Barratt Developments plc - BDEV

Thks for the info. I want to buy some Real estate stocks. Just dont know which companies are the best for it atm

You might want to consider a REIT - Real Estate Investment Trust.

Barratt are set up well, I’ve worked across a fair few FTSE250 builders.

Headwinds in the industry (not sceptically Barratts)

  • the property ombudsman which is planned for later this year but might be delayed could force pre completion inspections and this could add to build times and ultimately affect the turnover.
  • Land prices if restrained isn’t shown they could over pay based on current prices that could recede slightly.
  • Material shortages for the next 6-12 months could increase prices and affect the bottom line.

In reality most builders operate in monopoly / duopoly status. Within a 5 miles radius of most sites you’re likely to have 1-2 developments from competing builders and normally there is enough to differentiate yourself from each other. Add to this Help to buy only available on new homes and a large section of the market who prefer new homes you end up often the only show in town.

As @Doubledig says if you’re looking for broad exposure to real estate a REIT might work but caution should be shown for any with an over sized exposure to retail / commercial office space. Another alternative is to invest in the ‘picks and shovels’ by looking into material suppliers.

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Thks much appreciated…

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If you have a FTSE 100 ETF in your portfolio you are already investing in Barratt’s!

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A note of caution here but this news is perhaps more interesting to dividend investors with its whisper of a special payment later in the year:

Rising costs catch up with builders

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The UK’s biggest housebuilder has seen a slump in pre-tax profit for the year to June after setting aside cash to repair legacy properties, despite revenue topping £5bn for the first time.

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HALF YEAR RESULTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2022

Britain’s biggest housebuilder Barratt cuts dividend after ‘marked slowdown’ in sales

Interesting news.

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Analysts are predicting profit for NEXT year of £355m down from over £1bn LAST year.

Reporting year end figures next week for year to June.

£BDEV (Barratt Developments) just released their yearly results.
Final Results for the year ended 30 June 2023 – Barratt Developments Plc

They don’t have a great outlook for next year, they reduced their dividend and cut on buybacks. (source FTSE 100 Live: Stocks hit as rising oil price sparks inflation fears | LSE:BDEV (proactiveinvestors.co.uk))
This is normal in my opinion, BDEV is going through a down cycle due to the current macro economical situation. According to what I have read, property is usually the first to be hit and usually the fastest to recover in a downturn. I will hold this stock for now, but I might reconsider my position once we are out of this cycle due to it’s high cyclicality. Do your own research.

They have also appointed a new board member Nigel Webb, which was working as Executive Committee at British Land Company plc (£LAND) which is a popular REIT.

UK House builders in general have been impacted by this report and are down today.

Big news in the house builder world today, turns out Vistry isn’t the only one to swallow up new brands.

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I guess it’s a case of consolidation that occurs in tougher market conditions (in comparison to conditions in past years).
Appears the markets believe it’s a good deal for Redrow, but slightly bad for Barratt based on the early share price swings.

Do you think it’s a good or bad deal @NeilB? From prior comments you work in/more familiar with the industry

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Redrow hasn’t spent very long above 600p recently so a bump of ~84p will be well received and you’re getting to the ATH (I don’t know what dilution events, if any occurred during this time).

Redrow has a very strong brand and identity but seems to have struggled in scaling much past the mid-5000 houses a year.

If Barratt doesn’t barratt them up and “value engineer” out all of their design features then it’s good for both.

Think this was an internal video but hey, it’s all out in the open now.

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All that said, the market doesn’t seem to like this

Maybe not so much the merger/deal itself, rather the results Barratt has released

Revenues at the FTSE 100 firm slumped 33.5% over the period, to £1.9 billion, as the number of completions fell 28.5% year on year to 6,171 homes.

And the dividend being cut from 10.2p to 4.4p

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Ah missed result update today. Maybe it was a case of trying to bury bad news and didn’t work.

The market has turned, it started in the south east at least, in late November. With banks cutting rates heavily on Jan 4th it only picked up steam.