Principle Barriers Holding Back Schemes & Public Sector Solutions 24
Barriers to growth: 1 2 3 4 5 6 7 8 Not enough outlets Too slow Sales Rates (Mortgage availability) Not enough land: Public sector land speed of delivery to market Alternative delivery models BTR Planning/Complexity/Local standards/sangs Balance Sheets Small to medium sized companies Infrastructure/Cash Flow Up front costs Funding Challenges Grant post March 15, Mixed use funding Viability values/s106/cil 25
To Deliver 232,000 Dwellings p.a. Assuming 25% Affordable housing Then 174,000 OM Dwellings required p.a. (Double!) At 2.5 SPOM (0.58 SPOW), then 5,800 outlets required p.a. Housing Developers report consented Land Banks of 400,000 Dw (2 years supply v need but length and distribution not even) On average, the equivalent of 20 new Outlets p.a. need consenting in the 327 Local Authority areas (but significant housing demand only in 50% of LA areas). Help to Buy Functionin g Planning System Get the 100,000 plots on public sector land to market 26
Public Sector Land: Partnerships & collaboration Severalls Hospital 248 dwellings Deferred payment terms Secured under HCA DPP Oakgrove, Milton Keynes 1,100 dwellings new community 7,000m 2 mixed commercial OJEU bid JV with the HCA Phased draw down 27
To Stimulate New Markets Deliver on 1bn BTR Funding Follow through on related 3bn debt guarantees
Planning a success story Kilnwood Vale, Crawley, Sussex Strategic project with original option signed in 2002 Successfully promoted through Core Strategy and Area Action Plan with outline planning granted in October 2011 for 2,250 units Landowner sought fixed price deal for first 1,416 units Price agreed October 2011 Site purchased in October 2012 Remaining 830 units to be acquired in due course pursuant to existing option and further expansion land possible and subject to same option GBB funding secured for initial infrastructure 11 years from option to delivery Browfielfd development in an area of need with supportive LPA s Good example of the duty to cooperate What role financial incentives (NHB?) Source: Company information. 29
Planning successes for the wrong reasons Imberhorne Lane, East Grinstead Rocky Lane, Haywards Heath 100 homes, c. 30m estimated GDV Site promoted through the emerging Core Strategy. Planning application for 100 units submitted and refused by the LPA LPA which does not have a five year land supply did not offer any evidence at Inquiry Inspector granted planning permission in June 2011 Site acquired pursuant to option at discount to OMV with first delivery anticipated in 2013 5 Year land supply Stronger Executive Leadershi/ Greater incentives (NHB?) 96 homes, c. 35m estimated GDV Same LPA still doesn t have a five year land supply and following successful approval on appeal at Imberhorne Lane, East Grinstead, Council agreed to application being made for an initial 100 dwellings An application for 96 units submitted and planning permission granted in August 2012 Site capacity for another 100 dwellings with further planning application to be made in Spring 2013 30
Planning at scale in EM3 Area a complex story Longcross, Surrey: 310 acre mixed use development abutting Wentworth 50/50 joint venture with Aviva following freehold acquisition in 2005. Site let for short-term use pending re development netting circa 3m per annum Allocated in the now revoked S. E. Plan Strategic housing need Allocated as Major Development Site in the green belt Northern site 111 acres already consented for 113,434 sqm meets local B1 Office development. New outline planning application submitted for 83,613 sqm B1 offices and 200 dwellings issues: SANGS Local Traffic Surrounded by high-value Surrey and Berkshire postcodes with excellent transport links including Longcross Halt rail station within the site How to get the duty to cooperate to work? Potential for further 1,300 dwellings and supporting mixed use development on 200 acre Southern Site following Council decision to allocate in Core Strategy Source: Company information 31
Developers Contribution to Planning. Quality design and build Reputation for developing quality housing with well-conceived master plans More CABE Building For Life Gold Standard awards than any other developer Awarded five stars for customer satisfaction three years in a row by the HBF Second place in Next Generation industry wide sustainability benchmark for past four years Project winner at the 2012 Housing Design Awards Ongoing training in Building for Life 12 across all development and planning staff to maintain core skills in delivering places in which people want to live, work and play Planning expertise as a key differentiator and barrier to entry for new entrants 32
