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Investors have welcomed Vistry’s plans to merge its housebuilding and affordable homes divisions, with shares in the company increasing by 12.6% yesterday.
The group announced yesterday that profits before tax dropped by 8.4% to £174m in the first half of the year, despite revenues growing 31.4% to £1.77bn during the period.
But it warned that sales of private homes slowed again in June as high mortgage rates continued to erode demand for new homes.
As a result, Vistry, which merged with with Countryside late last year in a deal worth £1.1bn, unveiled plans to now solely focus on building affordable homes and no longer build private homes.
The listed housebuilding giant is to merge its 8,700-home traditional housebuilding business in with the newly bolstered partnerships housing business, until now known as Countryside Partnerships, under plans to take advantage of the shortage of affordable mixed-tenure housing in the UK.
Under the initiative, Vistry said it will bring its housebuilding and partnerships operations together “with a simplified operating structure under a single business”, re-purposing land held by housebuilding for partnerships housing.
It said this will involve pre-selling at least 50% of the homes on a site to partners – typically housing associations, Build to Rent investors, local authorities or later living providers – with the firm targeting an average of 65% of plots on each site pre-sold.
Vistry said the re-organisation would drive a further £25m in cost savings, over and above the £60m in efficiencies it said had already been derived from the Countryside purchase, and would result in the number of business units being cut from 32 to 27.
Greg Fitzgerald, chief executive of Vistry, said: “The scale of the social need for affordable mixed tenure housing across the country continues to increase and it is clear that Vistry is uniquely positioned as the leader in partnerships housing.
“In this context and following our annual review of the Group’s strategy, the Board has concluded that focusing the Group’s operations fully on partnerships by merging our Housebuilding operations with our Partnerships business, best enables sustained growth in housing output, [and] provides greater benefits to our partners, while maximising value”.
Housebuilders Vistry Group and Countryside to merge in £1.3bn deal
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