Barratt’s £250m property U-turn

Housebuilder Barratt is to put its commercial development arm, Wilson Bowden Developments, up for sale with a price tag of more than £250m.

Property Week understands that Jones Lang LaSalle Corporate Finance has been asked to assist with the sale of Wilson Bowden Developments, which develops commercial and regeneration schemes across the UK.

Barratt chief executive Mark Clare and Wilson Bowden Developments managing director Nick Richardson are thought to be leading a team preparing a data room for the upcoming sale.

Barratt bought Wilson Bowden, which also has a housebuilding arm, for £2.2bn last spring, but a £1.7bn debt burden has piled on pressure for Barratt to raise cash through partial sales. It would welcome offers for the whole of Wilson Bowden Developments but the company could also be split into two or even three parts, such as retail development and office and industrial development.

There is also a chance that Barratt could sell the Wilson Bowden Developments Scotland mixed-use arm, which is developing the £600m Ravenscraig project with Richardsons Capital, in a separate transaction.

Barratt and JLL will be carrying out the sale at a difficult time for both the residential and commercial property markets.

Shares in Barratt fell 4.5% to 386p in line with the rest of the housing sector on Tuesday after Halifax revealed that house prices had fallen 2.5% in March – the biggest single-month fall since September 1992.

Its shares have fallen 67% in the last year, and the group now has a market capitalisation of £1.3bn.

Last autumn Barratt asked JLL to conduct a strategic review on its plans for Wilson Bowden Developments. In its interim results in February, Barratt said the review had been completed and that it was ‘encouraged with the existing and potential future value in its portfolio’. However, it stressed that there was little potential for crossover with the rest of the business. City sources now say a sale is the best way to deliver value to shareholders.

Barratt has already joined rivals such as Taylor Wimpey in scaling back its land-buying operations. It is especially exposed to the ailing first-time buyer market, which is being rapidly choked off as mortgage deals are withdrawn.