Regeneration specialist St Modwen has confirmed it is expecting a “strong” rise in pre-tax profits this year buoyed by continued expansion in the commercial property market.
The investment and development company, which has built its reputation on the reclamation and remediation of brownfield sites, is currently completing the £450m Swansea University’s Bay Campus development, due to open in the autumn of next year.
“We continue to add to our UK development pipeline as we start on site with a variety of projects,” explained chief executive Bill Oliver. “One of the biggest of these is the 150,000 sq ft Marks & Spencer store at Longbridge, Birmingham.
“This increase in construction activity illustrates the improvement in the commercial property market, both in general and specifically in the regions, which are now starting to experience good tenant and investor demand,” he added. “Coupled with positive conditions in the markets in which we operate, we anticipate achieving strong results for the 2014 financial year.”
The Birmingham-headquartered developer said it was also witnessing a growing appetite for commercial investment opportunities and had agreed the sale of almost £40m of assets during the second half of the year. The residential land market was also performing strongly, Oliver said, with terms for around £80m of land sales to housebuilders being agreed since May this year.
“Since the half year, we have agreed the sale of £38m of assets to a broad investor base, with all transactions being above the May 2014 book value,” explained the chief executive.
“In line with our business model, we intend to reinvest the funds generated from these sales to progress active asset management initiatives and to acquire new properties to add to our land bank.”
The developer had recently “substantially restructured” its debt portfolio and was in a remarkably strong financial position, with over £170m of undrawn facilities in place.
Earlier this week, West Berkshire Council said it was still backing St Modwen as the prefered developer for a Newbury regeneration scheme — despite the company recently pulling out of a similar project in Bognor Regis.
St Modwen — the front runner to revamp Newbury’s London Road Industrial Estate — withdrew from the West Sussex scheme to build flats, a cinema, hotel and shops in an agreement with Arun District Council after claiming the contract was no longer financially viable.
A spokesman for St Modwen, Gerwyn James, explained: “In Bognor Regis, St Modwen and Arun District Council recently ended the development agreement on very amicable terms after a sustained effort from both parties to deliver a scheme through the recession … The council will now be directly progressing the scheme through the planning processes before reverting to the market once more next year.”
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