Land News

St Modwen banks for long-term future

Citywire, 14th February, 2005

Regeneration specialists St Modwen Properties bought 1,600 acres of development land last year yet still produced its twelfth successive year of record results.

Much of the land is for long-term development partnerships, many of them with local authorities or government bodies, and detailed plans don’t yet exist, but the acquisitions boost what chief executive Bill Oliver called 'the hopper of future opportunities'.

He knows the long-term future for any property company is in its land bank and reckons St Modwen is sufficiently flexible to follow fashion and switch between town centre regeneration, partnering industry in restructuring industrial areas, renewing brownfield sites and heritage restoration.

The FTSE 250 company, created in April 1986 by the reverse takeover of Clarke St Modwen Properties by Redman Heenan International, aims to double its asset value every five years.

Most of the £130 million of land bought last year generates income, a total of £33.3 million last year against 2003’s £31.6 million, a key reason why St Modwen’s gearing is 85%, below some others in the sector. It also sold 35 properties.

In the year to 30 November 2004 profit before tax increased 15% to £40.3 million against £35 million the year before on turnover down from £136.1 million to £130.1 million.

A final dividend of 5.1p a share compares to 4.4p last time raises the total 15% to 7.6p against 6.6p. The shares (SMP), up 18% in 2004, rose 2.75p to 364.5p.

Oliver said so far this year it has made £13 million in property profits either completed or under contract.

‘We’re looking for a repeat of 2004 and I would us to buy around 1,000 acres,’ he told Citywire.

Last year’s deals included 600 acres of Corus’ Llanwern steelworks, the remainder of MG Rover’s Longbridge site, 478-acres of a former Ministry of Defence storage site at Long Marston, Warwickshire, a 100-acre former power station site at Meaford, near Stone in Staffordshire, the remaining half of Kirkby shopping centre and the Malls shopping centre at Basingstoke.

St Modwen is involved with town centre regeneration schemes in Edmonton, Wembley and Farnborough, and has high hopes for the redevelopment of South London’s Elephant & Castle, but this is at least two or three years away.

Mike Foster of KBC Peel Hunt retained his buy recommendation saying the stock was the top pick in its sector because of the quality of its earnings progress.

The name of the company, incidentally, comes from Modwenna, the patron saint of the wells in Burton upon Trent, Staffordshire, best known for producing beer where the original company began.

Liverpool City Council has named St Modwen as the referred developer for the £40 million Great Homer Street regeneration project, which along with retail includes a supermarket, market hall, health centre and community facilities.

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