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Urban&Civic Plc (UANC)

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Thursday 28 March, 2019

Urban&Civic Plc

Notification of Transfer to Premium Listing

RNS Number : 3971U
Urban&Civic plc
28 March 2019
 

THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SHARES OR OTHER SECURITIES IN THE COMPANY NOR SHALL IT FORM THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER.

 

28 March 2019

Urban&Civic plc

Notification of Transfer to the Premium Listing Segment

 

Urban&Civic plc ("Urban&Civic" or the "Company" and, together with its subsidiaries from time to time, the "Group") announces that it is proposing to transfer the listing category of its ordinary shares (the "Ordinary Shares") from the Standard Listing segment to the Premium Listing segment of the Official List of the Financial Conduct Authority (the "FCA") (the "Official List") under Rule LR5.4A of the Listing Rules issued by the FCA (the "Listing Rules") (the "Transfer").

The provision of a minimum 20 business days' notice (which period commenced by way of today's announcement) is required to effect the Transfer. No shareholder approval is required in connection with the Transfer. It is anticipated that the Transfer will take effect at 8.00am on 30 April 2019, conditional on the approval of the FCA.

1.    Background to and reasons for the Transfer

Urban&Civic came to market as a result of the reverse takeover of Terrace Hill plc in May 2014 and the Ordinary Shares were admitted to the Standard Listing segment of the Official List on 22 May 2014 ("Admission"). In light of the recent changes to the Listing Rules that has resulted in the introduction of LR6.12, which provides a new concessionary route to a Premium Listing for property companies, the Company is now eligible for a Premium Listing.

It is anticipated that, subject to the Transfer becoming effective and other conditions being met, the Company will be considered for inclusion into the FTSE UK Index Series in due course.

The Company has therefore requested that the FCA approves the Transfer with effect from 8.00am on 30 April 2019. All of the Ordinary Shares in issue at such time shall be subject to the Transfer. As at 27 March 2019 (being the latest practicable date prior to this announcement), the Company had 145,116,606 Ordinary Shares in issue.

2.    Effect of the Transfer

No changes to the business of the Group have been or are proposed to be made, in connection with the Transfer.

The board of directors of the Company (the "Board") believes that the Transfer will bring with it a number of benefits to the Company and its shareholders. In particular, the Board believes the Transfer will:

·   provide an appropriate platform for the continued growth of the Group, further raise its profile and allow exposure to a wider investor base, enhancing the liquidity of the Company's shares;

·    enable the Ordinary Shares to be considered for inclusion in the FTSE UK Index Series which are widely utilised investment benchmarks for institutional investors; and

·   benefit the Company's shareholders by illustrating its commitment to corporate governance of the highest standard through its adherence to Premium Listing standards which include governance, regulatory and reporting compliance requirements, although the Company already adopts many of the standards which apply to companies with a Premium Listing.

Following the Transfer, certain additional provisions of the Listing Rules, which since Admission have only applied on a voluntary basis, will apply to the Company. These provisions, set out in Chapters 6 to 13 (inclusive) of the Listing Rules, include the following matters:

·    the application of certain additional requirements that are specific to companies with a Premium Listing (Chapter 6);

 

·     the application of the Premium Listing Principles (Chapter 7);

 

·     the requirement to appoint a sponsor in certain circumstances (Chapter 8);

 

·     the requirement to comply with various continuing obligations, including requirements relating to further issues of shares, to comply with all relevant provisions of the UK Corporate Governance Code (the "Code") (or to provide an explanation for any non-compliance in its annual financial report) and requirements relating to notifications and contents of financial information (Chapter 9);

 

·     the requirement to announce, or obtain shareholder approval for, certain transactions (depending on their size and nature) and for certain transactions with "related parties" of the Company (Chapters 10 and 11);

 

·    certain restrictions in relation to the Company dealing in its own securities and treasury shares (Chapter 12); and

 

·    various specific content requirements that will apply to circulars issued by the Company to its shareholders (Chapter 13).

 

3.    Working capital

The Company is of the opinion that the working capital available to the Group is sufficient for its present requirements, that is for at least the next twelve months from the date of this announcement

4.    Corporate governance

The Board is committed to, and recognises the importance and value of good corporate governance. Since Admission, the Board has based its corporate governance approach on voluntarily reporting its compliance with the Code. As at the date of this announcement, the Company complies fully with the Code. The annual report and accounts of the Group in respect of the financial year ended 30 September 2018 describes how the Company applied and complied with the provisions of the Code throughout that financial year. The annual report and accounts of the Group in respect of the financial year ended 30 September 2019 will also include such a statement. The Company acknowledges that a revised version of the Code was published in July 2018 and will apply to accounting periods beginning on or after 1 January 2019.

5.    Further Listing Rule Requirements

Independent business

The Group's business focuses on large scale strategic sites where, as Master Developer, it is bringing forward in excess of 8,500 acres of land predominantly within 100 miles of London through a fully serviced land parcel model. In addition, the Group's business covers commercial developments as well as strategic land promotion through its subsidiary, Catesby Estates plc. The revenue created by these other business divisions allows the Group to reinvest further in its strategic site portfolio.

The Group operates its business in an independent capacity and the Company carries on an independent business as its main activity.  The Group has strategic control over its ability to earn revenue and freedom to implement its business strategy.

In particular, the majority of the Group's consolidated revenues derive from the portfolio of strategic sites and properties that it owns, operates, or promotes. The residual balance of revenue currently arises from the Group's 50 per cent interest in the strategic site at Rugby Radio Station and an 82.2 per cent interest in a strategic site in Newark.

