Harworth Group has revealed its net development value (NDV) took a hit in a trading update for the financial year for the 12 months to the end of December.
The company said its EPRA NDV would be ‘within the current market consensus range and towards the lower end’, due to ‘market-driven outward yield movements in the valuation of the investment portfolio and more mature industrial and logistics major development sites, amid rising interest rates and a softening of macroeconomic conditions’.
Lynda Shillaw, chief executive of Harworth, said: “Despite resilient demand and our management actions to drive value across the portfolio, a combination of rising interest rates, inflation and wider market and political headwinds have weighed heavily on investor sentiment in the second half. This has translated into a reversal of our first half valuation gains and a marginal net decline in valuations and therefore in EPRA NDV over the year.
“Continued economic volatility means that the market backdrop for the year ahead is challenging. Uncertainty is likely to remain in our markets until interest rates reach their peak, and inflation falls back to manageable levels, creating the conditions for growth and improved investor confidence. Against this backdrop it is important to highlight that our focus markets of residential and industrial and logistics are drivers of economic growth and continue to have robust fundamentals, and that there remains an acute shortage of high-quality consented land.”
Shillaw added the company ended the year in a strong financial position with low gearing and significant available liquidity.
“Harworth is a long-term through-the-cycle business, which means that we look through near-term market conditions,” she said. “We control our landbank, where and when we invest, and have a highly experienced management team who are focused on execution.
“We are confident that our strategy is the right one to deliver long-term value to stakeholders while making progress on our net zero carbon commitments, and our strong financial position, differentiated products, and the scale and mix of our portfolio, position us well to realise the full potential of our sites.”
Harworth’s share price fell 2.52% in morning trading to £116.00 off the back of the update. The company will publish its full year results on 14 March 2023.
