Inland Homes (“Inland Homes” “the Group” or “the Company”), the leading brownfield developer, housebuilder and partnership housing company with a focus on the south and south east of England, today issues a trading update in respect of the 15 months ended 30th September 2019 ahead of its results which will be announced in January 2020.
Revenue: £151m (2018: £150m)
Partnership housing equivalent units: 339 (30 June 2018: 82)
Open market completions: 200 (30 June 2018: 275)
Forward sales (at trading update): £41.6m (2018: £20m)
Total land bank plots: 7,796 (2018: 6,870)
Land plots sold: 577 (837 plots)
Number of plots with planning permission: 3,068 (2018: 1,547)
Cash: £9.5m (2018: £40m)
Net debt: £155m (2018: £80m)
Significant progress has been made in the period with strong momentum across the Group’s operations and trading in the period has been in line with the Directors’ expectations.
After more than five years of intense work, we finally secured planning consent on our flagship 100 acre Wilton Park site in Beaconsfield, Buckinghamshire. We also secured consent for a new “urban village” of 1,725 homes next to the station in Cheshunt Hertfordshire, which took three years to gain.
These two consents will lead to a considerable increase in the EPRA value of the Group’s assets and provide a significantly improved pipeline for our business activities. We are evaluating routes to enable us to develop these projects to maximise the returns for our shareholders.
As expected, private housing completions fell to 130 (2018: 275) due to the significant number of large-scale apartment developments under construction where occupations can only be achieved on handover of completed blocks. We currently have 889 private homes and 578 partnership housing equivalents under construction, which provides an indication of the current scale of our development programme. We have begun discussions with a number of build to rent operators and expect to enter into this market which will reduce our headline gearing and generate new capital to reinvest in our business. Our high quality homes continue to sell well with an average selling price of £250,000 and at an average sales rate per active site over the last nine months of 0.71 homes per week. This demand is underpinned by a shortage of new homes and supported by the ongoing availability of “help to buy” and an environment of low interest rates. The current forward order book for private sale stands at £28.3m. In addition, we have forward sold the hotel under construction in Bournemouth for £13.3m.
Our partnership housing equivalent units have increased by 313% in line with our increased penetration into that marketplace. A recent partnership housing contract worth £5.4m was secured for Watford Community Housing Trust for 45 homes. We expect to secure further significant contracts during the new financial year.
Our fledgling temporary modular housing business, Hugg Homes, secured a pre-let to Broxbourne Council for 32 units at Cheshunt during the period, bringing the total number of Hugg units currently operational to 54 and producing gross rental income of circa £500k per annum. We provide local authorities with a high-quality alternative to bed and breakfast/hostel accommodation at a considerable saving to the taxpayer whilst using Brownfield land waiting for planning permission. Councils across England spent approximately £1bn in 2017-18 on temporary accommodation, indicating a significant market for Hugg Homes.
Planning & land bank
As previously stated, Wilton Park and Cheshunt Lakeside obtained consent for over 2,000 new homes.
At Wilton Park, the initial consent is for 304 new homes and 1,730 sq m of commercial space. The current anticipated gross development value is circa £350m. There is also a draft allocation for further development on the site which if adopted could provide a further 250 homes and 18,500 sq m of commercial space. Inland also controls the access to other adjoining potential development sites which could have additional monetary value. The commercial space will be on the frontage to the Pyebush Roundabout which is within half a mile of junction 2 of the M40, making an attractive location for a high-quality business park.
The Cheshunt Lakeside planning permission for 1,725 homes and 19,000 sq m of commercial space will be one of the largest brownfield developments in the South East, with an estimated gross development value of over £620m. We expect to produce a mixed tenure development comprising privately rented homes, homes for sale as well as those built in partnership with housing associations for affordable housing. There will be also be a new school and significant employment opportunities for local people. We expect to complete the purchase of our current joint venture partner’s interest in the project by the end of October 2019.
Our land bank now stands at a record 7,796 plots of which 3,068 have planning consent. Our growing strategic land portfolio where most of the plots are controlled by discount to market value options has increased significantly and now comprises 3,533 plots. We are achieving a good success rate in getting sites allocated for development in local plans.
Demand for consented housebuilding land remains strong with 577 plots sold in the period. Of these 207 were sold to other housebuilders with 325 plots sold to housing associations.
The gross development value of our entire land bank now exceeds £2bn.
Our balanced business model of partnership housing, homes for private sale and the sale of consented building land is serving us well, whilst ancillary rental income of over £2.6m pa across the Group is a useful by-product of our brownfield activities.
The demand from housing associations for the delivery of “turnkey” projects, where we can deliver the land and the build, is exceptionally strong and with the requirement for affordable homes being high on government and local authority agendas. We believe we are in an excellent position to grow the partnership housing business significantly with the land bank that we are creating.
With a substantial number of highly sustainable sites suitable for rental housing, we expect to secure the first build to rent opportunities early in the new financial year. As the Group evaluates this opportunity and considers the best way to develop its sites at Wilton Park and Cheshunt, it will consider its funding options with a view to maximising returns for shareholders.
Stephen Wicks, Group Chief Executive, commented:
“We have maintained our significant growth trajectory whilst investing heavily in high quality staff and systems, at the same time as improving build quality and increasing satisfaction with both customers and partners.
“The business is performing well at all levels and we are laying the foundations for significant future growth. With the benefit of our new planning permissions and the momentum that has been achieved, we are now well set to increase the scale and breadth of the business.”