Home Estate Planning Property giant Bruntwood makes worst loss in its near 50-year history

Property giant Bruntwood makes worst loss in its near 50-year history

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Property giant Bruntwood has slumped to its worst losses in its near 50-year history, it has been revealed.

Bruntwood has reported pre-tax losses of £226.5m for the year to October 2, 2023, according to newly-filed accounts, having posted a profit of £79.6m in the prior 12 months.

The Manchester-headquartered group is lead by chief executive Chris Oglesby who was awarded an OBE in the King’s Birthday Honours List last year.

The property group owns almost 100 landmark buildings and commercial spaces across Greater Manchester, Cheshire, Liverpool, Birmingham, Leeds and Glasgow.

Bruntwood Limited’s latest accounts also show its turnover increased from £108.5m to £111.8m over the year.

A statement signed off by the board said: “With an economic backdrop of rising interest rates, political uncertainty and the cost-of-living crisis it is not surprising that Brentwood has seen its worst loss in its 47-year history.

“This is as a result of the market-driven reduction in our property values having to be recognised through our profit and loss, despite not being realised; an accounting policy that changed with the adoption of FRS102.

“Increases in interest rates from 2.25 per cent to 5.25 per cent by the Bank of England to combat rising inflation, and increases in gilt rates demanded by the financial markets due to inflationary risk have put unprecedented pressure on valuation yields, which have consequently increased at a faster rate than seen in my 35 years in the industry.

“our average valuation yield has moved from 6.74 per cent to 7.92 per cent which all other factors being equal would give rise to a 19 per cent movement in values.

“Our portfolio has, however, seen a 17 per cent decreased, with positive movements driven by our activity in increasing rental levels and reducing vacant.

“The valuation reduction is almost entirely due to external forces and leads to the loss on revaluation of £199.3m seen in our results.

“Our joint ventures also saw the pressures of external yields, with valuation losses of £109m within these driving our share of losses.

“It is therefore pleasing to report the fundamental of the business as seen in the underlying gross profit, remain strong. Gross profit has increased from £61.5m to £62.5m.”

The group’s SciTech joint venture with Legal & General secured a £500m investment in October 2023 and welcomed the UK’s largest local authority pension fund, Greater Manchester Pension Fund, as a shareholder.

Bruntwood SciTech has a target to create a £5bn UK-wide portfolio that supports 2,600 high-growth businesses by 2032.

The property group added: “There is no dub that the ever-changing economic environment will continue to prove challenging.

“However, with some stabilisation on the horizon in interest and gilt rates, our valuation yields now look conservative and values will recover as inflation feeds through to rent expectations.

“The group is well positioned with a strong balance sheet, a business model aligned to the needs of its customers and a strong regional portfolio.

“We remain inherently embedded in our cities and communities, with a purpose aligned to ensuring their ongoing success and sustainability.

“We look forward to the coming year as we come together with our joint venture partners, our civic and academic partners and our retained towns business to create thriving cities.”

During the year the average number of people employed by Bruntwood fell rom 727 to 696.

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