Wire · Echonomia Post
Peel Group has stepped up its attack on Harworth Group’s strategy, continuing to argue that it should take the business private. Peel questioned whether Harworth’s planned exit from residential will deliver value for shareholders and claimed the company has provided “no meaningful detail” on its data centre ambitions. Peel Pepper, the vehicle behind the £582.9m all-cash takeover offer for Harworth, issued its initial response after the developer rejected its 172.5p-per-share bid and unveiled plans to become a pure-play powered land and industrial and logistics specialist.
Peel said Harworth’s latest results showed EPRA NDV per share had fallen 4.3% to 214.8p, while statutory NAV per share declined 4.2% to 206.5p. It also pointed to a negative 1.4% total accounting return over the past 18 months and described Harworth’s new longer-term target of a low double-digit TAR as “unsubstantiated and unconvincing”. The bidder said Harworth had also failed to demonstrate how it would achieve its existing target of growing EPRA NDV to £1bn by 2028-29.
Peel has previously argued that Harworth’s cashflow profile is becoming less sustainable and that its powered land strategy remains at an early stage and said that its data centre strategy is “highly speculative”. The bidder also challenged Harworth’s decision to exit residential, and said that disposing of a segment with a reported valuation of £234m into a challenging market was “unlikely to optimise returns” for shareholders. Sources close to Harworth say the company has not set a fixed timetable for disposing of its 28,584-plot residential pipeline and intends to determine the pace of its exit according to where it can maximise shareholder value.
The company sold 155 residential plots during the first half and expects to complete sales of a further 783 plots by the end of 2026. It also secured planning consent for 660 homes during the period. Additionally, Harworth owns the freehold of 38% of its residential portfolio, with the remainder controlled through joint ventures, options and planning promotion agreements.
No timetable has been set for Harworth’s exit from major long-term residential projects including Ironbridge, Stewartby, Staveley, Diseworth and Grimsby West. Peel also claimed Harworth had provided “no meaningful detail” on its data centre strategy, noting that its powered land portfolio does not yet have full planning consent and arguing that receipts from a potential sale of its second data centre site could come as late as 2033. Harworth has 0.8GW of accepted power offers across its hyperscale data centre pipeline and has identified opportunities across its land bank that could increase the total powered land pipeline to 1.9GW.
Its strategy is to sell sites at the powered-land stage rather than develop data centres itself, allowing it to crystallise value before eventual power-on dates. Harworth points to its £106m sale of powered land at Skelton Grange to Microsoft in 2024 as evidence of that model. It also entered exclusivity with a data centre operator last month over a potential conditional sale of a second site.
Peel’s suggestion that proceeds from that site could arrive as late as 2033 takes the furthest date from Harworth’s stated 2028-33 potential disposal window for five data centre opportunities. Analysis undertaken by JLL for Harworth estimates that, after discounting anticipated future receipts to present value, its data centre pipeline could generate around £121m of incremental value above its EPRA NDV at 30 June – equivalent to 37.3p per share. Peel’s existing offer values Harworth at 172.5p per share, a 36% premium to the three-month volume-weighted average share price before the offer, but a 19.7% discount to Harworth’s latest EPRA NDV per share.
The bidder already controls around 29.96% of Harworth. Peel said it would “carefully review” Harworth’s response to its offer and issue more detailed views in due course. Harworth, meanwhile, maintains that its strategic overhaul was not prompted by the takeover approach.
A source said that Harworth’s board approved the key initiatives behind the new strategy in early July, before Peel announced its offer in August. Image © Adobe Stock Send feedback to Akanksha Soni Follow Estates Gazette
Source: Estates Gazette
