Henry Boot has set aside £100m of capital for new acquisitions in the industrial and build-to-rent sectors in the next two to three years.
Chief executive Tim Roberts (pictured) told EG the developer is looking to capitalise on its balance sheet and acquire assets to support its long-term strategy for growth. It will mainly focus on buying land for housebuilding, industrial and build-to-rent projects.
As part of that strategy, the developer will explore opportunities for diversification into suburban BTR.
“We’ve got very clear ambitions that we’ve been open to the market, that we want to get bigger, that we want to grow by about 40%,” said Roberts.
“We have to have the firepower to invest in our development pipeline, in our housebuilding business and our land promotion business so that we can achieve our growth ambitions.”
Henry Boot has a circa £1.3bn GDV development pipeline, 64% of which is focused on industrial and logistics. Its BTR pipeline amounts to 15%, valued at around £175-£200m.
To grow its BTR business, the developer will seek partners to forward fund the developments in its pipeline, such as its £140m scheme on the former Sytner car site in Birmingham’s Jewellery Quarter.
Roberts said: “We will progress the scheme some more, but we will look to forward fund that in the second half of 2023. And it does feel as though the investor market is there to fund schemes like this.”
He added: “There is demand for family BTR in the suburbs, and that is something we are exploring.” Roberts highlighted that it owns a “big” site on the edge of Coventry that could host a suburban BTR scheme, although it would require a specialist partner.
Henry Boot exchanged on 992 plots during the year ending 30 December 2022, nearly halving from 1,880 in 2021. Roberts said he expected a reasonable year ahead for land sales.
Earlier today, the developer reported a record underlying profit of £56m for the year, rising by 97% on 2021. Roberts highlighted residential as the “main driver” of its performance.
The developer sold £279m of land, buildings and houses in the first half of the year, while being “very selective on acquisitions”. It bought £28m of property during the period.
Roberts said: “Financially we are very secure, we have a very good balance sheet, and our NAV has gone up 10%, primarily due to the profit we have retained.”
NAV per share increased by 10.5% to 295p during the year. Gearing has inched up to 12.3%, from 11.4% the previous year.
Roberts said: “We are a business that wants to be long term, we don’t like layering on financial risk with operational risk.”
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