Control of the business

As detailed above, the Group's business focuses on large scale strategic sites.  The Group has operational control over all of its strategic sites, save for Rugby Radio Station and Wintringham. Where the Group has operational control, it has 100 per cent ownership interests in all of these strategic sites, save for Newark in which it has an 82.2% controlling interest (after an additional priority position).

The Group has a 50 per cent interest in the strategic site at Rugby Radio Station; and a one-third interest in the site at Wintringham. No activity can be carried out at any of these sites without the Group's knowledge or control, save that, in relation to Rugby Radio Station and Wintringham, the Group is not able to vote on board matters in which it has a conflict of interest. The Company is the Master Developer on both of these sites and therefore pursuant to the development management agreements in place, it takes the leading role in all operational and strategic activities in respect of both of these joint ventures.

The lack of operational control at the strategic land sites at Rugby Radio Station and Wintringham is not deemed material in the context of the Group as a whole. For example, Rugby Radio Station accounts for approximately 19 per cent of the total consented and allocated homes for all strategic sites and Wintringham accounts for approximately 9 per cent. Similarly, Rugby Radio Station accounts for approximately 18 per cent of the Group's property portfolio as valued by CBRE Limited ("CBRE") as at 31 December 2018 (see paragraph 9 below); and Wintringham accounts for approximately 5 per cent.

The Group also has day-to-day operational control over, and 100 per cent ownership interests in, all of its commercial developments and strategic land promotion business (with the exception of a 50 per cent interest in Manchester New Square).

Constitutional arrangements

The Company has in place a constitution that allows it to comply with the rules and regulations relevant to a Premium Listing and, pursuant to the policies adopted by the Company, the Board shall be responsible for ensuring that the Company continues to comply with such requirements.

6.    City Code on Takeovers and Mergers ("UK Takeover Code")

As the Company has its registered office in the UK and its Ordinary Shares are admitted to trading on the Main Market of London Stock Exchange plc, it is currently and, following the Transfer, will remain subject to the UK Takeover Code.

7.    Appointment of sponsor

J.P. Morgan Securities plc, which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan Cazenove") is acting as sole sponsor to the Company in relation to the Transfer.

8.    Financial information on Urban&Civic

The relevant pages of the documents listed below are incorporated by reference into this announcement and copies of the documents are available free of charge from the Company's offices at 50 New Bond Street, London W1S 1BJ from the date of this announcement up to and including the date of Transfer, and from the Company's website at www.urbanandcivic.com.

Information incorporated by reference into this document

Reference document

Relevant pages in reference document

Financial information of the Group for the financial year ended 30 September 2016 and audit report thereon

Directors' report and Directors' responsibility statement

 

Independent auditor's report

 

Consolidated statement of

comprehensive income

 

Consolidated balance sheet

 

Consolidated statement of changes in equity

 

Consolidated cash flow statement

 

Notes to the consolidated financial statements

111 to 115

 

 

118 to 121

 

122

 

 

123

 

124

 

 

125

 

 

126 to 163

 

 

Financial information of the Group for the financial year ended 30 September 2017 and audit report thereon

Directors' report and Directors' responsibility statement

 

Independent auditor's report

 

Consolidated statement of

comprehensive income

 

Consolidated balance sheet

 

Consolidated statement of changes in equity

 

Consolidated cash flow statement

 

Notes to the consolidated financial statements

 

121 to 125

 

128 to 132

 

 

133

 

 

134

 

135

 

 

136

 

 

137 to 171

Financial information of the Group for the financial year ended 30 September 2018 and audit report thereon

Directors' report and Directors' responsibility statement

 

Independent auditor's report

 

Consolidated statement of

comprehensive income

 

Consolidated balance sheet

 

Consolidated statement of changes in equity

 

Consolidated cash flow statement

 

Notes to the consolidated financial statements

114 to 117

 

 

120 to 125

 

126

 

 

127

 

128

 

 

129

 

 

130 to 165

 

9.    Valuation of the Group's properties

As required by Rule LR6.12.1 of the Listing Rules, the Company has commissioned a valuation report of its properties to help demonstrate that it has three years of development of its real estate assets represented by increases of the gross asset value of such assets.

The freehold and leasehold assets held within the Group were independently valued as at 31 December 2018 by CBRE, acting in the capacity of External Valuers as defined in the RICS Red Book. The valuations accord with the requirements of IFRS 13, FRS 102 and the 2017 Edition of the RICS Valuation - Global Standards (incorporating the International Valuation Standards) (the "RICS Red Book").  A copy of the valuation report is set out in Annex to this announcement.

The Directors of the Company and CBRE confirm that as at the date of this report, they are not aware of any material changes to the properties which would affect the valuation between the effective date of the valuation and the date of the report provided in the Annex to this announcement.

10.  Consents

J.P. Morgan Cazenove has given and has not withdrawn its written consent to the inclusion in this announcement of the references to its name in the form and context in which they are included.

CBRE has given and has not withdrawn its written consent to the inclusion in this announcement of the valuation report in the Annex to this announcement and the references thereto and to its name in the form and context in which they are included.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of the Company is Heather Williams, Company Secretary.

 

Enquiries

J.P. Morgan Cazenove

(Sponsor)

Bronson Albery / Tara Morrison                                                                                                                0207 742 4000

FTI Consulting

Dido Laurimore                                                                                                                                             0203 727 1000

IMPORTANT NOTICE

The contents of this announcement have been prepared by and are the sole responsibility of the Company. The Company is not offering any Ordinary Shares or other securities in connection with the proposals described in this announcement. This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in the Company or securities in any other entity, in any jurisdiction, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities.

