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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June 22, 2023


Company news

Nexus Infrastructure (NEXS, 148p, £13m mkt cap)

Provider of civil engineering infrastructure services to UK housebuilders through its operational business, Tamdown (having sold its TriConnex and eSmart Services infrastructure and utilities services businesses). Statement re ilke Homes [‘ilke’]. “The Board of Nexus notes the media coverage regarding ilke Homes filing a notice of intention to appoint an administrator. ilke is a customer of Nexus’ Tamdown division with two developments, which have both been paused by ilke. Tamdown has been in discussions with ilke regarding the situation and the outstanding invoices due in relation to these two sites. As at the date of this announcement, the total amount overdue from ilke to Tamdown is approximately £835k. In addition, a further amount of approximately £962k will become due shortly in relation to work delivered up to 31 May 2023 and there is further work in progress in the region of £250k relating to the period in June prior to work on the sites being paused by ilke. Tamdown had also been anticipating additional turnover amounting to approximately £4m over the remainder of the current financial year FY23. Given today’s developments regarding a potential administration of ilke, there is a risk that Tamdown will be unable to collect these amounts, which would have a significant impact on group profit during the current financial year FY 23. Tamdown will continue to work with ilke Homes with a view to recovering the amounts due, and Nexus will update the market in due course when the situation is more certain. The group continues to maintain a robust balance sheet with cash and cash equivalents at the half-year ended 31 March 2023 of £15.9m. Whilst the situation is uncertain, there is the potential for a cash impact of just over £2m”.

SigmaRoc (SRC, 58p, £405m)

Heavy construction materials group active in the UK, Channel Islands and Benelux. ESG. Company’s first carbon capture facility installed at Nordkalk subsidiary’s site in Köping, Sweden. The Aqualung Carbon Capture membrane technology can capture up to 25% of the process emissions emitted. The unit will also be connected to a pilot purification module to simulate settings required to produce higher purities of CO2 for different end-use applications. The group is working with various businesses and solution providers with regards to the end use of CO2 including being involved with NICE (Norvik Infrastructure CCS East Sweden) project to explore CO2 utilisation options with various partners and plans to implement the technology in all of Nordkalk’s operating kilns by 2030.

Speedy Hire (SDY, 30p, £141m)

UK and Ireland tool, equipment and plant hire services provider. FY (Mar) results, Board change. Rev +14%, £434m; adj PBT +6.6%, £32.1m; stat PBT -94%, £1.8m (after £20.4m asset write-off); adj EPS +24%, 5.2p; div +18%, 2.6p; net debt, £92.4m (FY 23, £67.5m) after £24m share buyback.

Strategy: New five year ‘Velocity’ transformation and growth strategy launched with focus on revenue growth and margin improvement. Trade and retail opportunity enhanced through new arrangements with B&Q. Target to be net zero business by 2040, 10 years before the government target.

Outlook: “Recent key contract wins and extensions, as well as strong pipeline, gives us confidence in meeting our expectations for the coming year”. Paul Rayner appointed CFO, effective from 1 July. He joined Speedy in the role of interim CFO on 1 November; his appointment to the permanent position follows a comprehensive recruitment process supported by external consultants. He is a Fellow of The Institute of Chartered Accountants with over 25 years’ experience in senior financial roles including interim and permanent roles respectively on the main board of FTSE listed companies Avon Protection and Chemring Group. Capital markets day, 11 July.

First Property Group (FPO, 26p, £29m)

Property fund manager and investor with operations in the UK and Central Europe. FY (Mar) results. Stat PBT -65%, £2.5m; EPS -72%, 1.7p; div nc, 0.5p; EPRA net assets +1.0%, 46.5p; net debt, £22.0m (FY 22, £17.2m); gearing, 41% (36%).

Trading: Investment properties at book value +29%, £47.0m; at market value, +28%, £54.0m; associates and investments at book value. -17%, £22.1m.

Strategy: The group has established a platform for the provision of debt to finance commercial property investments, given the general withdrawal of financing from the market. “It is too early to determine the likely success of this venture but we believe it to be the right product, launched at the right time”.

Outlook: Poland – “Commercial property markets have slowed dramatically as interest rates have increased and banks have withdrawn from lending. The development of new buildings has similarly reduced. However, continued economic growth and the influx of refugees and businesses from Ukraine is sustaining occupational demand”. UK – “The investment market for commercial property has weakened. Offices have been particularly hard hit due to lockdowns and the development of a work from home culture. The cost of ensuring that buildings comply with net zero legislation is exacerbating the situation and is resulting in wide value dispersion between those buildings which do comply, those that can be made to comply and those for which compliance is too costly. Rental values should over time be sustained by inflation and a reduction in the supply of property in sectors which are over supplied, such as offices”.

Urban Logistics REIT (SHED, 119p, £564m)

Specialist UK ‘last mile’ logistics real estate investment trust. FY (Mar) results. Net rental income +45%, £53.0m; adj earnings +39%, £32.7m; IFRS loss before tax, £82.7m (FY 22, PBT £171.8m); adj EPS +3.3%, 6.9p; div nc, 7.6p; IFRS net assets £770m (£893m); debt, £351m (£239m).

Trading: Total portfolio valuation, £1,107m (£1,015m), -9.8% LFL, driven by £160m of acquisitions. Record year for leasing activity, with 42 new lease events, generating £6.1m in new rental income, with 34% like-for-like rental increases. Total portfolio,  130 mid box urban logistics assets, 9.7 million sq ft; EPRA vacancy rate of 7.4% (FY22: £5.59 and 6.9%). “Despite challenges, Urban Logistics’ portfolio has continued to perform well. Market driven declines in valuations were somewhat offset by our active asset management. Our conservative balance sheet, with a high proportion of our debt fixed or hedged and a low LTV, reduces our exposure to interest rate fluctuations”.

Outlook: “At time of writing we trade at a significant discount to NAV and therefore are restricted in our ability to raise money through a share offer, however there is significant potential within our own portfolio to drive growth through asset management, recycling and more efficient use of the land we already own. We are cautious, but believe we are very well positioned, and have everything we need in place to perform in an uncertain future”.


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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