Harworth profits nudge £50m

Since its year-end, Harworth has added to a programme of disposals by offloading the former Ilke site in Knaresborough for £13.3m, while net-zero homes and forward funding deals have been advanced on the residential side.

The Yorkshire property group built on 2022’s pre-tax profit figure of £30.9m, recording £49.8m in a year that saw land sales and industrial lettings contribute in a big way.

Over the course of 2023, the company also reduced its net debt, from £48.4m, to £36.4m, as its net asset value climbed to £637.7m.

A shift in emphasis group-wide has seen the business launch its first net zero residential project in Pontefract, while Harworth has also agreed its first forward-funding deals, with social housing provider Great Places.

Lynda Shillaw, chief executive, said: “Harworth once again delivered another strong performance in 2023, ahead of the MSCI All Property Index and resulting in one of the sector’s leading total returns, while maintaining a low loan-to-value of just 4.7% and significant financial liquidity.

“We continue to benefit from the unique combination of our extensive landbank and the application of our specialist skillset to develop new market opportunities and realise the highest value from each of our sites.

“This saw us complete serviced land and property sales at prices broadly in line with book values before transaction costs, achieve lettings ahead of estimated rental values, and progress some exciting acquisitions as we build our future pipeline and continue to move sites through the planning system.”

Shillaw said that the firm remains confident of achieving its stated ambition of becoming a £1bn business by the end of 2027.

She continued: “I am delighted with the performance of the business over the year, which was a tough one against a continued challenging macroeconomic backdrop, ongoing structural changes in parts of the market and domestic political uncertainty.

“So far in 2024, macroeconomic conditions remain challenging but there are signs of optimism. Our key markets remain characterised by structural undersupply and we are seeing good demand for our serviced residential land as well as high levels of occupier interest in our employment sites.”

Harworth is a regenerator of large-scale, complex sites across the North of England and the Midlands. The group owns, develops and manages a portfolio of more than 14,000 acres across around 100 sites.

In the chair’s address accompanying the financials, Alastair Lyons revealed that Steven Underwood, a long-term non-executive director, will step down at the end of 2024. Underwood joined the Harworth board as a representative of Peel, until 2019 a key shareholder in the group, in 2010.

Development

Over the course of 2023, 110,000 sq ft of industrial space was completed at Gateway 36 in Barnsley, and 83,000 sq ft at Rotherham’s Advanced Manufacturing Park, with 55% of the space now let, exchanged or in heads of terms.

Work is under way on a further 187,000 sq ft at the AMP, comprising two pre-let units and a build-to-suit project. Across the whole portfolio, Harworth’s potential pipeline tops 37m sq ft.

At Waverley, work started on 21,000 sq ft of amenities to support burgeoning residential development, including a pharmacy, medical centre, convenience retail and leisure.

Plots sold

In all, 1,170 residential plots were sold, with an extensive remaining pipeline of 27,190 plots. Nine deals were completed with six different housebuilders, several in a surge of deals late in the year. Around £52m was brought in through the sales, broadly in line with book value.

Planning approvals and funding mixed-tenure living

Harworth completed its first forward-funding agreement, signed as part of its portfolio of sites for affordable housing, with a further one signed after year end. Both deals were with Great Places, for the delivery of 155 homes in total.

Planning approvals have been secured for 45% of the group’s portfolio of sites for build-to-rent properties, while consent is in place for the first pilot site for Harworth’s net zero carbon homes product, at the Prince of Wales development in Pontefract.

Harworth is developing its net zero residential brand as Coze Homes. Shillaw said: “This product has significant potential not only to improve the vibrancy of our communities and unlock challenging development parcels, but to develop our understanding of the technical requirements of this relatively immature market.”

Acquisitions

Acquisitions added 1.8m sq ft of industrial & logistics space and 809 residential plots to the pipeline with several other significant transactions in legals, Harworth said.

Outline consent was secured for 397 residential units, with a further 500 units approved after the year end. More than 1m sq ft of I&L space was greenlit, including 800,000 sq ft at Skelton Grange, Leeds.

Applications for 10.1m sq. ft of industrial & logistics space and 1,774 residential plots are at various stages of the planning system.

Investment portfolio

Harworth’s policy has been to divest itself of older stock, and at year end the group’s portfolio was rated at 37% grade A, with £70m of stock offloaded in the year.

A notable deal has been completed since year end, with the former 275,000 sq ft base of modular homes company Ilke, in Flaxby Moor, Knaresborough, sold for £13.3m.