Housebuilder issues profit warning as interest rate cut delay hits UK demand
Demand in the housing market tailed off last month as hopes of a Bank of England rate cut faded, according to an industry report released just hours before a major housebuilder issued a profit warning.
A monthly study by the Royal Institution of Chartered Surveyors’ (RICS) pointed to a drop in prices during May.
At that time, mortgage rates were edging upwards after it became clear there would be no imminent action from the Bank to cut borrowing costs, despite some progress in its battle against inflation.
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Fixed rates had taken a tumble at the start of the year in anticipation of a rate cut from the 5.25% level imposed by the Bank to tackle the pace of price growth.
But the news out of Threadneedle St since has been akin to ‘we’re (still) not there yet’ – with markets now seeing August or September as the most likely months for the first reduction.
The delays to rate cut expectations – a familiar theme for markets during 2024 – hit sentiment among buyers, RICS said, as many fret over affordability.
According to the latest data from the information service moneyfacts.co.uk, the average two-year fixed residential mortgage rate currently stands at 5.97%.
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It was last above 6% in December last year.
RICS suggested buyers were sitting on their hands in anticipation of borrowing costs coming down.
That trend was cited by housebuilder Crest Nicholson for a drop in half-year profits, warning its annual earnings would fall at least by a third.
Its shares lost up to 12% in the wake of the update, that also confirmed its interim dividend had been cut to just 1p per share from 5.5p.
In addition to the lending landscape, the company also said that the election was creating “short-term uncertainty”.
Tarrant Parsons, RICS senior economist, said: “The recent recovery across the UK housing market appears to have slipped into reverse of late, with buyer demand losing momentum slightly on the back of the upward moves seen in mortgage rates over the past couple of months.
“Nevertheless, expectations point to this delaying, rather than derailing, a modest improvement going forward.”
A pack of trade and private equity suitors are circling Evri, one of Britain’s biggest parcel delivery companies.
Sky News has learnt that Apollo Global Management and Platinum Equity are among the parties which have lodged initial offers for Evri, which is reportedly worth around £2bn.
City sources said that a number of strategic bidders were also participating in the auction, which is being run by bankers at Rothschild.
Evri, which changed its name from Hermes in 2022, uses more than 20,000 couriers and has a network of over 14,000 ParcelShops and lockers.
Pic: PA
It is used by a large number of prominent retailers as well as the online platforms Etsy and Vinted.
The company has been owned by Advent International, another private equity group, since 2020, when it bought it from German mail order company Otto.
It has a near-20pc share of the UK market, delivering more than 700m parcels annually.
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The auction of Evri comes as Parcelforce’s parent, the Royal Mail owner International Distribution Services, is in the process of being taken private.
On Friday, Sky News revealed that Yodel, which narrowly averted collapse this year, was raising tens of millions of pounds to strengthen its balance sheet.
Advent declined to comment, while neither Apollo nor Platinum responded to a request for comment.
Blackstone, one of the world’s biggest private equity firms, is in advanced talks to buy a stake in Ambassador Theatre Group (ATG), the owner of some of the most famous playhouses in London’s West End.
Sky News has learnt that Blackstone, which manages more than $1trn (£790bn) in assets, is close to snapping up a minority interest in the owner of the Duke of York’s and Lyceum theatres.
If completed, it will be a significant corporate transaction for a company which has staged productions of Harry Potter and the Cursed Child, Hamilton and The Book of Mormon.
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City sources said that Blackstone was expected to acquire the shareholding from TEG, an Australian live entertainment and ticketing company which bought into ATG during the pandemic.
One added that the deal would involve a stake of between 10% and 15% changing hands.
ATG has been majority-owned by Providence Equity Partners since 2013, making it a lengthy ownership period by private equity industry standards.
Providence did consider running a sale process several years ago but was stymied by the pandemic, which forced the closure of theatres and other live entertainment venues for months during a succession of lockdowns.
ATG operates dozens of theatres in the UK, with its other prominent venues including the Harold Pinter Theatre, as well as the Empire in Liverpool and the Lyric and Hudson on Manhattan’s Broadway.
In total, it owns roughly 60 theatres, having struck a deal in 2021 to buy the Golden Gate Theatre and Orpheum Theatre in San Francisco, and the Fisher Theatre in Detroit – both of which are key cities for touring Broadway productions.
The group operates dozens of theatres in the UK. Pic: iStock
Pic: Geoff Moore/Shutterstock
Last year, it announced that it was combining its US operations with Jujamcyn Theaters to strengthen its position in that market.
The company competes with rivals including Lord Lloyd Webber’s Really Useful Group and the billionaire Sir Leonard Blavatnik, who owns the Theatre Royal Haymarket.
The valuation of ATG in the deal with Blackstone was unclear this weekend.
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Providence acquired the company for £350m over a decade ago.
In 2022, it was reported to be seeking to refinance roughly £1.2bn of debt.
ATG has a workforce of more than 4,000 full-time equivalent employees, and its venues have played host to some of the world’s most successful plays and musicals, including The Lion King, Les Miserables and Wicked.
The company was founded in the 1990s by the husband-and-wife team Sir Howard Panter and Dame Rosemary Squire, who subsequently went on to set up a rival theatrical group.
It is now run by Ted Stimpson, a leisure industry veteran who replaced Mark Cornell last year.
A renewed sale process for ATG is said to be unlikely to take place for some time.
Accounts for International Entertainment Holdings, ATG’s parent company, show it made a record operating profit in the year to 25 March 2023 of £120.5m.
It said that advance ticket sales were exceeding pre-COVID levels.
Blackstone and Providence both declined to comment.
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