J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove), which is authorised by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the Financial Conduct Authority (the "FCA") and the PRA, is acting exclusively for the Company and no one else in connection with the proposed Transfer, and will not regard any other person as a client in relation to the proposed Transfer, and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice, in relation to the proposed Transfer or any other matter referred to in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed on J.P. Morgan Cazenove by the Financial Services and Markets Act 2000 ("FSMA") or the regulatory regime established thereunder, neither J.P. Morgan Cazenove nor any of its affiliates, directors, officers, employees, agents or advisers owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of J.P. Morgan Cazenove in connection with this announcement, any statement contained herein or otherwise, nor makes any representation or warranty, express or implied, in relation to, the contents of this announcement, including its accuracy, completeness or verification or for any other statement purported to be made by J.P. Morgan Cazenove, or on behalf of J.P. Morgan Cazenove in connection with the Company or the Transfer. J.P. Morgan Cazenove accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability to any person who is not a client of J.P. Morgan Cazenove, whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's result of operations, financial condition, prospects, growth strategies and the industries in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position, the Company's earnings, financial position, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future.

The contents of this paragraph relating to forward-looking statements are not intended to qualify the statement made as to the sufficiency of working capital in this announcement.

Subject to the Company's regulatory obligations, including under the Listing Rules, the Disclosure Guidance and Transparency Rules, the EU Market Abuse Regulation (EU) No 596/2014 and the FSMA, neither the Company nor J.P. Morgan Cazenove undertakes any obligation to update publicly or revise any forward looking-statement whether as a result of new information, future events or otherwise. None of the statements made in this announcement in any way obviates the requirements of the Company to comply with its regulatory obligations.

The timetable to Transfer set out in this announcement is subject to change and amendment. There can be no assurance that the Transfer will become effective in the timeframe set out in this announcement or at all.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.

 

 

ANNEX

 

 

VALUATION REPORT

In respect of:

 

Urban&Civic plc Property Portfolio

 

On behalf of:

J.P. Morgan Securities plc and Urban&Civic plc

Date of Valuation: 31 December 2018

Date of Report: 28 March 2019

 

Valuation Report

Report Date

28 March 2019

Addressee

J.P. Morgan Securities plc

25 Bank Street

London E14 5JP


(in its capacity as sponsor to Urban&Civic)

                                       

Urban&Civic plc ("Urban&Civic")

50 New Bond Street

London W1S 1BJ

 

(together, the Addressees)

The Properties

 

 

See Schedule of Properties below.

Instruction

To value the unencumbered freehold and leasehold interest in the Properties on the basis of Market Value as at the Valuation date in accordance with the terms of engagement entered into between CBRE and J.P. Morgan Securities plc and Urban&Civic plc dated 23 November 2018.

Valuation Date

31 December 2018.

Capacity of Valuer

External Valuer, as defined in the RICS Valuation - Global Standards 2017.

Purpose

We understand that our Valuation is required for inclusion in an announcement to be issued by Urban&Civic 28 March 2019 ("Announcement") in connection with Urban&Civic's proposed transfer of the listing category of its ordinary share capital from the Standard Listing Segment to the Premium Listing Segment of the Official List of the Financial Conduct Authority ("Purpose").

The effective date of our Valuation is 31 December 2018.

Market Value of Urban&Civic's Interest in the Properties

£559,520,000 (Five Hundred and Fifty Nine Million, Five Hundred and Twenty Thousand Pounds) exclusive of VAT, as shown in the Schedule of Capital Values set out below.

 

We have valued the Properties individually and no account has been taken of any discount or premium that may be negotiated in the market if all or part of the portfolio was to be marketed simultaneously, either in lots or as a whole.

 

Where a property is owned by way of a joint tenancy in a trust for sale, or through an indirect investment structure, our Valuation represents the relevant apportioned percentage of ownership of the value of the whole property, assuming full management control. Our Valuation does not necessarily represent the 'Market Value' (as defined in RICS Valuation - Global Standards 2017) of the interests in the indirect investment structure through which the Property is held.

 

Our opinion of Market Value is based upon the Scope of Work and Valuation Assumptions attached, and has been primarily derived using comparable recent market transactions on arm's length terms.

We hereby confirm that as at the date of this report, we are not aware of any material changes to the Properties which would affect our Valuation between the effective date of the Valuation and the date of this report. 

Compliance with Valuation Standards

The Valuation has been prepared in accordance with the RICS Valuation - Global Standards 2017 which incorporate the International Valuation Standards and the RICS Valuation - Professional Standards UK January 2014 (revised April 2015) (the "Red Book"). The Valuation has been prepared for a Regulated Purpose as defined in the Red Book.

We confirm that our Valuation and report have been prepared in accordance with the relevant provisions of the Listing Rules of the Financial Conduct Authority and paragraphs 128 to 130 of the ESMA update of the Committee of European Securities Regulators' recommendations for the consistent implementation of the European Commission Regulation (EC) no. 809/2004 implementing the Prospectus Directive.

 

We confirm that we have sufficient current local and national knowledge of the particular property market involved, and have the skills and understanding to undertake the Valuation competently.

 

Where the knowledge and skill requirements of the Red Book have been met in aggregate by more than one valuer within CBRE, we confirm that a list of those valuers has been retained within the working papers, together with confirmation that each named valuer complies with the requirements of the Red Book.

 

This Valuation is a professional opinion and is expressly not intended to serve as a warranty, assurance or guarantee of any particular value of the subject property.  Other valuers may reach different conclusions as to the value of the subject property. This Valuation is for the sole purpose of providing the intended user with the valuer's independent professional opinion of the value of the subject property as at the Valuation date.

In accordance with the Red Book, we have made certain disclosures in connection with this valuation instruction and our relationship with Urban&Civic.

Assumptions

The Property details on which each Valuation are based are as set out in this report.  We have made various assumptions as to tenure, letting, taxation, town planning, and the condition and repair of buildings and sites - including ground and groundwater contamination - as set out below.

