Terrace Hill Group has exchanged contracts with Places for People for the sale of the majority of its remaining residential assets, comprising 925 units, for the sum of GBP70m.
The sale comprises 95 per cent of the group’s wholly owned residential assets and 91 per cent of the properties held within Terrace Hill Residential, its residential investment joint venture in which it owns a 49 per cent interest.
The sale price reflects a discount of less than one per cent of the book value of GBP70.66m. On a pro forma basis worked from the group’s year end accounts to 30 September 2012, as adjusted for the effect of the completion of the Southampton forward funding announced earlier this week, the group’s on balance sheet net debt will reduce from GBP47.2m to GBP20.2m with a reduction in gearing from 78.2 per cent to 34.6 per cent. On a look through basis, including the group’s share of relevant associates’ net debt, total net debt reduces from GBP85.7m to GBP26.7m with gearing reducing from 142.1 per cent to 45.7 per cent.
The sale is due to complete in February 2013. Terrace Hill has already commenced a programme of sales to owner occupiers for the remainder of the residential portfolio, which comprises 35 units located in Manchester and the South West that have a book value of GBP5.5m.
Philip Leech, chief executive at Terrace Hill, says: “This sale follows our previously stated commitment to exit the residential investment sector and concentrate on our core activity of commercial development. Having given ourselves a further 18 months to implement this strategy, I am delighted that we have completed the majority of the sales in a single portfolio transaction, well ahead of time. The few retained properties are currently being sold on a piecemeal basis to owner occupiers, most of which are expected to achieve prices at levels in excess of book value.
“The consequent reduction in net debt and gearing will have a very positive affect on the group’s balance sheet and will allow us to fully concentrate our financial and personnel resources on commercial development, particularly in the food store sector where we continue to see good opportunities and from which we expect to deliver strong shareholder returns.”
David Cowans, chief executive at Places for People, says: “We’re delighted to conclude this deal which is part of our long-term strategy to build a private rented portfolio as part of our housing offer to all of our customers.”