Re Joint Venture at Wembley Park

RNS Number : 7015E

Quintain Estates & Development PLC

14 April 2014

 



14 April 2014

Quintain Estates & Development PLC

("Quintain" / "Company" / "Group")

  Quintain creates 475-home Joint Venture at Wembley Park to accelerate value creation, seed new income streams and support portfolio diversification

·     50:50 Joint Venture with Keystone for the next residential plot at Wembley Park

·     £22.7 million will be paid for the plot and £9.5 million for associated infrastructure

·     Transaction supports the creation at Wembley Park of more homes, more quickly

·     New income stream secured through the creation of a new Quintain-owned PRS business

Quintain has established a 50:50 Joint Venture with Keystone Developers S.A. ("Keystone"), a subsidiary of Keystone Group Holding AG, a Swiss real estate and private equity family office, to deliver the next 306,000 sq ft phase of residential development at Wembley Park.

The Joint Venture will pay Quintain £22.7 million for the unserviced 2.5 acre plot ("NW01") and a further £9.5 million for future associated infrastructure: a total of £32.2 million. In its respective roles as a 50 per cent. partner and the land vendor, Quintain will therefore own 50 per cent. of the equity in the Joint Venture and receive cash proceeds of £13.6 million, paid around completion of the transaction, with a further £2.5 million to be paid on completion of the first phase, anticipated in 2016.

Seven buildings containing 475 homes will be built on the plot, arranged around an acre of private gardens. Two of the buildings, covering 93,000 sq ft and containing 143 homes, will be constructed for Quintain, for which the Company will pay the Joint Venture £37.1 million. Of this amount, £5.6 million will be paid in May 2014 with the balance paid from existing Company resources on practical completion, expected in 2016. These homes will be retained by Quintain and professionally managed as high quality private rental sector ("PRS") accommodation. This builds on the Company's existing lettings platform, established in 2008, which already successfully manages 150 properties on behalf of individual landlords and achieves average occupancy rates of 97 per cent.

Quintain expects a new, strong income stream to be generated for the Group from this PRS business. In addition, Quintain's appointment as development and project manager for NW01 will generate fee income of approximately £3.3 million over the next three years, further enhancing the Group's earnings.

As well as accelerating the delivery of homes at Wembley Park in a sustainable manner, this transaction will enable the Company to invest capital more quickly in its growing London Portfolio.

As at 30 September 2013, the remaining development land at Wembley Park was valued at £312.0 million. Consent is held to develop 5,000 new homes (3.2 million sq ft on a net internal area basis) on this land, alongside 1.9 million sq ft of office, leisure, retail and student development. The £312.0 million included £73.0 million spent on infrastructure across the wider site.

Maxwell James, Chief Executive of Quintain, said:

"This Joint Venture unlocks value for shareholders from our largest London asset, paving the way for the delivery of more new homes at Wembley into a supply-constrained London housing market. Strategically, this deal enables us to establish a sustainable development programme for Wembley Park whilst recycling capital into our growing London investment portfolio, with the objective of creating superior returns for our shareholders."

"We are pleased to be undertaking this development with Keystone, a partner with whom we have previously worked at Wembley Park with great success."

Giorgio Laurenti, Chairman of Keystone Group, commented:

"We are delighted to join forces with Quintain once again at Wembley Park. We first cemented our partnership through the successful acquisition of the Wembley student accommodation building in 2011 and are pleased to continue investing in Wembley as the area regenerates into an increasingly vibrant location."

ENDS - -

Enquiries:

Quintain Estates & Development PLC Maxwell James / Richard Stearn Cressida Curtis         Tel: [phone]

RLM Finsbury Group Jenny Davey Charlotte Whitley Tel: [phone]

Forward looking statements

This announcement is for information purposes only and contains certain forward-looking statements which, by their nature, involve risk and uncertainty because they relate to or depend upon future events and circumstances.

There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward looking statements, including a number of factors outside Quintain's control. All forward-looking statements are based upon information known to Quintain on the date of this announcement and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Quintain gives no undertaking to update forward-looking statements whether as a result of new information, future events or otherwise. Information contained in this announcement relating to the Company should not be relied upon as an indicator of future performance.

 

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