Healthy profits on disposals boost regeneration specialist
Brownfield regeneration and property investment specialist Harworth is anticipating its 2017 performance to be ahead of expectations, indicated by the growing value of its portfolio and a strong second half.
In a trading update for the year to the end of December, the group said it delivered another strong operational performance in the second half of the year across all its business segments.
Harworth said value gains (revaluation gains and profit on disposals) are anticipated to be appreciably ahead of expectations and as a result group EPRA NNNAV (equivalent to Group Net Asset Value) as at 31 December 2017 is anticipated to be moderately ahead of expectations, ensuring another year of double-digit growth.
Profit excluding value gains is anticipated to be in line with expectations, the company added.
The value gains achieved have been driven mainly by management-led actions, including receipt of outline planning consent for two major sites at Thoresby in Nottinghamshire and Kellingley in North Yorkshire, and good progress on lettings across the income portfolio, including Harworth’s direct developments, resulting in higher valuations.
Meanwhile, healthy profit on disposals such as the sale of engineered development land for over 600 residential plots, including two land parcels totalling 13.87 acres to regional housebuilders at Waverley, Rotherham during December for a total in excess of £11m, boosted the group.
Harworth also sold key development plots for nearly 1m sq. ft of commercial uses, including an 18.3-acre plot at Logistics North, Bolton and a six-acre plot at Riverdale Park, Doncaster during December for a total of £12.5m.
The group said it has now invested all the £27.1m raised in its March 2017 equity placing into five sites, which will reinforce the group’s long term strategic landbank and recurring income base while increasing its geographic reach.
Owen Michaelson, chief executive, said: “The group had a strong first half of the year as highlighted in our interim results. This momentum has continued into the second half, with full year results anticipated to exceed our expectations. Sales on consented land at our key development sites have been achieved at above book value and good progress on planning and lettings has driven the growth in the valuation of our portfolio. This includes progress at Riverdale Park in Doncaster, where we have realised an engineered land sale above book value less than two years after we purchased the site.
“This robust position reflects the underlying strength of our business model and the ability of our management team to deliver the majority of our value gains. We remain confident in the long-term fundamentals of the residential and commercial markets in the North of England and the Midlands. This in turn gives us the assurance we need to continue to invest in new sites to deliver future shareholder value.”
