"It's Credity and It's OOOhhh SOOooo Crunchy", but if you're a 'brownfield land development specialist' its not especially tasty.
Like lots of companies, which have to borrow heavily in order to make speculative investments, St Modwen are feeling the pinch. Their shares have fallen by over 50% in the last year and, as a result, its borrowings of £470 million are about £100 million more than its worth.
Back in July [before everything went the shape of pears] Bill Oliver [Chief Executive of St Modwen] said that "We will no longer sell any residential land because of a lack of buyers. We put four or five sites [Can't think where that might have been .. Ed.] on the market in spring time and found that national house builders were no longer bidding. There is long-term value there and so we won’t sell into a market that isn’t there".
Which suggests that, even back then, they were not likely to be investing in a large scale retail and residential development like the Arcade Site. In their most recent report to share holders [October 1st] they have said;
"The residential land market remains virtually non existent. We do not expect this market to recover for some time, and are planning our business accordingly."
to which they add, for good measure;
“Cash management and cost control are priorities at this time, and the necessary decisions are being taken to maintain the long-term potential of the business.”
Which, you would think, should put the kibosh on building a monstrous monument to the 'good old days' when credit was cheap, and more storeys meant fatter wallets.
Its not all doom and gloom for lovers of St Ms style in brownfield land grabs. No, even though they are;
"being very selective in the acquisition opportunities we pursue".
They will instead be pursuing
"a number of development agreement opportunities where the initial requirement is to put in our skills rather than cash."
Surely no council would be dumb enough to buy these skills, ......................would they?
Still, it would be interesting to know what LBWF are planing to do now. However, I fear we may be greeted as per, by a protracted silence, a whistling wind and a few tumble weeds rolling down the street [or litter, if the Kier contract is not quite 'embedded' in your street]
For all the latest St Modwen misery check out their FT slot