viewTaylor Wimpey

Taylor Wimpey raises £500mln and goes on land buying spree

Sales demand has been strong since it reopened sales centres, the FTSE 100-listed housebuilder said

Taylor Wimpey -

Taylor Wimpey PLC ((LON:TW.) said it has raised £522mln through a placing and retail share offer to give it the firepower to add to its landbank. 

The FTSE 100-listed housebuilder said that disruption in the land market as a result of the coronavirus (COVID-19) pandemic has thrown up the chance to buy plots for future development at good prices.

Deals on twelve sites have been agreed, it added, with the average operating profit margin above the company’s medium-term target.

Terms had also been agreed in principle for a further 13 sites with talks underway on a further 60.

Sales demand had been strong since it reopened sales centres, Taylor Wimpey added, with 0.62 net private sales per week in the three weeks to June 14, 2020. That compares with 0.51 for the week ending May 31, 2020, and 0.85 this time a year ago.

The builder also confirmed it intends to resume ordinary dividend payments in 2021.

The fundraise included £515mln from a placing at 145p a share, or a 5% discount to the group's closing price last night. The retail offer was at the same price.

William Ryder, Equity Analyst at Hargreaves Lansdown said:  “Taylor Wimpey’s given its vote of confidence to the housing market, and has raised half a billion pounds to take advantage of the opportunities it’s spied in the land market.

 "In addition, it’s giving the government back its money for the furlough scheme as trading has been stronger than feared.

"However, if the economy fails to gather the momentum needed to pull itself out of this slump house prices could fall heavily. In this case, Taylor’s confidence will look like hubris, and investors will regret pouring in additional funds.

"But fortune favours the bold, and courage now could set Taylor up for years of strong returns.”

Shares dropped 5% to 144.4p.

-- adds comment, share price --

Quick facts: Taylor Wimpey

Price: 101.2 GBX

Market: LSE
Market Cap: £3.69 billion

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