Harworth Group announces £106.6m land sale at Skelton Grange to Microsoft

Harworth Group plc, a prominent land and property regenerator, has exchanged contracts for the conditional sale of 48 acres of land at its Skelton Grange site in Leeds to MSFT MCIO Limited (“Microsoft“). The total sale price of £106.6 million, payable in two tranches, reflects a strategic advancement in Harworth’s emphasis on the direct development of Grade A Industrial & Logistics properties.

The transaction includes two plots: Plot 1, a 27-acre unserviced parcel selling for approximately £52.9 million with completion expected in H2 2024, and Plot 2, a 21-acre serviced parcel selling for about £53.2 million targeted for completion in H1 2026. The disposal price represents a premium over the book value, indicating a lucrative deal for Harworth. The company also plans to reinvest the net proceeds into its strategic landbank, enhancing its investment portfolio and focusing on growing recurring earnings.

This sale is classified as a Class 2 transaction under the Financial Conduct Authority’s Listing Rules and marks a significant milestone in Harworth’s growth strategy. The funds from this sale will support the direct development of more Industrial & Logistics properties, aiming to increase the size of its Investment Portfolio to about £0.9 billion by the end of 2029.

Skelton Grange has been a focal point of regeneration since Harworth’s acquisition in 2014. It has undergone extensive remediation and development, culminating in approvals for significant Industrial & Logistics space. This site, once a power station, is transforming into a hub for modern industry, including potential for a hyperscale datacentre and a Battery Energy Storage System (BESS) facility, contributing significantly to local economic growth.

Upon the transaction’s completion, Harworth will have invested approximately £36.7 million into the site, with an expected return of £135.7 million from sales. The development aligns with Harworth’s commitment to placemaking and creating sustainable places where people want to live and work, targeting an internal rate of return (IRR) over 40%.

Lynda Shillaw, CEO of Harworth Group, stated, “This transaction not only represents our largest deal to date but also exemplifies our capability in regenerating brownfield land. We are confident in our strategic focus on Industrial & Logistics sectors, aiming to significantly increase its proportion in our portfolio by the end of 2029.”

The sale of Skelton Grange land to Microsoft is a testament to Harworth’s strategic vision and operational expertise. It underscores the company’s ability to create substantial value through strategic land sales, while accelerating the growth of its Industrial & Logistics development program, poised to enhance shareholder returns through improved recurring earnings.

Harworth’s decision to focus on Industrial & Logistics by leveraging the proceeds from strategic land sales is a forward-thinking approach that could set a benchmark for the industry. By reinvesting in high-value sectors and retaining developed properties, Harworth is positioning itself for sustainable growth and enhanced dividends, reflecting robust business acumen in the face of evolving market demands.