Kier Residential launches JV with Cross Keys Homes
For release at 0700 hours on 23 March 2017
Kier Residential launches joint venture with Cross Keys Homes
Kier, a leading property, residential, construction and services group, today announces that, on 22 March 2017, it established a joint venture with CKH Developments Limited ("Cross Keys"), a housing association and care services provider which principally operates in the east of England (the "JV").
Kier will transfer part of its land bank and a number of its residential developments in the east of England, valued at up to £97m, into the JV with Cross Keys contributing up to £4m of equity into the JV. Kier will receive a cash payment of up to £64m for the assets and the JV will be funded by a non-recourse revolving credit facility from HSBC Bank plc. There will be a 90:10 split of economic ownership and each party will have 50:50 voting rights. Initial completion of the transaction is expected to take place by 31 March 2017, with subsequent completions expected to take place prior to 30 June 2017 upon the transfer of further sites.
The JV is expected to be cash generative from completion of the transaction. The transaction will release funds to Kier for reinvestment in other parts of its business in line with its 15% return on capital employed hurdle. Kier expects the transaction to be earnings accretive in 2019.
Kier and Cross Keys have a long-standing relationship in the eastern region, operating in complementary sectors of the housing market. Kier will provide its development, land-buying, construction and sales expertise to the JV. Cross Keys will provide access to key strategic relationships for the benefit of the JV.
Haydn Mursell, Chief Executive of Kier, said: "The joint venture represents a strategic milestone for Kier Residential. This transaction enables us to accelerate our strategy to recycle the capital employed in the Kier private land bank to drive the future growth of the Group and improve our overall ROCE. In addition, the joint venture plays a role in addressing the UK Government's housing strategy by creating a vehicle which can focus on delivering new homes in the east of England, a geography both parties know well."
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For further information, please contact: |
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Richard Mountain/Nick Hasell (FTI) |
+44 (0) 203 727 1340 |
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Kier press office |
+44 (0) 1767 355 903/ +44 (0) 7791 719452 |
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Louise Turner-Smith, Head of investor relations |
+44 (0) 7976 790012 |
About Kier Residential
Kier has over 70 years of experience in the residential sector, with access to a wealth of resources and expertise. Kier Residential offers a UK-wide capability to build a broad spectrum of residential housing whether for private sale on our own land, mixed tenure housing or contract building for a client. Specialising in a range of tenures, it constructs and maintains buildings for open-market sale, private rental, affordable rent and shared ownership. Kier's housing teams develop more than 2,100 units of both private and affordable housing schemes every year, with expertise running through the whole development process from land assembly and funding through to aftercare.
About Cross Keys
Cross Keys is a housing association and residential builder based in Peterborough. It was established as a not-for-profit organisation in 2003 by Peterborough City Council. It now manages over 11,000 properties and houses around 14% of the city's population. In order to tackle the housing shortage in the UK, Cross Keys is committed to building more affordable homes. Cross Keys provides homes through social housing, shared ownership, private rent and leasehold and has plans to expand into new geographic areas. For further information on Cross Keys, please see www.crosskeyshomes.co.uk
Cautionary statement
This announcement does not constitute an offer of securities by Kier Group plc (the "Company"). Nothing in this announcement is intended to be, or intended to be construed as, a profit forecast or a guide as to the performance, financial or otherwise, of the Company or any of its subsidiaries (together, the "Group") whether in the current or any future financial year. This announcement may include statements that are, or may be deemed to be, ''forward-looking statements''. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's or the Group's ability to control or predict. Forward-looking statements are not guarantees of future performance. You are advised to read the section headed ''Principal risks and uncertainties'' in the Company's Annual Report and Accounts for the year ended 30 June 2016 for a further discussion of the factors that could affect the Company's or the Group's future performance and the industry in which it operates. Other than in accordance with its legal or regulatory obligations, the Company does not accept any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
This information is provided by RNS
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