Glenveagh Properties PLC Issues Trading Update29 Jun 2018
Glenveagh Properties PLC (“Glenveagh” or the “Group”) a leading Irish homebuilder listed on Euronext Dublin and the London Stock Exchange is holding its AGM today at 10 a.m. (this morning) at Herbert Park Hotel, Ballsbridge, Dublin 4. This statement comments on the Group’s current trading and the outlook for the financial year.
Glenveagh is delighted that its first year as a public company has been marked by strong achievements and progress across all its objectives. Glenveagh is ahead of schedule in delivering its key IPO targets, namely acquiring land for residential building, constructing and selling houses and apartments, and scaling its business as a PLC.
€404 million of capital has now been deployed in land assets since last October’s IPO.
Glenveagh is pleased to announce four further substantial land acquisitions for Homes and Living today:
Three sites for Homes and one site for Living, with a combined acquisition cost of €120 million capable of delivering 2,780 units.
The Group’s landbank is now 10,120 units, 31% of which are shovel-ready with 97% (as a proportion of acquisition cost) zoned residential: Homes’ landbank comprises 8,270 units across 38 sites. Living’s landbank comprises 1,850 units across four sites
Construction has now commenced on 12 sites for Homes with c.700 residential units currently under construction and c.800 expected to be under construction by Homes by the end of 2018.
Sales activity has been strong with 234 units signed or reserved since 1 January, through a combination of show home villages and marketing suites.
The Group is currently selling from six sites, which will rise to eight sites during 2018.
Homes continues to evaluate its sales options for its Herbert Hill, Dundrum site following reverse enquiries from institutional investors seeking yielding product in a scarce environment for quality, new build rental stock.
Scaling the business as a PLC
Headcount has increased from 85 permanent employees at IPO, 148 employees at the March interims, to 204 permanent employees today, with over 80% of recruitment in the construction, health and safety and commercial departments.
The Group’s market backdrop remains very favourable with significant demand for housing, particularly starter homes, clearly evident across the Group’s selling sites.
Homes remains on target to deliver 250 completed and sold units by year-end and retains its principal focus going forward in constructing well-built and value for money houses for the starter home market. The speed and skill at which Homes has opened its construction sites post IPO and use of off-site construction methodologies, including timber frames, has also de-risked the delivery of the Group’s unit delivery targets of 725 and 1,000 in 2019 and 2020 respectively.
Land acquisition conditions remain attractive for the Group given the nature of the sellers, favourable creation values when purchasing sites of scale, and the ability to achieve gross margins in line with projections. A number of significant land opportunities are expected to be brought to market by various parties over the summer months.
Glenveagh’s Co-Founder and CEO Justin Bickle commented:
“I am delighted to report that we are ahead of schedule in meeting each of our IPO goals. We continue to enjoy significant structural advantages as a PLC including a strong balance sheet, construction operations of scale, and an attractive pipeline of residential land opportunities. Since last October when we created Glenveagh, we have made a fast start in turning land into built stock in a very favourable selling market. Using timber frames to construct our houses, benefiting from a strong and growing network of sub-contractors, and having assembled a sector-leading management team with a culture of innovation and capital discipline, we are well on our way to becoming a volume homebuilder and the leading residential delivery platform in Ireland.
While we expect the current favourable market conditions to continue for our core Homes business, in parallel through our Living division we are seeking to deliver mixed-tenure solutions, to address the public housing crisis, and other PRS solutions, having regard to the structural shift to rental in Dublin and other key cities.
We believe that the combination of our Homes and Living divisions allow us to access both consumer and institutional demand for modern, well-built residential product in Ireland, and help diversify risk across the cycle. We look forward to reporting on our further progress in the coming months.”
Current market environment
The Group is experiencing favourable market conditions, illustrated by strong progress on sales and reservations towards its 250 unit year-end target, ahead of the autumn sales season. Demand is most pronounced in the starter home market, which is the Group’s core focus. House price inflation and construction cost inflation is tracking in line with Group expectations.
Central government policy initiatives encouraging building delivery such as fast-track planning, Help to Buy, Vacant Site Levy and changes to apartments building regulations are also a net positive for the Group.
Announcement of further substantial land acquisitions
The Group is announcing four further substantial land acquisitions for Homes and Living today, with a combined acquisition cost of €120 million capable of delivering 2,780 units, assuming planning is obtained.
1. Cork’s Docklands
Homes has exchanged contracts to acquire a 4.6-hectare site in Cork’s Docklands with the potential to deliver up to 1,000 residential units. The exact purchase price is commercially sensitive but is in excess of €15 million. The acquisition is expected to complete by Q3 2018. This acquisition is Glenveagh's first in Cork’s Docklands, the city's new major urban hub and regeneration area. The development site is located in close proximity to Cork city centre and adjacent to a large concert and sports venue. The Group acquired the site following a public tender process.
