Hargreaves Services Share Discussion Threads

[smithie6] 28/11/2020 15:25

interesting

[meijiman] 28/11/2020 12:45

Maybe our ceo made fantastic decisions buying these open cast mines a decade or so ago. So far sighted they were bought for their building development potential.

[muckshifter] 28/11/2020 11:36

Yes CT, I thought I'd remembered correctly. I was very impressed at the time by that development on a severely contaminated site I was familiar with, and wondered who owned Waystone. Finding out that it was a Schreier family business was not much of a surprise as I had watched Bernard Schreier since, I think it would be the 80s, when he was a big second hand Cat dealer.

IIRC, he used to buy up plant from sites, do it up and then sell it at a good profit, and I worked out that his opposition ie. Levertons, Finnings etc, official cat dealers, could not compete with him. Later, again iirc, he started buying up sickly opencast coal operators, and again I wondered how he made a success of them. But I never found out if they were just undervalued in terms of the amount of plant they held, or if they had undervalued remaining coal, overvalued reinstatement provisions held in special accounts, under measured and valued spare parts for heavy machinery, or in the case of private OCCSs, land which had great value potential if reinstated in the right way. But I was sure he had an angle.

Fast forward to yesterday's conversations on this thread and you can see where my take on the expertise of Waystone, and the benefit to HSP of the JV came from.

[castleford tiger] 27/11/2020 22:58

Some great discussions today

Couple of points
Harwood have a seat on the board now.

Waystone muckshifter is correct did and are still developing j32 at Castleford.
I got to know the team quite well.

I remain of the opinion that HSP has plenty of hidden value
Tiger

[smithie6] 27/11/2020 13:07

permission to build the road to the main commercial area, close to junction 5 on M18
was given in Sept. '20
750m long, some of that 750m will be imo for road branches on the commercial estate/area

hxxp://unity-yorkshire.com/unity-connect-primary-estate-road-receives-planning-consent/

so, perhaps work to build it might not have started yet....but Balfour Beatty have the inside track to do the work since they are already there with machines to build the road across the whole site, which that news release said was planned to open in Jan. 2021. The latest news for that date might have changed a little if there have been any delays for bad weather or problems. But things are definitely moving forward.

(I think that news in the future (Jan./Feb.'20) (& a video ) of that public road being open thru to a junction of a motorway, going thru a very big development site that HSP owns & which already has planning permission to build 3100 houses etc etc... should surely help the value of the land & hopefully the share price :-) )

It mentions that the permission helps the marketing of the remaining warehouse/commercial land (which might imo have a value close to the previous sale, £25 million, since it is of a very similar size & is at the same location).

[smithie6] 27/11/2020 12:59

splitting off the land division

interesting idea

[terry236] 27/11/2020 12:57

I think Harwood could be the ultimate buyer of HSP, maybe once they are at a more advanced stage on multiple sites/projects. Or on the flip side they could push (once the coal biz is of far smaller size) for HSP to be split up, one taking the land, the other with the energy/industrial businesses.

[smithie6] 27/11/2020 12:44

interesting

Hardwood Capital own 28% of HSP, ref. the HSP website, AIM rule 26 info.

& the following is info for the property section of Hardwood Capital

"Harwood’s existing portfolio comprises investments in the private rented sector, commercial property, and residential development. Harwood Real Estate are looking to acquire additional investments in towns across the UK which are experiencing increases in rents and capital values"

so, there is always the possibility that Hardwood could be a buyer of some of the HSP land,
eg. if they wanted to get income from renting houses or warehouses/commercial property then they could do that at various of the HSP sites.

