Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

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April 18, 2024

FOXT, SGRO, HOME

Company news

Foxtons Group (FOXT, 52p, £157m mkt cap)

High profile London estate and lettings agent. Q1 (Mar) trading update.

Guidance: “This has been a strong start to the year with our revenue growth demonstrating the real momentum we have built across the business. We have made great strides in the past two years. We are well placed to continue to unlock value within our business, drive growth, and ultimately deliver against our medium-term adjusted operating profit target”.

Trading: Revenue +9% Y/Y, £35.7m. Lettings 5%, £24.0m; Sales +17%, £9.5m; Financial Services +16%, £2.3m. Lettings – Revenue increase reflects incremental revenues from the two 2023 portfolio acquisitions and broadly flat revenues on a LFL basis. “As expected, compared to 2023, the supply and demand dynamic has normalised and rental prices have stabilised accordingly”. Sales – Revenue growth “underpinned by a significant increase in Foxtons’ market share”. Sales agreed volume +31% (+34% by value), “the highest value since the 2016 Brexit vote, and expected to support further revenue growth in Q2, supported by an improving sales market backdrop as mortgage availability and rates have both stabilised, alongside good levels of available stock”.

Viewpoint: Further evidence, following yesterday’s FY results from M Winkworth (WINK, 175p, £23m) that the London sales market – arguably the region most sensitive to interest rate and political expectations – has been recovering.

Segro (SGRO, 828p, £11,075m)

UK’s leading owner and developer of warehouses and industrial space, also active in Europe. Q1 (Mar) trading update. Guidance: “As stated in our full year results, our existing portfolio and land bank offer us the potential to grow our passing rents by more than 50% over the next three years, through capturing embedded rent reversion, leasing vacant units and developing new space. The £907m of new equity raised in February provides us with the capacity to pursue further attractive growth opportunities, both through development and asset acquisitions. This gives us confidence in our ability to deliver further compound growth in earnings and dividends during 2024 and beyond”.

Trading: Total new headline rent signed +21%, £29m; pre-lets signed, +89%, £17m; uplift on rent reviews and renewals, 18% (Q1 23, +14%) – UK, +21%; Europe, +9%. “Segro has completed or unconditionally exchanged on £159m of disposals so far in 2024, at prices above December book value. Market data shows industrial and logistics asset values are stabilising. Segro is well-placed to invest in profitable development with an average yield on cost of 7 – 8%, with capacity for further attractive growth opportunities enhanced by the proceeds of our recent equity raise”. HY results, 26 July.

Home REIT (HOME, shares suspended)

Real estate investment trust funding the acquisition and creation of properties providing accommodation to the homeless. Update on potential litigation. “The Company has recently issued a comprehensive response to a pre-action letter of claim received from Harcus Parker Limited, on behalf of certain shareholders. The letter of claim alleges that the Company, along with certain other parties, provided information to investors which was false, untrue and/or misleading. The Company intends vigorously to defend itself in respect of the threatened litigation and has denied the allegations made against it. Further, as announced on 5 March 2024, the Company intends to bring legal proceedings against those parties it considers are responsible for wrongdoing. To that end, the Company has itself recently issued pre-action letters of claim to Alvarium Fund Managers (UK) Limited (its former alternative investment fund manager) and AlTi RE Limited, its former investment adviser’s appointed representative. The Company intends to issue further pre-action correspondence in due course. The Company cannot comment any further on these issues at this stage as to do so may prejudice the Company’s position in any potential proceedings. Any relevant announcements in this regard will be made at the appropriate time”.

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