REG - Harworth Group PLC - Completion of £53.4m land sale at Skelton Grange

HarworthAnnouncement

20/12/2024 13:30

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RNS Number : 9813Q  Harworth Group PLC  20 December 2024

 20 December 2024
 Harworth Group plc
 ("Harworth" or "the Group")

 Completion of Plot 1 land sale at Skelton Grange to Microsoft for £53.4
 million

 Harworth Group plc, a leading regenerator of land and property for sustainable
 development and investment, announces that it has completed the sale of Plot
 1, comprising 27 acres of land at its Skelton Grange site in Leeds to MSFT
 MCIO Limited ("Microsoft"), for proceeds of £52.9 million following the
 satisfaction of all pre-completion conditions.

 As previously announced, contracts were exchanged with Microsoft in June for
 the conditional sale of 48 acres of land at the site (the "Disposal Plot")
 comprising two adjoining land parcels:

 ·                                Plot 1 for gross consideration of £52.9 million on an unserviced basis.
 ·                                Plot 2, which comprises 21 acres, to be sold on a serviced basis for gross
                                  consideration of approximately £53.2 million. Completion of the sale of Plot
                                  2 remains targeted for H1 2026.

 Harworth will retain 16 acres on which to promote c.250,000 sq. ft. of
 employment space (the "Retained Land"). This is in addition to the c.77 acres
 owned by way of joint venture through The Aire Valley Land LLP at
 a neighbouring development, Gateway 45.

 Alongside the sale of Plot 1, Harworth has also been reimbursed £0.5 million
 for the costs it has incurred in securing additional power capacity for the
 site. Servicing of Plot 1 will be completed by Harworth as development manager
 under a separate development agreement, which will now commence following
 completion of the transaction, alongside servicing works to support the sale
 of Plot 2 and the promotion and delivery of the Retained Land.

 Upon completion of the sales of Plots 1 and 2, Harworth expects that it will
 have invested c.£48.7 million in the site which includes an increase in
 servicing costs for the Disposal Plots reflecting the results of intrusive
 site investigation and detailed technical design works alongside Microsoft
 following the exchange of contracts in June. At that stage the investment will
 have realised £135.7 million of sales, generating an IRR above 40%, with
 further returns expected from the future delivery of the Retained Land.

 The former Skelton Grange power station site was purchased by Harworth in
 December 2014 for c.£3 million. The site is located to the south-east of
 Leeds and the work undertaken by Harworth as master-developer since
 acquisition has been an integral part of the regeneration of the area,
 supporting significant inward investment. To date, Harworth has initiated
 remediation and enabling works, optimised the planning status of the site,
 and, acquired a further 21 acres of adjoining land. The Company has also
 secured a series of transactions including a 19.5-acre
 land sale to Enfinium in 2020, which is developing a 49MW energy-from-waste
 ('EfW') renewable electricity generation facility for its own operation,
 the grant of a lease in 2021 to facilitate the development of a Battery
 Energy Storage System ('BESS') facility on a 5.7-acre demise, and exchanging
 on the conditional sale to Microsoft.

 Once the development is complete, Skelton Grange is expected to provide
 c.250,000 sq. ft. of Grade A Industrial & Logistics space, a hyperscale
 datacentre, a BESS facility, an EfW facility, and c.28 acres of land returned
 to natural habitat alongside improved green travel infrastructure, which
 Harworth estimates will represent in excess of £4 billion of inward
 investment providing a substantial boost to the regional economy.

 In line with its strategy, Harworth expects to recycle the Plot 1 proceeds
 into infrastructure works and development across its 9.6m sq. ft. consented
 Industrial & Logistics pipeline and continues to review opportunities for
 potential high-value uses, like Skelton Grange, across its wider portfolio.

 Lynda Shillaw, Chief Executive at Harworth commented: "I am delighted to be
 able to announce that we have completed the first phase of our landmark
 48-acre land sale at Skelton Grange to Microsoft. Our technical teams are now
 fully mobilised and initial site works are underway. We continue to work
 closely with Microsoft and other key stakeholders as we focus on the full
 remediation and servicing of the site to enable the second tranche of the
 sale, which remains on track for H1 2026.

 "Skelton Grange has the most challenging ground conditions of any of our sites
 and is a fantastic example of the value Harworth delivers as a leading
 regenerator of brownfield land through optimising our masterplans, deploying
 timely and effective investments into remediation and infrastructure and
 creating a scheme that has attracted a range of industries.

 "Our long-term through the cycle model, agility in identifying and responding
 to opportunities and consistency in execution creates both value for
 shareholders and supports economic growth in our regions. The transaction with
 Microsoft has also further enhanced our existing expertise to include
 datacentres, and we continue to review our land portfolio for other potential
 value enhancing opportunities."

 For further information

 Harworth Group plc
 Lynda Shillaw (Chief Executive)                                            T: +44 (0) 7436 167 285
 Kitty Patmore (Chief Financial Officer)                                    E: investors@harworthgroup.com
 Luke Passby (Head of Investor Relations & Communications)

 FTI Consulting
 Dido Laurimore                                                             T: +44 (0) 20 3727 1000
 Richard Gotla                                                              E: Harworth@fticonsulting.com
 Eve Kirmatzis

 About Harworth

 Listed on the equity shares (commercial companies) category of the Main Market
 of the London Stock Exchange and a constituent of the FTSE 250 index, Harworth
 Group plc (LSE: HWG) is a leading sustainable regenerator of land and property
 for development and investment which owns, develops and manages a portfolio of
 over  14,000  acres of land on over  100  sites located throughout the North
 of England and Midlands. The Group specialises in the regeneration of large,
 complex sites, in particular former industrial sites, into new Industrial
 & Logistics and Residential developments to create sustainable places
 where people want to live and work, supporting new homes, jobs and communities
 across the regions and delivering long-term value for all stakeholders. Visit
 www.harworthgroup.com for further information. LEI: 213800R8JSSGK2KPFG21.

 

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