If any of the information or assumptions on which the Valuation is based are subsequently found to be incorrect, the Valuation figures may also be incorrect and should be reconsidered.

Variation from Standard Assumptions

None.

Verification

We recommend that before any financial transaction is entered into based upon these Valuations, you obtain verification of any third-party information contained within our report and the validity of the assumptions we have adopted.

We would advise you that whilst we have valued the Properties reflecting current market conditions, there are certain risks which may be, or may become, uninsurable. Before undertaking any financial transaction based upon this Valuation, you should satisfy yourselves as to the current insurance cover and the risks that may be involved should an uninsured loss occur.

Valuer

The Properties have been valued and inspected by a valuer who is qualified for the purpose of the Valuation in accordance with the Red Book.

Independence

CBRE currently value the Properties as part of a wider mandate for financial reporting purposes on behalf of Urban&Civic.

CBRE have also undertaken valuations for Homes England for loan security purposes in connection with Alconbury Weald, Houlton and Wintringham Park. 

The total fees, including the fee for this assignment, earned by CBRE Ltd (or other companies forming part of the same group of companies within the UK) from the Addressees (or other companies forming part of the same group of companies) is less than 5.0% of the total UK revenues.

Responsibility

We are responsible for this report and accept responsibility for the information contained in this report and confirm to the best of our knowledge (having taken all reasonable care to ensure that such is the case), the information contained in this report is in accordance with the facts and contains no omissions likely to affect its import.

This report will be relied upon by J.P. Morgan Securities plc and Urban&Civic plc. No reliance may be placed upon the contents of this report by any other third party for any purpose other than in connection with the Purpose.

 

 

Publication

Neither the whole nor any part of our report nor any references thereto may be included in any published document, circular or statement nor published in any way without our prior written consent. 

Such publication of, or reference to this Valuation Report will not be permitted unless it contains a sufficient contemporaneous reference to any departure from the Royal Institution of Chartered Surveyors Appraisal and Valuation Standards or the incorporation of the special assumptions referred to herein. 

 

Yours faithfully

Yours faithfully

 

 

 

 

 

 

 

 

 

Rupert Driver MRICS

Senior Director
RICS Registered Valuer

 

For and on behalf of
CBRE Limited

Jason Hardman MRICS

Executive Director
RICS Registered Valuer

 

For and on behalf of
CBRE Limited

 

T: +44 2071822550

E: [email protected]

T: +44 2071822802

E: [email protected]

 

 

CBRE UK (London - Residential)

Henrietta House

Henrietta Place

London

W1G 0NB

 

T: +44 2071822000

 

 

 

Schedule of Values

Freehold - Properties held for Investment and Development

Address

Tenure

Market Value (100% interest)

Urban&Civic

% Ownership

 

Market Value

Urban&Civic Interest

1. Alconbury Weald, Alconbury

Freehold

£270,200,000

100%

£270,200,000

2. Houlton, Rugby

Freehold

£207,000,000

50%

£103,500,000

3. Wintringham Park, St Neots

Freehold

£77,600,000

33.3%

£25,866,667

4. Priors Hall, Corby

Freehold

£57,700,000

100%

£57,700,000

5. Middlebeck, Newark

Freehold

£56,080,000

82.2%

£46,100,000

6. Manchester New Square, Manchester

Freehold

£52,900,000

50%

£26,450,000

7. Deansgate, Manchester

Freehold

£22,500,000

100%

£22,500,000

8. Land at Armadale, Scotland

Freehold

£750,000

100%

£750,000

 

 

Total (say)

£553,070,000

Leasehold - Properties held for Investment and Development

Address

Tenure

Market Value (100% interest)

Urban&Civic

% Ownership

Market Value

Urban&Civic Interest

9. Hudson Quay, Middlesbrough

Leasehold

£3,900,000

100%

£3,900,000

10. Canningford House, Bristol

Leasehold

£2,550,000

100%

£2,550,000

 

 

Total (say)

£6,450,000

Portfolio Total

 

 

 

Market Value

Urban&Civic Interest

 

 

Total (say)

£559,520,000

 

Overview of the Strategic Sites held for Development

Alconbury Weald, Alconbury

¾ Located approximately 3.5 miles north west of Huntingdon town centre in Cambridgeshire, 65 miles north of London. Alconbury Weald comprises two adjoining sites, the former 'Alconbury Airfield' site and 'Grange Farm', which in total extend to approximately 1,431 acres.  The Property is held freehold and Urban&Civic have 100% ownership.

¾ Huntingdon District Council granted outline planning consent in September 2014 for the redevelopment of the Property with a residential led mixed use scheme called Alconbury Weald comprising 5,000 dwellings and circa 3 million sq ft of B1, B2 employment space, together with open space and community uses. Circa 370 acres of land on the former Alconbury Airfield site was already designated as an Enterprise Zone. This was granted in 2011 for 25 years.

¾ The Property benefits from excellent transport links via road with the A1 and A14, and via rail with the East Coast Mainline from Huntingdon, with journey times of 50 minutes into London. These strategic routes provide linkages to Huntingdon, Cambridge, Peterborough and into London.

¾ Infrastructure funding from Homes England is in place and being utilised to accelerate the delivery of infrastructure including the link road at the eastern end of the development through Grange Farm. Extensive infrastructure work has been carried out to bring forward the first key phases of commercial and residential development at Alconbury Weald and to service the wider site.  Infrastructure costs (including Section 106 costs) spent to date total circa £80.3 million and outstanding costs as at 31 December 2018 total approximately £227.37 million. 

