Acquisition of 5,000 unit scheme under development at Priors Hall, Northamptonshire
Urban&Civic announces that it has purchased a 100 per cent interest in freehold land at Priors Hall in Northamptonshire for a consideration of £39.9 million. The existing consented land extends to 907 acres in two local authority areas, Corby Borough and East Northamptonshire District. Separately, Urban&Civic has acquired a further 58 acres of mostly contiguous woodland for an additional £550,000 to take the total invested to £40.5 million. Priors Hall is being acquired from the Joint Administrators. There is no provision for further payments to be made by Urban&Civic under the terms of either contract.
Priors Hall has an existing outline planning consent for 5,095 units, some of which has been sold to seven different housebuilders and is in the process of being built out. The development is split into three residential phases with the new homes set within lakes, open parkland and forests. Urban&Civic is acquiring 3,656 uncontracted plots, substantively comprising Phases 2 and 3 and the benefit of outstanding sums on Phase 1. Estimated near term receipts from Phase 1 housebuilder contracts now payable to Urban&Civic are expected to be in the order of £11.8 million, including overage, giving a net purchase consideration of £28.1 million for the uncontracted plots.
The scheme already has more than 1,000 residents; housebuilders on site include Barratt and David Wilson, Taylor Wimpey, Kier and Francis Jackson Homes. There were close to 200 housing completions at Priors Hall in the 12 months to March 2017. Priors Hall Primary School for 420 children had its first intake in September 2016, and is adjacent to the Foster Associates designed Corby Business Academy, which opened in 2008. House prices currently being achieved are in the range of £200 - £225 per square foot.
The purchase of Priors Hall is being part funded by the Homes and Communities Agency (‘HCA’), which is also making available additional facilities to cover future forecast infrastructure spend. Total committed facilities from the HCA for the transaction aggregate £45.4 million, excluding accrued interest. The terms reflect those afforded to Urban&Civic elsewhere, including the provision that repayments are made only out of distributed proceeds. Given realistic expectations as to the sales rates arising from the Master Developer model, equity capital being invested in the project by Urban&Civic is unlikely to materially exceed £15 million. Group facilities from the Government's housing delivery agency now total £137.8 million (again excluding accrued interest) of which £85.6 million are drawn.
The Priors Hall acquisition and the extent of HCA support demonstrate the focus of Urban&Civic as Master Developer. Working to help implement national priorities in creating quality environments and extending housing choice, the Group now owns outright or in partnership, approaching 20,000 housing plots in the process of delivery, with an additional 10,000 units on strategic sites in an immediate planning pipeline. These represent some of the largest residential projects within 100 miles of London with strong transport connections. A further approximately 10,000 units on smaller sites are being promoted by group subsidiary Catesby on its own behalf or that of third parties.
Commenting on the acquisition, Nigel Hugill, Chief Executive of Urban&Civic, said:
“Priors Hall offers exceptional upside for shareholders and demonstrates the ability of Urban&Civic to work through large site challenges that other developers often find too daunting. The acquisition is right in our sweet spot: complicated history, long and supportive funding structure, demonstrable potential for better project organisation and improved planning. Plus the fundamentals are strong: 68 minute direct rail service into London and 7 million people living within 50 miles. Recent house price growth in the local area is amongst the highest in the country, whilst Priors Hall has been achieving sales of around 200 new homes a year despite being under managed and over leveraged. We believe our skills and experience as incoming Master Developer confer competitive advantage for which we expect to be rewarded with superior returns."