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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May 20, 2024

HWG, BLND | Economics – House prices edge up further in May, Rightmove

Company news

Harworth Group (HWG, 138p, £446m mkt cap)

Land regeneration group, including in former coalfields. AGM.

Guidance: “Harworth has delivered strong strategic and operational momentum to date in 2024 as we continue towards our growth ambition of £1bn EPRA net development value by the end of 2027. Strong demand remains for our serviced residential products which provide us with regular funding as we make excellent progress on our industrial & logistics pipeline in the remaining years of our current strategic planning period: this enables the delivery of over 3.3 million sq ft and c. £430m gross development value across our industrial & logistics sites by the end of 2027”. Available liquidity of £171m and pro-forma LTV as at 30 April 2024 of 8.4%, based on December 2023 valuations.

Trading: Housing land – Completed, exchanged or in heads of terms on 75% of budgeted sales for the current financial year; continuing to build the scale of the pipeline with 0.5 million sq ft of strategic land acquisitions as part of site assembly, plus several exciting opportunities in execution. Allocation received for 3.5m sq. ft. and 600 plots and draft allocation received for 2.3m sq. ft. and 2,275 plots. Industrial & Logistics – Planning applications for 10.1 million sq ft of industrial & logistics space and 2,274 housing plots progressing through the planning system. 0.4 million sq ft of industrial & logistics development underway or ready to start later in 2024, of which 52% is pre-let or being constructed for the owner-occupier: once balance is fully let it is expected to contribute £2.9m of annualised rental income in total. Enabling works underway for 2.1 million sq ft of further development on commercial sites.

British Land Company (BLND, 403p, £3,740m)

Leading UK commercial property investment, development and services group. Disposal. Contracts exchanged for the sale of 50% stake in Meadowhall Shopping Centre to partner Norges Bank Investment Management for £360m. This follows the sale of some ancillary land by the Joint Venture for £7m (British Land share) earlier this year. Combined, these deals value the entirety of the Meadowhall Estate at £734m, 3% above September book value. Proceeds after net debt of c. £200m are expected to total c.£156m. The impact of the transaction on FY25 NTA per share is expected to be negligible and the FY25 EPS dilution is estimated to be 0.6p prior to reinvestment. The transaction would reduce HY24 proportionally consolidated LTV by 2.7ppt. As part of the transaction, British Land will remain as asset manager of Meadowhall shopping centre, for which it will continue to earn fees in line with current terms. The transaction is expected to complete in July 2024 and the proceeds will be used for general corporate purposes including reinvestment into retail parks.

Economic data

House prices. Asking prices rose for the fifth consecutive month in May, albeit at their lowest rate, according to the latest Rightmove House Price Index. Prices rose 0.8% M/M, down from +1.1% in April and the Y/Y rate fell to +0.6%, from +1.7%. Unusually, all GB regions say M/M increases and only two Y/Y decreases (South East, -0.1%, and East of England, -0.6%). The number of sales being agreed during the first four months of the year is 17% higher than last year, outstripping the 12% increase in the number of new sellers coming to market. However, it is taking 62 days to secure a buyer, up from 55 days a year ago. Moreover, it is taking an average of 154 days from agreeing a sale to legal completion. In London, though, the average time to secure a buyer is almost unchanged at 64 days (63 days).

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