 

 

¾ Approximately 33.2 acres (net developable) of commercial land in three transactions to IKO, M&M and JAT have completed, with land receipts of approximately £9.12 million received.  A further 1.5 acres has been transferred to iMet for their new training facility which will act as a catalyst and deliver advanced technical skills in manufacturing, engineering and technology at Alconbury Weald.  We understand that a further 2 acres of commercial land have recently exchanged to Magpas air ambulance (Magpas). Moreover, Magpas is due to rent a further acre. Completed commercial buildings onsite include the Incubator Building, which is fully let; Incubator 2 and the Club Building, which provides a residents' gym.

¾ Residential land with capacity for 874 dwellings is under contract with four housebuilders (Hopkins Homes, Morris Homes, Redrow and Crest Nicholson) through a combination of joint ventures and build licences.  To date there have been 182 completions. Urban&Civic, through its Civic Living operation, is also developing 138 dwellings, which are currently under construction.

¾ At the date of valuation, approximately 262.3 acres (net) with capacity for 3,988 dwelling remained unsold.

 

Houlton, Rugby

¾ Located approximately 3.0 miles south east of Rugby town centre, the application site extends to approximately 1,168 acres and has the benefit of outline planning consent for 6,200 dwellings; together 3 primary schools, a secondary school, 31,200 sq ft of community buildings, circa 77 acres of employment, circa 60 acres of formal open space and sports pitches and 507 acres of open space.

¾ The freehold interest of the Property, now known as Houlton, is held in a 50:50 Partnership between Urban&Civic and AVIVA.  The Partnership owns the freehold of approximately 1,120 acres of land within the application site, estimated with capacity for up to circa 5,950 dwellings. 

¾ Infrastructure funding from Homes England is in place and being utilised to accelerate the delivery of infrastructure including construction of the link road which connects Houlton to the town centre.    

¾ Extensive infrastructure work has been carried out to bring forward the first key phases of residential development at Houlton and service the wider site.  Infrastructure costs (including Section 106 costs and land assembly costs) spent to date total circa £96.1 million and outstanding costs as at 31 December 2018 total approximately £145.6 million.

¾ The Tuning Fork cafe and Visitor Centre at Dollman Farm are open to the public. The first primary school opened in September 2018.

¾ Residential land with capacity for 860 dwellings is under contract with four housebuilders (Davidson Homes, Morris Homes, Crest Nicholson and Redrow) through build licences.  There had been 96 completions at the date of valuation.

¾ At the date of valuation, approximately 294.8 acres (net) of residential land with capacity for approximately 5,092 dwelling remained unsold.

 

Wintringham Park, St Neots

¾ Located in St Neots in Cambridgeshire approximately 55 miles north of London, 17 miles west of Cambridge.  The Property comprises a greenfield site of approximately 400 acres, formerly made up of agricultural fields. At the date of valuation construction of infrastructure works had commenced. 

¾ Urban&Civic acquired a one third partnership stake in the freehold interest of the Property with Nuffield Dominions Trust and the Nuffield Oxford Hospitals Fund in April 2017. The Property is designated in Huntingdon District Council's Core Strategy and following the submission of a planning application in October 2017, in March 2018 Huntingdon District Council resolved to grant planning permission for the development of the site with up to 2,800 dwellings, two new primary schools and 680,000 sq ft of new employment space.  The Section 106 Agreement and outlined consent was approved in November 2018.

¾ The strategy of Urban&Civic in its capacity as a Master Developer will be to undertake the key infrastructure works and fulfil the principal S106 obligations to facilitate 'serviced land' transactions to a range of national, regional and local housebuilders (either through build licence agreements or land sales).  We understand that Urban&Civic may also undertake some development parcels itself under its Civic Living operation.

¾ The total infrastructure budget (including S106 and CIL costs but excluding operational fees) totals £153 million, with costs of approximately £4.36 million spent to date. We understand the Partnership has secured £26 million of infrastructure funding from Homes England.

¾ We understand that a build licence has been secured with Cala for 222 dwellings, and heads of terms agreed with a housebuilder on a second parcel of land with capacity for 233 dwellings.

 

 

Priors Hall, Corby

¾ Located in Corby in Nottinghamshire approximately 80 miles north of London, 60 miles east of Birmingham and 20 miles north east of Nottingham. The Property is held freehold and Urban&Civic have 100% ownership.

¾ The Property extends to approximately 907 acres (not including woodland) across two Local Authority areas, Corby Borough and East Northamptonshire District.  Priors Hall has the benefit of an existing outline planning consent for 5,100 dwellings, some of which has been sold to housebuilders and is in the process of being built out.  The development is split into three residential phases (Zone 1, 2 and 3) with the new homes set within lakes, open parkland and forests. Urban&Civic is seeking to increase the density up to approximately 5,400 dwellings in total.

¾ The scheme already has more than 1,000 homes; housebuilders on site include Barratt David Wilson, Taylor Wimpey, Kier, Larkfleet Homes, Jelson Homes and Francis Jackson Homes. 

¾ Priors Hall Primary School for 420 children had its first intake in September 2016, and is adjacent to the Foster Associates designed Corby Business Academy, which opened in 2008. 

¾ We understand the acquisition of Priors Hall was part funded by Homes England, which is also making available additional facilities to cover future forecast infrastructure spend. Outstanding infrastructure costs (including S106 obligations) to deliver the scheme, at the date of valuation total approximately £153.8 million.

¾ Zone 1 - approximately 108.7 acres (net) of residential land with contracts with housebuilders in place for 1,557 dwellings with capacity for an additional 270 dwellings. At the date of valuation, we understand that outstanding revenue including deferred land payments, overages and other commissions totalling approximately £5.68 million remained outstanding.  2.6 acres (net) with capacity for 50 dwellings remains unsold; together with approximately 17 acres (net) of mixed use land parcels remain unsold.

¾ We understand that Zone 2 and Zone 3 will have capacity for approximately 249 net developable acres of residential land and Urban&Civic will be seeking to obtain consent for delivery of a further 3,577 dwelling across these two development zones.

