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Sat August 08 2020

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Boost for Balfour Beatty as PPP sale price justifies revaluation

2 Oct 14 Balfour Beatty has sold its 50% interest in the Pinderfields & Pontefract Hospital PPP project in West Yorkshire for a price that seems to justify its recent portfolio revaluation.

Pinderfields & Pontefract Hospital
Pinderfields & Pontefract Hospital

Balfour Beatty has also reached financial close on a multi-family housing project in the US and been appointed preferred bidder for two student accommodation projects in the US and Australia.

Pinderfields is being acquired by its co-shareholder, a subsidiary of HICL Infrastructure Company Ltd. Balfiour Beatty said that the consideration of £61.5m exceeded its expectations, generating a gain on disposal of £42.2m. The proceeds exceed the revised directors’ valuation by £13.5m, representing an uplift of 28%.

In August 2014 Balfour Beatty published a review of the directors’ valuation of its PPP portfolio, which resulted in the UK portfolio valuation increasing by 63% to £801m, and the total portfolio increasing in value by 46% to £1,051m, as at June 2014.

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As part of its strategy to recycle PPP equity, Balfour Beatty expects to invest approximately £20m of equity in three international projects over the next three years. It has reached financial close on Carmendy Square, a multi-family housing community in Florida, USA, and has also been appointed preferred bidder on two new student accommodation projects, one for the University of Texas at Dallas and one for University of Wollongong in Australia.

Carmendy Square is Balfour Beatty Investment’s first investment into a multi-family housing project in the US. The Dallas project is the third student accommodation success in the US in 2014, whilst the Wollongong project is its first project in Australia.

Balfour Beatty Investments CEO Ian Rylatt said: "This disposal supports the substantial increase in the directors’ valuation of the PPP portfolio, whilst also demonstrating that the valuation maintains a level of prudence. We continue to see a strong pipeline of opportunities and therefore, in line with our strategy of recycling equity, the proceeds will be invested in new projects as we continue to diversify our business.”

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MPU

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