Share Search
Visit the Share Search
St. Modwen momentum turns positive again in second half
9th Feb 2021 07:54
(Sharecast News) - St. Modwen Properties reported an 11.7% fall in its net asset value per share in its annual results on Tuesday, to 427.7p, after it saw 1.1% growth in the second half.
The FTSE 250 company said its total accounting return for the year was a negative 11.4%, swinging from a positive 4.6% in the prior year, which was driven by the reduction in its net asset value during the first half.
Adjusted EPRA earnings per share for the 12 months ended 30 November were 9.9p, down from 17.4p year-on-year, due to the temporary disruption of income caused by the Covid-19 pandemic.
Its board still declared a total dividend of 5p per share, up from the 3.6p distribution at the end of 2019, which was in line with its existing dividend policy.
St. Modwen swung to a loss for the year of £120.8m, from a profit of £49.5m in the 2019 financial year, following profits of £13.7m in the second half.
Its see-through loan-to-value ratio was described as "stable" at 20.2%, up from 19.6% at the end of the prior year, which the board said reflected non-core disposals and tight cost control during the period.
The company reported "strong" operational performance despite the disruption caused by Covid-19, with a "clear focus" on two sectors with long-term growth trends, being logistics and housebuilding.
In St. Modwen Logistics, which made up 49% of the total portfolio at year-end, up from 39% at the start of the year, it said 97.9% of rent was collected on the portfolio focused on urban and big box warehouses, with like-for-like rental growth standing at 6.1%.
The company completed 1.2m square feet of new warehouse development during the year, up from 0.9m square feet a year earlier, with 81% of associated £7.6m estimated recovery value let or under offer, up from 58% of 2019 completions this time last year.
St. Modwen said it was on track to deliver 1.5m square feet of new developments in 2021, with 27% of the committed pipeline pre-let or under offer, and the firm expecting to generate a yield on cost of 7.5%.
It also described a "significant" upside in its 19m square foot long-term pipeline, focused on key logistics corridors and conurbations, providing visibility to grow the portfolio to more than £1bn by 2023 through profitable development.
In St. Modwen Homes, which made up 27% of the company's total portfolio, up from 26% year-on-year, the company sold 948 units in the year, down from 1,060.
It said that was at an average selling price of £259,000 with a 12.4% operating margin, down from 14.8% year-on-year, which the directors said highlighted the "relative resilience" of its product despite between nine and 10 weeks of lost production in spring
The company's net promoter score slipped to 74 from 76, and its Home Builders Federation customer satisfaction rating improved to 96% from 92%, which was the second highest for all large UK housebuilders.
St. Modwen said it was on track to grow home completions by up to 25% in 2021, with its margin expected to recover to about 14.5%, supported by a "strong" order book covering 47% of targeted private sales, up from 34% at the same time last year.
The firm's 5,900-plot pipeline provided visibility to grow volumes to around 1,500 units by 2023,, the board said, with a "clear pathway" to grow margins to between 16% and 17% by 2023, and further potential growth beyond that.
Finally, in strategic land and regeneration, which made up 24% of its total portfolio, down from 35% in 2019, St. Modwen highlighted the sale of £125m of non-core assets and surplus land during 2020, and a further £7m since November.
Once all of that is completed, it would have further reduced the share of the strategic land division to 22% of its total portfolio.
The company said it intended to sell between £180m and £200m of assets by 2023, reducing the division to less than 10% of overall portfolio, and focus its land capability solely on sourcing land for logistics and residential development.
It said strategic land still turned in a "solid" operational performance, with 91.6% of rent collected despite the impact of lockdowns on residual retail assets, and valuations "broadly stable" in the second half following a marked reduction in the first half.
The firm also highlighted that it secured a new capital-light strategic land opportunity which, subject to planning, could deliver about 1,100 new homes and an internal rate of return of around 20%.
"St. Modwen delivered strong operational results in 2020 under extraordinary circumstances," said chief executive officer Sarwjit Sambhi.
"Our strategy is focused on two sectors, logistics and housebuilding, where structural demand is growing, acknowledging that the economic outlook is uncertain."
Sambhi said those sectors made up 78% of the company's portfolio now, and would represent over 90% within three years.
"In both, momentum is strong, and we have an attractive pipeline to accelerate growth.
"Supported by our solid balance sheet, we expect delivery of our growth strategy to increase adjusted EPRA earnings per share to around 28p. and improve our total accounting return to between 9% and 10% in the medium term."
