28th March 2008
Interim Management Statement March 2008
St. Modwen Properties PLC, the UK’s leading regeneration specialist, announces continued progress in uncertain market conditions. This Interim Management Statement covers the period from 1st December 2007 to 28th March 2008.
• Progress in marshalling future major projects, including gaining a planning consent at Coed Darcy for 4,000 homes
• Active construction programme in progress, with good level of sales and lettings of speculative units at Quedgeley, Stoke and Avonmouth
• Sale agreed on residential land release at Taunton
• Further new banking facilities completed, increasing undrawn committed facilities to £224m
Anthony Glossop, Chairman, said:
“Future market conditions remain uncertain, and macro-economic signals have undoubtedly deteriorated. In such circumstances, we are increasingly mindful of the need to manage our exposure to speculative development, whilst seeking to maintain a flow of profit for future periods.
Our overall view remains that our marshalling and development programme will enable us to see growth in the company’s net asset value in 2008, albeit at a lower level than in the recent past.”
St. Modwen Properties PLC
Interim Management Statement for the period from 1st December 2007 to 28th March 2008
Pricing levels in the property market are as we anticipated in our last announcement in February. At these new levels there is a weaker but active level of investor interest. Occupier interest remains relatively resilient, particularly for smaller office and industrial buildings. We are beginning to get some benefit from more favourable construction prices. Our regeneration-led business model with a broadly based regional focus is still enabling us to find opportunities to add value.
We continue to make progress in marshalling projects for future delivery.
• Coed Darcy – planning consent has been obtained for 4,000 dwellings, 500,000 sq ft of employment together with retail and community facilities, and the Section 106 obligations and outline remediation strategy have been agreed.
• Hayward’s Heath – some twelve years after its acquisition, we have secured a favourable planning resolution for five acres of residential development.
Whilst we are being more cautious in our forward construction commitments, there are still business opportunities for the well-located, well-priced product. We are therefore continuing an active construction programme, partly speculative, partly anchored by pre-sales or pre-lets, including:
• Quedgeley West Business Park, Gloucester - a 102,000 sq ft distribution warehouse is to be developed for transport company CM Downton. A further 120,000 sq ft distribution/industrial space is under construction, with 47,000 sq ft having already been pre-let.
• Longbridge – an extensive investigation and ground remediation programme is underway, which will see more than 7 million cu ft of soil remediated across the former West Works. The first phase of new development on the Cofton Centre part of the site has commenced with the construction of 76,000 sq ft of speculative industrial units. Meanwhile we continue to be involved in the emerging Area Action Plan which will determine the future uses of the site and should reach a satisfactory resolution later this year.
• Avonmouth - a 165,000 sq ft distribution centre is under construction for Nisbets, a catering equipment supplier, which is scheduled to be completed in July. A speculative phase of 78,000 sq ft of industrial buildings has been sold to three owner occupiers.
• Rugby - Converteam, a world leader in power conversion engineering, has taken a new 15-year lease on refurbished industrial space at an annual rent of £900,000 as part of our regeneration plans to transform more than 100 acres of the former GEC complex close to Rugby town centre.
• Stoke-on-Trent - four speculative schemes totaling 175,000 sq ft have been completed on the 400-acre Trentham Lakes site and the former coal stockyard site at Centre 500, Wolstanton. Two thirds of the units have been sold or let.
• Glasgow - the development of 80,000 sq ft of high quality industrial accommodation has begun on the former Rolls Royce site at Hillington, Glasgow. A 25,000 sq ft building has already been pre-sold to Toolbank, a tool supply company.
Residential land sales continue to form a significant element of our delivery programme. The current uncertainties in the residential market have made us more cautious on this year’s land releases, but the first release of seven acres at Norton Fitzwarren, Taunton has been well received and a sale has been agreed.
We continue to add to the hopper, with the following transactions in the period:
• Coed Darcy – during the period we exchanged contracts with BP for the acquisition of the 1,000 acre former oil refinery at Llandarcy in South Wales, of which 320 acres is developable. The site will be transformed into the Coed Darcy Urban Village with 4,000 homes to be built over the anticipated 20 year development period.
• Sunderland – we have acquired the 9.3 acre former ARC International glassworks, with about 350,000 sq ft of buildings of which around half have some potential for re-use. Sunderland arc, the city¹s urban regeneration company, has identified the former glassworks as a priority site on the edge of the city centre.
During the period a new £75m revolving credit facility has been put in place, which bolsters our undrawn committed facilities to £224m. Net borrowings, excluding joint ventures, are currently £420m and gearing 90%.
Future market conditions remain uncertain, and macro-economic signals have undoubtedly deteriorated. In such circumstances, we are increasingly mindful of the need to manage our exposure to speculative development, whilst seeking to maintain a flow of profit for future periods.
Our overall view remains that our marshalling and development programme will enable us to see growth in the company’s net asset value in 2008, albeit at a lower level than in the recent past.
Anthony Glossop - Chairman
Bill Oliver - Chief Executive
St. Modwen Properties PLC
Anthony Glossop, Chairman
Bill Oliver, Chief Executive
Tim Haywood, Finance Director
0121 222 9400
020 7457 2020
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