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Thu February 20 2020

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St Modwen explores move into private rented sector

7 Feb 17 A strategic review by the new chief executive of St Modwen looks set to see the developer start building housing specifically for the private rented sector.

New chief executive Mark Allan
New chief executive Mark Allan

Mark Allan succeeded long-serving Bill Oliver as chief executive of St Modwen on 30th November 2016. Mr Allan previously spent 10 years as chief executive of Unite, which he built up as a specialist in purpose built student accommodation. Since his arrival at St Modwen, a review of the business portfolio and strategy has been launched.

“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,” he said. “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.”

Signalling how this strategy shift might manifest, he said: “We see some potential to develop assets for the emerging private rented sector (PRS) and we will assess the scale of this opportunity during 2017.”

St Modwen’s residential building activity is currently carried out both through St Modwen Homes and in joint venture with Persimmon. The Persimmon JV is coming to an end over the next two year and St Modwen Homes is set to increase its output at least proportionately.

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St Modwen reported pre-tax profit of £60.8m for the year ended 30th November 2016, substantially down from £258.4m the previous year. The collapse in profits was attributed to “a combination of external market factors and significant valuation gains booked in 2015”.

House-building contributed £27.1m (2015: £26.7m) to profit before, with £15.3m from St Modwen Homes (2015: £10.3m) based on 485 (2015: 315) units sold and £11.8m (2015: £16.4m) from the Persimmon JV based on a 50% share of 402 (2015: 652) units sold.

Urban regeneration remains key to St Modwen’s business model, however, notably through projects at New Covent Garden in London, Swansea University’s Bay Campus, and Longbridge in Birmingham, all of which are continuing.

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