You are viewing 1 of your 1 free articles
Crest Nicholson to increase bulk sales to associations as focus on affordable housing intensifies
House builder Crest Nicholson is aiming to increase its bulks sales to housing associations after launching a new division focused on the affordable housing market.
The FTSE 250 giant said it expects bulk sales to account for between 15% and 20% of its revenue in future, compared with 5% to 10% historically.
Explaining the move in the group’s annual report, Peter Truscott, chief executive of Crest Nicholson, wrote: “While these [bulk] sales will, in all likelihood, be at lower prices than could be achieved for individual sales, the advanced cash inflows and certainty yield a stronger return on capital employed for a portion of our future business.”
Bulk sale deals by house builders are often struck with housing associations, whereby stock is sold off at a discount to help boost builders’ financial performance.
Last month, Crest Nicholson reported a 39% drop in annual profits as sales were hit by a sluggish housing market sparked by Brexit paralysis. A year ago the firm revealed it had sold off more than 200 homes to housing associations through bulk deals.
READ MORE
Crest Nicholson also revealed in its annual report that it has launched a new stand-alone business called Crest Nicholson Partnerships and Regeneration (CNPR), which is focused on “the third-party investor and affordable homes markets”.
Mr Truscott, who left Galliford Try last year and is in the midst of a turn-around effort at Crest Nicholson, wrote: “The key to maximising revenue streams from this part of our business is through close working with RPs [registered providers] to maximise the grant funding available, as they identify the appropriate homes and tenure models needed.
“CNPR will manage these relationships and will seek to develop them over the long term.”
Mr Truscott has recruited former Galliford Try colleague Kieran Daya to head up the new division. Mr Daya was previously national land and development director at Galliford Try Partnerships, the arm of the Galliford Try which worked with registered providers and councils to deliver regeneration schemes.
On its hunt for institutional investors for bulk sales, Crest Nicholson’s annual report said: “In the future we will assess the demand and returns for bulk sales to institutional investors. Joint venture undertakings and external land sales, each offering different risks and benefits, will be assessed on a case-by-case basis.”
Among the institutional investors with registered provider arms are US private equity giant Blackstone, which acquired for-profit provider Sage in 2017, and Legal & General.
It comes as other major house builders increase their focus on the affordable housing sector.
Vistry Group, previously Bovis Homes, said in September that it was looking to become the “partner of choice” for housing associations. And Bellway early last year launched a new London division to work with housing associations and local authorities on affordable homes.
