Vistry Group is to deliver more than 2,900 new homes worth £819 million – said to be one of the largest new build residential investment deals on record.
The agreement, with Leaf Living and Sage Homes, will see the new units built across 70 Vistry developments and most of the homes completed within the next two years.
It follows a dramatic restructure revealed by the FTSE 250 housebuilding company in September, to merge its Housebuilding and Partnerships operations and become a ‘partnerships-only’ business, resulting in the loss of 200 jobs and amid talks with its supply chain about price reductions on contracts.
The new deal includes 1,522 homes for the private rented sector for Leaf and 1,393 affordable units for rent and shared ownership for Sage – 2,915 in total.
The Group expects an initial cash payment of £160 million in FY2023, with further staged payments across the development programme.
Vistry and Sage will also use an existing Homes England grant to enable the first tranche of their units.
The plots, part of Vistry’s former Housebuilding landbank, are being pre-sold in line with its aim of achieving 65 per cent of pre-sales across the business.
It is expected to deliver an adjusted operating margin of more than 12 per cent and a return on capital employed of 40 per cent, in line with the Group’s medium-term targets.
Vistry said its adjusted profit before tax expectation for FY2023 is still £410 million and year-end net debt is £100 million.
The Group said delivery of the new homes will get underway this year.
“We have an excellent track record of working in partnership with Leaf and Sage to deliver new homes and I am extremely pleased to have reached agreement to grow these relationships through this exciting, market leading opportunity,” said Greg Fitzgerald, Vistry Group CEO.
“Through our unique Partnerships model, Vistry is maintaining the momentum of delivery of much needed affordable housing across the UK.
“Our strategy gives the Group significantly greater visibility on earnings than traditional housebuilders and this new partnership and others to follow, will help us drive towards our medium-term targets and the delivery of £1bn of shareholder distributions over the next three years.”
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