KUALA LUMPUR: Eco World International Berhad (EcoWorld International) announced today that it has agreed terms with Be Living Holdings Limited (Be Living), the development arm of prominent UK contractor and developer Willmott Dixon Holdings Limited, to acquire a 70% stake with plans to jointly develop 12 sites in Greater London and the South East of England. The estimated total gross development value (GDV) of the 12 sites is at least £2.6 billion (approximately RM14 billion) with acquisition of the sites to be carried out in 2 stages.
The joint-venture also contemplates the acquisition of a development management company (DMco) with a full multi-disciplinary team of highly experienced personnel. Going forward, the DMco will be the development manager of all projects under the joint-venture with Be Living. This will provide EcoWorld International, as the 70% shareholder of the DMco, with a strong pool of in-house talent and manpower resources to grow its UK business and bring it to greater heights.
The definitive agreement for the Stage 1 sites (Stage 1 SPA) has been signed with Be Living and negotiations are at an advanced stage for the Stage 2 sites. EcoWorld International targets to complete its acquisition of the Stage 1 sites by the 1st quarter of 2018. Negotiations and documentations for Stage 2 sites are expected to conclude shortly after.
“Today’s announcement is the culmination of several months of hard work to seal the deal with Be Living that will transform not just the size but also the scale and scope of our operations in the United Kingdom. We are truly appreciative of our new partners at both Willmott Dixon and Be Living for the faith they have placed in us to grow the joint-venture’s development business in the UK, said Tan Sri Liew Kee Sin, Executive Vice Chairman of EcoWorld International.
“On our part, we will do our utmost to bring value to the partnership by applying the best of what we have learnt as a developer operating in three different continents to the projects that we will be undertaking together. Given the breadth and depth of our combined and complementary strengths in the international arena and local UK market, I am both confident and tremendously excited about what we can achieve through this joint-venture,” he continued.
The 12 sites which are the subject of the joint-venture are located within the London commuter belt in areas where the local population live and commute to the capital for work. All are close to or within a 10-20 minute walk to tube or rail stations offering a 30-40 minute commute to Central London and providing easy access to International Airports.
The sites to be acquired under the Stage 1 Acquisitions are as follows:
|2.||Kensal Rise and Maida Hill||Brent and Westminster, London|
|3.||Millbrook Park||Barnet, London|
|4.||Barking Abbey Retail Park||Barking and Dagenham, London|
|5.||Barking Tesco||Barking and Dagenham, London|
|6.||Nantly House, Lampton||Hounslow, London|
Several of the sites have received planning consent which will enable the Group to move on to plan for the launch of the same within a year of completion of site acquisition. The others are targeted to be launched within a year of full planning consent being received.
The remaining 6 sites proposed to be acquired as part of the Stage 2 Acquisitions have largely not received planning consents yet. Taking a more prudent approach, the Group has agreed with Be Living for these sites to be injected into the joint-venture progressively, subject to planning consents meeting pre-agreed minimum criteria being obtained from the local councils for each of the Stage 2 projects.
The Stage 2 sites are as follows:
|1.||Kew Bridge||Hounslow, London|
|2.||Aberfeldy Village||Tower Hamlets, London|
|4.||Tulse Hill||Lambeth, London|
|6.||Tesco Osterley||Hounslow, London|
Due to the location of the projects outside Central London, the price point envisaged for the products to be developed by the joint-venture will range from £500 psf to £800 psf. This broadens the spectrum of price points currently offered by EcoWorld International’s existing portfolio of development projects and will allow it to tap into the large pool of domestic and foreign investors in the affordable segment.
Domestic buyers of projects within the price range contemplated above are entitled to benefit from government homeownership initiatives such as the Help-to-Buy scheme, where the United Kingdom Government will provide an equity loan (interest-free for 5 years) for new build residential properties of up to 40% of the price within Greater London and 20% outside of London.
Recently, in the Chancellor’s Autumn Statement in November 2017 a stamp duty relief has also been proposed for properties priced up to £500,000 in London. Along with the Help-to-Buy scheme this will boost the already strong local demand for homes within these price points and further insulate the affordable segment from global sentiment. All this also bodes well for the joint-venture given that a majority of the homes to be developed are proposed to be priced below £500,000.
“The proposed joint venture with Be Living is truly a game-changer for EcoWorld International on many fronts. Firstly, our development presence in the UK will potentially increase by fourfold with approximately 8,200 units to be added on to our existing portfolio once we complete the acquisition of all 12 sites,” said Dato’ Teow Leong Seng, President & CEO of EcoWorld International.
“From a geographic and market penetration standpoint our reach will also extend from Central London where our products are priced from £800 psf to £1,500 psf to Greater London and the South East of England where we will be able to offer homes priced from £500 psf to £800 psf that an average income earner is able to afford. This will enable us to serve the needs of both the local market and our traditional international audience to grow the joint-venture into a strong and sustainable long-term player in the UK residential development market,” he continued.
Teow further explained that the joint-venture will enable EcoWorld International to establish an immediate footprint in the Build-to-Rent (“BTR”) subsector by co-developing the BTR platform with Be Living and enter the private rented sector (“PRS”) given the increasing demand in the private rental market.
In addition, the Group will be able to leverage on Willmott Dixon’s long-established reputation in the construction industry, as well as extensive network of business relations and contacts developed with key stakeholders and local authorities, to potentially participate as a co-developer in off-market residential schemes.
“We are also delighted to welcome 110 talented individuals who will be joining the DMco into the EcoWorld International family. Their presence as part of the Group will greatly strengthen the viability of our business model going forward as we will now have the in-house capability and expertise to manage our own projects in the UK as full-fledged multi-disciplinary developer,” Teow said.
The Purchase Consideration for EcoWorld International’s acquisition of its 70% stake in the Stage 1 sites and DMCo is £64.9 million (approximately RM356 million). This is proposed to be fully funded using part of the proceeds raised from its recent Initial Public Offering (“IPO”).
The Purchase Consideration for the Stage 2 sites have yet to be finalised however the Group is planning to fully fund this using a combination of bank borrowings and / or other debt instruments. This is in view of its low gearing level of only 0.05 times following the conclusion of its IPO in April 2017 which successfully raised more than RM2.5 billion.
Please refer to the detailed announcement for further details of the proposed acquisition and joint-venture.