The demolition of a swathe of properties in Dundee has seen affordable housing giant Hillcrest swing to a pre-tax loss of more than £5 million.
The housing association, which has more than 6,000 properties, recorded turnover to £53.3m for the year ending March 31, an increase from £50m in 2018.
However, a £9.67m impairment on affordable let properties led to a loss of £5.1m last year against a profit of £6.4m in 2018.
Lindsey Dryden, director of finance for Hillcrest, said the impairment related to the redevelopment at Ellengowan Drive in Dundee.
The project will see 128 cottage flats replaced with 39 houses and 91 flats on the site.
She said: “A decision was taken by the board to demolish the current housing stock and replace it with housing that would meet all the current building standards and in particular for energy efficiency.
“The demolition of the first phase is due to start in this calendar year with work starting on the new homes in 2020.
“The accounts are required to reflect this position and as such there is an impairment cost in the accounts which is largely offset by a reduction of the reserve in the balance sheet.”
The figures were revealed as the charity published its first report since completing its rebranding exercise.
The shake-up saw Hillcrest Housing Association become Hillcrest Home, Gowrie Care has become Hillcrest Futures and Hillcrest Maintenance Service was renamed Hillcrest Maintenance.
A merger of Northern Housing Company and Hillcrest Enterprises saw a new firm, Hillcrest Enterprises, launched to deliver commercial activities.
In order to top-up Scottish Government grant funding to construct new units, the charity secured a £72.5m revolving facility and a £70m private placement.
Hillcrest has also been extending its reach, with a £12.5m development near Stonehaven.
Chairman Alan Russell said: “The development of new homes is still a critical part of what we do, and Hillcrest has added 270 new homes to its portfolio over the last year.”
Hillcrest invests in a range of services to assist customers sustain their tenancy, including help and advice on council tax, claiming benefits and energy advice including heating system demonstrations, contact with fuel suppliers, meter credit top-ups and help to switch suppliers.
The charity said the range of services it provides has effectively added more than £1.6m to the pockets of its tenants.