The new boss of Peverel has given an interview to Property Week. She wants time, but leaseholders are jettisoning the company as quickly as they can.
20 April 2012 | By Emma Haslett
Private equity owners hope Entwistle will combat Tchenguiz effect. Emma Haslett reports
Janet Entwistle, newly appointed chief executive of residential management company Peverel Group, has a challenge on her hands.
Peverel’s new owners, Chamonix and Electra Partners — the private equity firms that bought the retirement home specialist in a joint venture for £62m last month — have brought her in to help improve the company’s image, which is in tatters.
The change of ownership follows a year of turmoil, which began with Peverel in administration and the arrest of then-owner Vincent Tchenguiz.
he change of ownership follows a year of turmoil, which began with Peverel in administration and the arrest of then-owner Vincent Tchenguiz.
Tchenguiz denies the Serious Fraud Office allegations against him and the SFO has since been branded “incompetent” by a judge in relation to the case.
But the £62m price tag is a far cry from the £500m Tchenguiz’s Consensus Business Group paid for the company in the property boom in 2007. Peverel manages 59,000 retirement flats and 132,000 leasehold flats. The buyout not only simplifies its structure — leaving the group’s £125m debt in its holding company, which is still in administration — but has also enabled the new owners to obtain £25m of debt from the Royal Bank of Scotland (box, below).
Customers have accused the property management company of overcharging and the business has had to provide compensation. The leaseholders at the Weekday Cross scheme in Nottingham won £730,000 in compensation after service charges rose by 75% in two years between 2006 and 2008.
Peverel has also been criticised for “hiding” transfer fees, paid by leaseholders to freeholders when they sell their flat. It has been accused of levying fees as high as 8% of sale price.
The firm finally sank into administration last March when Bank of America Merrill Lynch called in the £125m loan. Just days before, the Tchenguiz brothers were arrested in London’s Mayfair before they flew out to MIPIM, as part of an investigation into the collapse of Icelandic bank Kaupthing. The Tchenguiz Family Trust still owns 108,000 of the units Peverel manages.
Entwistle acknowledges that improving the group’s reputation is a priority.
“I’m not saying everything everybody did was wonderful — it wasn’t,” she says. “But if we look at how to change the business, customer service has to be absolutely at the heart.”
She is now canvassing opinion from a wide cross-section of stakeholders — from management level within the business, down to the people behind a rash of snappily titled websites that featured tales of residents being “ripped off” by the company — to try to devise a new strategy for the group.
We have to look at how we communicate, so customers have a better understanding of their position
Entwistle admits changes need to be made at the group level, but claims issues such as fees are tough to negotiate. She explains that, although Peverel is responsible to the landlord for collecting fees, it plays no role in setting them. If the industry worked to improve communication, customers’ reactions might be different, she suggests.
“A lot of the emotion that arises is because people are surprised when they realise they have these fees to pay, and it’s often the relatives of people who have died,” she says.
“We all have a role to play — and I think that includes Peverel — in looking at how we communicate, so people have a better understanding of their position and they don’t have the upset of surprises.”
Entwistle notes that, as the population ages, the retirement business is looking increasingly lucrative, adding: “I think customer demand for services that enable people to live independently, with appropriate supporting services as they get older, is going to increase.”
The company’s complex model — it includes an insurance arm and a firm that makes security systems — may also come under scrutiny as part of Entwistle’s new strategy. However, there are no imminent plans to sell those businesses.
Indeed, Entwistle believes the best way to turn the group around is by taking things slowly.
“For me, the key thing is making sure we really understand what the customers want,” she says.
“You can only do that by taking time and engaging properly. We have new owners who have a long-term commitment and want to build [the business] into one with a sustainable future. That’s a great opportunity.”
Peverel by numbers
- £62m paid to Peverel’s administrators by two private equity firms
- 200,000 properties under Peverel’s management
- £25m of debt held by Peverel
- £125m of debt originally held
- 108,000 units still managed by Peverel that are owned by Tchenguiz Family Trust