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Harworth grows strategic land bank with £45m of acquisitions and increases existing loan facilities to £100m

Friday, May 4, 2018

Harworth Group plc, the regenerator of land and property for development and investment, announces the acquisition of four strategic sites across the North of England and the Midlands, for a total consideration of £45 million plus acquisition costs. The acquisitions comprise a mix of brownfield and greenfield sites across 299 acres, the largest of which was acquired for £32.45 million, and support the Company’s ongoing delivery of a double-digit rate of return by replenishing its strategic land bank and building its recurring income.

The acquisitions have been funded through the Company’s existing Revolving Credit Facility (“RCF”), which has been extended from £75 million to £100 million, with Santander UK PLC providing an additional £25 million commitment to sit alongside the existing £75 million commitment from The Royal Bank of Scotland plc. The terms and covenants of the RCF remain unchanged with a margin of LIBOR plus 210bps and expiry in February 2023. Following these acquisitions, over £20 million of the RCF remains undrawn and the Company expects its year end loan to value to remain in the range of 10% to 15%.

The sites, in Yorkshire, Derbyshire and Leicestershire, are within the Group’s core markets of the North of England and the Midlands. Two of the sites generate existing income of £3.1 million per annum from two commercial tenants. In total, the acquisitions provide the potential for the development of up to 3,000 homes and over 1m sq. ft of commercial space. Harworth will use its market leading master planning and regeneration skills to promote the sites through the planning process and remediate the land ready for future development where applicable. Further details on the sites are set out below.

Owen Michaelson, Chief Executive of Harworth, said: “These acquisitions and the increase in our financing facilities demonstrate the continued implementation of our strategic priorities. We are expanding our strategic land bank to deliver further value to our shareholders through clear, long-term value-add opportunities, whilst both securing additional income and maintaining low gearing and financing headroom to support the continued growth of the business.

“Our confidence in the strength of, and the outlook for, our principal markets in the North of England and Midlands is underpinned by the continued undersupply of new homes and commercial space in the face of high levels of demand from housebuilders and commercial occupiers alike. Harworth continues to make a significant contribution to the ongoing economic growth of the regions as one of the UK’s leading regeneration companies.”

North of England acquisitions

Nufarm, Bradford
Harworth has purchased a 112-acre site at Wyke, Bradford, for £32.45 million plus acquisition costs. Less than a mile from Junction 26 of the M62 and providing excellent access to a number of major Northern cities and ports, the site comprises an agrochemical works set over 32-acres operated by Nufarm UK Limited (“Nufarm”), alongside 80-acres of unoccupied land. It is let on a 50-year lease, commencing October 2005, at a current passing rent of over £2.1m per annum, representing a net initial yield of 6.2% and a reversionary yield of 7.0% based on fixed uplifts. The 80-acres of unoccupied land also has the long-term potential to deliver a major new commercial development.

Flaxby, North Yorkshire
Harworth has acquired a 22-acre site in Flaxby, North Yorkshire for £8.75 million plus acquisition costs. Within half a mile of Junction 47 of the A1(M), the site comprises a c.276,000 sq. ft commercial unit occupied by Ilke Homes Ltd (“Ilke”), the modular homes manufacturer. A 14-year lease has been agreed with Ilke at a stabilised rent of £1m per annum, representing a stabilised net initial yield of 10.9% and a reversionary yield of 12.1%. The site’s very low density of 29% also provides a potential opportunity for further commercial development.

Midlands acquisitions
As part of expanding its regional presence, Harworth has also acquired two strategic sites in the Midlands, totalling 165 acres, for a total consideration of £3.88 million plus acquisition costs.

Cinderhill, Derbyshire
Harworth has acquired 112 acres of land across three separate parcels near Denby in Derbyshire. These purchases are in addition to Harworth’s existing promotion agreement for the wider masterplan. The site is currently being promoted through Amber Valley District Council’s Local Plan process as a major new residential-led development across 421 acres that could deliver up to 3,000 new homes and 450,000 sq. ft of commercial space.

Bardon Hill, Leicestershire
Finally, Harworth has acquired 53 acres of greenfield land in Bardon, Leicestershire, which is adjacent to the Company’s existing major development at Coalville. Strategically located within two miles of Junction 22 of the M1, Harworth will promote the site through the planning process for a commercial scheme of up to 350,000 sq. ft of manufacturing, distribution and roadside uses.

Find out more about our shareholding in Harworth Group plc here.

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