Berkeley Share Discussion Threads

[jonwig] 02/6/2008 11:39

FT, Lex:

Sometimes life is terribly unfair. Chastened by the downturn of the early 1990s, the UK housebuilders did not build speculatively this time round. There is no stock of unsold houses as in Spain and the US to weigh on prices. However the tightness of credit – prompted in part by the excesses in US housing – has had a rapid and dramatic effect on volumes in the UK as mortgage lending has been reined in. Overall sales in April were half the level of a year before, and homebuilder reservations (where a buyer hands over a deposit before the house has actually been completed) were down by roughly two-thirds.

A realistic forecast for price declines of 15 per cent for this year combined with sales volumes down by a third would probably mean the industry makes an operating loss. That means share prices are now discounting Armageddon as well as writedowns to the value of land holdings. At the start of 2007 the seven largest companies had a combined market capitalisation of more than £19bn. They are now worth less than £6bn.

The sector trades on about 0.7 times tangible net asset value, with the two most heavily leveraged companies – Barratt Developments and Taylor Wimpey – on just 0.3 times. A lack of profits means that investors are also anticipating curtailed land purchases. The buying of land for future development is the foundation of the housebuilder model and essential to generating profits in the future.

Bankers will be eyeing loan covenants nervously. In the US, two of the housebuilders rated by Moody's have entered bankruptcy protection so far this year and the remaining 19 are all on negative watch. Increasing resistance to renegotiating lending terms is expected and the builders are furiously trying to cut working capital and keep cash flowing. The UK sector will have to follow suit, which means dividends are under threat. The trouble is, housebuilders will not want to miss out on the opportunity to buy land when prices are depressed. A round of Autumn equity raisings now seems inevitable.

[jonwig] 28/5/2008 14:10

Property Week:

Housebuilder David McLean axes 30 staff

12:33 | 28.05.08

By David Doyle

North-west developer David McLean announced today it will make 30 people redundant in response to the impact of the credit crunch.

The firm, based in Deeside, said the redundancies, which will be focussed on its 'Homes' division, were 'unavoidable in the present climate.'

'As with many companies, this situation is unavoidable in the present climate and we must take these steps now to ensure that we operate in the most efficient way possible in order to maintain our position of strength,' a statement released today said. 'We are confident that as a group, we will remain on target to ride this challenging market.

Exciting opportunities

'There are a number of exciting opportunities arising from the current market and in particular with regard to land. This gives us the confidence to be positive about the future.'

The company, which employs around 300 staff and has a turnover of around £240m, said it is now holding individual consultations with the staff that will be affected.

David McLean Homes, founded in 1972, develops homes in the north west, south west, Midlands and south Wales.

[jonwig] 06/5/2008 16:35

Tempus: Brick building
James Rossiter

A profit warning from Bovis should hardly come as a surprise given the announcement 10 days ago that Persimmon, Britain's most valuable housebuilder, had stopped opening up new sites for construction. Persimmon, like Bovis today, blamed the virtual freeze on lending to first-time buyers.

More remarkable is the lack of recent profit warnings from other similar-sized regional housebuilders whose area managers, like those at Bovis and Persimmon, feed through trading data at the end of every week.

The last time the industry suffered a downturn in housing sales was the spring and summer of 2005 before a cut in interest rates revived the market. That mini downturn sparked some merger and acquisitions activity led by Persimmon's takeover of Westbury.

In October 2005 Westbury, the southern housebuilder with a similar range of small family homes to those built by Bovis, delivered a 26 per cent decline in its full-year profits - its financial year end was August - and by November of that year Persimmon had made a recommended cash bid worth £643 million for the business.

A string of other deals followed but with the targets selling out for ever larger premiums to their net asset values, culminating in Barratt Developments's £2.2 billion purchase of Wilson Bowden a year ago. Barratt today carried a market value of less than £1 billion implying all the goodwill paid for in the Wilson Bowden deal is now considered worthless.

If there is going to be another round of consolidation investors should expect Persimmon to be the first to strike before concrete evidence emerges of a revival in the mortgage lending market.

Both Bovis and Redrow will be in Persimmon's sights as two housebuilders with a good product that sells well when the mortgage market is in full flow but which suffers, like today, from their limited scale when the lending market is a lot tighter.

Time has proved that Persimmon, unlike Barratt, has not overpaid for its acquisitons. With Persimmon's gearing set to fall below 25 per cent this year and hundreds of millions of pounds at its disposal for acquisitions, investors should not be surprised if executives at Persimmon have not started sharpening pencils.

[jonwig] 05/5/2008 07:47

Guardian:

A massive downturn in the property sector has led to £1.3bn merger talks between the housebuilders Bellway and Redrow.

Such a deal would create the second-largest housebuilding firm behind Persimmon at a time when the industry is under enormous pressure to cut costs.

Neither Bellway nor Redrow were willing to comment last night, saying they never discussed "market rumours".

However, well-placed sources confirmed that discussions had taken place. One said: "There is nothing remarkably surprising about all this. Everyone is talking to everyone in the sector about consolidation at the moment and although there was an approach from Bellway, there are no ongoing discussions."

