Strategic Update and Market Listing
02/10/2024 07:00
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One Heritage Group plc (OHG)
One Heritage Group plc: Strategic Update and Market Listing
02-Oct-2024 / 07:00 GMT/BST
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02 October 2024
This announcement contains inside information within the meaning of
Article 7(1) of the EU Market Abuse Regulation No. 596/2016 as it forms
part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon
the publication of this announcement, this inside information is now
considered to be in the public domain.
ONE HERITAGE GROUP PLC
(“OHG” or “the Company”)
Strategic Update and Market Listing
One Heritage Group PLC ("OHG" or "the Company") the UK-based residential
developer, development manager and property manager, focused on the North
of England, is pleased to announce a comprehensive restructuring plan, to
include a rebrand, that will position the Company for sustainable growth,
financial stability, and enhanced market presence.
Background
Since December 2020, the Company has been listed on the Main Market of the
London Stock Exchange (now the Equity Shares (Transition) category for
commercial companies previously listed on the standard listing segment).
During this time, the Company has focused on the development and
redevelopment of new and existing buildings (“Development Activities”) to
create apartments, as well as the refurbishment of existing properties
(“Refurbishment Activities”) to create Co-living accommodation.
Additionally, OHG has acted as development manager on behalf of
third-party investors in their development activities in the UK.
Newly developed and refurbished properties owned by the Company were then
sold or retained, with Co-living properties primarily marketed to
investors through the Hong Kong network of One Heritage Property
Development Limited (“OHPD”), the Company’s majority shareholder. Schemes
of apartments were sold either through this network or via forward sale
agreements with institutional investors.
Since listing, OHG has successfully delivered over 150 residential
properties as principal and over 100 properties as a development manager.
Additionally, it has developed over 70 Co-living projects and currently
manages over 300 tenants across its portfolio.
Over the last few years the external environment has undergone significant
changes. The property development market has been adversely impacted by
rising construction costs, increased operational expenses, weakening
investor demand and broader macroeconomic uncertainties which, together,
have created a challenging environment. In response to this, OHG has taken
decisive steps to adapt and strategically realign its operations.
A major change in OHG’s business model has been the move away from
in-house construction. Previously, projects such as St Petersgate in
Stockport and Bank Street in Sheffield were completed by an in-house team.
However, given the rising costs and risks associated with self-delivery,
the Company now engages third-party construction firms under fixed-price
contracts, mitigating the risk of financial exposure.
As previously announced, the Company has also decided not to proceed with
the construction of two projects, Churchgate in Leicester and Seaton House
in Stockport on the grounds of viability. Following a strategic review,
the Company is also moving away from providing Co-living services, which
have been adversely impacted by market challenges. Structural changes to
right-size the Company’s cost base have also been carried out recently.
Moreover, OHG has commenced the implementation of a comprehensive
restructuring plan that better positions it for sustainable growth, as
follows.
Key Strategic Actions
1. Restructuring of Debt and Capital Allocation:
Strategic Investment in One Victoria: On 01 October 2024, OHG exchanged
contracts unconditionally to acquire a 30% stake in the company that owns
the One Victoria project by purchasing shares to the value of £3 million
from OHPD. The acquisition will be funded by drawing down £3 million from
the remaining shareholder loan facility, increasing the facility from £11
million to £14 million (“Existing Facility”). The completion date for the
acquisition is 29 October 2024, which may be extended or brought forward
by agreement between the parties, with a long stop date of 8 November
2024.
The One Victoria project in Manchester has a Gross Development Value (GDV)
of £39.5 million. The project, consisting of 129 apartments and 2
commercial units, is scheduled for completion in the second half of 2025.
To date, 37 sales contracts have been exchanged, 3 units are reserved, and
89 units remain unsold. Construction finance is being drawn down to fund
ongoing construction costs, with Torsion Construction Limited serving as
the principal contractor.
Located in a prime area of Manchester, the One Victoria project is
designed to meet the growing demand for high-quality residential and
commercial spaces. As Development Manager, OHG will continue to oversee
the development of the project.
