Balfour Beatty announces disposal of PPP asset and three new projects
Related M&A Transactions
Balfour Beatty has announced the disposal of its 50% interest in the Pinderfields and Pontefract Hospital PPP project, in West Yorkshire, UK.
In addition, Balfour Beatty has reached financial close on a multi-family housing project in the US and been appointed preferred bidder for two student accommodation projects in the US and Australia.
The Pinderfields and Pontefract Hospital, a 88,000 m2 - 708 bed hospital, is being acquired by the current co-shareholder, a subsidiary of HICL Infrastructure Company Limited, the listed infrastructure investment company advised by InfraRed Capital Partners.
The consideration paid for the stake is £61.5 million (US$99.6 million), which exceeded Balfour Beatty management's expectations, generating a gain on disposal of £42.2 million. The proceeds also exceeded the revised Directors' Valuation by £13.5 million, representing an uplift of 28%.
In August 2014 Balfour Beatty published a review of the Directors' Valuation of the PPP portfolio, which resulted in the UK portfolio valuation increasing by 63% to £801 million, and the total portfolio increasing in value by 46% to £1,051 million, as at June 2014.
As part of Balfour Beatty's strategy to recycle equity invested in its portfolio, the group also announced that it has reached financial close on Carmendy Square, a multi-family housing community in Florida, USA, and has also been appointed preferred bidder on two new student accommodation projects, one for The University of Texas at Dallas and one for University of Wollongong in Australia. Balfour Beatty expects to invest approximately £20 million of equity in these projects over the next three years.
Carmendy Square is Balfour Beatty Investment's first investment into a multi-family housing project in the US. The Dallas project is the third student accommodation success in the US in 2014, whilst the Wollongong project is its first project in Australia, leveraging market expertise from the UK and US.
Ian Rylatt, CEO of Balfour Beatty Investments, said:
This disposal supports the substantial increase in the Directors' Valuation of the PPP portfolio, whilst also demonstrating that the valuation maintains a level of prudence. We continue to see a strong pipeline of opportunities and therefore, in line with our strategy of recycling equity, the proceeds will be invested in new projects as we continue to diversify our business.