Persimmon says size matters after buying land for 1,700 homes

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The Independent Online

Persimmon, the housebuilder, said it was demonstrating the benefits of its size after acquiring two major sites for redevelopment.

Persimmon, the housebuilder, said it was demonstrating the benefits of its size after acquiring two major sites for redevelopment.

The company, one of the three big housebuilders in this country, bought 118 acres in total, on which it plans to put 1,700 homes. The schemes should yield sales worth £260m and are both on "brownfield" land - sites that had previous industrial uses.

There have been rumours that Persimmon, which bought Beazer in 2001, was looking to acquire one of the mid-sized builders that are still independent. Some analysts suggested the size of the land purchase yesterday made this less likely.

However, John White, Persimmon's chief executive, said the move "makes no difference whatsoever" to the group's capacity to buy other companies. He pointed out that Persimmon's last reported gearing figure was 28 per cent, compared with the 100 per cent gearing that it was willing to take on to pull off the Beazer deal.

"We're in a strong position to buy land or acquire businesses under the right terms," he said.

Mr White added that size mattered in competing for scarce suitable land - having the balance sheet to buy larger sites readily. He said trends in the housebuilding sector suited bigger players, as a result of the increasing emphasis on brownfield sites, which are more complex and costly to develop, as did the trend towards building more homes per acre.

Persimmon announced the acquisition of a 78-acre site at Cape Hill, Birmingham, previously occupied by the former Coors Brewery. Up to 975 new homes will be built with residential development expected to begin in summer 2005. The project is worth in excess of £110m.

Persimmon has also pur-chased a 40-acre site with planning consent for 750 units in Braiswick, Colchester. The site is currently occupied by the Flakt Wood factory. This £150m project is to start this autumn.

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