 

Middlebeck, Newark

¾ Located approximately 20 miles south west of Lincoln, 20 miles north east of Nottingham and 127 miles north of London.

¾ The Property is situated approximately 1.2 miles south of Newark-on-Trent town centre and the scheme forms an extension of the existing settlement area of the town. Road communications are good with the A1 running north to south and the A46 running east to west. Rail journey times from Newark Northgate to London King's Cross take approximately 1 hour 30 minutes. The Property is held freehold and Urban&Civic own and control 82.2%, which is subject to a collaboration agreement.

¾ Newark and Sherwood District Council granted outline planning consent in November 2011 for the development of up to 3,150 dwellings; two local centres; including retail and commercial premises (classes A1 to A5), a 60-bed care home (class 2), 2 primary schools, day nurseries/creches, multi-use community buildings including a medical centre (class D1); a mixed use commercial estate of up to 50 hectares comprising employment uses (class B1, B2 and B8) and a crèche (class D1). This application also included the construction of a southern link road.

¾ A revised outline planning consent was signed on 4 February 2015 (ref: 14/01978/OUTM). We understand that the updated consent has resulted in a change in the number of Affordable Housing units required and a reduction in the level of S.106 obligations. We understand that all the commercial space is designated for B8 use.

¾ The site in its entirety extends to a total gross area of approximately 694 acres which is comprised of the following net acreage; Residential - up to 183.7 net developable acres including local neighbourhood centres (A1 to A5 and B1(a) uses); Employment (B8) - 110 net developable acres.

¾ Infrastructure works totalling approximately £30.94 million have been spent to date, although U&C have historically received a cash payment of £3.13 million from the utilities company Western Power for an easement right, which has been utilised against infrastructure costs. 

¾ There have been two residential transactions to housebuilders - Avant (build licence) and Bellway (land sale subject to deferred payments), as summarised below.

Avant - 16.1 acres (net developable) - 173 dwellings (100% private) - build licence agreement in which the consortium will receive a proportion of the sales values upon completion.

Bellway - 4.2 acres (net developable) - 64 dwellings (100% private) - straight land sale but subject to deferred land payments.

 

 

 

Valuation Movement between 30 September 2018 and 31 December 2018

 

Address

Market Value (Urban&Civic Interest)

As at 30 Sep 2018

Market Value (Urban&Civic Interest)

As at 31 Dec 2018

Reasons for Change

1. Alconbury Weald

£266,500,00

£270,200,000

Strategic development site under construction. Capital expenditure on infrastructure works of approximately £2.4 million in Q4 2018.  Value uplift reflecting ongoing progress, unwinding of cashflow discount, and sales in the period. No material change to underlying serviced land values.

2. Houlton

£99,500,000

£103,500,000

Strategic development site under construction. Capital expenditure on infrastructure works of approximately £8.182 million in Q4 2018.  Value uplift reflecting ongoing progress, unwinding of cashflow discount and sales over the period. No material change to underlying serviced land values.

3. Wintringham Park

£23,833,000

£25,866,667

Outline planning consent granted with Section 106 Agreement signed. Build licence to Cala Homes completed. Bids received from several Registered Providers for the Affordable Housing in key phase 1 showing an uplift above Q3 valuation assumptions.

Infrastructure works have commenced with capital expenditure (including DM and operator fees) over the period of approximately £1.746 million.  Uplift in value reflect the material progress outlined above.

4. Priors Hall

£55,000,000

£57,700,000

Strategic development site under construction. Capital expenditure of approximately £3.3 million over Q4 2018.  Zone 1 land sales secured with Electric Corby and Kier. House sales evidence over Q4 2018 demonstrating house price inflation. Services land values on Z2 increased from £980,000 to £1m per net acre.  Uplift in value reflect the material progress outlined above, and sales over the period.

5. Middlebeck

£46,100,000

£46,100,000

Strategic development site under construction.  Limited capital expenditure in infrastructure in Q4 2018.  Value uplift reflecting ongoing progress, unwinding of cashflow discount and sales over the period. No material change to underlying serviced land values.

6. Manchester New Square

£20,050,000

£26,450,000

Development under the course of construction. Construction cost expenditure of approximately £12.8 million in Q4 2018.  Increase in value reflects the capital expenditure with no change to the revenue assumptions.

7. Deansgate

£22,500,000

£22,500,000

No material change over Q4 2018.

 

8. Land at Armadale

£750,000

£750,000

No material change over Q4 2018.

 

9. Binhamy Retail Park

£6,300,000

-

Sold

 

10. Hudson Quay

£3,900,000

£3,900,000

No material change over Q4 2018.

 

11. Canningford House

£2,550,000

£2,550,000

No material change over Q4 2018.

 

 

£546,980,000

£559,520,000

 

 

Sources of Information and Scope of Works

Sources of Information

We have carried out our work based upon information supplied to us by Urban&Civic, which we have assumed to be correct and comprehensive. Set out below is a summary of the information provided and relied upon in connection with the principal strategic sites within the portfolio.

Alconbury Weald, Alconbury

¾ Confirmation of land uses and plot densities prepared by David Lock Associates.

¾ Environmental Reports prepared by Environ in respect the Alconbury Airfield site and Grange Farm, dated October 2009 and February 2011, respectively.  We have also been provided with a copy of the Environment Review prepared by Environ dated February 2014, in respect of both sites.

¾ Alconbury Weald Cost Plan Framework (no.11 Version 2), prepared by Davis Langdon and dated 25 February 2014.  Together with infrastructure and planning cost updates as at 31 December 2018 prepared by Urban&Civic, which we have relied upon. 

¾ In terms of infrastructure costs spent between the project start and the date of valuation, we have relied upon cost information provided by Urban&Civic.