[terry236] 27/11/2020 12:17

hxxps://www.eastlothiancourier.com/news/18899806.latest-plans-town-centre-blindwells-unveiled-next-week/

[smithie6] 27/11/2020 11:52

nice to see the share price up again today

(the mkt phps likes the news that the cross site road at the Hatfield site is being built & phps 30% has been tarmac'd.....& hence a feeling that that project is now going to move forward...(& that the £9 million from Bellway (Blindswell project) & £25 million to the JV for the Hatfield project should be received in coming months, a step change from only paying out for site infrastructure (~£17 million at Blindswell ! over last 3 financial years) to seeing big payments being received)...

coupled with the +ve boost to mkts of the plans for injecting the population with vaccines & the Covid19 crisis ending at some time in 2021....improving the environment for the market for ppl buying houses (& property companies buying land from companies like HSP to meet that demand for houses)

[smithie6] 27/11/2020 11:51

hmmmm

not sure
feeling I get is that the co. would see it as commercial info which it doesnt have to reveal

but shareholders can ask.

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interesting that Weystone got planning permission for that cross site road back in 2009 !, even though not built until the present weeks, 11 years later

so, one guess is that the 50:50 JV agreement might go back to 2009 or before ??

[smithie6] 27/11/2020 11:01

Waystone might well have good experience & knowledge

but lets be honest here, we are not talking about building the first nuclear bomb !

putting houses onto land, it's been done before I believe !!

& for any projects, sure the project needs the right skills to do different jobs, but so what, you go out & get competing quotes to provide those skills, be it earth moving (which HSP are highly skilled at themselves), putting in sewage, gas pipes, street lights

as a land owner you don't give 50% of the land value to say the sewage pipe installing company just because the sewage pipes are important/vital

perhaps Waystone have to pay for a big mass of costs such as project roads, sewage pipes, etc etc ??

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well, the company is majority owned by big external stakeholders such as IIs
so I guess the 50:50 JV for the Hatfield site must have been a correct decision, since if any stupid major financial decisions were made the director responsable would just get removed by the company owners (which is not the bod)

[muckshifter] 27/11/2020 10:50

Smithie6,

Waystone puts in a lot of expertise, imo (and no doubt originally some cash to balance the undeveloped land value). I have a feeling that Waystone was the key to the development of the severely contaminated land next to the M62 at junction 31 or 2 near Castleford where there is now a big leisure / shopping complex, so their expertise in all aspects of planning approval, remedial works, etc, is valuable.

Interesting stuff about the M18 link road, I thought it was just from the development to the M18, not right through the site. Again, Waystone will have had a big hand in getting that commitment from the local authorities.

PS. 50 /50 is the end result, so that means 50% of the eventual profit to Hargreaves.

[smithie6] 27/11/2020 09:55

muckshifter

"The Schrier (Waystone) / Hargreaves JV at Hatfield colliery, or Unity as they call it, is a 50 /50 JV"

You know how this works ?
Hargreaves is putting in to the JV a massive plot of land with planning position for 3100 houses & 60 hectares of commercial use. That has a high value, over 100 million pounds...so I can't see how the JV can be 50:50 unless the other partner (Waystone) contributes a similar value/amount.

What has Waystone put in to the JV ??!

imo they can't expect 50% of the profit from the land that someone else owns (Hargreaves) !!...

(the £25 million that will arrive for the 32 hectares at Hatfield site ....what % of it will Hargreaves get ??, noting that Hargreaves owns 100% of that land)

anyone know more ?

[smithie6] 27/11/2020 09:49

the link road across the whole site is budgetted/contracted at £16.7 million
(is it about 2 miles long, & it needs a bridge over train line & that is obviously expensive)

& I've seen info that says that the JV part of that is ~£3.7million, if my memory is correct from yesterday.

it's a public road contract so the info is on the net

----

cost of privately funded road to go to the planned warehouse on the sold 32 hectare site ?
no idea but I would guess 1-2 million might cover it.
depends if it has to have lighting, pavements;

& depends if it has to go around 3 sides/borders of the sold site (multiples the total length needed) or just to the closest corner
..my guess is that it would have to go along at least 2 sides (1 long side & 1 short side)

it only has to go to the first (closest) roundabout after the junction 5 on M18, between the new roundabout & the junction is already there now, or 95% there and mostly paid for with public money.

