1st October 2007
Interim Management Statement 1st October 2007
St. Modwen Properties PLC, the UK’s leading regeneration specialist, announces continued strong progress.
* Significant milestones achieved in major town centre regeneration projects at Wythenshawe, Hatfield and Basingstoke
* Significant progress in marshalling future major projects, including gaining a planning consent at West Ruislip for 495 homes
* Substantial construction programme in progress, with good lettings of speculative units at Quedgeley, Longbridge and Accrington
* Completion of re-financing programme, with £719m of bank facilities in place until 2011/2012, including £189m of undrawn committed funding for future expansion
Anthony Glossop, Chairman, reporting on the period said:
"We have made good progress during the period across a wide range of projects.
Although industry commentators are now reporting a softening of property yields, our business model is based on adding value to land acquired in its rawest state, rather than on relying on a rising market to provide growth. Our breadth of skills as the UK’s leading regeneration specialist continues to be recognised, and we remain confident of our ability to meet our corporate target of doubling net asset value per share every five years.”
1st October 2007
St. Modwen Properties PLC
Anthony Glossop, Chairman )
Bill Oliver, Chief Executive ) 0121 222 9400
Tim Haywood, Finance Director )
College Hill www.collegehill.com
Gareth David 020 7457 2020
Interim Management Statement 1st October 2007
St. Modwen Properties PLC is today publishing its first Interim Management Statement, relating to the period from 1st June to 30th September 2007
The period, which as it covers the summer holiday season, is traditionally the quietest in the year. Nevertheless, property profits in excess of £5m were realised from more than a dozen completions across all of our six regions.
We continue to make good progress in marshalling projects for future delivery. Significant achievements have been made on a number of our major town centre projects:
• Wythenshawe - the latest phase of the £130m regeneration of the town centre has been launched with the opening of a new £20m Asda food store. Planning applications have been submitted for a further 55,000 sq ft of retail, leisure and office development.
• Hatfield – the £100m mixed use regeneration scheme was further advanced by the exchange of a key agreement with the Royal Mail, and the holding of the CPO and road closure enquiry.
• Basingstoke – an 87,000 sq ft anchor store has been sold on a long lease to Primark, as a preliminary step towards the regeneration of The Malls shopping centre.
Elsewhere we continue to move forward the planning position on major sites:
• West Ruislip – planning consent has been obtained for 415 homes and an 80 unit retirement home, the second scheme to be brought forward from the Project MoDEL portfolio. The site is now being marketed for sale.
• Yalding – a planning application has been submitted for the mixed use redevelopment of this former Syngenta site, comprising 315,000 sq ft of employment space and 350 residential units.
• Coed Darcy – a resolution to grant outline planning for 4,000 dwellings, 500,000 sq ft of employment together with retail and community facilities and the agreement of the outline remediation strategy was obtained in the period. We are well advanced in the detailed negotiations with BP for the acquisition of this site.
Our substantial construction programme continues to deliver new schemes for future years:
• Longbridge Technology Park – the 45,000 sq ft Innovation Centre has been completed and is being let to a range of technology-based businesses, with 21 % now occupied
• Edmonton Green – the leisure centre at the heart of this £100m mixed use scheme was handed over to the council and is now open to the public. The residential units have been handed over to the Housing Associations, four months ahead of programme. Work on the next phase, the construction of a 66,000 sq ft foodstore and additional retail units, is well underway.
• Accrington – following the sale earlier in the year of Junction 7 Business Park, we have been actively developing the balance of this former Marconi site. A 38,000 sq ft industrial scheme has been completed and fully sold, and a 30,000 sq ft office scheme has also been completed.
• Quedgeley, Gloucestershire - 30,445 sq ft of the second phase of distribution / industrial units now under construction has been pre-let, while a further 91,000 sq ft will be available by the Spring.
It is in the nature of our business that occasional setbacks are encountered, and not all of the progress in this period has therefore been positive. However, the diversity and range of the hopper is a key strength of the company, meaning that no individual project is critical to our overall success. Two such events that arose during this period were:
• St Matthew’s Quarter, Walsall – We were saddened that the listed Shannon’s Mill building, which was to form the centrepiece of our £40m retail and residential regeneration scheme, was lost to an arson attack in August. Although this event will delay and may alter the ultimate development, we were fully insured and expect to suffer no financial loss.
• Elephant & Castle – We were disappointed not to be selected by Southwark Borough Council for its proposed £2bn redevelopment. However, as we are the owners of a key part of the site, we intend to work with the selected developers to maximise the value of our holdings. All bid costs had been written off as they were incurred.
We continue to add to the hopper, which currently comprises some 5,100 acres of developable land, including the acquisition of 175 acres in the year to date. Our principal success during this period has been our selection as preferred developer by Waltham Forest Council for the Arcade site in Walthamstow.
At Coed Darcy, Skelmersdale and Bognor Regis, where we have recently been selected as preferred developer, excellent progress has been made during the period, such that it is now expected that development agreements will be finalised by the end of the year.
During the period we have completed the re-financing of our principal joint venture, Key Property Investments, via a five year £200m facility. This was the final stage of a substantial re-financing programme which has been implemented this year.
As a result of this, the group's (including 100% of KPI) banking facilities have increased to £719m (30th November 2006: £642m), with a weighted average maturity of 5 years (2006: 4 years). Current net debt is in the order of £530m, giving us a gearing of approximately 86%. We now have undrawn, but committed facilities of £189m (2006: £198m) available to finance future expansion. Moreover, the terms of these facilities have also been improved, with a weighted average margin of 81 basis points (2006: 100 b.p.) over LIBOR.
It is reassuring in the current uncertain credit environment that all of our existing facilities are in place until 2011/12, and that the interest cost of 65% of our debt is fixed by hedging contracts. The weighted average fixed interest payable under these hedges is 5.0%, which compares very favourably to three month LIBOR of 6.4%.
Although industry commentators are now reporting a softening of property yields, our business model is based on adding value to land acquired in its rawest state, rather than on relying on a rising market to provide growth. This is evidenced by the significant planning consent that we obtained at Llanwern which was announced earlier in the year, and by the continued progress of development at our other brownfield renewal sites, such as the former zinc smelter at Avonmouth. Our breadth of skills as the UK’s leading regeneration specialist continues to be recognised, and we remain confident of our ability to meet our corporate target of doubling net asset value per share every five years."
CCA Glossop WA Oliver
Chairman Chief Executive
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