2. Project Bill – GDA
Homes has also exchanged contracts to acquire a c.16.2 hectare site of zoned residential land in the Greater Dublin Area (“GDA”) which has the potential to deliver c.400 residential units subject to planning. The exact purchase price is commercially sensitive but is in excess of €20m. The acquisition is expected to complete in Q3 2018. This acquisition further strengthens Glenveagh’s focus on delivering starter homes in the GDA in proximity to transportation nodes. The Group acquired the site off-market.
3. Project Hector - GDA
Homes has signed an unconditional legal contract to acquire a large landbank in the GDA which has the potential to deliver up to 700 residential units subject to planning. The exact purchase price is commercially sensitive but is in excess of €9m. The acquisition is expected to complete in Q3 2018. This acquisition further strengthens Glenveagh’s focus on delivering starter homes in the GDA.
4. Castleforbes, North Docklands, Dublin
Living has exchanged contracts on the underlying loan package secured against Castleforbes Business Park (“Castleforbes”) a 2.44 hectare site in Dublin’s North Docklands. Living intends to take control of the Castleforbes site, having also acquired 100% of the shares in the site’s associated management company, through a consensual ‘loan to own’ transaction. Once controlled, Castleforbes has the potential to deliver more than 650 units, subject to planning. The exact purchase price is commercially sensitive but is in the region of €60 million.
This transaction is Glenveagh's second major acquisition in Dublin's North Docklands. Castleforbes is adjacent to the East Road site which the Group acquired from the same vendor in January 2018 and provides Living with optionality to deliver a c.1,100 apartments campus in Dublin’s North Docks, which is one of the City's major urban hubs and regeneration areas. The site is in proximity to major employers such as Facebook, and enjoys favourable transportation links to Dublin airport, and via rail and road to the rest of the city. Again the secured loan and associated management company were acquired by the Group off-market.
Since its IPO in mid-October 2017, the Group has evaluated over €1.6 billion of land opportunities out of an addressable land market of c. €5 billion as estimated by the Group at IPO. Of that €1.6 billion, the Group has deployed funds against c.€400 million, or one quarter, of the land opportunities, considered. When determining the attractiveness of acquisition sites, the Group’s principal evaluation criteria is (i) location, (ii) attractive margins, (iii) availability of infrastructure and (iv) early unit delivery in the years 2018 to 2020.
Of the residential land acquired since IPO, c. 80% has been secured off-market, which is testament to Glenveagh’s proven sourcing and underwriting model and deep sector relationships.
Going forward, Glenveagh’s land opportunity continues to be significant with additional land now being tendered on market, while off-market transactions remain in strong supply.
Glenveagh Living (Living)
The Group is also pleased to announce today significant progress for its Living business, which comprises Partnerships and delivery of new homes designed for PRS.
Capitalising on its first mover advantage in this vertical, the Partnerships business focuses on mixed- tenure developments and joint ventures, having regard to the public sector housing crisis in Ireland and relationships driven nature of the broader property market locally.
Living continues to promote the benefits of adopting a mixed-tenure approach to housing delivery solutions, particularly where the land is owned by a local authority or other State agency. The Group believes mixed-tenure solutions will be increasingly utilised by these State bodies over time, following appropriate procurement processes.
Delivery of New Homes for PRS
Following the acquisition of Castleforbes referred to above, Living’s PRS development portfolio now comprises 1,850 units, which is one of the largest in the Irish residential market. The scale of Living’s PRS portfolio, wholly assembled since IPO, and the significant pipeline of similar opportunities open to Living to deliver rental communities of scale means that the Group is presently evaluating financing options for Living’s PRS portfolio given institutional appetite for private rental units in Ireland’s key cities.
For further information please contact: Gordon MRM
Note to Editors
Glenveagh Properties PLC develops and builds sustainable starter, mid-size and executive homes (both houses and apartments) in Ireland. The Group comprises two divisions, Glenveagh Homes (Homes) and Glenveagh Living (Living). We strive to found, create and contribute to communities by consistently delivering exceptional homes and value for money, via our two operating divisions.
Glenveagh Homes offers a platform that combines conveniently located residential development sites in Ireland (mainly in the Greater Dublin Area), with an award-winning developer and a sector-leading senior management team. In addition to developing our own land, through its Partnerships arm, Glenveagh Living works with strategic holders of development land in the public sector to facilitate the development of mixed-tenure communities and through its PRS arm provides private rental communities for institutional investors. www.glenveagh.ie