Real estate giant CBRE is set to snap up FTSE housebuilder Telford Homes as it plans to cash in on the UK’s growing build-to-rent market.
The US property giant has reached an all-cash agreement to buy Telford for roughly 350p per share in cash, valuing the deal at £267m and representing an 11.1 per cent premium on Telford’s closing price last night.
News of the offer pushed shares in Telford, which is listed on London’s Alternative Investment Market (Aim), up more than 10 per cent this morning.
Under the leadership of Jon Di-Stefano, Telford has been putting more focus on the build-to-rent market as part of a strategy to offset waning house sales in the capital.
However, margins have been hit by its direction away from traditional private house sales and into the rental market.
Pre-tax profits plunged 13 per cent to £40.1m for the year to the end of March, as the group had warned earlier this year, with steeper discounting and a Brexit-driven slowdown in the property market also driving the drop.
In a statement this morning Telford said it was recommending shareholders vote in favour of the deal.
Its directors, who have been advised by Rothschild & Co as to the financial terms of the acquisition, consider the terms of the deal “to be fair and reasonable”.
CBRE, which is listed on the New York Stock Exchange, said Telford will become a part of its Trammell Crow Company.
Di-Stefano said: “Being part of Trammell Crow Company will allow Telford Homes to enhance its growth in the build to rent / multifamily market in London. Our management team have found that Trammell Crow Company is aligned with both our culture and our current strategy and its platform will give Telford Homes access to greater resources, improved technology and wide-ranging expertise.”
The scheme is set to become effective during the third quarter of 2019.