Decent start for St Modwen as Help to Buy provides resi boost

BIRMINGHAM developer St Modwen says the business has continued to perform well since the start of the financial year with profits and cash flows in line with expectations.

In a trading update the firm said it had completed two important milestones in the period: the share placing which raised £49m which will allow it to develop the New Covent Garden Market site in Nine Elms, London without the need to increase the debt leverage on the company’s balance sheet and its development agreement with Swansea University for the first phase of its £450m new Science and Innovation Campus.

St Modwen said its residential business is performing strongly with good on-going demand for its land.

“We continue to secure predominantly residential-led planning consents across our land bank, whilst works are progressing well across all of our live residential sites,” it said.

“Good sales rates are being achieved and future profit from residential development remains in line with the expectations set out as part of our 2012 results announcement. The Government’s new equity loan scheme, ‘Help to Buy’, launched in the recent Budget, opens up the opportunity for a wider range of prospective purchasers to get onto the property ladder.

“At our residential sites across the UK we have already seen the advantages that such schemes can have and we will be introducing Help to Buy across our St. Modwen Homes sites which are priced under the £600,000 threshold.”

Bill Oliver, chief executive of St Modwen, said: “The signing of the development agreement with Swansea University coupled with the investment sale of income from the student accommodation illustrates clearly our ability to deliver shareholder value from long-term development opportunities.

“At the same time, the redevelopment of New Covent Garden Market remains on track and we are excited at the potential of this important project.

“Beyond our major projects, we continue to extract maximum prospective value from our land bank through asset management, remediation, the planning process, development and delivery and we are seeing good returns from our residential-led schemes.”