matters.

On March 2, it was announced that Graeme Bell had been appointed to this position, with a start date of March 9.

On March 10, the board’s reluctance about answering the outstanding questions apparently evaporated, and responses [not attributed to any individual] were emailed by a TH spokesperson [see sidebar].

These provoked further questions [see editorial, page 12], which were sent to TH on March 15, along with an iterated request for the previously promised interview with the new CEO.

The next day, the following was received from the spokesperson:

“At this time our Board and Acting CE are focused on providing business continuity across the organisation and business operations for staff, tenants, stakeholders and the community.

“This includes completing the rent review – this is a priority for Trust House and we are working as quickly as possible so we can update our tenants. Once we have let our tenants know we will share the update more widely and with the WTA.

“Therefore the request for interviews is declined at this time. Graeme is only one week into his acting CE role and there will definitely be an opportunity to talk with him – he has significant social housing experience but time to get his feet under the table is reasonable.

“In the meantime, the best source of information for your interest in the financial history of Trust House is through our website, where there are copies of the financials and annual reports from 2012 to 2022 readily available.

“These publications also give you insight into the direction and decisions of previous Boards.”

 

SIDEBAR STORY

Trust House Q&A 

Does Trust House have a comprehensive written plan to upgrade and repair existing housing stock? If so, can you provide a copy?

Trust House has an Asset Management Plan. This is an internal business plan and is commercially sensitive, so not available to the Wairarapa Times-Age.

Trust House reported a substantial profit in the 2022 financial year. Why are these profits not being used in the first instance to repair and upgrade the properties?

Trust House Limited made a net operating profit of $2.53m in the year to March 2022. The total spend on housing for the 11 months to February 2023 on the existing rental properties is $3.21 million – made up of $2.4m in capital expenditure and $813,000 on repairs and maintenance.

What is the source of the trust’s $20 million or so of debt – and what’s the exact figure?

Long-term bank debt at 31 March 2022 was $20 million. Trust House took on an initial debt of $10.5m in 1999 to purchase the houses. Further debt has been taken since then to support various business decisions and investments. 

What has contributed to the apparent 85 per cent increase in the trust’s operational expenses in the past four years?

Trust House expenses have not increased by 85 per cent. Trust House operating expenses were $16.7m in 2022, up from $14.6m in 2018.  This is an increase of 14 per cent, predominantly due to inflationary pressures.   resignation – announced on February 13 – again requested responses to the initial questions, and several more prompted by the now-ex-CEO’s interview on February 23.

As noted in a February 28 article, the organisation’s board indicated it would prefer the questions be answered by its yet-to-be-appointed interim chief executive, on the basis that they involved operational matters.

On March 2, it was announced that Graeme Bell had been appointed to this position, with a start date of March 9.

On March 10, the board’s reluctance about answering the outstanding questions apparently evaporated, and responses [not attributed to any individual] were emailed by a TH spokesperson. These provoked further questions [see editorial, page 12], which were sent to TH on March 15, along with an iterated request for the previously promised interview with the new CEO.

The next day, the following was received from the spokesperson:

“At this time our Board and Acting CE are focused on providing business continuity across the organisation and business operations for staff, tenants, stakeholders and the community.

“This includes completing the rent review – this is a priority for Trust House and we are working as quickly as possible so we can update our tenants. Once we have let our tenants know we will share the update more widely and with the WTA.

“Therefore the request for interviews is declined at this time. Graeme is only one week into his acting CE role and there will definitely be an opportunity to talk with him – he has significant social housing experience but time to get his feet under the table is reasonable.

“In the meantime, the best source of information for your interest in the financial history of Trust House is through our website, where there are copies of the financials and annual reports from 2012 to 2022 readily available.

“These publications also give you insight into the direction and decisions of previous Boards.”

Trust House Q&A

Does Trust House have a comprehensive written plan to upgrade and repair existing housing stock? If so, can you provide a copy?

Trust House has an Asset Management Plan. This is an internal business plan and is commercially sensitive, so not available to the Wairarapa Times-Age.

Trust House reported a substantial profit in the 2022 financial year.

Why are these profits not being used in the first instance to repair and upgrade the properties?

Trust House Limited made a net operating profit of $2.53m in the year to March 2022. The total spend on housing for the 11 months to February 2023 on the existing rental properties is $3.21 million – made up of $2.4m in capital expenditure and $813,000 on repairs and maintenance.

What is the source of the trust’s $20 million or so of debt – and what’s the exact figure?

Long-term bank debt at 31 March 2022 was $20 million. Trust House took on an initial debt of $10.5m in 1999 to purchase the houses. Further debt has been taken since then to support various business decisions and investments.

What has contributed to the apparent 85 per cent increase in the trust’s operational expenses in the past four years?

Trust House expenses have not increased by 85 per cent. Trust House operating expenses were $16.7m in 2022, up from $14.6m in 2018. This is an increase of 14 per cent, predominantly due to inflationary pressures.

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