TIDMSMP
RNS Number : 6243Y
St. Modwen Properties PLC
07 December 2017
Date of issue: 7th December 2017
ST. MODWEN PROPERTIES PLC
("St. Modwen" or the "Company")
TRADING UPDATE
DELIVERING ON FOCUSSED STRATEGY
St. Modwen Properties PLC (LSE: SMP), today provides a trading
update for the period to 30(th) November 2017.
Mark Allan, Chief Executive, said:
"We have continued to advance our new strategic objectives since
announcing them in June 2017 and have made solid progress in terms
of accelerating delivery and focusing activity towards the higher
performing industrial and logistics sector and our St. Modwen Homes
business, both of which are experiencing excellent growth.
"At the same time, St. Modwen's diverse portfolio and broader
business has continued to perform well, demonstrating resilience
and growth, and signalling that the full year results will be in
line with expectations."
Overview
We have previously highlighted the significant opportunity to
build on existing strengths and the scale of potential within the
Group's asset base which in turn, led to the formation of four
clear strategic objectives against which future performance and
direction are now being reported:
i. accelerating commercial development activity;
ii. growing our residential and housebuilding business;
iii. cementing and growing our regeneration reputation; and
iv. portfolio focus and capital discipline.
Commercial development activity - around 1 million sq ft
delivered this year
In line with our strategic plans, in the second half of the
year, we have continued to make good progress with our pipeline of
high quality development opportunities; focussing predominantly on
our A1 industrial and logistics portfolio where, this year, we have
completed approximately 1 million sq ft of speculative, pre-let and
pre-sold development.
Also, over the past six months, we have seen continued occupier
demand for our product, with the proportion of our committed
industrial and logistics pipeline being speculatively developed now
59% (May 2017: 73%). We expect our commercial development profits
for the year to be in line with plan.
Residential activity - St. Modwen Homes expects sales to
rise
The UK housebuilding market has remained resilient throughout
2017, particularly in the regions.
St. Modwen Homes is currently active on 16 sites across the UK
and has experienced robust demand for new homes with sales volumes
for the year expected to be in line with expectations, growing by
approximately 43% over the previous year to 694. In line with our
intentions, the associated growth in profits is expected to at
least offset the lower profits from the Persimmon JV as its
activity levels reduce.
During the year, the appetite for land from third party
housebuilders has remained steady and we have sold or agreed for
sale 47 acres of land, representing 1,160 units, for proceeds of
GBP58 million (Group share). In line with our strategic plans, we
have also been preparing land ready for sale in preparation for an
anticipated acceleration in 2018.
Cementing and growing our regeneration reputation - new
large-scale schemes secured
Throughout the year, we have also continued to pursue
high-quality acquisition opportunities that complement our skills
in delivering infrastructure and new communities, whilst also
reflecting the Government agenda for developing more housing and
employment spaces.
Earlier in the year, we secured two new large mixed-use
residential-led developments, the first being Kingsgrove, Wantage,
where we have signed a development agreement to deliver a mixed-use
community of 1,500 homes. We have also very recently signed a
development agreement to deliver Buckover Garden Village, a new
community of up to 3,000 homes in Gloucestershire. Together with
our development partner, the Tortworth Estate, we anticipate
submitting a planning application during the first half of
2018.
At the Bay Campus, Swansea University, construction of the next
phase of student accommodation and academic facilities is advancing
in line with plan and the sale of the first phases of student
accommodation is well progressed. We expect to secure a disposal in
the first half of 2018.
Portfolio focus and capital discipline - delivering strategic
sales and reducing gearing
In line with our strategic focus, we completed the disposal of
Nine Elms Square, in 50/50 joint venture with VINCI plc, in the
summer for GBP470 million which was in line with book value. We are
now continuing to progress with the rest of this landmark
multi-phased project which, in addition to the construction of the
new 500,000 sq ft market facilities, over a 10-year period, will
also comprise three distinct character areas featuring a mix of
residential, commercial, retail and leisure units.
Our share of the deferred tax relating to the site sold was
GBP18.5 million, which will therefore no longer be added back to
EPRA NAV per share and represents a reduction of approximately 8
pence.
The proceeds from the transaction will be used to reduce Group
borrowings as well as fund ongoing development activity across the
Group.
We continue to recycle and rationalise our portfolio, evaluating
which of our assets to prepare for sale in the first half of 2018
and, at the same time, identify for retention a significant
proportion of our commercial development pipeline.
At the half year, we identified a smaller asset portfolio of
approximately GBP100 million, representing GBP4 million of
associated net rental income, and our intention to dispose of this
within the next few years. Our newly established asset management
team has made good progress on the disposal of these assets with
over GBP20 million of this portfolio now sold, representing
approximately GBP0.5 million rental income. We are now evaluating
the remainder of the portfolio to establish the optimum approach to
disposing of the remaining properties.
In addition, we are actively progressing discussions on the
refinancing of our existing GBP488 million of secured bank
bilaterals, replacing them with a similar quantum of unsecured bank
finance to give us greater operational flexibility.
The Company intends to announce its results for the Full Year on
6(th) February 2018.
LEI number: 213800WMV4WVES8TQH05
-ENDS-
ENQUIRIES:
St. Modwen Properties PLC Tel: 0121 222 9400
Mark Allan, Chief Executive www.stmodwen.co.uk
Rob Hudson, Group Finance Director
Charlotte McCarthy, Head of Corporate Communications
FTI Consulting Tel: 020 3727 1000
Dido Laurimore/ Tom Gough/ Ellie Sweeney stmodwen@fticonsulting.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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