Nine months after joining Harworth Group as chief executive, Lynda Shillaw has completed her strategy review and set out her goals for the business – with a big headline number.
Over the next five to seven years, Shillaw wants Harworth to double its net disposal value from £516m to more than £1bn.
It’s a big ambition, but Shillaw is adamant that it can be achieved by continuing to do what Harworth does well, rather than mending what isn’t broken.
“Right from the beginning, we always said it would be evolution not revolution,” Shillaw says. “I joined Harworth because I loved what it did. I suspected that it had huge potential and hid its light under a bushel in respect of the landbank that it had.
“This strategy is very much about doing more of what we do… It unlocks the potential to deliver more and grow the business from a lot of the assets and resources we have today.”
The strategy, published today alongside Harworth’s half-year results, has four strands.
The first is what Shillaw calls “a step change in the quantum” of Harworth’s direct development work. The company has 9m sq ft of consented industrial and logistics sites. For the past six years the company has been averaging 200,000 sq ft of direct development a year. Between next year and 2026, the team reckons it can lift that figure to 800,000 sq ft.
“We intend to undertake as much of the development as possible ourselves,” Shillaw says. “But I’m a realist as well – the sector is cyclical, and what we’ll do is manage the risk and our exposure by varying the amount of prelet, speculative, JV or single Harworth development as we go through the life of the plans.”
Next is a bigger residential push, growing the products Harworth develops as a way of bolstering its placemaking abilities. The company has 30,000 plots, with planning consent already in place for 9,855 of these.
A build-to-rent strategy will see Harworth develop an initial single-family rental portfolio of up to 600 units, launched next year, with a further 1,500 eyed across its schemes in the coming years. Shillaw says a hunt for a forward-funder will kick off before the end of this year.
“When we looked at the market in depth, the opportunity to build build-to-rent product is significant,” she adds. “We can do it at scale, and we can do it alongside the traditional build-to-sell product.
“We’ve seen everyone from Lloyds to Goldman Sachs and others enter this space. What they’re looking for outside of urban centres is scale and an ability to work with businesses that can deliver a proper, scalable pipeline. We think we’re really well placed to do that.”
The third part of Shillaw’s plan is to grow the strategic land portfolio. After all, as Shillaw says: “If we’re going to work through our pipeline faster we need to make sure we are acquiring and assembling strategic land sites to replace what we’re working through.”
New regional teams are a possibility as the company looks to increase its pace of acquisitions. Shillaw expects the company to maintain its tradition of having a 12-15-year supply of land at any time.
Finally, there is the company’s investment portfolio, valued at £271m. Shillaw wants to reposition much of that, adding newly developed assets that will, over time, ensure that everything in the portfolio is grade A.
“If we build more, we can put more stock that we build in there, and sell out of some of the stuff that has done its job for us and crystallise that value,” she says. “It’s attractive to us because we can control the quality of what we’ve built and the environmental standards it’s built to. We can also create mini portfolios of shiny, grade A assets and take that into the market as we churn that. It gives us far more control. When you’ve got the ability to build at the scale we have, I think it’s a smart move to hold more of what we’ve built.”
Four drivers of growth, five years, and hundreds of millions of pounds in value that could be created – investors will hope that Shillaw and her team have Harworth’s theory of evolution just right.
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