OTMP | News – Telford Homes posts £193m loss; Mixed picture for regional housing markets
OnTheMarket (OTMP, 70.5p, £58m mkt cap)
PERL has a relationship with Shore Capital, Joint Broker to OnTheMarket and is restricted in commenting on this proposed transaction.
Agent-backed residential property portal. Recommended acquisition of OnTheMarket and HY (Jul) results.
Acquisition: CoStar UK, (‘Bidco’), a wholly-owned indirect subsidiary of CoStar Group and the board of directors of OnTheMarket announce they have reached agreement on the terms of a recommended 110p per share cash offer to be made by Bidco for the entire issued and to be issued share capital of OnTheMarket. The Acquisition, to be effected by means of a Scheme of Arrangement, values the entire issued and to be issued ordinary share capital of OnTheMarket at approximately £99m and represents a premium of approximately: 56.0% to the closing price of 70.5p per OnTheMarket Share on 18 October and 93.7% to 56.8p, the three-month volume weighted average price. The Acquisition has the support of 29.5% of OnTheMarket’s share capital, which includes its six largest shareholders. CoStar has built “the world’s leading online property marketplaces, generating hundreds of millions of leads, resulting in millions of successful commercial and residential property transactions for its clients. CoStar’s websites attracted approximately 280 million visits in September 2023, and include Homes.com, the second largest and fastest growing residential marketplace in the United States. OnTheMarket’s network of property professionals and breadth of advertiser relationships provide a strong foundation to compete with the dominant UK property portals and support the growth of its related software solutions and data insights”.
Results: Rev +1%, £16.9m; adj op profit -15%, £1.1m; loss before tax, -£0.1m (HY 22, +£0.1m); EPS, -0.1p (+0.5p); dividend, 0p (0p); net cash, £11.5m (£11.3m).
Trading: Ave monthly advertisers listed +2%, 13,323; ave rev per advertiser (ARPA) -2%, £201.
In other news …
Build-to-rent. London private rental developer Telford Homes has reported a £193m loss for FY (Dec) 22 after taking stock of potential remedial building safety works, ConstructionEnquirer.com. The results mark a further setback for global real estate investor CBRE, which bought the previously listed developer four years ago for £267m. Since the acquisition, Telford has only returned a pre-tax profit once, in 2020 of just £1.7m, according to the report. In 2021, it made a loss of £14m, mainly due to delays and exceptional costs following a subcontractor failure on the refurbishment of architect Erno Goldfinger’s listed 27-storey Balfron Tower in East London. According to the latest Companies House accounts, Telford has provisioned £143m, based on its estimate for building fire safety remedial works in the coming years. This was further compounded with losses from onerous build-to-rent contracts and further losses incurred on the Balfron Tower block job, which finally finished this summer. Even before these exceptional losses, Telford Homes made a pre-tax loss of £18m from turnover up 5% to £296m. CBRE, which is a leading BTR developer in the USA, bought Telford with hopes of achieving similar success in the UK.
Comment. While storm clouds continue to gather across Britain’s housebuilding market, regional conditions are rather more variable. My latest monthly column for Property Week (paywall), UK housing’s mixed weather map:
‘ “On a bad day… you can see Wales,” a chief executive of a national housebuilder joked some years ago while unveiling homes by the Severn Estuary outside Bristol. Since then, local prices have soared, forcing many workers in the booming Somerset area to buy on the other side of the river.’
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