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16 Mar 2022
First Take: National Grid - St William property JV sold
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First Take: National Grid - St William property JV sold
National Grid plc (NG:LON) | 1,054 -58 (-0.5%) | Mkt Cap: 39,215m
- Published:
16 Mar 2022 -
Author:
Martin Young -
Pages:
4
Sale of St William JV
Yesterday National Grid announced the sale of its entire 50% equity interest in the St William Homes LLP ("St William") JV to The Berkeley Group for cash consideration of £412.5m.
Alongside the JV sale, National Grid and Berkeley Group have entered into a series of sale and purchase agreements for a number of additional sites owned by National Grid. These are expected to complete over the period to 2025 for a total consideration of approximately £270m.
Deferred consideration of £230m in respect of sites previously sold to St William is also payable by Berkeley Group to National Grid over the period to 2031.
c.0.7% benefit to valuation
The St William JV is represented in National Grid’s income statement in two ways: (i) as revenue in ‘NGV and Other’ representing sales of property into the JV; and (ii) National Grid’s 50% share of St William’s post-tax earnings. There is no separation by National Grid of its fully consolidated property earnings between sales to St William and other, but the impact on earnings of the disposal is likely to be immaterial, in our view.
Our sum-of-the-parts valuation values NG’s fully consolidated property interests (this includes the future sale of land to St William) at £355m, and we view this as consistent with the £270m referred to above. The deferred consideration in respect of the sites already sold is reflected on National Grid’s balance sheet.
We value National Grid’s 50% stake in St William at book value, equivalent to £137m at 31st March 2021. The value obtained from the sale of the JV interest is therefore a minor positive to our valuation, at c.8p/share (c.0.7%).
We welcome a non-core disposal
We view the disposal as one of a non-core asset, and one that we welcome.