St Modwen’s disposal strategy delivers ‘solid’ results

St Modwen Homes

Property group St Modwen has maintained profits in a year which has seen huge change throughout the business and uncertainty across its sector.

The Birmingham-based investor and developer has been implementing a strategy to reduce its exposure to retail and to refocus on growing its housebuilding volumes and industrial and logistics development activity.

St Modwen sold over half of its retail portfolio during the year, generating £177m by agreeing deals that averaged less than 1% below book value.

St Modwen chief executive Mark Allan

Since the launch of new chief executive Mark Allan’s strategy 18 months ago, the group has sold assets worth £814m – more than 40% of its initial portfolio.

It has also been able to accelerate its development plans, increased its committed pipeline by 50% in a year to 1.5m sq ft, delivered 0.9m sq ft of new space and secured planning for 2.1m sq ft.

“Our results for the year were solid, especially against a backdrop of significant asset rotation, de-leveraging and ongoing macro uncertainty,” said Allan.

“We are now well placed to deliver a meaningful improvement in our return on capital and earnings in the coming years.”

The group increased its key metric of net asset value (NAV) per share by 4%, to 470.4p, while its dividend was up 13% to 7.1p. Profits edged up 1% to £60.5m.

St Modwen’s share price had an 18-month climb out of the post-EU referendum slump in June and July 2016, increasing its value by 80%, before flattening out over the last year. At last night’s close of 403p, the group had a market value of £900m.

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