Harworth raises £28m to fund ambitious plans

Harworth has bought into the investment vehicle that owns Gateway 45, Leeds largest live commercial development.
Harworth has bought into the investment vehicle that owns Gateway 45, Leeds largest live commercial development.
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Harworth Group, which specialises in the regeneration of former coalfield and other brownfield sites, has conditionally raised £28m to fund ambitious plans for the creation of thousands of new homes.

The Rotherham-based firm, which was behind the redevelopment of the former Rossington Colliery near Doncaster and the Prince of Wales Colliery in Pontefract, recently entered into four option agreements to buy 200 acres of strategic land to deliver over 1,500 homes and 600,000 sq ft of new commercial space.

If successful, Harworth will have 2,750 acres of strategic land, offering 10,429 residential plots available for sale to housebuilders at a time when housing is in short supply.

The deals would also bring Harworth’s consented commercial space to 10.4 million sq ft, including business parks and industrial units and warehousing, which would be ideal for logistic and distribution hubs.

Harworth said that strategic land makes up just 5 per cent of the value of its portfolio, down from 15 per cent at the end of 2015.

The group said that while this is positive and reflects the success of management to move this land through the development process, it recognises the need to expand this in order to maintain growth targets.

£19m of the proceeds raised will be used for the four deals on 200 acres and for funding the first three years’ planning, remediation and infrastructure works, and further site assembly.

In addition, Harworth is reviewing a further four potential acquisition opportunities for up to 407 acres of strategic land, for both residential and commercial development. These acquisitions would require an investment of £15.5m and, if pursued, could be part funded by the balance of the proceeds of the placing, with the remainder being met by the company’s internally generated free cash.

Harworth’s chief executive Owen Michaelson, said: “An important part of our strategy is to replenish our land and property portfolio, both by securing new recurring income streams and to grow and expand our strategic land bank, which is fundamental to us continuing to deliver value to our shareholders.

"While we have made good progress in the past two years in securing valuable acquisition opportunities, today’s placing enables us to accelerate our acquisition strategy through the funding of the purchase of, and investment in, further sites to support the long term growth prospects of the business.”