Urban&Civic’s proposed reverse takeover of Terrace Hill is set to create a property company described as “St Modwen on steroids”.
The market has applauded the move by former Lend Lease and Chelsfield boss Nigel Hugill in forging the new housing-led regeneration specialist, which will be listed on the main London Stock Exchange.
Former Quintain Estates chief executive Adrian Wyatt said the “very capable” Hugill was one of the “leading lights” in urban regeneration.
He added: “There are lots of large-scale developers in the market but there are not many broad-based, insightful urban regeneration specialists around.”
Development Securities boss Michael Marx said it was a “terrific” move. He praised the quality of the team and the business, which he said was “a very good model that plays to this moment in the cycle”.
Investors also pledged their support by way of an oversubscribed capital raise of £170m for the new business, which will be led by Hugill as executive chairman and his partner Robin Butler as managing director.
Some £3.6m of the shares were bought by management. AIM-listed Terrace Hill founder and 62.9% shareholder Robert Adair will have a circa 10% stake in the enlarged group. He will be non-executive deputy chairman while Terrace Hill chief executive Philip Leech will be property director.
Five-year-old U&C’s main backer, US private equity group GI Partners, will maintain a 24.6% stake in the enlarged business. Terrace Hill’s main institutional shareholder, Caledonia Investments, will also have a circa 8% stake.
Hugill said that people could see the “industrial logic in the deal” that has been six months in the making after JP Morgan Cazenove brought the parties together.
“Terrace Hill’s real strengths are pipeline creation and its project management, while we’re pretty good at planning and large-scale regeneration. We were going to have to bolt on delivery capability but this is much better because it also gives us a pipeline.”
U&C owns two large strategic residential land sites in the UK that together are earmarked for 11,200 houses valued at £2.7bn (see below).
The deal, which valued U&C at £95.3m, is an elegant solution for capital-constrained Terrace Hill, which had stagnated as gearing tipped towards 80%. The enlarged group, to be called Urban&Civic, will bring forward Terrace Hill’s 19m sq ft pipeline, which will be developed retaining the AIM-listed firm’s name.
Hugill said: “A lesson we learned at Chelsfield is that a company that does big site investment that runs for 15 years needs another brand name. The Terrace Hill name is one of the strongest elements of the business. Why would you throw that away?”
The deal is set to complete on 14 May subject to shareholder approval and U&C will start trading on the main market on 22 May.
What’s in the pipeline?
? 1,432-acre Alconbury Weald site in Cambridge earmarked for 5,000 homes and 3.1m sq ft of commercial over 20 years
? 1,170-acre Rugby site, with planning for 6,200 homes and 1.3m sq ft of commercial
? four foodstores totalling 340,000 sq ft and two central London offices across 190,000 sq ft
? nine regional development projects totalling 540,000 sq ft
bridget.o’connell@estatesgazette.com
