Harworth completes deployment of equity raise proceeds with two further site acquisitions

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Harworth Group plc announces that it has purchased two strategic land sites, in Droitwich and Doncaster, for a total consideration of £8.2 million.

The sites have been purchased using the remaining proceeds from the £27.1 million equity placing in March 2017.  Both are forecast to support Harworth’s ongoing delivery of a double-digit target internal rate of return and significant value appreciation.

131-acre land acquisition close to Junction 5 of the M18, Doncaster

 Harworth has purchased a privately sourced 131-acre site in Doncaster, South Yorkshire, for £3.0 million plus acquisition costs, with an option agreement for a further 131 neighbouring acres. Adjacent to Junction 5 of the M18, Harworth will leverage its market leading land regeneration skills to promote the site through the planning process, to deliver a regionally significant employment scheme, totalling up to 2.4m sq ft of distribution, manufacturing and engineering space.

Industrial Estate, Droitwich, Worcestershire 

Harworth has purchased an 8.7-acre site at Berry Hill Industrial Estate in Droitwich, Worcestershire, from DHL, for £5.2 million plus acquisition costs.  Three miles from Junction 5 of the M5, the site currently comprises a 112,416 sq ft commercial unit, that has immediately been leased back to DHL. The five-year term at a passing rent of £450,000 per annum represents a net initial yield of 8.15% and a reversionary yield of 8.65%, supporting the Group’s strategy of increasing and improving the quality of its recurring income base, whilst in the longer-term, the site’s very low density of 30% provides attractive upside opportunity for a whole or partial site redevelopment.

The two acquisitions follow the three strategic land purchases completed in August 2017 across the Midlands and North West; Chatterley Valley in Stoke-on-Trent; Coalville in Leicestershire; and Wingates in Bolton. These five transactions plus acquisition costs and initial planning & infrastructure costs account for the full £27.1 million of new equity raised in March 2017.  All 2017 acquisitions are forecast to support Harworth’s ongoing delivery of a double digit target internal rate of return and significant value appreciation.

Commenting on these deals, Owen Michaelson, Chief Executive Officer, said:

“This is a major milestone for the business which sees the culmination of the successful deployment of all new equity raised in March through the acquisition of two well-located sites that are projected to deliver double-digit returns.  Expanding our strategic land bank is a core part of our business strategy of delivering continued value to our shareholders and both purchases provide clear long-term value-add opportunities.  In addition, securing a strong covenant at Droitwich adds to our medium-term income stream, as we look to improve the defensive qualities of the portfolio.

“The outlook for our principal markets in the North of England and Midlands remains strong, with a scarcity of good quality new commercial space continuing to drive the allocation of new sites and occupier demand for well-connected new space. Both of these purchases directly respond to these requirements as we continue to develop a portfolio of high quality places where people want to live and work.”