Skip to content or view screen version

St Modwen financial crisis

Keith Parkins | 17.07.2008 14:55 | Repression | Social Struggles | Birmingham

St Modwen, St Modwen the Destroyer, otherwise known as The Developer from Hell, appears to be in financial crisis.

Massive write down of value of assets, first half losses of £20 million, shares at half their previous high. The recommendation in the business and investment pages of The Independent was to sell!

Burying cash in the sand would be a more fruitful investment!

St Modwen non-existent yuppie flats for sale
St Modwen non-existent yuppie flats for sale

"What was not expected, either by us or the market generally, was the pace and severity of decline in the residential market, which has yet to find a stable level. This means that, for residential land, there is currently no genuine market, as the major housebuilders are unwilling to invest in land until they can see the way ahead more clearly." -- St Modwen

'Poor old St Modwen are having a torrid time at present. No doubt St Modwen will now use the credit crunch and the downturn in the property market to ring yet more concessions out of councils and dilute what little commitment it has to affordable and social housing.' -- Friends of Queen's Market

Earlier in the year, property developer St Modwen was claiming that the credit crunch was being used as an excuse by property companies.

Only a few weeks ago in a puff piece in the local Farnborough comic they were claiming that they were not effected by the property crash and credit crunch!

And yet a few years ago in Farnborough, when St Modwen in an out of court settlement were forced to pay compensation to a local resident, St Modwen claimed they lacked the readies to settle the claim and payment in kind was reluctantly accepted!

All very odd, especially when other property companies were seeing a meltdown in their share price, were laying off staff, were closing regional offices, when town centre redevelopment schemes were being put on hold if not cancelled.

There could be only one explanation, St Modwen was in serious trouble and were trying to talk their way out of it, to create a smokescreen.

And so it has come to pass. St Modwen are in serious difficulty.

In Farnborough, they have trashed the town for an unwanted redevelopment. Now all that exists is boarded-up shops and a huge demolition site. Nothing ever happens. The only plausible explanation, their pathetic excuses to one side, is that they do not have the money.

Currently they are trying to salvage Farnborough by selling non-existent ludicrously overpriced yuppie flats that will be lucky to fetch even half the asking price by 2010, even assuming they are built by then, which on St Modwen's track record is highly unlikely.

The non-extent yuppie flats, Centrus at The Meads, will sit atop a non-existent superstore with 24 hour lorry delivery, overlooking the goods yard. The site is currently a large demolition site and has been since half Farnborough town centre was demolished last summer.

Hatfield consists of boarded-up shops. The St Modwen redevelopment has been put on indefinite hold. The best the local council can offer is to put up a few hanging baskets! St Modwen had offered to start part of the work if the council or another body made a "substantial investment".

As the local paper has reported: 'Smashed windows, 'closing down' signs and boarded up shop fronts scrawled in graffiti clearly show the town centre is on its knees. ... Remaining businesses have now been left in limbo surrounded by derelict properties.' [Ghost town revealed, The Welwyn & Hatfield Times, 4 June 2008]

In Manchester, St Modwen has been forced to make an undisclosed payment (thought to be in the region of between £1,000 and £2,000) to local traders for the damage to their businesses caused by St Modwen.

In Farnborough, no payments or even offers of payments have been made.

St Modwen, apart from the directors of Phoenix, were the only ones to do well out of the collapse of MG Rover. They bought the Longbridge site for a song. Locals wish to see the contaminated site turned into a park. Plans to develop the site have now been put on indefinite hold following recent heavy losses recorded by St Modwen in their interim report.

As have plans to develop a site at Stoke.

Across the country St Modwen has encountered strong local opposition. Be it in London or Green Belt or with unwanted eco-towns.

At Bognor Regis, where St Modwen wish to destroy the seafront, their plans were decisively rejected in an overwhelming no vote in a local referendum, a referendum that local councillors have tried to ignore. The only group to have held any form of consultation with the local community is the local Civic Society.

At Coombeswood, where St Modwen are trying to trash Green Belt, they claim it will enhance the wildlife value of the area!

