Urban&Civic, the property investor and developer provides the following Company update on the day of its AGM.
Trading conditions and valuation update
After a markedly quiet November and December, the level of customer visits and reservations has returned to more normal levels. Our current expectation for the year ending September 2019 remains in line with previous guidance of 635 completions on strategic sites with a further 335 sales of infrastructured plots at Europa Way, Warwick. Taken together, this would represent more than double the equivalent realisations to September 2018. Achieved sales prices are broadly in line with forecast, other than at Priors Hall in Northamptonshire where the early benefits of the more rigorous Urban&Civic approach continue to be recognised in above market growth. The tone of house price sales at Priors Hall is now around £235 per square foot, or some 10 per cent higher than the average on acquisition in October 2017.
Reference to an increased emphasis on building faster to reduce costs and improve Return on Capital Employed has been a feature of the recent results commentaries from our listed housebuilder customers. That also plays directly to the strengths of our Master Developer model. We continue to sign new licence arrangements with a balance of existing and new housebuilder customers. Last month, Cala Homes was added to the roster on a first parcel at Wintringham, St Neots in Huntingdonshire. The housebuilding subsidiary of Legal & General, has contracted on 222 serviced plots at a minimum annual drawdown of 42 dwellings per year. The minimum per plot receipts exceed 2 x the £23,900 September 2018 balance sheet valuation, after accounting for all allocated servicing costs and blended to include affordable housing receipts. It is anticipated that first occupations at Wintringham will take place around the end of 2019. Licence arrangements over a second parcel are expected to be exchanged before 31 March, 2019.
As part of the exercise by which Urban&Civic shares move from Standard to Premium Listing (see below) our valuers, CBRE, are required to refresh the September 2018 valuations. They have confirmed that there has been no material change above net spend as at 31 December, 2018, other than at Priors Hall, up 7.2 per cent net of spend to £57.7 million (September 2018: £50.7 million+ £3.3 million subsequent capital investment) and Wintringham, up 5.9 per cent to £25.9 million (September 2018: £23.8 million+ £0.6 million subsequent capital investment, pro rata to our 33 per cent interest).
Significant new project: Tyttenhanger, Hertfordshire
Agreements have been completed with the Tyttenhanger Estate representing over 2,000 acres of land predominantly to the immediate north of junction 22 to the M25. The holdings in Hertsmere Borough in Hertfordshire are approximately 18 miles from Marble Arch in Central London and equidistant between St Albans and Potters Bar. Tyttenhanger is the only substantial site identified by Hertsmere Council in their "Planning For Growth" consultation document (October 2018) for housing (4000+ new dwellings) and employment (4,000 new jobs) ahead of publication of the draft Local Plan. Hertsmere completed an interim public consultation exercise in January 2019 and is working towards the adoption of a new Local Plan in 2021.
The Development Management agreement at Tyttenhanger provides for Urban&Civic taking responsibility for planning and delivery, including site servicing costs, receiving a substantial minority participation. The land stands in single ownership and, whilst in the Green Belt, is of sufficient scale to independently support a sustainable new settlement with prospectively reduced out-commuting due to the extent of intended employment provision. The existing Willows Activity Farm attracting more than 400,000 visitors per year will be protected and enhanced. A direct new route to Potters Bar train station is proposed, which would not require additional land acquisitions.
Tyttenhanger maintains Group focus as trusted partner with a proven track record of delivery quality and its ability to identify strategic development opportunities to meet prevailing housing need in key growth and, most especially, supply constrained locations in South East England. The agreement was made bilaterally and takes the total number of Urban&Civic strategic projects to nine.
Premium Listing
Following posting of the 2018 Report and Accounts last month, we are progressing with the procedural aspects of the move of Urban&Civic shares to the Premium List (this involves inter alia the provision of current valuations as set out above). It is intended that the Transfer Announcement will be made not later than 31 March 2019.
Commenting, Urban&Civic Chief Executive, Nigel Hugill, said:
"The power of the Urban&Civic model in galvanising large site delivery becomes progressively better recognised. The sales profile within the business remains sharply upwards. Tyttenhanger takes the number of strategic projects to nine, much the highest of any UK Master Developer. The land sits on either side of the M25 between St Albans and Potters Bar, in one of the most supply constrained locations in South East England. Unusually, the entire 2,000 acres is in single ownership, a crucial factor in reliable delivery. We envisage viable and rapid jobs- led housing growth, very much as is being delivered at Alconbury. Hertsmere is 79 per cent Green Belt; it is simply infeasible to reach local employment and housing aspirations without a major release. The Council is to be commended for rising to the challenge of identification via the conscientious adoption of a plan led approach, backed by empirical research and extensive public consultation."