[smithie6] 27/11/2020 09:38

I can tell you that

:-)

[muckshifter] 27/11/2020 08:05

That's a valiant attempt at ascertaining the property value of Blindwells and Hatfield, Smithie6. The Schreier (Waystone) / Hargreaves JV at Hatfield colliery, or Unity as they call it, is a 50 /50 JV. Knowing the Schreier organisation, I would be surprised if they haven't managed to get some local authority financial support for the link to the M18, but haven't seen any costings etc in Hargreaves Annual Reports.

[smithie6] 26/11/2020 19:36

imo the 25 million to the JV for the Unitygate project should be completed/paid in this fin. year of HSP (to end of May '21)

(what % of it will HSP get ??)

(the access road close to junction 5 is surfaced, & putting a road across the whole 250 hectare site is happening now, perhaps 30% is tarmac'd & work is happening
I think they plan to finish it in January -March 2021, so, not far away
....I assume that the short road to the 32 hectare warehouse site is also happening now using the same machines & workers)

& also £9million +£1million of sales at Blindwells=£10million

so, there should be some solid cash inflow in this fin. year of HSP & a solid % of profit I assume out of that £25million payment to the JV, ( or to at least pay for most/all current/future site devel. costs)

[smithie6] 26/11/2020 18:53

site near Hatfield, near Doncaster in England ..

RNS
"32 hectare (79 acre) plot to a national retailer for the development of a 75,000 sq metre (800,000 sq ft) national distribution centre and training facility. The sale, which will realise approximately GBP25m of revenue for the joint venture on legal completion, is conditional upon..." ...access road &...

32 hectares from a total of 250 !
so 218 hectares left !!


32 hectares for £25 million
£781k per hectare !!!

it is valuable land.

noting that X % will be for empty spaces, Z% for roads/streets etc etc.....which are not sellable m2

---
A) valuation method A.
even at £350k per hectare
(too low. Bellway paid 9 million for land for 147 houses I think. (but perhaps the best area on the site ??; & Bellway are offerring 3,4,5 bedroom houses; cheaper starter homes will bring down the total average)
61k/house plot
£2 million per hectare, but this will be for building land & excludes m2 of roads etc.)


the remaining 218 hectares @ only 350k/hectare (including roads & open spaces) (too low) would be worth
218 x 350k= £ 76.3 million. (I see it as being notably higher)
+ the 25 million deal = ~£100 million (too low)

minus cost of access road to this warehouse (200-300 metres ?, not far, slap bang next to the slip road to junction 5) - site development costs - planning appl. costs - legal - project team -

B) valuation method B
assume 25 million for the rest of the commercial useage land. ~35 more hectares
say £25 million again. ( but higher costs for roads since more smaller units, so more access roads)

& say average 50k/serviced home plot (guestimated number based on Bellway deal at Blindswell project near Edinburgh) & licence is for 3000 homes at this project. Is £50k accurate ?
= £50k x 3000
= £150 million

total guestimated possible income = 25 +25 + 150
= £200 million

costs= road to big warehouse + roads to smaller warehouses + roads to houses + HSP % of road ( + bridge) from junction 5 thru the site to local town + project team + legal costs + partner % + ...+....+...+
who pays for installing site/home services like sewage, gas, electricity, water
= ?

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I think method/guestimate B is more accurate

estimating the numerous costs, much more difficult to do I think, unless you have experience in the housing project/development sector

-----

this site has

- train station. at the edge of it ('Hayfield')
- direct motorway access to the site !. junction - on M18 !

-----

the road going thru the site from the junction across to the local town is being part funded by public money.
lovely :-)

(noting that a road had to be built thru the site anyway to help people get closer to their houses !...)


-----

Anyone know the typical deal with the partner ?
HSP owns the land ...& I haven't seen any news that the partner has put in any cash at all, so I assume they get a % of sales or something...& perhaps a profit bonus.

