Students and renters drive £1.7bn building deal frenzy
BRITAIN’S developers have been suffering from the slowdown in the housing market.
But two property deals announced yesterday show there is burgeoning appetite in less traditional types of accommodation.
Shares in London- focused housebuilder Telford Homes surged as its move away from private housing to the build-to-rent accommodation sector paid off.
New York-listed real estate giant CBRE has agreed to buy Telford for £267m. With fewer young people in a position to get on the ladder in London, Telford sees the takeover as a way to enter the city’s fast-growing and less risky build-to-rent market.
This sees firms put up housing and sell it to long-term landlords, who rent it out. CBRE’s chief executive Bob Sulentic said: ‘Telford Homes is well positioned to lead this trend.’
Telford’s chairman Andrew Wiseman said the board will urge shareholders to accept the 350p per share deal, which is at an 11pc premium to Telford’s closing price of 315p on Tuesday. It will become part of CBRE’s Texas- based Trammell Crow Company.
Shares in the AIM-listed firm closed up 13.7pc, or 43p, to 358p.
In another tie-up, FTSE 250listed Unite Group will pay £1.4bn for the UK arm of Liberty Living to capitalise on the growing market for student accommodation.
The deal will create a property giant worth more than £5bn, with some 73,000 student beds across 173 sites.
Unite will buy Liberty from Canada’s Pension Plan Investment Board, which will take a 20pc stake in the new, enlarged group, and has proposed selling a further 26m shares to help fund the takeover. Unite shares rose 2.1pc, or 20.5p, to 1018p. Together, the Telford and Unite tie-ups are worth £1.7bn.
The FTSE 100 hit a 10-month peak as gambling giant Flutter
Entertainment soared on rumours of possible merger and acquisition activity. Flutter, previously known as Paddy Power Betfair, kept quiet, but its shares still closed up 11.5pc, or 704p, at 6838p.
Its rise helped the Footsie climb 0.7pc, or 50.13 points, to 7609.32.
Earlier in the session it reached 7621 points, its highest since September 2018. The FTSE 250 also rose, climbing 0.7pc, or 131.5 points, to 19,790.83.
Topps Tiles jumped 2.4pc, or 1.6p, to 68.6p, as its third-quarter sales rose 3.8pc in the three months to June. This was partly due to weak sales in the same period last year. DIY stores have suffered from stagnation in the housing market, with home-owners delaying building projects.
But Topps has tried to make up for a disappointing performance in 2018 by launching 25 ranges, and trimmed its estate back from 374 stores to 365. Demand for arts and crafts supplies, on the other hand, is robust if the performance of The Works is anything to go by.
Shares in the budget stationery retailer rose almost 10pc, or 6.25p, to 69p, after a 13pc rise in revenue to £218m in its maiden annual results as a listed company. But profit fell 9.6pc to £2.3m, which it put down to a hit from float costs and charges for debt refinancing.
And, finally, some punters obviously feel brave enough to weather the Neil Woodford storm. Woodford Patient Capital knocked Scottish Mortgage Investment off the top spot as the most-bought investment trust in June, according to Interactive Investor.
Scottish Mortgage had been in the lead for almost five years, but discount-hunters piled into Woodford last month, seemingly undeterred by a 25pc fall in the Patient Capital share price since Woodford Investment Management’s Equity Income fund was suspended on June 3. Patient Capital rose 3.4pc, or 1.9p, to 58p.