Business Homes cashflow problems prompt review

Small business space provider looks at further costcutting measures

Business Homes, one of the UK’s top small business accommodation providers, is reviewing its business because of cashflow problems.

The company, which is based in Leeds and also has offices in Cheshire, East Kilbride in Scotland and Reading, is considering a range of cost-cutting measures.

Medium-sized developers of office space for small businesses are starting to suffer badly in the market as their key occupiers struggle to trade and to raise finance for property acquisitions.

Other providers of flexible office and industrial space for small firms are also starting to hit problems.

A development director and construction director left Valad earlier this year because it does not plan to speculatively develop any more of its Io Centres, which provide flexible industrial space for lease or purchase by small firms.

Business Homes is considering measures such as the closure of some offices and operating from cheaper premises; redundancies; and refinancing with its bank, Bank of Scotland Corporate.

It has already made two tranches of redundancies, cutting a total of 12 staff in March and July. Ten staff remain, led by Simon Houlston, the chairman, and James Houlston, group managing director.

However, Business Homes continues to trade and take-up of its small units has not collapsed. Only around 40 of the 300 units it has built in the last three years are empty. The company’s woes stem more from its operating cashflow, a source said.

Business Homes’ problems will be another blow for Bank of Scotland Corporate, which is struggling with its property company loan book and equity stakes. Business Homes is meeting regularly with the bank to keep it updated on the situation.

Business Homes has joint ventures with Hortons’ Estate, a Birmingham developer; the Emery group – the first investor into Business Homes; and Cala Properties in Scotland.

It has also set up private investor funds with Jones Lang LaSalle Corporate Finance to invest in its development programme.

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Business Financial Services

Business Homes cashflow problems prompt review