[smithie6] 26/11/2020 18:34

I guess that the total money received & total costs won't be known for a few years for phase 1, 1600 houses
& later for the 900 houses of phase 2

do you know how much has been done for the £17-20 million that HSP has spent (ref. accounts)...& whether it is all done now for phase 1 ??

does the 17-20 million include all the roads in phase 1 ? , power cabling ?, sewage pipes ? , fresh water pipes ?, gas pipes ?

or is there notable money still to be spent for phase 1 ?

the school to be built. the state pays for that or HSP ?

------

some assets will I assume produce a lower sale price per acre or m2 of land/property, lower price homes
..while some assets will I assume produce a higher sale price per acre or m2
such as shops, bar, café, restaurant (clients from the final 2500 homes (6500-7500 people !!) & customers of the park & ride)

[muckshifter] 26/11/2020 17:57

Smithie6,
You ask “any experts on typical costs to provide services & roads for a residential site ?

per hectare !!

But Blindwells is not a normal or “typical”; residential building site. It is a site with considerable civil engineering work needed to prepare it, with considerable settlement risks to be overcome. If you read the sections of annual and half year reports related to Blindwells from say mid 2018, you will get a flavour of how difficult these plots are to prepare. I don’t think HSP have achieved even one of the many predictions of plot availability, sales completion, etc. during those two years. So, this is not easy or cheap plot preparation work, and I doubt if even HSP themselves could give you an accurate prediction of the profitability of the site yet. It should be reasonably profitable imo, but probably not the bonanza many here are expecting.

[smithie6] 26/11/2020 15:59

ah ha
so, it was tipped.

------

strong price movement up in the last 1/2 hour

[sphere25] 26/11/2020 15:34

Added here. Shares on offer are drying up, suspect that larger seller is clearing out allowing a bigger push higher. Someone picked up a very significant 201,431 just after close yesterday too.

Normally this would move big on little buying, but the buying of late has been notable, and it hasn't shifted in the same proportion as historic moves. Now it could be set to go.

Not a subscriber but seen the Simon Thompson with a strong buy update as per the noted stream of buys earlier:

"An unwarranted 39 per cent discount to NAV of 403p (land is in the books at cost), the shares offer material upside to the 320p target price I outlined"

All imo

DYOR

[smithie6] 26/11/2020 12:34

Sphere25

yes, some big trades reported at the end of recent days, which look like sales
(1 such trade reported today, for yesterday)
(while on the other hand 2 directors bt shares recently, on 23rd Nov at ~220p, the non-exec chairman put in over £100k more, to add to his existing holding, a sizeable chunk of cash)

a sequence of buy trades of 1500 shares each time, close together, at around midday today
hmmmm
looks imo like repeated trades from 1 person; which the MM wouldn't like, officially it's not allowed I think....supposed to place 1 bigger trade (& pay a bigger spread !)

[smithie6] 26/11/2020 12:21

any experts on typical costs to provide services & roads for a residential site ?

per hectare !!

it's a key factor in estimating possible HSP profits from developing/selling any land

----

1600 homes in phase 1
& 900 in phase 2, if it happens
= 2500 homes

at £50k/homeplot
that is £125 million

but then you have to deduct a lot of costs

At Blindwells ~16M spent on site infrastructure in last 2 years
& ~2 million the year before
..close to 20M
& a lot more infrastructure yet to go in I assume...including for phase 2, if it happens X years in the future

& then there is marketing, project team, office lease costs, office heating, any advisers...& a % of the plc costs &...

====

note: it is only 1 of the HSP projects, using its big land bank

=====

the location close to Edinburgh & the good road connection (A1), bordering the site !! & the train station is very positive.....producing lots of demand for housing...which can surely soak up 2500 new homes without problem, over time

whereas if the site was in the middle of no-where & with bad road links & no train line it would be impossible I assume to sell 2500 serviced home plots at £50k/plot.