Property development company Harworth Group posted a 4.4% uplift in EPRA net disposal value (NDV) to 205.1p per share in annual results to 31 December 2023.
With dividends, which were up 10% to 1.466p, the company delivered a NAV total return of 5.1% for the year.
The increase was driven by the unlocking of development land for high value real estate uses such as industrial and logistics and the progression of planning applications.
The group completed the development of 193,000 sq ft of industrial & logistics space in the year, and has a remaining pipeline of 37.7m sq ft.
Work is underway on the construction of a further 208,000 sq ft, while enabling works have started for a further 1.5m sq ft. In total, these developments plus recently completed vacant space are expected to add £5.1m annualised rent, of which £1.9m is already let, exchanged or in heads of terms.
On the residential side of the business, 1,170 residential plots were sold to housebuilders in the period, and the company has an extensive remaining pipeline of 27,190 plots.
The residential sales totaled £52.1m, with all transactions at prices broadly in line with book values before transaction costs, the company said.
Land acquisitions during the year added 1.8m sq ft of industrial & logistics space and 809 residential plots to the pipeline with several other significant transactions with lawyers.
Planning approvals were secured for 397 residential units, with a further 500 units approved after the year-end, and 1.1m sq ft of industrial & logistics space. Applications for a further 10.1m sq ft of industrial & logistics space and 1,774 residential plots are progressing through the planning system at year-end.
The company has a very low level of debt, with year-end net debt of just £36.4m, representing a net loan to portfolio value (LTV) of 4.7%. There are no major refinancing requirements until 2027.
Available liquidity stands at £192.2m, which coupled with the ability to generate cash through land sales, allows the company to self-fund its extensive development pipeline.
Lynda Shillaw, chief executive of Harworth, commented: “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.
“Since 2015, Harworth has undergone a transformation as a business whilst doubling its EPRA NDV. The progress made across our portfolio in 2023 underpinned a 4.4% increase in our EPRA NDV, to £663m, and we remain confident of achieving our strategic ambition of becoming a £1bn business by the end of 2027. 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. We have a self-propelled growth strategy driven by our landbank and the skills of our people, and our long-term through-the-cycle approach means that, as well as securing and progressing opportunities to deliver long-term value to investors, we are well positioned to take the management actions that will generate further value gains from our portfolio in the year ahead.”