Development appropriate to its context Broad range of development and project management skills gives Crest Access to variety of development opportunities and markets The capability to design aspirational, residential led developments for its partners The expertise to deliver both housing and urban development Capability to meet partners expectations and create a forward land supply 33
Mending Balance Sheets 55% 50% 45% 40% 35% 30% 25% 20% Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Smaller builders Top 10 builders Top 11-50 builders Jul-12 Aug-12 50.9% 26.9% 22.3% Target Help to Small & Medium sized developers FY12 gearing pre and post offering (indicative) compared with the listed peer group 50% 44.2% 40% 37.9% 30% 20% 23.5% 21.9% 19.2% 16.7% 16.0% 14.5% 10% 0% 9.3% 9.5% 7.2% 2.5% 5.4% n.m. n.m. n.m. 3.7% Barratt Crest Nicholson pre-offering Taylor Wimpey Redrow Crest Nicholson post-offering Berkeley Bellw ay Bovis Persimmon Net Debt /TNAV Net Debt + Land Creditors /TNAV Source: Company information, Crest FY12 data subject to audit Note: Last reported balance sheet figures. Crest Nicholson post new money balance sheet assumes 50m of primary equity raised 1) 10m utilised to cover Guarantee liabilities 34
Infrastructure/Cash flow Making sites deliverable Bath Riverside, Bath Contracted to acquire from private vendor by major project team in 2004 Infrastructure Crest appointed as Bath Council preferred funding/ development partner for whole development 7.9m public funding towards new infrastructure GBB & GPF secured from Bath Council and HCA Outline planning granted for a 2,281 dwelling new urban quarter for Bath in Dec 2010 EM3 Growing Enterprise 813 unit first phase to be delivered on Crest owned land with supporting mixed Funding uses Further phases secured by exclusivity agreement 142 legal completions in FY12 Source: Company information. 35
Affordable Housing Grant Post March 15 Centenary Quay, Woolston, Southampton Crest appointed as development partner by South East Regional Development Agency in 2006 following OJEU tender Outline planning secured for 250m landmark regeneration of 12.5 hectares of Southampton waterfront incorporating 1,653 residential dwellings, including 25% affordable Food store and retail space; new library and Primary Care Trust facility 228,500 sq ft Marine Employment Zone (by others) Project to be completed over c. 8 10 years Acquired in phases with first two phases on site 65 dwellings completed in 2012 with 96 completions anticipated in 2013 Further 1,317 plots and supermarket not in the Group s portfolio but potentially secured through a lock out agreement Being delivered in partnership with Homes and Communities Agency (HCA) Government to Announce & commit to post Mar15 models and funding streams 36
Viability Daventry, Northampton Crest entered into a Development Agreement with Capel House Property Trust to design and deliver this housing led mixed use development in 2012 financial year Revised outline planning permission and Section 106 Agreement secured in July 2012 for 1,000 unit development with estimated GDV of 175m and reduced off site payments and affordable housing First phase detailed planning application submitted with approval anticipated Spring 2013 Development to be delivered in accordance with Garden Village principles including a mixed use centre and supermarket Tools to renegotiate S106 Agreements. Setting of realistic CIL charging rates Land to be drawn in phases and secured at a base price of less than 15k/plot, with the vendor entitled to participate in revenue upside, payable over the life of the development upon phase completions Solutions to funding Affordable housing Crest benefits from priority returns thereafter with surplus proceeds shared with landowner in agreed proportions 37
Complexity & the costs of regulation and sustainability Smart planning around building regulations provides potential incremental cost benefits Anticipating future direction of regulation to ensure full compliance with new requirements Sustainability team of three, leading innovation and research, integrated with the business Customer focused & advanced designs; lean delivery Structured research for achieving Zero Carbon Working with the Technology Strategy Board on building performance evaluation Leading the sector in R&D: 6.4m TSB part funded research consortium AIMC4 TSB funded R&D programme at Centenary Quay into the performance of the CHP installation and the as built performance of the homes. Wider structured programmes for post-occupancy research; 12-24 months of real information Ability for the industry to deliver with economies of scale to known national standards! With an agreed carbon reduction time line and definition Crest s AIMC4 homes at Noble Park, Epsom have been delivered to Code 4 without renewable technology Crest is already delivering Code 4 dwellings on several of its larger projects and expects by 2013 to have transitioned the business into delivering cost effective low energy building solutions 38