Price point a strength in London, Telford Homes tells shareholders

Investors in London-focussed residential property developer Telford Homes were told that the company was continuing to perform “well” on Thursday, as they gathered for its annual general meeting.

The AIM-traded firm said the London housing market at its typical price point had remained “robust”, with ongoing demand from a “broad base” of customers.

Chief executive Jon Di-Stefano told shareholders the average price of the open market homes within Telford’s development pipeline was £539,000, with the board expecting that to remain relatively constant in the future.

“Our homes priced below £600,000 continue to sell at a steady rate,” Di-Stefano explained.

“Above that level we have to work harder with prospective customers, but nevertheless we are still securing sales in line with our forecasts.”

Di-Stefano said forward selling continued to be a core part of the business model, through early open market sales launches and forward-funded build-to-rent developments.

He said that approach reduced risk, while increasing visibility over profit recognition and cash inflows.

“Combined with our average price point, this will help to insulate Telford Homes against any short to medium term volatility in the London housing market.”

“Over the past three years we have made strong progress in the build-to-rent sector which now forms a significant part of our future growth strategy.

“Our activity in this burgeoning sector is helping to increase the scale of the business and will enable us to build on our substantial development pipeline of over 4,000 homes.”

Di-Stefano reported that the company had commenced contractual negotiations for the sale of 257 homes at Equipment Works in Walthamstow, E17 with a “significant” build-to-rent investor.

Having purchased the site in December 2017, the group began the formal sale process in April, and reportedly received interest from a large number of investors.

Telford Homes said it expected to proceed to exchange of contracts in the next few months.

“We continue to appraise a number of new build to rent opportunities as we look to strengthen our reputation as one of London's leading developers in the sector,” Di-Stefano added.

“We have previously reported the possibility of forming a longer term partnership with at least one investor and we continue to believe this will be the most productive way of delivering increased build to rent development in the future.

“We are determined to find the right investor to fit with our London focus and with a long term commitment to the sector.”

As a result, Telford had instructed Savills to assist it in this process, and the company expected to make “significant progress” before the end of the year.

Di-Stefano said the board remained confident that the imbalance between supply and the need for new homes at Telford’s typical price point in London would underpin its future growth.

“We remain well placed to achieve our stated goal of exceeding £50m of total pre-tax profit for the year to 31 March 2019, weighted towards the second half as in previous years.

“Our position as one of the leading developers in London will be further enhanced by our increasing activity in the build to rent sector and the continued success of Telford Homes will enable us to deliver consistent returns to our shareholders.”