Rental growth fuels St Modwen Properties profits

THE REGENERATION specialist behind a multi-million pound housing scheme in Darlington has posted a surge in profits after seeing the value of its property portfolio top £1bn.

THE REGENERATION specialist behind a multi-million pound housing scheme in Darlington has posted a surge in profits after seeing the value of its property portfolio top £1bn.

St Modwen Properties turned in a strong financial performance in the half year to May 31, with pre-tax profits soaring 40% to £37.4m on revenues of £61.3m.

The growth was driven by a rise in rental income and several new development projects coming on stream.

The Birmingham-based firm also reported a £25m rise in the value of its properties, taking the overall value of its portfolio to £1.07bn.

The company said the “size and scale” of its development pipeline offered the promise of further growth, despite “tough” trading conditions in the industrial and regional office markets.

North-east regional director Stephen Prosser said: “Our landbank, together with our strategy of focusing on opportunities that allow us to add value, means that we are well placed to continue this growth.

“The extent of our offer - from land purchase, to planning, design, build and letting - and our flexible approach to working with our partners, has played a major part in improving regional income.

“From this current position of strength we will continue to grow the business across all areas of activity.”

St Modwen is currently working on several joint ventures, including a scheme with Persimmon to build 2,000 homes. Around 250 will be based on the former Corus site on Whessoe Road in Darlington.

The scheme will include a mix of two, three and four-bedroom family homes and one and two-bedroom apartments.

Construction work is due to start this year, with the first batch of homes ready for occupation next year.

But St Modwen confirmed that plans for a £50m industrial park at Faverdale near Darlington were still on hold.

Aimed at large-scale manufacturers and distribution firms, the scheme will provide up to 1.2m sq ft of space and create 1,500 jobs if it gets off the ground.

The company has turned around its finances after making a huge pre-tax loss of £119.4m in 2009.

Many of its developments remained empty following the property market collapse, which wiped millions off the value of UK residential and commercial buildings.

But the company catapulted back into the black last year after shedding property assets and reducing vacancy levels from 17% to 12%.

This year the firm has secured several major deals for commercial developments, including a contract to develop a 135,000 sq ft office and production facility in Lincoln for Siemens. The German-owned engineering giant is heading a consortium that won a lucrative train-building order from the UK Government on the Thameslink rail scheme.

But the move sparked an angry response from unions who said the contract should have gone to rival consortium Bombardier, which this week announced it was shedding more than 1,400 jobs at its manufacturing plant in Derby.

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