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(Sharecast News) - FTSE 250 (MCX) 24,816.08 0.40%
Housebuilder Vistry surged on Tuesday after securing initial funding of £350m as part of the government's £39bn Social and Affordable Homes Programme (SAHP).
Vistry said it was the largest award possible in this phase and significantly in excess of the first award received under the previous programme. It will enable the company to deliver more than 3,000 affordable homes, well ahead of what was possible under the first phase of the last programme.
Vistry said it has identified immediate opportunities to deploy its own grant funding to deliver much needed affordable housing schemes within the current year. It also said it will deliver additional homes "at pace" by working in partnership with other strategic partners, established mayoral strategic authorities and councils as they commit funding to their programmes as part of the initial £9.58bn of allocations.
Chief executive Adam Daniels said: "Vistry has received direct grant funding awards under successive affordable homes programmes for nearly twenty years, and this award reflects our established track record and commitment to delivering much needed affordable homes in collaboration with Homes England and our partner providers. We are delighted that Homes England has made this significant announcement that will create over 73,000 new homes and provide Vistry, its partners and the wider sector with a much-needed stimulus.
"We already operate in all of the Established Mayoral Strategic Authorities and have established relationships with 29 of the 32 other strategic partners announced this morning. We look forward to continuing to work with councils and Homes England to meet local ambitions to increase housing supply at pace."
At 0910 BST, the shares were up 17.5% at 315.69p.
Russ Mould, investment director at AJ Bell, said Vistry "has received a much-needed vote of confidence".
"The award may raise eyebrows given Vistry's recent balance sheet issues," he said. "The entire housebuilding sector is contending with weaker demand thanks to a rising cost of borrowing in the wake of the Iran conflict and mounting build costs, but this is compounded at Vistry by its substantial debt pile. Many of its peers are sitting on net cash, giving them a buffer to help them get through a tough period.
"Vistry's increasingly onerous debts have forced it to slow build rates, sell off land and offload homes at heavy discounts in a frantic effort to generate cash.
"There have been reports of a major credit insurer withdrawing coverage from Vistry's suppliers and government data shows the housebuilder has been paying its invoices late.
"In that context, the government funding news is a major fillip for chief executive Adam Daniels ahead of a crunch strategy day at the end of next month.
"Vistry is in the unenviable position of requiring a big second-half improvement to hit its full-year profit targets. This is often a recipe for a profit warning, something the business can ill afford given its credibility is already in tatters after a particularly bruising period."
Jupiter Fund Management was also on the front foot after Berenberg initiated coverage of the shares with a 'buy' rating, highlighting a return to positive flows. "While it remains difficult to predict flows with any kind of certainty, with investor sentiment constantly shifting on geopolitical news, we believe that Jupiter has a diverse, attractive range of funds that should deliver growth," it said.
FTSE 250 - Risers
Vistry Group (VTY) 307.00p 14.30%
PPHE Hotel Group Ltd (PPH) 1,646.00p 4.31%
Jupiter Fund Management (JUP) 170.40p 3.65%
Ocado Group (OCDO) 241.00p 3.42%
TBC Bank Group (TBCG) 5,025.00p 3.06%
Keller Group (KLR) 2,942.00p 2.94%
Vesuvius (VSVS) 393.40p 2.93%
Discoverie Group (DSCV) 780.00p 2.90%
SDCL Efficiency Income Trust (SEIT) 37.00p 2.64%
Oxford Instruments (OXIG) 2,832.00p 2.61%
FTSE 250 - Fallers
Globaldata (DATA) 81.80p -2.85%
WPP (WPP) 389.80p -2.48%
Playtech (PTEC) 402.00p -2.47%
Dr. Martens (DOCS) 79.30p -2.10%
Hochschild Mining (HOC) 617.50p -1.98%
Raspberry PI Holdings (RPI) 583.00p -1.73%
IP Group (IPO) 70.80p -1.39%
Derwent London (DLN) 2,048.00p -1.35%
Kainos Group (KNOS) 1,238.00p -1.28%
Telecom Plus (TEP) 852.00p -1.27%
