Place10: Taking care of business
Just at the moment my three brothers and I merged our growing regional housebuilding business, Villafont Homes, with the respected family main contracting business, McGoff & Byrne, in 2007, a swift step change in the market was felt, says Chris McGoff, main board director.
Main contracting orders dried up, ‘wine bar developer’ clients went bust on us and cash surpluses turned to overdrafts. Housebuilding sales slumped, banks called in all their loans, moved you to the ‘naughty boys club’ and then tried to take part of our business.
The irony was private banking manager buyers were trying to renegotiate the prices for homes nearing completion, but were swiftly told to stand by their contract. In addition, and as the tide went out, other buyers who had over-extended themselves on cheap credit card debt were crying down the phone to try to get out of their purchase, whilst secretly taking delivery of new Aston Martins. It was ‘tin hat’ time and whilst we had to firefight to deal with immediate issues, the fact that we were a lean business with four pairs of family member eyes, allowed us to innovate quickly and move development activity into buoyant sectors to self-generate our own construction activity.
In the madness, solace was taken in reaching the EY Entrepreneur Finals in 2007 and we remain one of the few property finalists to have stayed in business, despite being a runner up. In addition, we won the Manchester Evening News’ Best Development of the Year award in 2008. The awards ceremony was interesting to say the least as in our hour of glory, empty tables were prevalent, as were grown men crying into their beers as the battered property congregation cleared early.
The silver lining for us was the care sector. We saw a niche opportunity to do things better as like the hotel and student sectors, care had to go new-build. An ageing demographic was driving demand and old converted properties were becoming environmentally, economically and even socially unsustainable. The sector wasn’t prepared for this and lacked dedicated land teams within organisations to source opportunities at a time of spiralling demand. By adopting a housebuilder ethos, focusing on the importance of land and eliminating third party construction entities, and therefore profit leakage, from the process, we harnessed the polarised skill sets of property development and construction with that of clinical expertise, to create a ‘builder and nurse’ partnership, and our New Care brand was born. The by-product of this activity was the important construction work created that fed McGoff & Byrne much needed revenue.
Our first home opened in 2010 and filled quickly, and despite banks running out of money, being mis-sold an interest rate product, New Care thrived, ultimately selling our first tranche of three homes in a pioneering transaction for North West stock to a US REIT. This provided the platform for re-investment for New Care’s next five homes, but also opened up opportunities to delivery homes for third party Operators. The business has recently received industry recognition by respected peers as the UK’s Best Care Home Developer and a for being an “innovator in care”. The business is now well positioned to grow its operating care portfolio further, whilst continuing to self-generate construction work.
McGoff & Byrne has recently rebranded as McGoff Construction and likewise has grown year on year from an £11m turnover in 2007 to a projected £75m turnover, a tier one main contracting challenger, with an enviable client list now including Merlin Entertainment, Borne Leisure, Whitbread, Greene King, and Barchester Health Care to name but a few.
Other spin off opportunities have seen the setting up of McGoff Group Facilities Services, and the formation of our own development-led children’s cay nursery chain, with our first site in Altrincham. That said, our biggest full circle achievement over the last decade is seeing the commencement of Downtown, a PRS inspired residential development of nearly 400 units with a build contract value of £52m, providing a firm foundation for McGoff Construction’s next three years. This project has reignited our passion for residential development and is now largely sold off plan with a near £85m GDV. Whilst we face challenges in managing the construction process and sales completions, it’s been a tough 10 years, but at least McGoff Group’s reputation has remained intact and has grown and diversified to an unprecedented level.
It’s been emotional, and who knows what the next 10 will bring.