Henry Boot reports stronger second half

Henry Boot CEO Tim Roberts

Henry Boot, the Sheffield-based land promotion, property investment and development group, published a a trading update for the year ended December 31, 2024, reporting a gradual improvement in the economy which translated into a steady increase in demand in its key markets and a stronger second half performance by the firm.

The Henry Boot group comprises Hallam Land, HBD, Stonebridge, Henry Boot Construction, Banner Plant and Road Link.

“According to Nationwide, house prices across the UK increased by 4.7% over the year while industrial property continues to see the strongest rental growth of all our sectors at 5.0%,” said Boot.

“However, transactions of all kinds remain slow to complete. Against this backdrop, our focus on high quality land, prime property development and premium homes saw the group perform relatively well and we expect profit before tax for the year ended 31 December 2024 to be in line with market expectations.

We have continued to make good progress toward our medium-term targets while investing in our long term future. Last month the group announced a transaction that will see it take full ownership of premium regional housebuilder Stonebridge Homes (SH) through the acquisition of the 50% it does not already own in the business from its joint venture (JV) partner.

“The acquisition will be undertaken in three tranches over five years, with the first having completed this month Henry Boot is now the majority shareholder. This transaction further increases our investment in housebuilding and forms a significant part of our growth plans.

As anticipated, by completing sales of major strategic sites and development land the group reduced net debt throughout H2 24 to c.£63m as at 31 December 2024 (30 June 2024:  £103.9m), resulting in gearing remaining well within the stated optimal range of 10-20%.

Hallam Land completed 2,661 residential plot sales in 2024 (2023: 1,944 plots). Although this was below the target of 3,000 plots for the year, Hallam still hit its full year financial target following the employment land sale in Coventry.

“Demand from major housebuilders for Hallam’s prime deliverable sites has improved. In H2 24, at Pickford Gate, Coventry, a total of 491 plots were sold to David Wilson Homes, whilst 632 plots were sold to Vistry Group. Additionally, 52 acres of employment land were sold to Royal London, resulting in total land sales at the scheme of £102m (Hallam share: £36m).

Hallam also grew its land bank to 104,787 plots in 2024 (2023: 100,972 plots), securing 10 new sites which have the potential to deliver c.6,500 plots. The Government’s proposed revisions to the National Planning Policy Framework (NPPF), have already shown early signs of improvement to the planning system. We believe this momentum will continue to unlock the delivery of new homes.

“In total Hallam secured consents on 2,982 plots (2023: 1,014 plots), of which 2,186 were achieved between September and December of last year, bringing the total number of plots with planning consents to 8,822 (June 2024: 7,990). A further 13,146 plots are currently in the planning system awaiting determination.

As a result of the changes to the NPPF, Hallam has identified 10,000 plots, which are expected to be submitted for planning over the next 12 months. This positions the group strongly to meet its medium-term strategic target of selling 3,500 plots pa.

“In 2024, HBD completed schemes with a total gross development value (GDV) of £331m (HBD share: £188m GDV), up from £126m last year (2023: HBD share: £112m GDV), of which 72% have been pre-let or pre-sold.

“This includes Island, (HBD Share: £33m GDV), a Net Zero Carbon (NZC) office building in Manchester city centre in a JV with Greater Manchester Pension Fund, which was completed in November on time and on budget.

“In October, a pre-let was secured for 50% of the space across the top five floors on a 10 year lease to Virgin Media O2, achieving a record office rent in Manchester. The remaining space is attracting strong occupier interest. Setl, (HBD share: £32m GDV), a 102 premium apartment building in Birmingham, was completed at the end of May last year.

“As of 20 January 2025, 64% of the units have been sold/reserved at target selling prices, achieving an average reservation rate of 1.0 unit per week. This includes c.£15m of sales that have either been completed or unconditionally exchanged.

With regard to the industrial and logistic sector (I&L), HBD completed a total of c.540,000 sq ft, including Rainham, (HBD share: £24m GDV), a four unit NZC development serving Greater London in a JV with Barings and two units (HBD share: £20m GDV) at Airport Business Park, Southend.

“At SPARK Walsall, specialist remediation works (HBD share: £37m GDV) also completed, allowing the first phase of this 620,000 sq ft prime development to begin.

Last month, HBD formed a UK focused I&L JV with Feldberg Capital, known as Origin. It has been seeded with three sites from our pipeline with a combined GDV of c.£100m. The JV intends to deliver c.£1bn of high quality I&L schemes over the next seven years. Earlier this month the JV secured a £54m development loan from BGO to fund the acquisition and development of the seed assets.

Following the completion of three significant schemes, combined with a more prudent approach to commencing new projects, HBD’s committed development programme now has a total GDV of £124m (HBD share: £33m GDV) compared to £299m at the end of 2023 (HBD share: £159m GDV).

“The committed schemes are currently 25% pre-let or pre-sold with 98% of development costs fixed. HBD also has optionality on a significant near-term pipeline, which includes various I&L schemes and Neighbourhood, Birmingham (£123m GDV) a 414-unit BtR development where HBD is pursuing institutional interest in forward funding the scheme …”

Henry Boot CEO Tim Roberts said: “Throughout 2024, we saw a gradual improvement in market conditions which translated into a steady increase in demand across our key sectors. This, coupled with our focus on high quality land, prime property development and premium homes means we expect year end profits to be in line with market expectations. 

Late last year we agreed two transactions which we see as being important steps in achieving our medium term growth and return objectives. First is our phased acquisition to take full ownership of premium housebuilder, Stonebridge Homes, and secondly the industrial & logistics joint venture with Feldberg Capital, which allows us to accelerate our development pipeline and recycle capital more efficiently.

Looking forward, we have started 2025 with a bit more optimism, albeit while the reduction in interest rates provided a welcome boost to the economy, the trend downwards is now anticipated to be at a slightly slower pace than previously expected.

“The improvements to the planning system we have already seen under the new government also give us confidence, and we therefore intend to ramp up our planning applications, with a further 10,000 plots expected to be made in 2025.”