Sale of Completed Inventory: Simultaneous to the investment in One
Victoria, Manchester, the Company has also exchanged contracts
unconditionally on 01 October 2024 for the sale of a portfolio of
completed residential and commercial properties, valued at £7 million, to
OH UK Holdings Limited (“OHUK”), a company connected with OHPD. This
portfolio includes residential properties at Bank Street, Sheffield,
Lincoln House, Bolton and Oscar House, Manchester, as well as the
commercial unit at St Petersgate, Stockport. The completion date for the
sale is 29 October 2024, which may be extended or brought forward by
agreement between the parties, with a long stop date of 8 November 2024.
With £2 million of debt linked to Oscar House as part of this transaction,
the net proceeds of the portfolio sale will reduce from £7 million to £5
million and these proceeds will be utilised to reduce the Existing
Facility from £14 million to £9 million.
With lower debt levels, the Company will gain greater financial
flexibility, enabling it to respond more effectively to market
opportunities and economic fluctuations. OHG remains committed to
supporting OHPD by facilitating sales and managing properties on their
behalf.
Refinance of Existing Loan Facility: As part of this restructuring,
OHPD(UK) entered into a new £7 million loan agreement with OHUK on 01
October 2024 at an interest rate of 6%, i.e., lower than the previous rate
of 7%, such facility to become available from the date of the completion
of the property transactions outlined above. The loan has a repayment date
of 31 December 2025, with an option to extend for up to 36 months. OHUK is
a related party, sharing the same majority shareholders as OHG and OHPD.
This new loan will be drawn down in full on completion and used to
partially repay the Existing Facility. The balance of approximately £2
million of the Existing Facility will then be written off by OHPD as part
of the restructuring, demonstrating OHPD's commitment to OHG’s success and
financial stability. The Existing Facility will therefore be settled in
full at completion and terminated.
2. The Company’s Listed Status
The Company is advised that completion of the transactions outlined above
will highly likely constitute a reverse takeover under the UK Listing
Rules. The Company is currently on the London Stock Exchange (“LSE”)
Equity Shares (Transition) category for commercial companies.
Between now and the release later this month of the Company’s Annual
Results to 30 June 2024 and the completion of these transactions, the
Company will continue to explore its options regarding a transition to the
Aquis Stock Exchange, or the implementation of a Matched Bargain Facility
or a complete delisting. The AQSE growth-focused market appears to align
more closely with the Company’s current size and strategic objectives,
providing a platform that is better suited to support its future
ambitions. The Board remains committed to delivering the best possible
outcome for shareholders and will provide further updates in due course.
3. Intention to rebrand to Zentra Group PLC
OHG will rebrand as Zentra Group PLC to reflect its renewed strategic
focus and to distance itself from any potential reputational risks
associated with the One Heritage brand in Asia, which is tied to its
majority shareholder. This new identity gives the Company the flexibility
to reshape its image in the UK market, focusing solely on residential
development to provide apartments and single-dwelling houses.
The decision to rebrand as Zentra Group PLC stems from a desire to
establish an identity that resonates with the Company’s strategic
repositioning. The name "Zentra" was chosen to embody the values of
balance, harmony, and focus, with "Zen" symbolising a sense of calm and
mindful approach to property development.
The Company is launching its new website today at:
1 www.zentragroup.co.uk The old website 2 www.oneheritageplc.com will
automatically redirect to the new website.
The Company intends to update the market when the name change is formally
effected, including details for trading in the Company's shares under the
new company name and new TIDM of " ZNT“, whilst the Company's ISIN and
SEDOL will remain unchanged.
4. Operational Focus and Strategic Realignment:
Focus on Core Residential Sectors: The Company will focus on two core
residential sectors by delivering apartments under its new "Living" brand
and houses under its new "Homes" brand while continuing to provide
property management services. This clearer focus enables the Company to
better position itself in the market and create greater awareness of its
brand proposition among stakeholders and potential customers.
