LONDON: East London-focused housebuilder Telford Homes has posted record sales, citing strong demand for homes in the capital’s non-prime markets.
Full-year revenues surged by 42pc to £245.6m, boosted by the company’s first major foray in into private rented sector (PRS) housing.
PRS housing, in which Telford sells developments to institutional investors who then rent out the space to generate an income, had brought “exceptional capital returns”, chief executive Jon Di-Stefano said, adding that PRS could become a “permanent and more significant” part of Telford’s business.
Yesterday, Telford agreed a deal to sell its Carmen Street development in Bow, east London, to M&G Real Estate for £69.3m. The deal is the second PRS scheme it has sold, following the sale of the Pavilions, in north London, to L&Q for £66.8m in February.
“Over the last 12 months it has become clear that there is now effective institutional demand for high quality, well located developments to be ‘built for rent’,” Mr Di-Stefano said.
“PRS sales not only balance risk in the development pipeline and significantly improve return on capital, needing no debt and little equity, but also bring forward profit recognition albeit at a moderately reduced margin. The sales to L&Q and M&G are just the start.”
He added that because the company is focused on non-prime locations in London, it has not been affected by the slowdown in the luxury London property market.
“There is an ongoing housing crisis and a clear imbalance between the supply of homes and the needs of a growing population,” he said.
“Telford Homes is building homes for Londoners in a market where demand continues to significantly outstrip supply, and the board believes that this undeniable structural factor will underpin the group’s future growth.”
Telford had forward-sold homes worth £579m as of April 1, up from £503m at the same point last year, and it has already secured more than 50pc of the total revenue it expects to generate in the next three financial years.
The development pipeline is worth £1.5bn, boosted by nearly £500m after Telford bought the regeneration business of developer United House.
Pre-tax profit for the year was up 28pc to £32.2m and shareholders will benefit from a total dividend for the year of 14.2p, up from 11.1p.
Despite the company’s robust figures, its share price was down 1pc this morning to 366.75p.
