Development Securities is closing in on a deal that could unlock a 225,000 sq ft regeneration project in Southwark, SE1.
The investor and developer is in talks to add a Southwark council-owned site to its redevelopment plans for vacant office building Algarve House.
An enlarged scheme would take in Southwark council’s low-rise block adjacent to Styles House to provide new offices and flats in a high-rise development beside Southwark tube station.
In DevSec’s interim results, chairman David Jenkins said: “At Algarve House, a derelict office building adjacent to Southwark Underground station, we are progressing the masterplan for a mixed-use development, having secured an option on the site last year.
“We are close to signing an agreement with an adjoining landowner to include its site in a co-ordinated planning application totalling 225,000 sq ft.”
DevSec gained control of Algarve House after signing an option agreement in 2011 with Purelake Group and Northstar 2000, paying £8m.
The group posted an uplift in profits in its results for the six months to the end of August, following its acquisition of residential developer Cathedral Group.
DevSec’s trading profit came in at £18.2m, on track for £27m this year. However, the Cathedral buy has prompted an upgrade to its forward guidance for the next three years. It expects 2015 trading gains to rise to £42.8m, 2016 gains to increase to £50m, up from £41m, and 2017 figures to rise again to £53m from £40m.
Pretax profits were £18m, excluding a £2.7m cost related to the Cathedral buy and a £7.6m swap cancellation. DevSec’s basic net asset value grew by 4.7% – £15.2m – to reach £335.5m, or 269p per share for the period.
