18 December 2013
Barratt Developments PLC
Further strengthening of our strategic alliance with London and Quadrant
Barratt Developments PLC ('Barratt') is pleased to announce the formation of a new joint venture ('JV') to act as the parent entity for the strategic alliance between Barratt and London and Quadrant ('L&Q'). This will provide a platform for the partners to continue to invest, in a disciplined way, in future opportunities in London.
Strategic alliance
Barratt and L&Q first partnered in 2010 for the development of Altitude, a 27-storey residential tower on Alie Street on the edge of the City of London. Since then, we have jointly acquired developments at Queensland Terrace in Islington and Fulham Riverside on the river in Fulham, and contracted on a site at Nine Elms, part of the major redevelopment of the area in Vauxhall. Together these JV sites will deliver a total of 1,700 units, with a gross development value of c. £1.2bn.
The combined strengths of the partnership, both operationally and financially, have consolidated Barratt London's position as one of the leading housebuilders in the capital. The JV partnership has enabled Barratt to optimise development opportunities across London whilst retaining a diversified portfolio and managing development specific investment levels. Barratt and L&Q will continue to pursue large scale, complex and financially attractive opportunities with a primary focus on the central London market where both partners have a strong record of delivering private and affordable housing.
The new JV parent entity is BDWZest Developments LLP ('BDWZest'). The three existing JV trading entities at Altitude, Queensland Terrace and Fulham Riverside have been transferred into BDWZest. There was nil consideration as Barratt and L&Q received an equal interest in BDWZest for their respective interests in the JV trading entities. Barratt's share of the gross asset value of the three existing JV entities as at 30 June 2013 was £119m.
The development at Nine Elms will be held in BDWZest when the purchase from Sainsbury's becomes unconditional in early 2014. Summary information regarding the four developments is in Appendix 1.
Financing facility
A new five year revolving credit facility of £120m has been arranged for BDWZest. This facility will initially repay a loan of c. £21m from L&Q that was made to the Altitude development in 2011. It will then be available to the JV for land and build expenditure. The JV will continue to be primarily equity funded by Barratt and L&Q.
Mark Clare, Group Chief Executive of Barratt Developments PLC said:
"L&Q has proved to be a strong commercial partner and by working together we have been able to broaden our operations in the London market. This new alliance reinforces that position and gives us even greater financial capacity to seek out and secure large scale and complex opportunities."
David Montague, Chief Executive of L&Q said:
"Our partnership with Barratt has enabled us to increase our delivery of much-needed high quality homes in landmark sites across London. This next step in our relationship will enable both of us to build on what has been a hugely successful start."
Appendix 1
Current developments with L&Q
As at 15 December 2013
|
Profit share (%) |
Gross development value |
Total units |
Private reservations to date |
Private units remaining to sell |
Private ASP |
Private : affordable (%) |
Altitude, Aldgate |
50 : 50 |
£124m |
235 |
148 |
23 |
£637k |
73 : 27 |
Queensland Terrace, Islington |
50 : 50 |
£149m |
375 |
154 |
221 |
£390k |
100 : 0 |
Fulham Riverside, Fulham |
50 : 50 |
£444m |
462 |
78 |
318 |
£1,065k |
86 : 14 |
Nine Elms, Vauxhall |
50 : 50 |
£456m |
645 |
Nil |
593 |
£719k |
92 : 8 |
Notes to the editors
Background on Barratt London
For over 30 years, Barratt London has been creating new homes and communities across the capital. Everything from ground-breaking urban regenerations, niche boutique residences, multi-million pound luxury homes, affordable housing and riverside communities to city centre towers. Barratt presently has 29 developments in London which will deliver almost 13,500 homes going forward.
Background on L&Q
The L&Q Group is one of the largest providers of affordable housing in the UK, managing over 70,000 homes in London and the South East of England. L&Q work with some 100 local authorities, with over 75% of their homes located in London boroughs. L&Q has the largest development programme of any Registered Provider operating in the London area.
This notification is made in accordance with L.R. 10.4.1.R(2) relating to Class 2 transactions.
This release contains certain forward-looking statements about the future outlook. Although the Directors believe that these statements are based upon reasonable assumptions, any such statements should be treated with caution as future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.
Conference call for analysts and investors
David Thomas, Group Finance Director will be hosting a conference call at 08:00am today, Wednesday 18 December 2013, to discuss this announcement.
To access the conference call:
Dial-in: +44 (0) 20 3427 1913
Passcode: 3021051
A replay facility will be available shortly after:
Dial-in: +44 (0) 20 3427 0598
Passcode: 3021051
For further information please contact:
Barratt Developments PLC |
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David Thomas, Group Finance Director |
020 7299 4896 |
Susie Bell, Head of Investor Relations |
020 7299 4880 |
|
|
For media enquiries, please contact: |
|
Patrick Law, Corporate Affairs Director |
020 7299 4892 |
Maitland |
|
Liz Morley |
020 7379 5151 |
www.barrattdevelopments.co.uk
