An improved performance during the second half of St Modwen Properties’ latest financial year was not enough to prevent a £120.8m full-year loss as the company grappled with what new chief executive Sarwjit Sambhi called “extraordinary circumstances” during the pandemic.
St Modwen posted a £13.7m profit for the six months to 30 November, but a £134.5m loss from the first half of the year still left the 12-month results firmly in the red. Net asset value per share was down by some 11.6% at 427.7p. Half of that fall was driven by a drop in value of two residential sites in Wales.
Sambhi, a former Centrica executive who joined the company as chief executive in November, nonetheless said that St Modwen’s focus on logistics and housebuilding, both growing parts of its portfolio, is “supported by structural growth trends”. Its logistics and homes divisions turned a profit for the year, offset by a £166.7m loss from its strategic land and regeneration unit. A 10.5% fall in portfolio value to £1.3bn was driven by a drop of almost 30% in that part of the business.
St Modwen will now focus on repositioning land for logistics and residential, as well as selling assets from that strategic land and regeneration part of the portfolio. The company plans to offload assets valued at between £180m and £200m by 2023, by which point the strategic land and regeneration division should account for less than 10% of the portfolio, down from 24% at the end of 2020.
The disposals will comprise non-core retail, including the Trentham Gardens leisure and retail estate in Staffordshire, as well as other commercial assets such as offices in Longbridge in the West Midlands and much of the company’s £80m surplus residential land.
Sambhi told EG the company is waiting for Covid restrictions to lift before progressing discussions around a sale of Trentham Gardens. “It’s picking the right time,” he said. “We want to get footfall back to where it was pre-Covid, which I don’t think will take us that long, and we’ll choose the right time within the next 18-24 months to market it. I’m very confident that we’ll get a buyer for Trentham. It’s a great asset, it’s just that we’re probably not the right owners for it.”
The company aims to grow the £666m logistics portfolio to more than £1bn during the next three years. It completed 1.2m sq ft of developments during 2020 and aims to deliver 1.5m sq ft of space this year.
House sales were down by 11% year-on-year to 948 units, and the company has a goal to grow volume by up to 25% this year. By 2023, the company aims to grow volume to 1,500 units a year.
“We’ve seen house sales hold up pretty well despite the noise around the end of the stamp duty holiday,” Sambhi said. “Our order book now stands at 47% sold for our current financial year.”
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