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Mon July 22 2024

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Taylor Wimpey builds war chest for land grab

18 Jun 20 House-builder Taylor Wimpey has raised £522m from investors to buy new land.

It has sold 355 million new shares at £1.45 each to raise £515m gross. A concurrent but separate offer to directors, employees and other retail investors raised another £7m.

Taylor Wimpey said that the Covid-19 pandemic had disrupted the land market “creating short term opportunities to acquire land from a broad range of sources at attractive returns and prices below pre-Covid-19 levels”.

Over recent weeks, Taylor Wimpey has agreed terms for 12 lucrative-looking sites around the country for an aggregate price of £136m. These sites have an average size of around 200 plots, delivering at an operating profit margin above the company's medium term target of 21-22%, and an average return on capital employed of 34%.

Terms have also been agreed in principle on a further 13 sites and an additional pipeline of around 60 sites currently under discussion and consideration.

Taylor Wimpey began reopening building sites on 4th May 2020, having been shut all of April, followed by sales centres and show homes in England from 22nd May.

During the Covid-19 lockdown, demand had remained ‘robust’, Taylor Wimpey said, and it continued to sell homes and progress purchases remotely each week. This has continued since the phased reopening of sales centres and show homes, and the net private sales rate per outlet per week has increased to 0.62 for the three weeks ending 14 June 2020 (2019 equivalent period: 0.92).

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In the three weeks since sales centres reopened in England, there has been a 176% increase in appointments booked and a 51% increase in website visits compared to the same period last year. Sales prices have been consistent with those achieved before the lockdown, it said.

Total group completions (including joint ventures) in the 24 weeks to 14th June 2020 were 2,531 (2019 equivalent period: 4,526). The UK order book is now worth £2,854m (11,484 home)s compared to £2,543m (10,623 homes) a year ago.

Chief executive Pete Redfern said: "We have built a strong and resilient business and invested in our people, processes and resources to deliver enhanced value to our stakeholders.

“We have taken decisive and early action to conserve cash and increase flexibility through the Covid-19 pandemic and we are now seeing a significant opportunity to invest in land at attractive prices.”

He said that the equity raise had been made “from a position of strength, to enable us to take advantage of these near term opportunities”.

Pete Redfern concluded: “We have seen robust demand for our homes throughout the lockdown period and have been encouraged by the continued resilience of the housing market as we have returned to our developments. Our order book remains strong with a healthy increase in reservations in recent weeks."

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