Harworth signs £106m deal with Microsoft for Leeds data centre

Harworth Development Group is celebrating its biggest ever land sale and has signaled a shift in strategy to more industrial and logistics sites.

The Rotherham-based group has exchanged contracts for the conditional sale of 48 acres of land at the former Skelton Grange power station in Leeds to computing giant Microsoft for the creation of a “large-scale data centre”. The deal, worth £106.6m, comes just a week after Harworth also announced a nearly £20m deal to sell land at Benthall Grange, Shropshire, to builders Taylor Wimpey .

Harworth said the proceeds from the new deal would be reinvested in its industrial and logistics development program and it now plans to keep more of the developed sites in its own investment portfolio. The company said its development at Skelton Grange will deliver an internal rate of return of 40 per cent when completed and will provide £4bn of inward investment for the local economy. The site is expected to be delivered in two phases, which will be completed in 2026.

Read more : Drax downloads the SME customer book

Go here for more Yorkshire business news

Harworth said that by the end of the Skelton Grange development, it would have invested around £36.7m and generated £135.7m in sales. It will preserve 16 acres of land for development for employment space.

In a statement to the Stock Exchange, Harworth said it now wants to increase its development proportion in the industrial and logistics sector and will also retain more sites in the future to increase its investment portfolio .

Lynda Shillaw, chief executive of Harworth Group, said: “Since relisting in 2015, Harworth has successfully completed a number of significant transactions that create value for our shareholders, but this sale of Skelton Grange is the group’s largest to date. present and is still an exemplary specimen. case study demonstrating successful brownfield regeneration.

“It highlights Harworth’s capabilities in identifying and acquiring complex sites, creating planning-friendly masterplans that maximize the site’s potential, and implementing timely and effective remedial and infrastructure investments. This transaction further develops our expertise to include data centers and highlights the growing range of industries that continue to be attracted to the schemes Harworth brings to the serviced land market.

“Over the past three years, and despite volatile market conditions, we have been able to implement our strategy, scale the business and continue to deliver market-leading returns. We remain confident that we will achieve our target of growing our business to £1bn of EPRA NDV by 2027 and in our ability to continue to grow the business beyond this.

“Despite this operational resilience, high share price discounts persist in the listed property sector and so with the aim of maximizing both total accounting and total shareholder return for our investors, we have undertaken a detailed assessment of our strategy to determine where our focus should be in the second half of our strategic plan period.

“Today, over 60% of Harworth’s business value is in the industrial and logistics sectors, and as we move into the second phase of our growth strategy, we expect this share to increase to over 85% by the end of 2029 .the continued successful delivery of our residential sites is integral to our strategy, as income from land sales provides a steady funding platform for the industrial and logistics development programme.

“We will retain several first-class industrial and logistics properties directly developed and therefore expect our investment portfolio to grow over the coming years to around £0.9bn by the end of 2029. We see this increased focus on industry and logistics. development as an opportunity to both maximize shareholder value and position the business for sustainable longer-term growth and profitability as we build a significant industrial and logistics business in the UK market and across our regions.”