One Heritage widens loss on project delay, costs

The Salford-based developer posted an operating loss of £2.1m for the year to end of June, attributed to a delay in the completion of its Lincoln House apartment scheme in Bolton, and rising construction costs.

One Heritage Group said its operating loss for the 12 months ended 30 June 2022 widened from £800,000 in 2021 – a loss at gross profit level of £700,000.

Annual profit was “impacted by a delay in the completion of its Lincoln House, Bolton, development and impairment of £1.3m across two of its development projects due to construction price increases”, the company said in a filing to the London Stock Exchange, where its shares are listed.

Lincoln House, a five-storey block containing 88 flats, was completed in August, “which has made a positive change to its balance sheet”, the filing said.

In January this year, One Heritage acquired Seaton House on Wellington Street in Stockport from a private investor and is drawing up plans to convert the office building into 30 apartments under permitted development rights, as its next Greater Manchester project.

Seaton House is close to another One Heritage project, 57 St Petersgate, which is being converted into 18 apartments.

The developer is also building the £37m One Victoria scheme – previously known as One Heritage and intended to be Salford’s tallest residential development – comprising two buildings of 10 and 13 storeys fronting Mirabel Street and Great Ducie Street.

In September, it appointed Leeds-based Torsion Construction as the main contractor to build the 129-home scheme, and the project is targeted to complete in the third quarter of next year.

Despite the overall loss, One Heritage grew its revenues by 276% to £1.7m in the 12 months to end of June, according to today’s filing. This was due to the sale in May of its 13-unit co-living property, 5-9 Nicholas Street in Burnley, as well as revenues from the group’s development management, co-living, and property services.

Group inventory increased from £7.2m to £15.1m in the period due to expenditure on four developments that are expected to be completed in the financial year to 30 June 2023. Net debt increased by £9.57m to £14.95m, and One Heritage raised £1.5m via an unsecured corporate bond in March, the company said.

Meanwhile, construction is ongoing on three of the group’s residential projects, totalling 68 units, according to the filing, and One Heritage expects to complete three developments in the next financial year ahead.

In the 2022 period, One Heritage signed a service agreement for co-living services and a further development management agreement, increasing its development management portfolio to four projects, including One Victoria.

Two planning applications were granted, for St Petersgate Stockport and Churchgate in Leicester, and an outstanding planning application for Seaton House is expected to be determined by the end of 2022.

Also in the period, a tenancy agreement was signed with Bolton NHS Foundation Trust to occupy 62 of the 88 apartments at Lincoln House until August 2023 at the earliest, the statement added.

One Heritage expects to expand its residential property services and co-living property services in the coming period following completion of its developments and is looking at ways to mitigate against the impact of cost pressures ahead.

Chief executive Jason Upton said: “I am immensely proud of our people and the progress that the group has made in what has been a challenging year for the industry. Our annual report provides a comprehensive view of the performance of the business and our strategy going forward with four strategic priorities outlined.

“Our environment is challenging, but there continues to be a lack of supply of quality residential accommodation in the UK, especially within areas of the North of England. We are particularly well-positioned to satisfy market demand in our chosen sectors and are confident in delivering on our business strategy.”

A contractor was appointed to build One Victoria in September. Credit: via One Heritage