Matt Crompton
Managing Director, Urban Regeneration
Nigel Franklin
Managing Director, Urban Regeneration
The division’s approach to partnering underpinned the achievements of Muse in 2008.
In 2008 the Urban Regeneration division delivered revenue of £84m (2007: £26m) and operating profit of £7.8m (2007: £4.2m), its first full year contribution following its acquisition in July 2007.
The division is responding to the challenges of the market by revisiting existing plans and rephasing developments to ensure it is best placed to take full advantage when the market improves. Although the recent softening of the commercial and residential property sectors means the short-term outlook for the division is subdued, the Group remains of the view that mixed use development is central to the regeneration of urban communities in areas of social and economic deprivation and will provide major opportunities in the long-term.
The division’s approach to partnering underpinned the achievements of Muse in 2008. In particular it secured the £350m redevelopment of Swindon Town Centre in partnership with Swindon Borough Council, South West of England Regional Development Agency and the Homes and Communities Agency. During the year the division also created a number of new facilities for clients, including the Greater Manchester Police Authority, Intercontinental Hotels, Standard Life and the Department for Communities and Local Government. In all, over 700,000 sq ft of offices, industrial, leisure and residential facilities were completed during the year.
Several other large scale opportunities, where Muse is in a preferred developer position, were also advanced considerably during the year.
These are expected to conclude during 2009 and to provide phases of profitable development in future years. Commercial and residential lettings and pre sales in 2008, including a 45,000 sq ft pre sale of an office building to United Utilities plc in Warrington, will contribute towards Muse’s income in future years.
Muse’s business model provides insulation from adverse cost and value corrections, as it does not hold substantial land assets. Its share of the development pipeline of projects in which it has an interest has increased in value to £1.3bn (2007: £1.2bn) with its share of three projects at preferred bidder valued at £650m. The division is expecting subdued conditions in the shortterm with an excellent platform for growth when the market returns to strength in the medium-term.
The division
The Urban Regeneration division, Muse Developments (‘Muse’), is a developer of large-scale mixed use urban regeneration projects. The business has an established track record and operates in the office, industrial, residential, leisure and ancillary retail sectors.
Typically Muse’s business involves creating relationships with public and private sector land owners who do not have the skill set or capital base to extract optimum value from their land assets. Muse uses its development experience to secure planning consent, develop, let and sell property through a partnership agreement that optimises profit and land value for itself and its partner respectively.
Unlike a property company, Muse does not hold long-term property investments or land banks, which means it has a limited exposure to adverse land and property valuations.
| 2008 | 2007* | |
|---|---|---|
| Revenue | £84m | £26m |
| Operating profit | £7.8m | £4.2m |
| Margin | 9.3% | 16.2% |
| Share of development pipeline |
£1.3bn | £1.2bn |
*2007 figures relate to five months’
performance only.
Operating profit is profit from operations
before amortisation
