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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August 25, 2023

KINO | Economy – First time buyers resort to ‘mates’ mortgages’ | News – Ilke Homes failed ‘owing £320m’ | Fortnight ahead

Company news

Kinovo (KINO, 51p, £32m mkt cap)

Property services provider, formerly Bilby, specialising in compliance and sustainability. Possible cash offer (from yesterday at 13:00). The group announced it had received a non-binding indicative offer from Rx3 Holdings which may or may not lead to an offer being made for the entire issued and to be issued share capital of Kinovo at a price of 56p per share (15% above previous closing price), payable in cash. Rx3 and Tipacs2, (which holds c.29.89% of Kinovo’s shares), are both ultimately owned by Mr Tim Scott. According to Kinovo: “The Board of Kinovo has proactively engaged with Rx3. Further, it has also commenced a process to consult with its key shareholders, noting that the Possible Offer is at the lower end of the Board’s expectation”. Shareholders should be aware that: (i) the Possible Offer has been communicated as being final and the Board has been unable to gain a higher price; (ii) Tipacs2 have acquired approximately 4.2% of the issued share capital of the Company in the last 12 months resulting in its current 29.89% shareholding; and accordingly (iii) Tipacs2 have a substantial level of influence over the Company. A further announcement will be made if and when appropriate. Shareholders are urged to take no action at this time. This announcement has been made by Kinovo without the approval of Rx3”. In accordance with the Takevoer Code, Rx3 must, by no later than 5.00pm on 21 September 2023, either announce a firm intention to make an offer for Kinovo or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. The deadline can be extended with the consent of the Takeover Panel.

Economic data

Mortgage market. More than half of prospective buyers say the house prices and economic challenges have forced them to consider finding a lodger, according to the Mortgage Advice Bureau. Economic uncertainty is a barrier for 42% of prospective buyers [presumably first time buyers] and 20% of those in the early stages of buying will now need a guarantor in order to get their foot on the housing ladder. 52% of prospective buyers say that once they’ve found the property they plan to buy, they would consider having a lodger to help supplement their outgoings. Of this number, 17% say they definitely plan on having a lodger. 18% will now need to buy with a partner, 9% with the help of a family member, and 7% are planning on buying with a friend. Only 10% believe they will be able to buy alone. The proportion of prospective homebuyers who have had their plans impacted rises to 73% of 25 to 34-year-olds, with a quarter 25% now needing to buy with a partner to combine deposit and incomes (described by the bureau as ‘mates’ mortgages), 10% with a friend, and 10% with a family member.

Viewpoint: This follows on from yesterday’s report that a survey from L&G Ignite had found that demand for interest-only mortgages has “spiked”. Other evidence of the challenges that first time buyers and existing mortgage payers have faced include moves to longer than 25-year terms.

In other news …

Modular construction. Volumetric housing group Ilke Homes collapsed owing £320m, according to calculations by The construction news website reported that it had access to a statement of proposals issued to creditors by administrator AlixPartners. Ilke went into administration in June after running out of money and failing to find a buyer for the business. Money owed to unsecured creditors was £249m with £226m made up of inter company debts associated with losses suffered by equity investors. Ilke Homes owed subcontractors and suppliers £17m and the tax authorities £2m plus £68m to Homes England. Sister development company Ilke Homes Land also collapsed owing £14m to subcontractors and suppliers and £21m in inter-company debts. The administrator’s report also revealed that Ilke Homes had just £26,000 in the bank when it entered administration.

Fortnight ahead

Company and economic news

Prices are as at the previous day’s close. Where quoted, net debt is pre-IFRS16 (excluding leases) unless otherwise stated.

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