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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November 8, 2023

PSN, GFRD, FPO, UKCM | News – WeWork files for US bankruptcy; King’s Speech skips nutrient neutrality for housebuilders

Company news

Persimmon (PSN, 1,146p, £3,659m mkt cap)

UK number three housebuilder by volume, top by market cap.

Galliford Try Holdings (GFRD, 237p, £244m)

UK construction and infrastructure services group.

Board changes. Galliford Try CFO Andrew Duxbury appointed Persimmon CFO with a start date to be confirmed in due course. Dean Finch, Persimmon Group Chief Executive, will continue to hold interim responsibility for the finance function, supported by Mike Smith, Group Financial Controller. Jason Windsor, previous Persimmon CFO left on 1 September to take the same role at abrdn. The Galliford Board has commenced a search to appoint a new CFO. During this process Mr Duxbury will ensure a smooth transition of his roles and responsibilities.

First Property Group (FPO, 18p, £19m)

Property fund manager and investor with operations in the UK and Central Europe. Trading update.

Guidance: “underlying trading profits for the financial year to 31 March 2024 remain in line with market forecasts”. Trading: Nearly one third of the vacant office space in Warsaw and Gdynia, which the Group acquired in 2021 and 2022, and which totalled some 20,000 square metres, has been leased. Tenant demand remains steady in both cities. In the six months to 30 September Fprop Opportunities, (FOP) which owns five properties in Poland and which the group deconsolidated in 2018, decreased in value by £2.2m, of which the group’s share amounted to £816,000. As a result, the group expects to report an overall loss in the first six months of the current financial year. HY (Sep) results, 23 November.

UK Commercial Property REIT (UKCM, 56p, £728m)

Real estate investment trust holding commercial properties including industrial, office and retail. Statement regarding a possible all-share merger. “UKCM is aware of speculation and confirms that it is in discussions with Picton Property Income in relation to a possible all-share merger on an EPRA NTA for EPRA NTA basis. There can be no certainty either that an offer will be made nor as to the terms of any such offer”.

In other news …

WeWork has filed for Chapter 11 bankruptcy in the US but declared it is “business as usual” for its operations in the UK and Ireland, Property Week (paywall). The flexible office pioneer, once valued at $47bn (£39bn), announced a strategic reorganisation process in the US and Canada and entered into a Restructuring Support Agreement (RSA) with holders. The Chapter 11 filing will give it protection from creditors and landlords as it restructures its huge debts, but based on its latest share price, WeWork is now worth less than $50m.

Politics. Yesterday’s King’s Speech, confirmed previous reports that the Government has dropped plans to legislate on nutrient neutrality for housebuilders, Building (paywall). Speculation about the future of the proposed legislation has been reported to have held up the building of 150,000 homes [a possible exaggeration; a c. 30% collapse in demand following interest rate hikes may have had more to do with this]. The speech also contained reform of leasehold rules and the private rental market.

Planning. Housing Secretary Michael Gove has refused planning permission for Buckinghamshire data centre because it would ‘harm’ view of Green Belt from M25, Building (paywall). The plans for the 163,000 facility were for the development of three buildings on a former landfill and quarry site of around 52 ha, between the M25 and the River Colne and come at a time when there is ““a significant and substantial demand for data centres”.

Viewpoint: You couldn’t make it up …

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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