Lucent Strategic Land Fund NAV Advances as Regional Land Delivery Programmes Gather Pace

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The substantial growth of Lucent Group's land fund assets, due to the success and progress of its joint venture development schemes, has seen its net asset value per share increase 10.36% over the past 12 months. Lucent Group is a UK site assembly and land development specialist.

Lucent Group, UK, Strategic Land, Lucent Strategic Land Fund, LSLF

Lucent Strategic Land Fund

The Lucent Strategic Land Fund has made significant positive progress over the last twelve months and this is reflected in the uplift in our net asset value.

Lucent Group (Lucent), the site assembly and land development specialist, is anticipating substantial growth in its land fund assets under management over the next couple of years as it continues to make progress on its joint venture development schemes across the UK. The Lucent Strategic Land Fund (LSLF) has seen its net asset value per share increase 10.36% over the 12 months to 31 January 2015 and it is expected to exceed this in 2015 following the acquisitions it made last year.

Investor interest in LSLF continues to be strong given the very clear and positive fundamentals that support this asset class in the UK. Over recent months, investor enthusiasm has increased – aided by the uncertainty that exists internationally for the traditional asset classes. Continuing concerns over geopolitical risk, as a consequence of events in the Ukraine, and increasing uncertainty over Baltic States, is making investment decisions harder and more uncertain for professional investors. Moreover, a slowing economy in China prompting worries over a potential contagion effect, and the potential for Greece to cause a Euro tragedy add to that uncertainty.

In contrast, the rationale for investment into UK strategic land seems relatively ‘issue free’. The chronic housing shortage that all political parties are committed to addressing, a financially robust housebuilding sector with all key participants having recently announced both increased output and profits, and yet the supply of UK land with consent remains at crisis level. When this macro backdrop is harnessed together with Lucent’s Investment Partnership model, and the interest that it is receiving from local authorities and institutional investors, LSLF’s proposition is a clear and compelling one for investors.

Commenting on LSLF’s performance, Charles Flynn, Lucent Group’s co-founder and CEO, said: “The Lucent Strategic Land Fund has made significant positive progress over the last twelve months and this is reflected in the uplift in our net asset value. Continued investment inflows and our commitment to delivering ‘shovel ready’ land will, we believe, play a key role in helping to solve the UK's housing crisis.

“The recent Elphicke-House report acknowledges that public-private sector partnerships are an answer to the housing crisis, and we are in a position to work with other councils to help them meet the housing need.

“Our successful investment partnership model enables us to work with those councils eager to answer the call to build more homes. We are able to provide the investment, land acquisition, planning and project management for large schemes and work at a fast pace to help grow investment in the area quickly and efficiently.”

Over recent months Lucent has been at the forefront of some significant schemes as its prominence in the real estate sector grows. These include:

  • Detailed planning for the new Red Funnel terminal at Royal Pier Waterfront being submitted to Southampton City Council as the first part of one of the City’s major redevelopment schemes which will see a new ferry terminal at Trafalgar Dock
  • Planning consent being granted for Lidl’s largest UK supermarket at Maryport in Allerdale, Cumbria; the first scheme to be brought forward in the Allerdale Investment Partnership signed between LSLF and Allerdale Borough Council 12 months ago
  • Concluding a joint venture agreement with Peterborough City Council to form a second Local Investment Partnership to provide funding for the local authority to masterplan and deliver extensive redevelopment schemes that would otherwise remain un-fulfilled or be approached in a piece-meal fashion due to local authority budget constraints.

In addition to development activity, increase investment from UK institutional investors is also expected, following East Riding Pension Fund’s investment of £20m into LSLF in 2014.

Fund Background

LSLF invests in land (or the contract to buy land) in areas which have been identified for residential development within the relevant Local Plan, but prior to the grant of planning permission. This targeted acquisition strategy is aimed at mitigating planning risk while enabling shareholders to benefit from the largest capital gain anywhere within the real estate cycle.

The key driver behind strategic land in the UK is demographics. Figures from the 2011 Census confirmed that the biggest ever growth in UK population has taken place over the last 10 years which is compounding the UK’s housing crisis. The Office of National Statistics expects the UK population to increase nearly 20% in the next 20 years. Government is determined to increase the housing supply and this, in turn, is increasing the demand for land with planning consent.

It is anticipated that the Government’s current efforts to encourage domestic economic growth in the UK by boosting housebuilding will impact as a further stimulus to the demand for strategic land over the next five or six years. These homes cannot be built until the increasing demand for land with planning consent is met – exactly what LSLF delivers.

LSLF is currently carrying out due diligence on a pipeline of land sites throughout the UK and is expecting to announce further acquisitions in the second half of 2015. These acquisitions are expected to have a continuing positive impact on the share price in the coming months.

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Charles Forsyth
@LucentGroup
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