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The first phase of Mayfield, including offices, won planning consent in February

U+I swings to full-year loss

Sarah Townsend

The regeneration developer reported a pre-tax loss of £58.6m for the year ended 31 March, dipping from a £6.3m profit the previous year due to “market disruption” on Brexit, the 2019 general election and the pandemic.

Matthew Weiner, chief executive of U+I said: “The last twelve months have been challenging, to say the least, and this is reflected in our results. Confidence briefly returned to the market in early 2020 with strong interest in commercial and residential space following the general election.

“However, the onset of Covid-19 caused most decision making and development progress to grind to a halt. The socioeconomic impact of Covid-19 will continue, at least for the short-term, driving new trends and behaviours.”

U+I, which is part of the consortium leading the £1.4bn redevelopment of the Mayfield Depot in Manchester, missed its earnings target for the full-year 2020, as it predicted in March, with development and trading gains falling sharply to £11m from £42.8m a year earlier.

The full-year gains figure – most of which (£9.3m) was from the sale of the Harwell Campus in Oxfordshire last year – is well below the company’s £35m-£45m target, mainly because of delivery delays, U+I said its full-year 2020 financial statement to the London Stock Exchange today. It warned in April that project timelines could slip due to the lockdown.

The £58.6m loss for the year is mainly attributed to investment portfolio revaluations accounting for £13.5m, the statement said.

Other factors contributing to the loss were provisions on historic projects in London accounting for £20.1m; the impact of overhead and net interest costs, accounting for £21.1m and not fully offset by development and trading gains; and a decision to impair project bid costs of £3.7m at a Dublin regeneration scheme, for which U+I has been shortlisted as a preferred developer.

Meanwhile, the company’s investment portfolio value, including share of joint ventures, was down 7.9% year-on-year to £130.6m, “primarily reflecting the continued market decline in retail sector property values”, according to the filing.

However, U+I reported a “positive outlook” for the Covid-19 recovery period, and said major city-regions such as Manchester, London and Dublin were well placed to benefit from “accelerated structural demand for mixed-use regeneration”.

Weiner said: “Our business model, centred on regenerating underestimated sites, often too complex for others, means we are particularly well placed to benefit from this demand, as, more than ever, the public and private sector rely on trusted partners to help them to unlock value from their assets, many of which are rich in history and character.

“We have responded quickly to the unfolding pandemic, strengthening our balance sheet and accelerating our efficiencies programme, which will enable us to emerge stronger once markets start to normalise.”

The company is also considering “opportunistic acquisitions that strengthen [its] development, trading and investment pipeline”, the chief executive added.

U+I launched a search for new acquisitions in May, placing a particular emphasis on income-producing land investments with a minimum 5% yield.

The company’s existing pipeline is primed for delivery, with resolution to grant planning or planning consent already in place for 6m sq ft of the portfolio, according to the statement.

 

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