St Modwen to ramp up development activity

Housing and regeneration specialist St Modwen has revealed plans to speed up development of its plannned project pipeline.

The firm has started to sell off some key assets to fund earlier build out of its planned pipeline of both commercial and residential schemes.

This will be used to fund industrial and logistics projects and regional housing schemes where demand remains high said the firm.

Chief Executive Mark Allan said: “We have a 17.3m sq ft pipeline of opportunities capable of delivery in the medium term, of which 7.5m sq ft represents high quality industrial and logistics projects that are deliverable over the next few years.

“These projects alone equate to nine years’ worth of work at recent levels of activity so, provided
that market conditions remain supportive, we believe there is clear opportunity to accelerate.”

St Modwen expects to spend £425m on construction of these sites which will have an estimated development value of £700m.

He added that the residential land bank also offered significant opportunities to grow profits.

Allan said St Modwen’s residential pipeline consisted of 16,900 plots – with nearly 14,000 within the planning system – plus a further 10,730 plots across three larger sites that required a different strategic approach.

“Based on recent levels of house building and land sales activity, the 16,900 plot pipeline equates to over 10 years’ worth of activity and, provided that the new homes market, particularly in the regions, remains robust, we believe there is a clear opportunity to accelerate.

“Of this total pipeline opportunity, we have identified 7,700 units for St. Modwen Homes.

“In the half year period, St. Modwen Homes delivered 230 units with an operating profit of £9m and we expect to deliver approximately 700 units for 2017. The rate of volume growth in St. Modwen Homes thereafter is unlikely to exceed 25% per annum.”

St Modwen has sold its stake in London’s 10-acre Nine Elms Square to joint venture partner Wanda Commercial Properties for £190m. It is also selling its student accommodation assets at the Swansea University Bay Campus, expected to release a further £90m for developments.

Announcing half-year results Allan said that St. Modwen continued to deliver a resilient performance, despite ongoing uncertainty in the broader economy. Profit before all tax was £29.3m (2016: £30.0m). The slip was largely due to commercial development profits reduced by £9.6m, reflecting a deliberate slowdown in activity following the Brexit referendum.

from Construction Enquirer http://www.constructionenquirer.com/2017/07/04/st-modwen-to-ramp-up-development-activity/

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