Shares jump as housebuilder offers £1bn payout to investors
Berkeley Group will pay £1bn of its profits to shareholders over the next two years as it laid out plans to increase housing delivery by 50% in the coming years.
Shares in the housebuilder shot up 5% on the news that it will reward shareholders with the unexpected cash, which comes after the firm built up £1bn by reducing land acquisition since the referendum result.
It is able to make the payments because of its strategy to increase delivery on 25 major regeneration sites across London and the South-east. The firm said it would “see Berkeley increase its annual housing delivery (including in its joint ventures) by as much as 50% over the next six years”.
However, Berkeley warned investors that the sale price of homes on regeneration sites would largely be below the average price of properties completed by the firm in recent years.
The increase in production could see the firm build up to 1,850 more homes a year, having constructed 3,700 homes in the 12 months to April 2019.
The firm said last month that it had started work on 20 sites, including a number of the major regeneration schemes, in the past 18 months. Each of these regeneration schemes, such as the Kidbrooke estate (pictured), includes plans for between 1,000 and 5,000 homes.
Prior to today’s statement, Berkeley Group already had a plan to allocate £140m to shareholders every six months from now until 2025. By deciding instead to grant £1bn in two payments this year and next, shareholders will end up receiving £455m more than originally planned.
After 2021, the planned twice-yearly payments of £140m will continue as originally anticipated.
Berkeley is expected to make a profit of £3.3bn in the next six years.
No comments yet