Development Securities has agreed to acquire Old Vinyl Factory developer Cathedral Group for an initial consideration of £20.9 million.
The acquisition also includes other entities forming part of Cathedral, and with additional deferred and contingent payments is expected to be up to £27.4 million.
Two members of Cathedral’s respected management team – Richard Upton, Cathedral’s Chief Executive, and Barry Bennett, Cathedral’s Chairman – are set to join the DevSec board on completion.
DevSec say Cathedral’s portfolio of nine mixed-use development opportunities in Greater London and the South East of England – including two existing Cathedral/DevSec JVs, The Old Vinyl Factory and Morden Wharf (in Greenwich) – diversifies their existing portfolio and presents opportunities to create value through regeneration. They expect trading gains by an estimated £16.0 million by FY 2017 and a further £29.4 million in the three years thereafter.
Around 25 other Cathedral employees are expected to join Development Securities, giving them a significantly greater capacity for projects.
Other projects include Telegraph Works in Greenwich, The Deptford Project in Deptford, St. Mark’s Square in Bromley, Circus Street in Brighton, and Spirit of Sittingbourne in Kent.
In addition, the portfolio includes two development opportunities totalling 582,700 sq. ft., where the acquisition of the sites is at an advanced stage of negotiation – The Albany in Deptford, and Preston Barracks in Brighton.
Six of the developments have funding in place to execute the relevant business plans, three have achieved detailed or outline planning consents, and planning applications have been submitted in respect of another two.
Michael Marx, Chief Executive Officer of Development Securities, said: “The acquisition of Cathedral is highly complementary to our existing activities. We are adding a portfolio of attractive development projects to our own portfolio, with the potential to deliver further gains in the years ahead. Furthermore, we are strengthening our senior management and delivery teams with highly respected and experienced individuals with whom we have worked for many years. Cathedral share our entrepreneurial and creative spirit and I am confident that the additional capabilities they bring will enable the enlarged Group to accelerate its growth and deliver enhanced value to shareholders in the years ahead.
“The consolidation of the resources of both businesses comes at a timely moment, as the UK economy, especially in Greater London and the South East of England, recommences positive GDP growth.”
Richard Upton, Chief Executive of Cathedral, said: “We are excited to expand our partnership with Development Securities. We already have a successful history together through our existing joint venture partnerships at The Old Vinyl Factory and Morden Wharf and our completed development at The Movement, Greenwich. We are confident that the integration with Development Securities will provide a stronger platform as we progress our existing portfolio of developments towards completion, and secure additional projects to further contribute to the growth of the Company.”