¾ Report on Title - relating to the Airfield Site, Reservoir, and Smith Land, prepared by Nabarro and dated 30 October 2009.

¾ Short Form Report on Title - relating to Alconbury Airfield, Smith Land and Grange Farm, prepared by Nabarro and dated 25 January 2013.

¾ Section 106 Agreement dated 30 September 2014, prepared by Mills & Reeve.

¾ Tenancy schedule for the Incubator building prepared by Urban&Civic.

¾ Construction costs for the Civic Living Parcel 4 prepared by Urban&Civic.

¾ Copies of the Build Licence agreements and heads of terms, together with accommodation schedules - source Urban&Civic.

¾ Housebuilder plot sales schedules for Hopkins Homes, Morris Homes and Redrow, prepared by Urban&Civic.

Houlton, Rugby

¾ Confirmation of land uses and net developable acreage for the masterplan, prepared by David Lock Associates.

¾ Red Flag Environment report prepared by Environ and dated 3 March 2014.

¾ Infrastructure costs plan prepared by Gardiner and Theobald. Together with infrastructure and planning cost updates as at 31 December 2018 prepared by Urban&Civic, which we have relied upon.  In terms of infrastructure costs spent between the project start and the date of valuation, we have relied upon cost information provided by Urban&Civic.

¾ Section 106 Agreement dated 21 May 2014.

¾ Real Estate Report prepared by Nabarro dated April 2014.

¾ Copies of the Build Licence agreements and heads of terms, together with accommodation schedules - source Urban&Civic.

¾ Housebuilder sales schedules for Davidsons, Morris Homes and Crest Nicholson, prepared by Urban&Civic.

Wintringham Park, St Neots

¾ Development cashflow prepared by Urban&Civic dated 11 September 2018.

¾ Wintringham Park Central Parcel Heads of Terms - source Urban&Civic

¾ Wintringham Cost Model prepared by Exigere dated 24 November 2017.

¾ Summary of the S106 Agreement key obligations (amounts, triggers and timings) prepared by Urban&Civic.

¾ Development Specification and land use schedule prepared by David Lock Associates.

¾ Ground Investigation Interpretive Report - The Shadbolt Group.

Priors Hall, Corby

¾ Infrastructure and S106 cost budget prepared by Urban&Civic.

¾ Copy of the financial model prepared by Urban&Civic.

¾ Section 106 Agreement (East Northamptonshire) dated February 2012.

¾ Planning decision notices dated March 2007 and February 2012.

¾ Housebuilder plot sales tracker prepared by Urban&Civic.

Middlebeck, Newark

¾ Certificate on Title prepared by Wragge Lawrence Graham prepared 17 March 2015.

¾ Confirmation of land uses and net developable acreage for the masterplan, prepared by Barton Willmore.

¾ A Geo Environmental Factual Report and a Phase 1 Desk Study prepared by Rodgers Leask and dated 10 December 2013 and 10 October 2013 respectively.

¾ We have been provided with revised Infrastructure and S106 costs prepared by Urban&Civic as at 31 December 2018, which we relied upon.

¾ In terms of infrastructure costs spent between the project start and the date of valuation, we have relied upon cost information provided by U&C.

¾ Section 106 Agreement dated 21 January 2015.

¾ A Collaboration Agreement dated 9 September 2011.

¾ Revised parameter and density plan prepared by JTP.

 

 

 

The Properties

Our report contains a brief summary of the Property details on which our Valuation has been based.

Inspection

Over the course of December 2018 and January 2019.

Areas

We have not measured the Properties but have relied upon the floor areas provided to us by Urban&Civic as set out in this report, which we have assumed to be correct and comprehensive. We have been advised that these areas have been calculated using the Gross Internal Area (GIA)/Net Internal Area (NIA measurement methodology as set out in the RICS Code of measuring practice (6th edition).

 

Environmental Matters

 

Unless otherwise stated above, we have not undertaken, nor are we aware of the content of, any environmental audit or other environmental investigation or soil survey which may have been carried out on the Properties and which may draw attention to any contamination or the possibility of any such contamination.

 

We have not carried out any investigations into the past or present uses of the Properties, nor of any neighbouring land, in order to establish whether there is any potential for contamination and have therefore assumed that none exists.

Services and Amenities

We understand that all main services including water, drainage, electricity and telephone are available to the properties. None of the services have been tested by us.

Repair and Condition

We have not carried out building surveys, tested services, made independent site investigations, inspected woodwork, exposed parts of the structure which were covered, unexposed or inaccessible, nor arranged for any investigations to be carried out to determine whether or not any deleterious or hazardous materials or techniques have been used, or are present, in any part of the Properties.  We are unable, therefore, to give any assurance that the Properties are free from defect.

Town Planning

We have made verbal planning enquiries only. Information supplied to us by planning officers is given without liability on their part. We cannot, therefore, accept responsibility for incorrect information or for material omissions in the information supplied to us.

Titles, Tenures and Lettings

Details of title/tenure under which the Properties are held and of lettings to which it is subject are as supplied to us.  We have not generally examined nor had access to all the deeds, leases or other documents relating thereto.  Where information from deeds, leases or other documents is recorded in this report, it represents our understanding of the relevant documents. We should emphasise, however, that the interpretation of the documents of title (including relevant deeds, leases and planning consents) is the responsibility of your legal adviser.

We have not conducted credit enquiries on the financial status of any tenants.  We have, however, reflected our general understanding of purchasers' likely perceptions of the financial status of tenants.

Valuation Assumptions

Capital Values

The Valuation has been prepared on the basis of "Market Value", which is defined in the Red Book as: 

"The estimated amount for which an asset or liability should exchange on the Valuation date between a willing buyer and a willing seller in an arm's-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion."