A takeover move by Bellway would be a fundamental change of direction for the company. Under its chief executive, John Watson, it has developed into the UK's fourth-largest housebuilder by stockmarket valuation through organic growth rather than by acquisition.

Last month, the company reported half-year profits had fallen from £100.8m to £96.9m, while Redrow saw its earnings slump even further, from £54.7m to £35.8m. Although Redrow is sixth in size by stockmarket valuation, it has a larger land bank than Bellway.

The results reflect deepening pessimism over the housing market after a long period of prices increasing as homeowners face rising mortgage payments, escalating fuel and food bills, and wider economic uncertainty.

Persimmon said recently that it would postpone new developments after revealing sales had slumped by a quarter in the first four months of the year. Its rival Taylor Wimpey revealed that orders had dropped by 26%.

The Bank of England has added to the widespread gloom by reporting that the number of new mortgages approved for house purchases in March fell to 64,000 from 72,000 in February. This was the lowest level since January 1999, and was down 44% on the figure for the same month last year.

The Land Registry announced a week ago that the number of properties sold between October 2007 and January 2008 was 26% lower than for a year earlier.

[jonwig] 04/5/2008 08:08

THOSE with long memories will remember that at the height of the last property crash in 1991, Sir Lawrie Barratt retook executive control of Barratt, the housebuilder he had founded, when it ran into financial difficulties. He nursed it back to health and since then the sector has enjoyed virtually uninterrupted growth - until now. Barratt is again in trouble, largely due to an ill-timed acquisition by its new chief executive, Mark Clare. The company, which has seen its market value slump to £935m, now faces debts of £1.7 billion, costing at least £100m a year to service.

Clare paid the thick end of £2.2 billion last year for Wilson Bowden, yet again proving that veteran builders like David Wilson have a much better understanding of property cycles than a hired hand like Clare, in his first chief executive role after being lured from Centrica.

It is little surprise the market is spooked that a rights issue at Barratt is imminent. In the past year its share price has slumped from £11.26 to 269Äp. Falling house sales have hit cash flow hard. A cash call is by no means certain, though. This point will be clearer when Clare reports the group's interim management statement on May 14. His first option is to turn off the tap for new land acquisitions which are running at some £100m a month and slow the building programme.

Barratt builds about 17,000 homes a year and already sits on a five-year land bank. Reducing land acquisitions will allow it to service and reduce group debt. It could even pay its full-year dividend. Out of all the housebuilders, Barratt and Taylor Wimpey are in the worst spot, but we are still not in a market like we saw in the 1990s. Barratt, which has to refinance its first £700m next April, can, for the time being, defer a need to raise cash. Clare has learnt the first rule of housebuilding: there is a time to buy and sell - and if you are on the wrong side it hurts.

[jonwig] 01/5/2008 19:30

Times (Tempus):

When at the end of February The Times asked if the Department for Communities and Local Government was sticking with the official Government target of building 240,000 new homes a year by 2016, the answer was a resounding yes.

Last year about 166,000 new homes - for both private ownership and social housing - were built.

Official figures out today reveal that construction orders for both the private and social housing - the so-called public housing and housing associations - have fallen off a cliff since January.

Private housing orders are down 29 per cent during the first quarter this year compared to last year while social housing orders are down 36 per cent.
Related Links

* Orders for new homes slump by 27 per cent

The value of total private housing new builds outnumbers the total value of social housing new builds by about eight to one. As construction costs have hardly moved over the past year it is fair to assume that in aggregate the total number of new housing starts has fallen by about one third.

With housebuilders slowing their rate of construction or, like Persimmon, putting a stop altogether on opening new sites, it is highly likely the rate of decline in new building starts will continue for the rest of the year.

Given that most housebuilders began to put the brakes on new construction late last summer, a 33 per cent annual decline in new build starts later this year will actually represent a far larger fall in the underlying volume of houses being built.

Mike Farley, chief executive of Persimmon, last week told The Times he believed annual housing completions could easily fall to 110,000 over the coming year. That would represent a decline in completions of ... one third. Over the next two years, without a sudden improvement in the economy, the number of completions will reflect the number of building starts.

Mr Farley's prediction last week may have seemed like doom mongering. Today's figures from the ONS however give his forecast far greater creedence.

It is time then once again for Ms Flint to get to grips with market forces, listen to the housing and construction industry, read the official statistics and for the Department for Communities and Local Government to revise Government targets.

Without a revision to Government housing targets the Treasury will simply have to slash the price it expects for thousands of acres of land

Only then will the housebuilders want to take the risk of continuing to buy land and build new homes in a market where house prices are on the slide amid a drought of mortgage finance.

[jonwig] 23/4/2008 11:35

Some landbanks:

BKG ... 31,307 ... 3,260 ... 9.6 years
BWY ... 23,000 ... 6,304 ... 3.6
PSN ... 78,863 .. 15,905 ... 5.0

[jonwig] 22/4/2008 11:25

LONDON (SHARECAST) - Shares in housebuilders moved lower this morning after Merrill Lynch downgraded stocks across the sector, citing reduced demand for new houses and a deterioration in the mortgage environment.