Having two distinct sub-brands allows the Company to tailor its messaging
and marketing efforts more effectively. The "Living" brand will resonate
with professionals seeking modern, vibrant living spaces, while the
"Homes" brand will appeal to families and individuals looking for more
traditional options. This dual sub-branding strategy helps the Company
meet the diverse demands of the market while leveraging its expertise in
residential property development.
By establishing clear and distinct brands along with a focused strategy,
the Company is better positioned to navigate the complexities of the
residential property market. This new clarity enhances its ability to
communicate its vision, attract the right customers, and deliver
high-quality residential solutions that meet the evolving needs of
communities.
Exit from Co-living Services: The Company has decided to fully exit the
Co-living sector. Rising construction costs and higher operating expenses,
particularly in areas like energy bills, have made the Company’s Co-living
product financially unviable.
The Company will also discontinue the management of Co-living property,
allowing the Company to focus on the property management in its two core
sectors. During this transitional period, the Company will work closely
with landlords of Co-living properties to ensure a smooth handover to new
property managers. The Company remains committed to fulfilling its
obligations and will oversee the completion of all ongoing projects in the
coming months.
Operational Changes:
The Board has made key appointments to strengthen the Company’s senior
leadership team. Scott Nicol has been appointed as Head of Investment and
will oversee the commercial aspects of the business, ensuring that the
Company’s investments align with its strategic goals. Ben Scandrett has
been appointed as Head of Development to lead the Company’s property
development projects. Additionally, Robert Holbrook, currently Interim
Head of Finance, will continue as Head of Finance in a part-time capacity.
Update on Existing Projects (not included in the £7 million sale of
completed inventory):
Victoria Road, Eccleshill Project: The near completion of the Victoria
Road housing project in Eccleshill is expected to generate cash flow in Q1
2025 for the Company once sales complete.
Asset Retention and Sales: The Company is prioritising the sale of assets
such as Churchgate, Leicester to further strengthen its financial
position. As announced 04 July 2024 the Company exchanged contracts for
the sale of the land to the rear of Seaton House, Stockport for £400,000.
The proceeds from these sales will be reinvested in the Company’s
development pipeline.
One Heritage Tower - Sale: The Company has an ongoing development
management agreement and has agreed updated terms which includes a 3% fee
of any land sale.
One Victoria - Completion: As mentioned above, the One Victoria project is
expected to complete in H2 2025.
Conclusion
The restructuring of One Heritage Group PLC and its rebranding to Zentra
Group PLC represent a pivotal moment in the Company’s journey. By
realigning operations with the current market environment, reducing the
debt burden, and focusing on core residential development strengths, the
Company is positioning itself for long-term success.
Contacts
One Heritage Group plc
Jason Upton
Chief Executive Officer
Email: jason.upton@one-heritage.com
Robert Holbrook
Head of Finance
Email: robert.holbrook@one-heritage.com
Hybridan LLP (Financial Adviser and Broker)
Claire Louise Noyce
Email : claire.noyce@hybridan.com
Tel: +44 (0)203 764 2341
About One Heritage Group
One Heritage Group PLC is a property development and management Company.
It focuses on the residential sector primarily in the North of England,
seeking out value and maximising opportunities for investors. In 2020 One
Heritage Group PLC became one of the first publicly listed residential
developers with a focus on co-living.
The Company is listed on the Standard List of the Main Market of the
London Stock Exchange, trading under the ticker OHG.
For further information, please visit the Company’s website
at 3 https://www.oneheritageplc.com/.
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Dissemination of a Regulatory Announcement that contains inside
information in accordance with the Market Abuse Regulation (MAR),
transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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ISIN: GB00BLF79495
Category Code: UPD
TIDM: OHG
LEI Code: 2138008ZZUCCE4UZHY23
OAM Categories: 2.2. Inside information
3.1. Additional regulated information required to be
disclosed under the laws of a Member State
Sequence No.: 350294
EQS News ID: 2000017
End of Announcement EQS News Service
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