Develop North PLC (Develop North), managed by Newcastle-upon-Tyne-based wealth management and fund management specialists, Tier One Capital Ltd (Tier One), passed a lending milestone of more than £70million during its most recent financial year.
In its annual results for the year ending 30 November 2023, Develop North has reported that, since 2017, it has now loaned £71 million to help fund commercial and residential property schemes in the North of England and Scotland.
Since inception, Develop North has created almost 3,000 jobs and supported 33 developments with a gross development value (GDV) of over £180m.
This landmark figure was achieved in the period following the agreement of four new loans including a £2.2million, 30-month facility to fund the construction of a new warehouse in Darlington, a £1.1million, 18-month facility to refurbish a hotel and wedding venue in North Yorkshire and two residential developments for a combined £2.4m in Aberdeenshire, Scotland.
Develop North is also forecasting an upturn in the property development market in 2024, following tough trading conditions that continued during the past 12 months.
It has navigated this period achieving turnover of £1.72million and profits of £0.261million with fund deployment totalling £19.5million as at 30 November 2023. The fund deployment was reduced by £5.7million since last year as Develop North saw three loans successfully repaid in the period.
Develop North has also delivered a Net Asset Value return of 1.4 percent, earnings per share of 2.5p and total dividends of 4 pence per share during the year.
Continued confidence in the fund was also demonstrated by the renewal of its rolling credit facility with Shawbrook Bank Ltd, which renewed to May 2025.
John Newlands, chairman of Develop North, said: “Notwithstanding the prospect of a general election, which always impacts the economy, a degree of market confidence and rising property transaction volumes is expected in 2024 as interest rates ease and affordability improves.
“Inflation is falling and, as the Chancellor indicated in the recent Budget, is expected to reach the Bank of England’s two percent target quicker than originally forecast, which will also fuel positivity.
“The property markets where we lend, while not immune to wider economic trends, have not suffered the turbulence experienced in other parts of the UK, in particular the South East. As such, the affordability of home prices has been less stretched and there has consequently been only a modest correction in prices in response to the changing interest rate regime.
“Moreover, I believe the lending disciplines that Tier One has in place will continue to provide protection to our loan portfolio; the relationships with developers, the maintenance of prudent loan to value ratios and the knowledge of each site and developments to which we lend.
“Therefore, Develop North will press ahead with identifying and investing in real estate projects of the highest quality, continuing to enhance the fund’s portfolio and strengthen its reputation in the market. This should lead to the creation of shareholder value that is sustainable in the longer term.”
Brendan O’Grady, Fund Manager at Tier One, the investment adviser to Develop North, said: “We are very proud to have achieved this significant lending milestone supporting developers across the North of England and Scotland, demonstrating Develop North’s role as a viable and effective lender in the property market.
“We are confident that the sustainable approach we have taken to the Develop North fund, the quality and experience of the developer management teams we are working with and the improving economic backdrop will enable us to support a growing number of developments. We are currently at various stages of due diligence across a number of projects in the North East of England, which is a strong indication of the confidence that will continue and grow in 2024.”