 

The valuation represents the figure that would appear in a hypothetical contract of sale at the valuation date. No adjustment has been made to this figure for any expenses of acquisition or realisation - nor for taxation which might arise in the event of a disposal.

No account has been taken of any inter-company leases or arrangements, nor of any mortgages, debentures or other charge.

No account has been taken of the availability or otherwise of capital based Government or European Community grants.

Rental Values

Unless stated otherwise rental values indicated in our report are those which have been adopted by us as appropriate in assessing the capital value and are not necessarily appropriate for other purposes, nor do they necessarily accord with the definition of Market Rent in the Red Book, which is as follows:

"The estimated amount for which an interest in real property should be leased on the Valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm's-length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.".

The Properties

Where appropriate we have regarded the shop fronts of retail and showroom accommodation as forming an integral part of the building.

Landlord's fixtures such as lifts, escalators, central heating and other normal service installations have been treated as an integral part of the building and are included within our Valuations.

Process plant and machinery, tenants' fixtures and specialist trade fittings have been excluded from our Valuations. 

All measurements, areas and ages quoted in our report are approximate.

 

 

Environmental Matters

In the absence of any information to the contrary, we have assumed that:

a) the Properties are not contaminated and are not adversely affected by any existing or proposed environmental law;

b) any processes which are carried out on the Properties which are regulated by environmental legislation are properly licensed by the appropriate authorities.

c) in England and Wales, the Properties possess current Energy Performance Certificates (EPCs) as required under the Government's Energy Performance of Buildings Directive - and that they have an energy efficient standard of 'E', or better. We would draw your attention to the fact that under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 it became unlawful for landlords to rent out a business premise from 1st April 2018 - unless the site has reached a minimum EPC rating of an 'E', or secured a relevant exemption. In Scotland, we have assumed that the Properties possess current Energy Performance Certificates (EPCs) as required under the Scottish Government's Energy Performance of Buildings (Scotland) Regulations - and that they meet energy standards equivalent to those introduced by the 2002 building regulations. We would draw your attention to the fact the Assessment of Energy Performance of Non-domestic Buildings (Scotland) Regulations 2016 came into force on 1st September 2016. From this date, building owners are required to commission an EPC and Action Plan for sale or new rental of non-domestic buildings bigger than 1,000 sq m that do not meet 2002 building regulations energy standards. Action Plans contain building improvement measures that must be implemented within 3.5 years, subject to certain exemptions;

d) the Properties are either not subject to flooding risk or, if they are, that sufficient flood defences are in place and that appropriate building insurance could be obtained at a cost that would not materially affect the capital value; and

e) we assume that invasive species such as Japanese Knotweed are not present on the Properties.

 

 

High voltage electrical supply equipment may exist within, or in close proximity of, the Properties. The National Radiological Protection Board (NRPB) has advised that there may be a risk, in specified circumstances, to the health of certain categories of people. Public perception may, therefore, affect marketability and future value of the property. Our Valuation reflects our current understanding of the market and we have not made a discount to reflect the presence of this equipment.

 

Repair and Condition

In the absence of any information to the contrary, we have assumed that:

a) there are no abnormal ground conditions, nor archaeological remains, present which might adversely affect the current or future occupation, development or value of the Properties;

b) the Properties are free from rot, infestation, structural or latent defect;

c) no currently known deleterious or hazardous materials or suspect techniques have been used in the construction of, or subsequent alterations or additions to, the Properties; and

d) the services, and any associated controls or software, are in working order and free from defect.

 

We have otherwise had regard to the age and apparent general condition of the Properties. Comments made in the property details do not purport to express an opinion about, or advise upon, the condition of uninspected parts and should not be taken as making an implied representation or statement about such parts.

 

Title, Tenure, Lettings, Planning, Taxation and Statutory & Local Authority requirements

Unless stated otherwise within this report, and in the absence of any information to the contrary, we have assumed that:

a) the Properties possess a good and marketable title free from any onerous or hampering restrictions or conditions;

b) the buildings have been erected either prior to planning control, or in accordance with planning permissions, and have the benefit of permanent planning consents or existing use rights for their current use;

c) the properties are not adversely affected by town planning or road proposals;

d) the buildings comply with all statutory and local authority requirements including building, fire and health and safety regulations, and that a fire risk assessment and emergency plan are in place;

e) only minor or inconsequential costs will be incurred if any modifications or alterations are necessary in order for occupiers of the properties to comply with the provisions of the Disability Discrimination Act 1995 (in Northern Ireland) or the Equality Act 2010 (in the rest of the UK);

f) all rent reviews are upward only and are to be assessed by reference to full current market rents;

g) there are no tenant's improvements that will materially affect our opinion of the rent that would be obtained on review or renewal;

h) tenants will meet their obligations under their leases, and are responsible for insurance, payment of business rates, and all repairs, whether directly or by means of a service charge;

i) there are no user restrictions or other restrictive covenants in leases which would adversely affect value;

j) where more than 50% of the floorspace of the Properties are in residential use, the Landlord and Tenant Act 1987 (the "Act") gives certain rights to defined residential tenants to acquire the freehold/head leasehold interest in the Properties.  Where this is applicable, we have assumed that necessary notices have been given to the residential tenants under the provisions of the Act, and that such tenants have elected not to acquire the freehold/head leasehold interest.  Disposal on the open market is therefore unrestricted;

k) where appropriate, permission to assign the interest being valued herein would not be withheld by the landlord where required;

l) vacant possession can be given of all accommodation which is unlet or is let on a service occupancy; and

m) Stamp Duty Land Tax (SDLT) - or, in Scotland, Land and Buildings Transaction Tax (LABTT) - will apply at the rate currently applicable.

 

 

 


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