Hargreaves Services has struck an £8.8m deal to sell the first tranche of its renewable energy land assets.
The North East-based group, which owns extensive tracts of land it is marketing for wind and solar projects, has secured a deal with real estate investment and asset management firm Meadow Partners. It includes an additional top-up consideration expected to be £3.8m but worth up to £5m, due by September 2029 and contingent on future wind yields.
New York and London-based Meadow has taken control of two wind farms and three access agreements in South Lanarkshire, Scotland. Hargreaves says the assets have a current annual rental income of £700,000 per year, including a variable top up of £200,000 per year reflecting wind yields experienced to date.
The deal is the first from Hargreaves portfolio following a slower than expected offloading of the assets which comprise 11 projects over several thousands of acres and valued at a minimum of £27m earlier this year. These renewables schemes are a mixture of wind farms, battery energy storage and solar farms with a combined generation capacity of 1,148 MW.
Roger McDowell, chair of Hargreaves Services plc, said: "We are delighted to announce this initial transaction in relation to our portfolio of renewable energy land assets. This sale represents the first phase in the group’s strategy to realise cash from these assets, and we are currently evaluating different mechanisms to return this cash to shareholders.
"This transaction marks the beginning of a number of material disposals from our developing renewables portfolio, which we intend to deliver for shareholders in the coming years.”
Analysts Singer Capital Markets said: "This is a significant event, unlocking value from the group's renewable energy land portfolio with more to come as Hargreaves Services plc continues its transition to a capital-light model. The assets are being sold for £8.8m with a further expected top-up consideration of £3.8m due Sept 2029. We reaffirm our BUY rating and 854p with today's update reinforcing our confidence in the value creation opportunity as management executes its strategy."
The deal comes as Hargreaves is also selling land at its major Blindwells former coalfield site in Scotland which is being offered for housing developments. Earlier this year another two plot sales at the East Lothian site generated £13.8m which was reinvested further market the land.
In the summer, County Durham-based Hargreaves shared preliminary results for the year to the end of May this year in which it pointed to revenue growth of 25% to £264.4m and 4% growth in underlying pre-tax profits to £17.6m. Meanwhile, ebitda increased more than 29% to £33.7m.
The group, which spans industrial services, raw materials supply and land regeneration, has enjoyed growth thanks to its involvement in earth moving works at the HS2 project, and at the major Sizewell C Nuclear Power Station project. The preliminary growth figures came after a profit upgrade in June.
