Proactive Investors - Run By Investors For Investors

Redrow and Cairn Homes under the cosh as founders reduce stakes in the housebuilders

Redrow's chairman and Bridgemere Securities have sold a 7% interest while three founders of Cairn Homes will offload a 2.1% stake
The housing market has slowed following last year's Brexit vote

Redrow plc (LON:RDW) and Cairn Homes PLC (LON:CRN) shares dropped after saying their founders were selling stakes in the housebuilders.

Redrow said its chairman Steve Morgan, who founded Redrow in 1974, has sold a 7% interest in the housebuilder through his charitable trust, The Steve Morgan Foundation, and Bridgemere Securities. 

Morgan disposed of 25.9 million existing ordinary shares at a 590p per share via an accelerated bookbuild.

Barclays Bank PLC acted through its investment bank as sole global co-ordinator and co-bookrunner with Peel Hunt.

Morgan and his vehicles will remain the company's largest shareholder with a 33% stake.

Shares fell 8.38% to 579.50p in afternoon trading. 

READ: Redrow says demand for homes remains strong despite Brexit as it reports record 2017 results

In September Morgan announced he plans to ease back from a full-time executive to a non-executive role but would continue to lead the business strategy and be involved in key projects.

"We believe this announcement could raise the question on whether Mr. Morgan will ultimately sell his entire stake in the company, and whether Redrow will be able to continue to grow successfully without Mr. Morgan's leadership," said analysts at UBS

"However, we highlight the market is now supported by (1) low interest rates; (2) structural undersupply; (3) supportive land market with limited competition allowing for attractive returns; (4) government support in the form of Help-to-Buy and planning reform."

Redrow cautious on outlook

The news comes a week after Redrow achieved record 2017 results and said it was confident of another strong performance in the next financial year despite the challenges facing the housing market, sending its share price higher.

In the year to 30 June 2017, pre-tax profit rose 26% to £315mln compared to the previous year and revenue increased 20% to £1.66bn, driven by a 15% gain in legal completions to 5,416 and 7% growth in the average selling price to £309,800.

However, the group highlighted key issues that “need to be addressed by government to support future growth”, including the status of European Union workers after Brexit, plans for the Help to Buy scheme and the need to revitalise stalled planning reforms.

Cairn Homes founders reduce stake

Irish housebuilder Cairn Homes said three of its founders will sell a 2.1% stake, or 15.64 million shares, in the company.

Chief executive Michael Stanley, his brother chief commercial officer Kevin Stanley and executive director Alan McIntosh will reduce their holdings.

Following the placing, Michael Stanley’s voting rights will reduce to 2.1% from 2.9%, Kevin Stanley’s will fall to 0.9% from 1.2% and McIntosh’s entities will drop to 4.7% from 5.8%.

Goodbody has been appointed as sole bookrunner of the placing, which will be launched today through an accelerated bookbuild.

Shares declined 3.96% to 1.730p.

Last week, Cairn Homes reported first half gross profits jumped to €7.7 mln from €5.1mln last year as revenue rose to €42.2mln from €16.0mln last year with 94 sales completions and forward sales of 474 units. 

The housing market has slowed since the UK voted to leave the European Union. Cairn Homes said while uncertainty remains for the broader Irish economy, it expects to benefit from the relocation of financial services jobs to Dublin from London. 

View full RDW profile View Profile

Redrow plc Timeline

February 08 2017

Related Articles

April 11 2018
Some 80% of Belvoir’s revenue comes from letting, which insulates it to a large degree from the ‘disruptors’
industrial property warehouse
June 12 2018
Custodian’s portfolio is weighted towards industrial sector and split between industrial, retail, office and other properties

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use