Development group Harworth is celebrating its largest ever land sale and has signalled a shift in strategy towards more industrial and logistics sites.
The Rotherham-based group has exchanged contracts for the conditional sale of 48 acres of land at the former Skelton Grange power station in Leeds to computing giant Microsoft for the creation of a “hyperscale datacentre”. The deal, worth £106.6m, deal comes just a week after Harworth also announced a deal of nearly £20m to sell land at at Benthall Grange, Shropshire, to housebuilders Taylor Wimpey.
Harworth said the proceeds from the new deal would be reinvested into its industrial & logistics development programme, and that it now intends to retain more of its developed sites into its own investment portfolio. The company said its development at Skelton Grange would deliver an internal rate of return of 40% when completed and deliver inward investment of £4bn for the local economy. The site is expected to be delivered over two phases, ending in 2026..
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Harworth said that, by the end of the Skelton Grange development, it would have invested around £36.7m and generated £135.7m in sales. It will retain 16 acres of land to development for employment space.
In a statement to the Stock Exchange, Harworth said it now wanted to increase the proportion of its developments in the industrial and logistics sector, and that it would also retain more of its sites in future to increase its investment portfolio.
Lynda Shillaw, chief executive of Harworth Group, said: “Since re-listing in 2015 Harworth has successfully completed a number of significant transactions that create value for our shareholders but this sale at Skelton Grange is the group’s largest to date and is yet another exemplary case study that demonstrates the successful regeneration of brownfield land.
“It highlights Harworth’s capabilities in identifying and acquiring complex sites, creating planning-friendly masterplans that maximise site potential, and deploying timely and effective investments into remediation and infrastructure. This transaction further builds our expertise to include datacentres and evidences the growing spectrum of industries that continue to be attracted to the schemes that Harworth brings to the serviced land market.
“Over the last three years and, despite volatile market conditions, we have been successful in implementing our strategy, scaling the business and continuing to deliver market leading returns. We remain confident that we will reach our goal of growing our business to £1bn of EPRA NDV by 2027 and in our ability to continue to scale the business beyond this.
“Despite this operational resilience, elevated share price discounts persist across the listed real estate sector, and so with the aim of maximising both total accounting returns and total shareholder returns for our investors, we have undertaken a detailed evaluation of our strategy to determine where our focus should be in the second half of our strategic plan period.
“Today, over 60% of the value of Harworth’s business is in the Industrial & Logistics sectors, and as we move into the second phase of our growth strategy we expect this weighting to increase, to over 85% by the end of 2029. The continued successful delivery of our residential sites is integral to our strategy as the proceeds from land sales provide a steady funding platform for the industrial & logistics development programme.
“We will retain more of our own prime Grade A industrial & logistics directly developed properties and therefore expect to see our investment portfolio grow in coming years, reaching around £0.9bn by the end of 2029. We see this increased focus on industrial & logistics development as an opportunity to both maximise shareholder value, and position the business for longer term sustainable growth and returns as we create an Industrial & Logistics business of significance in the UK market and within our regions.”
Original artice – https://business-live.co.uk/all-about/yorkshire-humber