Telford Homes is turning its back on the individual home buyers and putting more of its development pipeline into the rented sector.
Posting record revenue and profits in line with expectations today, the company’s chief executive Jon Di-Stefano said “Sales to individual investors no longer represent a significant part of our future pipeline”. He added, “Having reviewed our existing portfolio, we expect to change a number of developments that were planned as individual sale schemes to build-to-rent”.
Telford Homes has a development pipeline of 4,900 homes (up fro 4,000 a year ago) and with the new policy shift 70% of these will be on build-to-rent led developments and just 30% on developments led by individual sales. By comparison, in the year to 31st March 2019 31% of Telford Homes £354.3m revenue came from build-to-rent developments, in the year before that, fiscal 2018, 21% of annual revenue of £316.2m was from build-to-rent.
For the latest year, total profit before tax was a little down, as expected, at £40.1m (2018 – £46.0m) due to the increased proportion of lower margin build-to-rent developments within total revenue. Gearing was reduced from 52% to 37% during the year.
Telford Homes has entered into strategic build-to-rent partnership with investment companies Invesco and M&G Real Estate to accelerate growth in the sector.
Chief executive Jon Di-Stefano said: “Our business model is increasingly focused on build-to-rent housing and the reduced risk and lower capital requirements it brings. Despite some challenges our performance in the year to 31st March 2019 represents a great achievement for Telford Homes with revenue at an all time high due primarily to an increased proportion of build-to-rent contracts”. “Over the last three years we have made substantial progress against our objective to increase our output of build-to-rent homes to meet demand from institutional investors and to deliver high quality rental properties in the capital. There remains a long-term structural imbalance between housing supply and housing needs in London. Our recently announced partnership with Invesco and M&G signal our reputation as a trusted build-to-rent partner, and as such a significant step as we continue to develop our profile at the forefront of this burgeoning sector”.