At 0856 GMT, shares in St. Modwen Properties were up 1.91% at 400p.
The FTSE 250 company said its total accounting return for the year was a negative 11.4%, swinging from a positive 4.6% in the prior year, which was driven by the reduction in its net asset value during the first half.
Adjusted EPRA earnings per share for the 12 months ended 30 November were 9.9p, down from 17.4p year-on-year, due to the temporary disruption of income caused by the Covid-19 pandemic.
Its board still declared a total dividend of 5p per share, up from the 3.6p distribution at the end of 2019, which was in line with its existing dividend policy.
St. Modwen swung to a loss for the year of £120.8m, from a profit of £49.5m in the 2019 financial year, following profits of £13.7m in the second half.
Its see-through loan-to-value ratio was described as "stable" at 20.2%, up from 19.6% at the end of the prior year, which the board said reflected non-core disposals and tight cost control during the period.
The company reported "strong" operational performance despite the disruption caused by Covid-19, with a "clear focus" on two sectors with long-term growth trends, being logistics and housebuilding.
In St. Modwen Logistics, which made up 49% of the total portfolio at year-end, up from 39% at the start of the year, it said 97.9% of rent was collected on the portfolio focused on urban and big box warehouses, with like-for-like rental growth standing at 6.1%.
The company completed 1.2m square feet of new warehouse development during the year, up from 0.9m square feet a year earlier, with 81% of associated £7.6m estimated recovery value let or under offer, up from 58% of 2019 completions this time last year.
St. Modwen said it was on track to deliver 1.5m square feet of new developments in 2021, with 27% of the committed pipeline pre-let or under offer, and the firm expecting to generate a yield on cost of 7.5%.
It also described a "significant" upside in its 19m square foot long-term pipeline, focused on key logistics corridors and conurbations, providing visibility to grow the portfolio to more than £1bn by 2023 through profitable development.
In St. Modwen Homes, which made up 27% of the company's total portfolio, up from 26% year-on-year, the company sold 948 units in the year, down from 1,060.
It said that was at an average selling price of £259,000 with a 12.4% operating margin, down from 14.8% year-on-year, which the directors said highlighted the "relative resilience" of its product despite between nine and 10 weeks of lost production in spring
The company's net promoter score slipped to 74 from 76, and its Home Builders Federation customer satisfaction rating improved to 96% from 92%, which was the second highest for all large UK housebuilders.
St. Modwen said it was on track to grow home completions by up to 25% in 2021, with its margin expected to recover to about 14.5%, supported by a "strong" order book covering 47% of targeted private sales, up from 34% at the same time last year.
The firm's 5,900-plot pipeline provided visibility to grow volumes to around 1,500 units by 2023,, the board said, with a "clear pathway" to grow margins to between 16% and 17% by 2023, and further potential growth beyond that.
Finally, in strategic land and regeneration, which made up 24% of its total portfolio, down from 35% in 2019, St. Modwen highlighted the sale of £125m of non-core assets and surplus land during 2020, and a further £7m since November.
Once all of that is completed, it would have further reduced the share of the strategic land division to 22% of its total portfolio.
The company said it intended to sell between £180m and £200m of assets by 2023, reducing the division to less than 10% of overall portfolio, and focus its land capability solely on sourcing land for logistics and residential development.
It said strategic land still turned in a "solid" operational performance, with 91.6% of rent collected despite the impact of lockdowns on residual retail assets, and valuations "broadly stable" in the second half following a marked reduction in the first half.
The firm also highlighted that it secured a new capital-light strategic land opportunity which, subject to planning, could deliver about 1,100 new homes and an internal rate of return of around 20%.
"St. Modwen delivered strong operational results in 2020 under extraordinary circumstances," said chief executive officer Sarwjit Sambhi.
"Our strategy is focused on two sectors, logistics and housebuilding, where structural demand is growing, acknowledging that the economic outlook is uncertain."
Sambhi said those sectors made up 78% of the company's portfolio now, and would represent over 90% within three years.
"In both, momentum is strong, and we have an attractive pipeline to accelerate growth.
"Supported by our solid balance sheet, we expect delivery of our growth strategy to increase adjusted EPRA earnings per share to around 28p. and improve our total accounting return to between 9% and 10% in the medium term."
At 0856 GMT, shares in St. Modwen Properties were up 1.91% at 400p.