The broker cut its recommendations on Bovis and Taylor Wimpey to 'sell' from 'neutral' and on Barratt, Bellway and Redrow to 'neutral' from 'buy'.

Persimmon is now its only 'buy' recommendation in the sector.

Merrill said that visits to new homes sites showed some evidence of an early season bounce, but that this had faded away in recent weeks. Mortgage lending had also failed to stabilise as anticipated, the broker added.

It said that potential house buyers were holding off in anticipation of falling prices and amid job security concerns, adding that it sees house prices dropping 5% in both 2008 and 2009.

[jonwig] 22/4/2008 09:13

Times today:

Among housebuilders, Persimmon was up 11.5p at 699p after Panmure Gordon upgraded the stock in a new sector review. The broker said: "... current valuations factor in significant downgrades and asset writedowns and, therefore, we think a housing market crash is factored in to share prices. As a result, we maintain our target prices; however, we do move Persimmon from 'hold' to 'buy'."

The rest of the sector was a mixed bag as investor sentiment see-sawed between hope for the mortgage market following the Bank of England's move and fear of a sharper-than-expected economic slowdown. Barratt Developments was down 5.5p at 365.25p, Bovis Homes shed 16p at 512.5p and Bellway lost 23p to 790p, but Taylor Wimpey gained 0.75p to 159.75p and Redrow added 2.75p to 292.75p.

[jonwig] 21/4/2008 17:06

Contract Journal, 16/04/08:

Housebuilders' shares have had a woeful time over the past months though, looking ahead, Bellway is seen as having a rosier future than its competitors.

"Persimmon would love to buy it," explains one financial commentator, "as Bellway's management is one of the best. Yes, share prices have tumbled but as a sector, housebuilding is dynamic and we know that demand is not going to go away.

"The premium Persimmon would have to pay to get Bellway is very high, so Bellway will continue on its own organic growth path. It should retain its independence thanks to the fact that the others are now stretched for cash."

Bovis Homes hits the right buttons for Mike Foster, analyst with stockbroker KBC Peel Hunt. He says Bovis's shares have been oversold and that it has the attraction of a good landbank.

[jonwig] 24/3/2008 06:52

Looking at the housebuilding sector, I've had a feeling for a few weeks that the bottom has passed, with share prices not house prices, of course.

BKG represents the safest defence if that view is wrong; it's unlikely to be the strongest performer in the event of a big rally, as the rating is already high, and it has net cash not gearing.

[jonwig] 24/3/2008 06:49

. .



Major shareholdings (taken from website, 28 May 2015):
Tony Pidgley ..... 6,368,153 4.6699%
Rob Perrins ...... 1,461,792 1.0697%
Greg Fry ......... 1,243,056 0.9096%
Richard Stearn ....... 3,867 0.0028%
Karl Whiteman ....... 80,560 0.0590%
Sean Ellis .......... 57,029 0.0420%
Adrian Li ........... 10,000 0.0073%
John Armitt .......... 9,112 0.0067%
Glyn Barker ......... 10,042 0.0073%
Veronica Wadley ...... 6,500 0.0048%
Alison Nimmo ......... 4,000 0.0029%
Andy Myers ............. 650 0.0005%

[haroldthegreat] 27/1/2008 09:33

why the massive drop?

[haroldthegreat] 27/1/2008 09:33

why the massive drop?

[matthewa] 09/1/2008 08:17

Nearly halved in a month!

[c6rey1] 05/1/2008 09:05

Is that ALL!!!!

[c6rey1] 05/1/2008 09:05

Dropping 19%???????????

[overzeal] 04/1/2008 08:26

NINGY,
They've gone XP, that's all !

[ningy] 04/1/2008 08:17

How WRONG can you be lol

[cerrito] 30/12/2007 20:12

From the Sunday Times picks for 2008
Jenny Davey

BERKELEY GROUP

The shares of housebuilders have bombed amid growing fears of a housing slump. But I suspect the worries are overblown and prices are unlikely to crash in 2008. I believe London and southeast England will fare better than many other parts of Britain, so I am putting my bets on Berkeley Group.

Its shares have already lost a third of their value in seven months even though demand for its homes has stayed resilient. If the share price falls much lower, Berkeley founder and managing director Tony Pidgley will be tempted to try to take the company private. At £13.51, the shares are slightly more expensive than sector peers at 10 times prospective 2008 earnings. But management seems confident the company will buck the gloom – Rob Perrins, finance director, has recently added to his holdings, and next month Berkeley will pay out a special £2-a-share dividend a full year ahead of schedule. The shares are worth buying on hopes of a cyclical rebound in the second half of 2008 boosted by interest-rate cuts and improving sentiment.

[ards] 23/12/2007 08:21

citi think bkg best of worst bunch for 2008

[cashbunny] 07/12/2007 08:19

Hello Hello

[cockneyrebel] 28/9/2007 18:02

Ouch!



CR