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Return on assets Since our earliest days, robust asset management has been vital to our work. This has involved:

• Comprehensive stock condition surveys and net present value assessments, followed by the development of detailed masterplans and high quality refurbishment of the housing stock, using significant levels of capital grant to bridge the funding gap on negative value stock.
• Maximising the return on our land assets, through new build and the creation of mixed tenure neighbourhoods. 
• More recently we have further developed this approach through our Reshaping Poplar programme, which is built around a comprehensive approach to asset management and return on investment. We recognise that we now own 32% of land in the area, with another 30% of land being potentially available brownfield sites of which 8% are owned by the London borough of Tower Hamlets. We therefore have one of the strongest regeneration opportunities in London. We are committed to achieving mixed-tenure development at higher densities than the existing stock, so maximising cross-subsidy from homes for sale whilst mitigating development and sales risk. 
• We have also facilitated the development of the ‘Stuck in the Middle’ strategy for the neighbouring areas of Lower Lea and South Poplar in partnership with the London Borough of Tower Hamlets, the GLA, Transport for London, the London Borough of Newham and the London Legacy Development Company. The Stuck in the Middle partnership has identified 110 hectares adjacent to our stock with the potential to build 40,000 new homes and create 13,000 jobs. If successful it will benefit Poplar HARCA by attracting further investment to the area and potentially increasing the value of our homes. 
• Our current approach to maximising the return on our assets is characterised by extensive stock option appraisals based on detailed density calculations and net present value analysis. We aspire to redevelop as much as half our stock rebuilding at higher density. We estimate that there is the potential to add up to 12,000 new homes. Ideally we would achieve this over a 15 – 20 year period but that is very much dependent on our capacity and other external factors.
• Our work in securing wider infrastructure improvements, such as a pedestrian road crossing over an urban motorway near the Aberfeldy Estate and a new school and health centre in the St Paul’s Way area, has been key to securing the improved neighbourhoods that allow for increased values and successful regeneration. 

Risk based approach 
We take a risk based approach to ensure we achieve the desired return on assets within our financial framework. For example, we work in partnership with residential developers using land sale and barter arrangements, which means the risk is carried by the developers. We insist on overage clauses, but there is no underage. We therefore protect ourselves financially from any development losses, but share in development gains. We could take more risk and potentially make a higher financial return. However the priority is to ensure the area is regenerated and we need to ensure that that we can continue with this work in the future. 

We do not include any overages in our business plan. We do include conservative assumptions for shared ownership sales and a cash inflow from the Balfron Tower redevelopment. To test financial stability, we run a sensitivity of a 20% fall in shared ownership sales prices and removed all cash inflow from Balfron to ensure we are operating well within our financial framework and funder’s covenants. 

Examples of our success in maximising the return on our assets:
The redevelopment of the Aberfeldy Estate, which is now onsite, where we are replacing 297 existing homes with 1,176 new homes, of which 828 are for sale, 158 are for private rent, 170 are for affordable rent and 20 are for shared ownership. We are increasing the density of the estate from an existing 160 habitable rooms per hectare to 527, increasing the value of the land and our stock holding without the need to buy additional land. On the first phase of Aberfeldy, we have been generating an average sales value of £412 per square metre (psqm) against an appraisal allowance of £387 psqm.

Converting the Grade 2 listed Balfron Tower from a social rented block to all private sales. The red book valuation of Balfron Tower using EUV–SH is negative (£4,030,000). By changing the tenure to private sale we anticipate that the project will generate a positive NPV and reduce financial risk for Poplar HARCA.

We have secured overage clauses in contracts to ensure that we benefit from any upturn in the market. This strategy is expected to generate nearly £4m over two years including £1m for the Panoramic building, £500,000 for Carron Close, £1m for Bartlett Park and more than £1m for Tweed House.

Our 'Urban Living' initiative in partnership with Bellway Homes and Telford Homes identifies small unused sites or low density bedsit blocks to be replaced with higher density mixed tenure schemes. This has generated new affordable housing and land receipts for Poplar HARCA. In 2013/14 the Urban Living programme generated 39 new homes and we expect overage payments once work has been completed.

Work to identify new funding sources to increase net present values and return on investment. These include a project with DCLG and the GLA to identify potential new loan funds.