St Modwen in ‘exclusive negotiations’ to sell Nine Elms Square

Housebuilder reports steady financial performance as sale of £600m resi development site looms

Regeneration specialist St Modwen has confirmed that it is now “in exclusive negotiations” with a buyer for its ten-acre Nine Elms Square resi development site in Battersea.

The developer has been “exploring options” to offload the big residential element of New Covent Market’s regeneration, Nine Elms Square, since last February, and, as reported in December, serious buyers were sniffing by the end of the year. It has now confirmed that “whilst there is no guarantee of any transaction completing, [St Modwen is] now in exclusive negotiations with [a] prospective purchaser at a level firmly supportive of book value.” That book value has been estimated to be around £600m.

Planning permission is already in place for 1,800 homes on Nine Elms Square, with a cluster of towers including a 54-storey 346-unit number.

St Modwen’s flagship 57-acre New Covent Market site, which houses Nine Elms Square, seems to be trundling along nicely, with completion of an interim flower market facility freeing up 20 acres of development land, which should deliver around 3,000 homes in prime-ish London.

The firm’s annual report to shareholders tells of “strong performance from the residential business”, with operating profits of £27.1m (nudging up from 2015’s £26.7m); the St. Modwen Homes division has delivered an impressive 49% growth in profits. Resi activity accounted for just shy of half (47%) of the company’s overall development profits.

Mark Allan, Chief Executive of St. Modwen: “Active commercial property development and asset management, coupled with a strongly performing and growing residential arm, contributed to another good year for St. Modwen. This is despite the turbulent market backdrop during 2016.

“Following my recent arrival as Chief Executive, we have commenced a review of what I already believe is a fundamentally strong business and portfolio to determine our strategy moving forward. We unquestionably have an opportunity to build on our existing strengths while ensuring that our activities are focused in the optimum way and I am excited about the prospects ahead.”