Telford Homes to be bought by CBRE in £267m deal
London-focused housebuilder Telford Homes has agreed to a £267 million takeover by the world’s largest real estate services firm.
New York-listed CBRE has tabled a 350p-a-share offer for the group, sending shares in the builder soaring 12%.
Telford said it believes the offer – at an 11% premium to Tuesday’s closing price – is at a “fair value” given the current market conditions.
The firm recently revealed annual profits dropped 13% and warned 2019-20 results will also take a knock because of delays to its key project at City North in Finsbury Park.
Housebuilders are also seeing costs rise and shaky buyer confidence amid Brexit uncertainty, with prices stagnating.
Andrew Wiseman, chairman of Telford Homes, said: “The board believes that the offer from CBRE represents fair value for shareholders in light of Telford Homes’ market positioning, the current operating environment and the underlying value of Telford Homes’ site portfolio and pipeline.
“The board remains confident in the long-term prospects of the business, however the board also recognises the risks posed by the political and macro-economic environment, as well as the already stated impact on the group’s short and medium-term profitability from the implementation of its new build-to-rent strategy, which is lower margin in nature.”
CBRE, which has more than 90,000 employees and over 480 offices worldwide, plans to keep Telford as a standalone business within its Trammell Crow Company.
Jon Di-Stefano will continue as chief executive of Telford after the takeover.
CBRE said it sees “limited” scope for job cuts in Telford’s 300-strong workforce following the deal.
It added: “Any headcount reductions resulting from such rationalisation will be mainly targeted at operational and administrative functions and are not expected to be significant.”
Chairman Mr Wiseman is set to resign following the acquisition, if it is approved by shareholders.
Aim-listed Telford was founded in 2000 and has a development portfolio of £1.3 billion.
It recently switched strategy towards lower-margin build-to-rent developments, which offer greater revenue growth prospects.
Sales from this part of the market now account for 31% of the group’s total revenues, up from 21% the year before.
The developer’s shift in focus comes as it believes there is significant support from politicians and investors for build-to-rent developments in London to help solve the capital’s housing crisis.
Bob Sulentic, president and chief executive of CBRE, said: “The UK is in the early stages of a secular shift toward institutionally owned urban rental housing, similar to what we have seen in the US over the last two decades.
“Telford Homes is well positioned to lead this trend.”