Bovis Homes Group PLC Private Rental Sector Deals
March 24 2014 - 3:01AM
RNS Non-Regulatory
TIDMBVS
Bovis Homes Group PLC
24 March 2014
24 March 2014
Bovis Homes Group PLC
SUCCESS IN SECURING RETURN ENHANCING PRIVATE RENTAL SECTOR
DEALS
Bovis Homes Group PLC today announces that contracts have been
signed for two separate private rental sector (PRS)
transactions.
Demonstrating strong innovation to drive growth and shareholder
returns, the Group has signed contracts with two separate
investors, one of which is accessing funding through the
Government's Build to Rent Scheme, to sell new homes under two PRS
transactions across a range of sites already owned by the
Group.
The two transactions involve circa 510 homes with a total
revenue of approximately GBP80 million, of which circa 250 homes
are expected to legally complete in 2014 with the remainder in
2015. These homes will be delivered over and above the Group's
prevailing private sales, accelerating the development on each of
the sites included without sales risk, with an average housing
profit margin which is not expected to dilute the Group's
anticipated operating margin in 2014 and 2015. The strong profit
delivery combined with the acceleration of capital turn enabled by
these transactions will act as a further positive contributor to
increasing the Group's return on capital employed in both 2014 and
2015.
The first transaction for circa 190 homes is focused on the
south, particularly on larger sites where the Group may have
considered selling land phases to enhance capital turn and where
the PRS transaction, as an alternative to such land sales, delivers
stronger returns. In respect of this transaction, the Group will
partner with the investor and invest approximately GBP1 million for
an approximately 27% equity stake in the PRS investing entity and
will also advance GBP4 million as a secured loan. The second
transaction involves the delivery of circa 320 new homes on sites
mainly in the midlands and north, enabling the Group to accelerate
trading through some of its older sites, some of which are written
down.
Positive impact on returns
Assuming current market conditions continue, the strong private
sales position of the Group combined with the additional volume
arising from the PRS transactions should enable the Group to
deliver a strong increase in total reservations during 2014. The
Group now aims to deliver between 3,650 and 3,850 legal completions
in 2014 (including circa 250 PRS homes) with a further enhanced
forward order book for 2015 which will include the balancing circa
250 PRS homes. With a clear focus on controlling the capital
employed of the Group, capital turn is now expected to increase to
around 0.9 in 2014. As a result, return on capital employed is
expected to increase strongly to approximately 15% in 2014 (2013:
10.4%) with further progress anticipated thereafter.
Commenting, David Ritchie, Chief Executive said:
'We are delighted to have agreed these two Private Rental Sector
deals which will provide the opportunity to deliver over 500
additional new homes during 2014 and 2015. Through achieving this,
Bovis Homes is accelerating delivery across a number of its
existing housing sites and enhancing shareholder returns.'
- ENDS -
Enquiries: David Ritchie, Chief Executive
Jonathan Hill, Group Finance Director
Tel: +44 (0)1474 876200
Reg Hoare, James White and Giles Robinson
MHP Communications
Tel: +44 (0)20 3128 8100
This information is provided by RNS
The company news service from the London Stock Exchange
END
NRALFFIIVTIVFIS
Vistry (LSE:VTY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Vistry (LSE:VTY)
Historical Stock Chart
From Jul 2023 to Jul 2024