Harworth Group, which regenerates large, complex sites, into new industrial and logistics and residential developments, will be issuing a Trading Update next Tuesday, shares now 162p, analyst TP 252p

24.01.2025

This group 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.  

Harworth Group (LON:HWG) 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.  

It has consistently delivered against its growth targets and achieved market-leading returns.  

Since re-listing in 2015, it has grown its Statutory Net Assets by over 137%, whilst delivering a 10% average annual total accounting return. 

Its Capital Growth segment focuses on delivering value by developing the underlying investment and development property portfolios and includes planning and development activity, value engineering, proactive asset management and strategic land acquisition. 

To date, the group has directly developed around 2m sq. ft. of Industrial & Logistics space whilst also master planning sites and enabling land sales for the delivery of more than 5m sq. ft. of Industrial & Logistics space and over 10,000 Residential plots. 

The group's extensive pipeline now includes 9.6m sq. ft. of consented Industrial & Logistics space, expected to deliver up to £0.8bn of Gross development value by the end of 2027.  

Harworth remains confident in its strategy to reach £1bn EPRA NDV by the end of 2027, and to grow its Investment Portfolio to £0.9bn by the end of 2029.  

In The Last Six Months 

This group has really been quite industrious over the last six months. 

On 19th July 2024 it completed the sale of 15.6 acres of residential land to Taylor Wimpey at its Stopes Road development in Bolton, for some £8.5m. 

On 17th September it declared that it had been defined as a FTSE250 Index constituent. 

On 8th October it announced that it had completed the £43.7m acquisition of Catalyst, a 285,000 sq. ft., Grade A, urban logistics estate in Rotherham, South Yorkshire, based upon a net yield of 5.4%. 

Later that month the group held a Capital Markets Day, with members of its Management Team focused on the group's growth opportunity in Industrial & Logistics, its capabilities and track record of successful delivery and its intention to retain more directly developed Grade A space in its Investment Portfolio.  

That was followed by a tour of Skelton Grange and Gascoigne Interchange, two of Harworth's large scale Industrial & Logistics developments. 

Just before last Christmas, on 20th December, the company declared that it had completed the sale of Plot 1, comprising 27 acres of land at its Skelton Grange site in Leeds to Microsoft, for £52.9m.  

It already had in place a second deal with Microsoft for Plot 2 for £53.2m, which is due to be completed in the first six months of next year. 

The former Skelton Grange power station site, to the south-east of Leeds, was purchased by the company in December 2014 for around £3m, the work undertaken by Harworth as master-developer since the 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. 

On 24th December the company announced that it has sold at a premium to its book value, its 278-acre strategic land site in Ansty, Warwickshire, for £53.5m. 

Two Thursday’s ago, on the 9th January, the group reported that in the fourth quarter of 2024 it completed 1,896 Residential plot sales, with a headline sales value of £71.7m, bringing total Residential plot sales for 2024 to 2,385 (2023: 1,170 plots) with a total headline sales value of £104.1m (2023: £52.1m). 

After that was announced the group stated that its extensive Residential land pipeline now totals 31,264 plots, and with 15% of that pipeline already consented, Harworth is well positioned to support delivery of the UK's housing targets across its regions of activity. 

Management Comment 

At that time CEO Lynda Shillaw stated that: 

"Harworth had a busy fourth quarter in 2024, concluding nine Residential land sales, comprising 1,896 plots for £71.7m.  

This takes the total plot sales for 2024 to a new annual Harworth record of 2,385 plots, generating £104.1m of cash, split between upfront and deferred payments, and is in line with our strategic target of 2,000 per year on average.  

Throughout the year we continued to see healthy demand for our high quality de-risked serviced land, and notably we also completed two major land sales at our Skelton Grange and Ansty developments in December, for £106.3m.  

The proceeds from these sales will be reinvested into our Industrial & Logistics development programme to continue creating value for our stakeholders. 

We are committed to delivering sustainable regeneration schemes, creating new communities in our regions, and supporting delivery of much needed high-quality housing in the UK by accelerating delivery at our sites and broadening the range of our mixed tenure products, the latter seeing 582 of the year's plots sales to affordable housing providers.  

Our approach to placemaking and strong collaboration with strategic partners is key to success on these developments, and our extensive consented pipeline of 4,568 plots positions us well to continue supporting growth in the UK." 

The Equity 

There are some 324.96m shares in issue. 

Larger holders include Spencer Roditi (26.19%), Peel Land & Property Investment (26.04%), The Pension Protection Fund (17.76%), Schroder Investment Management (3.56%), Janus Henderson Investors (3.31%), Santander Asset Management (1.81%), Hermes Investment Management (1.29%), The Belvedere Realty Investments (0.98%), Evelyn Partners Investment Management (0.88%) and Premier Fund Managers (0.75%). 

Analyst’s Views 

Three analysts follow the group and all rate its shares as a Buy. 

The Highest analyst Target is 252p, the Lowest just 200p. 

Analyst Bjorn Zietsman, at Panmure Liberum, rates the group’s shares as a Buy with a 200p Target Price. 

For the year to end-December 2024 he estimates that the group’s Net Asset Value will have risen from 211.3p to 232.1p per share, while going for 247.1p in 2025 and as much as 268.4p per share in net assets next year. 

He is impressed by the group’s capital-light, self-funding model which utilises residential plot sales to fund profitable land promotion and industrial development. 

He notes that the company has sold plots to a broad range of Housebuilders, which highlights the demand for de-risked serviced residential land.  

The group’s Q4 residential transactions were spread across multiple sites,

indicating broad based demand, with transactions including 357 plots to Taylor Wimpey in Leicestershire, 530 plots to Bellway Homes in Nottinghamshire, 295 plots to Torus in Merseyside and 282 plots to Homes by Honey and Great Places in South Yorkshire. 

In My View 

Its shares, now at 162p, value the group at only £526m. 

Buying shares in this group, is like buying a pound coin for just 71p, many property sector observers suggest that a 10% to 12% discount on net assets is sensible. 

However, I reckon that the sensible way that this group is being progressed suggests that its shares should actually be trading at a premium to latest net asset value. 

This is no ‘whizz bang’ performer, but more of a good steady progressor, ideal for most portfolios. 

Next Tuesday morning it will be announcing its 2024 Finals Trading Update – I am very bullish and, in due course, see the shares climbing back above the 195p peak achieved last September.