Harworth Group plc, the brownfield regeneration and property investment specialist, has purchased two strategic land sites, in Droitwich and Doncaster, for a total consideration of €9.3m (£8.2m). The sites have been purchased using the remaining proceeds from the €30.7m (£27.1m) equity placing in March 2017. Both are forecast to support Harworth’s ongoing delivery of a double-digit target internal rate of return and significant value appreciation.
131-acre land acquisition close to Junction 5 of the M18, Doncaster
Harworth has purchased a privately sourced 131-acre site in Doncaster, South Yorkshire, for €3.4m (£3.0m) plus acquisition costs, with an option agreement for a further 131 neighbouring acres. Adjacent to Junction 5 of the M18, Harworth will leverage its market-leading land regeneration skills to promote the site through the planning process, to deliver a regionally significant employment scheme, totalling up to 2.4m sq ft of distribution, manufacturing and engineering space.
Industrial Estate, Droitwich, Worcestershire
Harworth has purchased an 8.7-acre site at Berry Hill Industrial Estate in Droitwich, Worcestershire, from DHL, for €5.9m (£5.2m) plus acquisition costs. Three miles from Junction 5 of the M5, the site currently comprises a 112,416 ft² commercial unit, that has immediately been leased back to DHL. The five-year term at a passing rent of €510,471 (£450,000) per annum represents a net initial yield of 8.15% and a reversionary yield of 8.65%, supporting the Group’s strategy of increasing and improving the quality of its recurring income base, whilst in the longer-term, the site’s very low density of 30% provides attractive upside opportunity for a whole or partial site redevelopment.
The two acquisitions follow the three strategic land purchases completed in August 2017 across the Midlands and North West; Chatterley Valley in Stoke-on-Trent; Coalville in Leicestershire; and Wingates in Bolton. These five transactions plus acquisition costs and initial planning & infrastructure costs account for the full €30.7m (£27.1m) of new equity raised in March 2017. All 2017 acquisitions are forecast to support Harworth’s ongoing delivery of a double-digit target internal rate of return and significant value appreciation.
Commenting on these deals, Owen Michaelson, Chief Executive Officer, said:"This is a major milestone for the business which sees the culmination of the successful deployment of all new equity raised in March through the acquisition of two well-located sites that are projected to deliver double-digit returns. Expanding our strategic land bank is a core part of our business strategy of delivering continued value to our shareholders and both purchases provide clear long-term value-add opportunities. In addition, securing a strong covenant at Droitwich adds to our medium-term income stream, as we look to improve the defensive qualities of the portfolio.The outlook for our principal markets in the North of England and Midlands remains strong, with a scarcity of good quality new commercial space continuing to drive the allocation of new sites and occupier demand for well-connected new space. Both of these purchases directly respond to these requirements as we continue to develop a portfolio of high-quality places where people want to live and work.”