Shares in housebuilder Crest Nicholson slid by as much as 12% this morning, wiping more than £60 million off its market cap, as it warned of “build defects” on its London homes.
Crest said the defects - at four sites within its regeneration and London arms, which closed in 2019 - will be fixed over the next three years, at a cost of £15 million. It has appointed consultants “to provide greater assurance” on those costs.
It did not reveal the locations of the four sites in question, with more details on the defects to be offered in June.
Investec analyst said the decision to bring in consultants was “unnerving”. They added: “The shares reside at a significant discount to book value, but uncertainty around the ultimate cost for remediation will continue to weigh on the shares.”
Analysts at Peel Hunt agreed that bringing in comonsultants “clearly raises the prospect of costs [to fix the defects] increasing”.
They said: “The further legacy issues outlined today are unlikely to encourage investors to form an orderly queue for the shares.”
Shares tumbled by 12.1% to 197p, taking more than £60 million off the housebuilder’s market value. Its shares had tumbled in August after a huge profit warning amid fast-rising interest rates, but they recovered in recent months amid hopes that the Bank of England would soon start cutting rates.
Crest Nicholson expects to build between 1,800 and 2,000 new homes this year, with around two thirds of those coming in the second half. Sale prices are expected to be flat on 2023.
It said: “The planning system continues to be challenging. Our strong land portfolio with several quality sites acquired last year places us in a favourable position to mitigate planning delays and support future outlet growth.”
