11 Feb 2015 07:00
11 February 2015
Urban&Civic plc
("Urban&Civic" or the "Company")
TRADING UPDATE AT TODAY'S ANNUAL GENERAL MEETING
FURTHER PROGRESS ACHIEVED ACROSS ALL MAJOR DEVELOPMENTS AND CONTRACTS EXCHANGED FOR 330 BEDROOM ON-TERMINAL HOTEL AT STANSTED AIRPORT
Urban&Civic will today provide at the Annual General Meeting of the Company a trading update covering group activities for the four months to 31 January 2015. The Board is pleased to report continued good progress across all aspects of the business and, additionally, the intended development of a 330 bedroom hotel with direct pedestrian access into Departures at Stansted Airport.
Stansted is the fastest growing airport for London and is increasingly associated with expansion in the Cambridge sub-region, which is likely only to consolidate with the impending relocation of Astra Zeneca. The investment reinforces Urban&Civic's strategic commitment to the greater Cambridgeshire area and the priorities of key stakeholder partners. It is also consistent with the Group's clear positioning towards consumer facing investments that can benefit from improving real earnings and increased consumer spend in evidently strengthening UK locations.
Alconbury
The expansion of Stansted as a major business airport is a crucial part of the economic growth plans for LEPs across the East of England, including Greater Cambridge Greater Peterborough LEP, for which Alconbury is the only Enterprise Zone. Government grant funded demolition to facilitate early large scale development at Alconbury is now complete and an encouraging level of commercial enquiries on the Enterprise Zone can be reported. Partly in anticipation, a new club facilities building to complement the fully-let Incubator is in the process of being submitted for planning.
Meanwhile, preliminary works have commenced on the first primary school at Alconbury, designed by the architects AHMM and to be operated by the Diocese of Ely. Negotiations are advancing with prospective local housebuilding partners for 127 new residences in Key Phase One. Construction is expected to start in the autumn with first occupations in spring 2016 and primary school opening soon thereafter. The current expectation is that the terms of the new build arrangements for the first residential phase will support recognition of further value in the accounts to 30 September 2015.
Rugby
We intend to complete the acquisition of our contracted joint interest from BT Plc in this major project, not later than 31 March 2015. No interest is payable on the outstanding consideration of £16.7 million and progress on the site has not been hampered by the delay in completion. The relocation of the resident newt population is ahead of schedule and should allow early works on site to be brought forward to the summer.
Waterbeach
The second sessions for the examination in public of the proposed Local Development Plans for South Cambridgeshire District and Cambridge City are about to commence. We are also making good progress in early stage discussions regarding bringing back existing buildings (including residential) into use. This would also enable access to fishing and a range of indoor sports, as well as opening a previously popular museum.
Stansted Airport
Manchester Airports Group, owners of Stansted Airport, has ambitious plans to double throughput from the existing approximately 20 million passengers per year, including adding a range of new, long haul destinations. Conditional contracts have been exchanged that provide for Urban&Civic acquiring the virtual freehold of an approximately 2 acre site for a new hotel of 330 bedrooms and with associated car parking and direct pedestrian access into the airport terminal for a fixed consideration of £8 million.
Outstanding conditions are expected to be satisfied by 31st March and construction is scheduled to commence in July 2015. The hotel will be operated under a major branded franchise and the target is to be open for trading by Christmas 2016.
Commercial
Construction at the Feethams leisure scheme in Darlington and the Middlesbrough Gateway Sainsbury's food store remain on schedule and on budget. The Gateway development was forward sold in mid-2014 and the expectation is that the remaining profit on delivery will be recognised in the current year.
The Feethams leisure scheme will be held by Group for income when it opens for trading in March 2016. The integral position of the development within Darlington town centre is consolidated by the recent announcement that a new 650 vehicle multi-storey car park is to be developed by the Local Authority. The car park is adjacent to the Feethams scheme but the costs are being met by municipal funds.
At Herne Bay, the planning permission decision notice has been issued and we expect to be on-site after Easter with handover and rental commencement in spring 2016. The store has been pre-let to Sainsbury's for 25 years on an RPI lease with a cap of 4 per cent but a collar of 2 per cent minimum annual uplift. Given the prevailing environment in which the Bank of England is forecasting short term price deflation, there seems every likelihood that the collar will be implemented in first instance. Accordingly, the initial intention will again be to retain the investment for income. This presumption will be kept under review since the finance lease characteristics of the completed investment should prove attractive to a range of prospective purchasers seeking protected yield.
The multi-let office and residential development at Howick Place in London's Victoria, which was developed in joint venture with Doughty Hanson, is currently under offer at £207 million with completion expected to occur before Easter. The Group expects to receive approximately £6 million in respect of its residual minority holding, which is slightly above the revalued balance sheet amount at 30 September 2014.
We have held initial meetings with Manchester City Council following our purchase in December last year of two excellent development sites across almost three acres on Deansgate and Princess Street within the inner ring road. The Council appear supportive of our plans for what are regarded as key projects for the city.
Nigel Hugill, Executive Chairman, commented:
"Development of a new 330 bedroom on-terminal hotel at Stansted is further demonstration of an unequivocal positioning towards consumer facing investment in identified regional UK locations where real disposable incomes look set to rise. Meanwhile, the clear need to build houses on strategic sites serving fast growing populations appears one of the few areas of genuine political consensus in the run up to the Election. Altogether, the Group feels to be in a good place".
ENDS
Enquiries
Urban&Civic plc 020 7569 1600
Nigel Hugill
Jon Austen
FTI Consulting 020 3727 1000
Giles Barrie
Dido Laurimore
Nick Taylor