Interim Management Statement for the period from 1st December 2008 to 17th April 2009 for St Modwen Properties PLC, the UK’s leading regeneration specialist.
During the period the Company has continued to trade profitably, before valuation and mark to market adjustments. The Company continues to transact a steady flow of business, we are still achieving planning and other successes in marshalling our sites for future development, and we continue to find good acquisition opportunities.
Cash management and cost control continue to be priorities for the Company at this time, and decisions continue to be taken to maintain the long term potential of the business and to ensure that we operate within our banking covenants.
Despite the general economic background:
– We have completed the investment sale of a foodstore at our 148,000 sq ft Catford Shopping Centre in Lewisham. The asset was acquired by a private investor for £9.1 million, reflecting a net initial yield of 6.9% and is let to Tesco for a further 62 years.
– At Langford Mead, the investment of a 40,000 sq ft industrial building has been completed. A private investor acquired the investment for £2.87 million, reflecting a net initial yield of 7.25%
– At Thurleigh, Bedfordshire, we have completed the sale of part of the site to MSV Group Limited for £5.3 million, reflecting a net initial yield of 8.5%
Our retained property portfolio continues to underpin our business by providing us with a strong income stream and our rent roll continues to grow, with increases since the year end, completed or in solicitors’ hands of £6.0m (£3.2m net of vacations and tenant failures)..
The marshalling of the hopper for future development has already made good progress across our regions this year:
– In January, we signed the £35 million development agreement to build the new Warwickshire College at Rugby, for which we started building works in February and which we expect to complete ready for the new term in September 2010.
– Terms have been agreed with AREVA T & D to redevelop its existing 360,000 sq ft premises at St. Leonards Avenue, Stafford into a 335,000 sq ft Business and Science Park with associated community and residential development. We are due to submit a planning proposal to Stafford Borough Council towards the end of April.
– Planning consents have been obtained for a 77,000 sq ft business park in Letchworth, Hertfordshire and a new sports facility at Coombs Wood which will free up an existing site for residential development.
– At our Melton Park Business Park in Hull, we have pre-sold a 30,000 sq ft office and distribution unit to East Riding County Council, for which works are expected to complete in July.
– We are currently constructing over 130,000 sq ft of pre-sold buildings at our Langford Mead project in Taunton where we recently started on site on the construction of a 75,000 sq ft Heritage Centre for Somerset County Council.
We continue to progress our mixed-use redevelopment schemes:
– In Farnborough Town Centre, Sainsbury’s emphasised its commitment to the site by expanding its proposed 50,000 sq ft anchor store by an additional 12,000 sq ft over two floors.
– At the £100 million regeneration of Wythenshawe Town Centre in Manchester, we recently secured two major pre-lets to Wilkinsons and Netto at our 43,000 sq ft Etrop Court Development.
– The £80 million regeneration of Wembley Central continues to see success with building works now well underway and over 60% of the first retail phase now pre-let.
The way in which we positively embrace run down and challenging sites with major regeneration issues has always given us a competitive advantage. It continues to do so in the current economic climate, where low cost retailers prosper and affordable leases are a key consideration for all businesses. This has been borne out recently by our success in re-letting 3 former Woolworth stores on improved terms.
We have been concentrating on acquisition opportunities where we are able to control the timing of expenditure to minimise any immediate exposure.
In this way, we have continued to add to the hopper by exchanging contracts with BP, subject to completion of further due diligence, on the acquisition of a 2,500 acre portfolio of disused sites, for which we had been selected as preferred developer in November 2008. The acquisition is characteristic of our ability to complete innovatively structured transactions – a vital skill in today’s market place. It has been bought for a nominal sum, with an undisclosed dowry received from BP in exchange for us taking on the liability for remediation works.
In addition, we have been selected by Devon County Council as joint venture partner for the £210 million regeneration of Exeter’s Skypark. Outline planning has already been granted for this 20 year project, which will see us transform this 107 acre site into 1.4 million sq ft of office and industrial/ manufacturing space.
The property market remains challenging with pricing still under pressure and transactions taking longer to bring to conclusion. There are reports of some more positive evidence on the investment front, and we have seen some tentative signs of this, but the position remains fragile and it is too early to claim that the market has bottomed. However, our confidence in the longer term remains undiminished.
Friday 17th April 2009
St. Modwen Properties PLC
Bill Oliver – Chief Executive
Tim Haywood – Finance Director 0121 222 9400
Charlotte McCarthy, PR Manager
Gareth David 020 7457 2020