Harworth buys key sites in £45m deal

Rotherham-based Harworth said the acquisitions include a mix of brownfield and greenfield sites across 299 acres, including a 112 acre site at Wyke, Bradford, for £32.5m and a 22 acre site in Flaxby, North Yorkshire for £8.75m.

The Bradford site is less than a mile from Junction 26 of the M62 and Harworth said it provides excellent access to a number of major Northern cities and ports. The site has an agrochemical works which is set over 32 acres and is operated by Nufarm UK, alongside 80 acres of unoccupied land.

It is let on a 50 year lease, which started in October 2005 at a current passing rent of over £2.1m a year, representing a net initial yield of 6.2 per cent.

The 80 acres of unoccupied land also has the long-term potential to deliver a major new commercial development.

The Flaxby site is within half a mile of Junction 47 of the A1(M) and includes a 276,000 sq ft commercial unit occupied by Ilke Homes, a modular homes manufacturer.

A 14 year lease has been agreed with Ilke at a stabilised rent of £1m a year, representing a stabilised net initial yield of 10.9 per cent. Harworth said the site’s low density of 29 per cent provides the potential opportunity for further commercial development.

Harworth said the deals support the company’s delivery of a double-digit rate of return by replenishing its strategic land bank and building its recurring income. The sites, which are in Yorkshire, Derbyshire and Leicestershire, are within the group’s core markets of the North of England and the Midlands.

Two of the sites generate existing income of £3.1m a year from two commercial tenants. In total, the acquisitions provide the potential for the development of up to 3,000 homes and over 1m sq. ft of commercial space.

Harworth said it will use its market leading master planning and regeneration skills to promote the sites through the planning process and remediate the land ready for future development where applicable.

Owen Michaelson, chief executive of Harworth, said: “Our confidence in the strength of, and the outlook for, our principal markets in the North of England and Midlands is underpinned by the continued under-supply of new homes and commercial space in the face of high levels of demand from housebuilders and commercial occupiers alike. Harworth continues to make a significant contribution to the ongoing economic growth of the regions as one of the UK’s leading regeneration companies.”

Analyst James Carswell at Peel Hunt said:"Two sites are income producing and will contribute towards recurring income, whilst two are strategic land purchases that could benefit from immediate marriage value uplift, whilst also boosting future development profits.

"Harworth is one of the few real estate companies able to generate 10 per cent total returns in a flat real estate market."

In addition to the two Yorkshire acquisitions, Harworth has acquired two strategic sites in the Midlands, totalling 165 acres, for a total consideration of £3.88m plus acquisition costs.