St Sod-them Properties plc, as they are known in Worcester, has tried to drive a coach and horses through the local plan and green belt and been less than honest and upfront with the local community. [Worcester Stadium row has a wider significance]

Their plans to impose an unwanted eco-town at Long Marston are facing legal challenge.

St Modwen's Elephant & Castle scheme was dead in the water. A £1.5 billion flop for St Modwen as Europe's biggest redevelopment went to an Australian rival. The news sent the St Modwen share price into free fall.

At the time, St Modwen were touting Elephant & Castle as evidence of their prominence in the regeneration businesses. Although it sounds like a sick joke, they were also doing the same with Farnborough, a town centre they have completely trashed.

At Swindon, when St Modwen tried to trash community woodland, they were chased out of town with their corporate tail between their legs.

St Modwen has been forced to write down substantially the value of its assets, has reported huge losses for the first half of the financial year..

St Modwen has slashed £37.7 million from the book value of its residential sites and £16.9 million off its commercial portfolio as a result of the property market slump.

St Modwen has reported an interim loss of £20 million after a net revaluation write-down of £31.8 million versus a profit of £65.1 million a year ago.

The book value of the company's residential sites is now just £14 million above historical cost, and falling rapidly.

City Lofts has gone into administration.

How soon will it be before St Modwen goes into receivership? How long will it be before the banks call in the loans when they see they are backed by worthless assets?
They say revenge is a dish best served cold. For St Modwen it will be Just Desserts!

It will be sweet music indeed for the many small businesses destroyed by St Modwen to see St Modwen driven into bankruptcy by their own rapacious greed.

The model St Modwen has been forcing on town centres under the guise of regeneration – retail, leisure, yuppie flats – is seriously flawed. It is not regeneration, it is exploitation.

Driving out local businesses, to be replaced by High Street retail chains that drain money out of the local economy, is not regeneration, nor is it sustainable development.

That St Modwen is facing financial ruin offers the chance for a rethink. Councils should be thinking of serving Compulsory Purchase Orders to regain control from this rapacious developer, followed by widespread consultation as to how local communities wish to see their town centres developed, green spaces protected.

How were local councils that got into bed with St Modwen so easily conned?

The recommendation from The Independent on St Modwen shares is to sell! An investment in St Modwen is seen as an investment to avoid, 'burying cash in the sand would be a more fruitful option for punters'.

Shares in St Modwen are currently trading at around half their previous high.


Reference and background

Paul Burnell, Retail slowdown hits construction, BBC news on-line, 8 July 2008

Alistair Dawber, St Modwen stricken by the property malaise, The Independent, 15 July 2008

Fight The Height Walthamstow, St Modwen set to invade East London - 18 storey tower block planned, Indymedia UK, 30 April 2008

Roland Gribben, St Modwen in the red after £54m property portfolio writedown, Telegraph, 14 July 2008

Dean Kirby, Cash for traders forced to move, Manchester Evening New, 4 May 2007

Keith Parkins, Redevelopment of Farnborough town centre, Indymedia UK, 9 April 2008

Keith Parkins, Farnborough town centre in its final death throes, Indymedia UK, 21 April 2008

Keith Parkins, Farnborough town centre - unsecured demolition site, Indymedia UK, 28 April 2008

Keith Parkins, More shops to close in Farnborough town centre, Indymedia UK, 23 June 2008

Keith Parkins, Firgrove Court demolition to begin soon, Indymedia UK, 23 June 2008

Keith Parkins, Farnborough town centre crisis worsens, Indymedia UK, 3 July 2008

Keith Parkins, Yuppie flats for sale, Indymedia UK, 8 July 2008

Keith Parkins, Collapse of town centre regeneration schemes, Indymedia UK, 14 July 2008

Project on hold after £20m losses, BBC news on-line, 14 July 2008

Tom Scotney, Credit crunch is no excuse, says St Modwen, Birmingham Post, 12 February 2008

Daniel Thomas and Amanda Vermeulen, St Modwen to reduce debt level after loss, Financial Times, 15 July 2008

Peter Woodifield, St. Modwen Reports Loss After Land Values `Collapse', Bloomberg, 14 July 2008

Keith Parkins


Display the following comment

  1. PPP bastards — Canoe Man