Interim Management Statement for the period from 1st June to 30th September 2010 for St Modwen Properties PLC, the UK’s leading regeneration specialist.
We continue to make significant progress in all areas of the business, capitalising on the positive trends that were reported in our recent half year review. Our traditional strengths of a diverse hopper and real hands-on active management are helping us to combat successfully weaknesses in the occupier market.
We remain active across all of our regions, delivering a range of profitable pre-sold and pre-let schemes, and continuing to see signs of recovery in the residential land market.
– A number of large, pre-sold construction projects are progressing well, including: the completion in the period of the 52,000 sq ft pre-sold Morrisons supermarket at Connah’s Quay, Flintshire and the 150,000 sq ft Warwickshire College building at Rugby. The 300,000 sq ft waste treatment and recycling facility at Avonmouth for New Earth Solutions is on programme and will be complete by the year end. Also, works have commenced on the construction of the pre-sold 48,000 sq ft office complex for Manchester City Council in Wythenshawe.
– Work on the 250,000 sq ft Bournville College at Longbridge is well-advanced and is on schedule for handover in time for the September 2011 intake of students. Elsewhere, at Longbridge the major road improvement works have now commenced, and work has begun on 115 houses for which we have received grant support from the HCA.
– We have also been very active with our asset management during the period. In the year to date we have completed more than 200 new lettings and renewals of almost a million sq ft of space. As a result, our gross rent roll has continued to grow and currently stands at some £45.9 million p.a.(November 2009: £43.0 million) as the £6.7 million of new rent generated by this activity more than compensated for the £4.8 million lost due to vacations.
– We have completed the sale of 29 acres of residential land for a total consideration of £40.5 million at values equal to, or ahead of, 31st May book value: 20 acres at the former MoD site at Bentley Priory, Stanmore to Barratt Developments; 4 acres at Haywards Heath to Crest Nicholson, and 5 acres at Newton le Willows to Jones Homes.
– Following the successful remediation of a 12 acre site in Crayford, we have exchanged contracts with AG Thames Holdings Ltd for its sale for £5.5 million. This site is part of the 2,500 acre portfolio that we acquired from BP in November 2009.
We have made excellent progress during this period in the marshalling of the hopper for future development. Of particular note are the following significant advances:
– We have entered into a joint venture with Persimmon PLC to develop 2,000 homes on seven sites within our hopper. The development across 120 acres of land will take up to five years to complete and we expect will have an end value of over £300 million. Further schemes will be added to the joint venture as planning permission is granted.
– We have secured planning permission for the 4.5 acre first development phase of our £270 million Firepool scheme in central Taunton which will comprise 113,000 sq ft of offices, 49 apartments and a hotel.
– We have obtained planning consent for 260 homes and 16,000 sq ft of office accommodation on our 17-acre former Pyrex glass factory site in Sunderland.
– We have obtained planning for a 73 room hotel at Edmonton Green, Enfield which has been pre-let to Travelodge.
– We have also obtained planning for a 650 home scheme at South Ockendon, Essex on the 31 acre site of a former Ford factory.
We continue to make selective acquisitions, targeting income-producing sites that are self-financing where possible, and Development Agreements. During the period:
– We have completed the purchase of an eleven-site portfolio of industrial estates for £21.4 million. With a rental income of £2.2 million, this represents a net initial yield of 10.3%.
– We have completed agreements to acquire, subject to the receipt of planning, a mixed use development of 280 acres of land at Branston, near Burton-upon-Trent, and 100 acres for employment-led development adjacent to the M23 near Crawley and Gatwick.
Whilst the outlook for commercial property remains uncertain, currently St. Modwen is not experiencing deteriorating market conditions. We are pleased with our strong performance on asset management; not only has it enabled us to maintain occupancy and rental levels but, together with our expectation of marshalling gains from within the hopper, gives us confidence in the out turn for the year.
30th September 2010