Real estate services giant CBRE is poised to purchase British house builder Telford Homes for €297 mln.
The New York-listed firm has placed a 350p-per-share offer, which sent shares in Telford shooting 12% up.
The deal is a bid by CBRE to get a slice of the build-to-rent market in the UK, which is growing as home-ownership declines among younger people. Telford's income from build-to-rent developments has jumped 10% to 31% of total revenue, compared to last year. The builder has a development portfolio of €1.45 bn.
CBRE’s offer values the entire issued and to-be-issued ordinary share capital of Telford Homes at approximately £267.4 mlm on a fully diluted basis. FactSet data valued the deal at roughly £340 mln, including net debt.
CBRE's CEO, Bob Sulentie, said: ‘The UK is in the early stages of a secular shift toward institutionally-owned urban rental housing, similar to what we have seen in the US over the last two decades. Telford Homes is well positioned to lead this trend.’
Telford Homes’ chairman Andrew Wiseman said: ‘The board believes that the offer from CBRE represents fair value for shareholders in light of Telford Homes’ market positioning, the current operating environment and the underlying value of Telford Homes’ site portfolio and pipeline.
‘The board remains confident in the long-term prospects of the business, however the board also recognises the risks posed by the political and macro-economic environment, as well as the already stated impact on the group’s short and medium-term profitability from the implementation of its new build-to-rent strategy, which is lower margin in nature.’
Telford Homes will remain a stand-alone business after CBRE acquires it, reports say.
Law firm Reed Smith is advising Telford Homes on the deal.
Delphine Currie, Reed Smith’s co-chair of global corporate group, said: ‘Having worked with Telford Homes since the company’s formation and admission to AIM in 2001, I am delighted to be working with them on this significant transaction, which showcases the strength and depth of our corporate expertise.’