Springfield’s purchase of the entire share capital of Walker Holdings (Scotland) expands its land bank and its sales presence in the Edinburgh commuter belt.
Walker focuses on private housing in the commuter belt, primarily building private homes with two to five bedrooms. Its developments generally comprise between 50 and 200 homes though it also delivers larger, multi-phased schemes. Five active sites with a gross development value (GDV) of £100m are under development by Walker and it has five further sites in the pipeline with a GDV of over £300m.
The acquisition is in line with Springfield’s stated strategy of expanding its land bank and sales presence. The acquisition makes use of and exceeds the group’s budget for its current financial year for land purchases. Springfield sees Walker as having a highly complementary land bank and sales presence and its directors believe that the purchase will complement last year’s acquisition of Dawn Homes, which gave Springfield similar access to Glasgow’s commuter belt.
Walker does not currently build affordable housing whereas development of its current land bank will require at least 346 affordable homes to be built, which represents an opportunity for Springfield’s Affordable Housing division.
The group will retain Walker’s premises in Livingston, all of the company’s 50 staff and the wWalker brand. Peter Matthews, Springfield’s managing director for Central Scotland (private housing), will take over the responsibility of running the Walker business.
The group has paid an initial net consideration of £21m in cash. The remainder will be paid in stages, with £6m tiled to the planning consent for a site at Carlaverock, Tranent. Approximately £4m is payable in equal amounts on the first and second anniversary of the completion of the acquisition.
It will also acquire £41.4m of cash in Walker, as part of the gross consideration of £72.4m.
Sandy Adam, executive chairman of Springfield, said: “The acquisition has enabled us to diversify our land bank with sites at various stages of planning and development in East Central Scotland, where we have been looking to strengthen our foothold. We are pleased to have efficiently delivered a large proportion of our land-buying plans for the wider Edinburgh area, adding 10 sites to our land bank in one deal rather than with multiple individual deals. Walker’s active sites bring an immediate sales presence in new locations and the sites in the pipeline further strengthen our land bank and enhance our quality of earnings.
“The acquisition of Walker supports Springfield’s growth aspirations with land and skilled employees. It enables us to deliver housing more widely across Scotland at a time when supply continues to fall well short of demand and average house price growth in Scotland is ahead of the rest of the UK. Interest rates are low, mortgage availability is good, barriers to new entrants are high and Springfield is well positioned to benefit.”