Development Securities buys Cathedral Group for £27.4m

Development Securities, the FTSE-listed property company, has acquired London-focused regeneration specialist Cathedral Group in a £27.4m deal.

Cathedral owns assets worth a gross £47m. The purchase adds nine projects worth £40m and totalling 5m square feet to Development Securities’ pipeline of works. The companies were already joint venture partners on two of the schemes.

Cathedral founder and chief executive Richard Upton will join Development Securities’ board as an executive director, while its chairman Barry Bennett becomes a non-executive director.

Mr Upton founded Cathedral in 1998 after leaving London housebuilder Mount Anvil, which he also had a hand in setting up. He is Cathedral’s principal shareholder, owning 95 per cent of the company until the sale announcement on Wednesday. The remaining 5 per cent was held by Cathedral’s managing director, Martin Wood.

Mr Upton said the merger would “provide a stronger platform” to help complete Cathedral’s pipeline of projects.

Michael Marx, Development Securities’ chief executive, said the deal would help his company to “accelerate its growth”.

“The consolidation of the resources of both businesses comes at a timely moment, as the UK economy, especially in Greater London and the southeast of England, recommences positive GDP growth,” he added.

Development Securities reported pre-tax profits of £19.5m in the year to February 28, 2014, with net assets of £328m. It raised £260m in asset sales, and spent £70m on acquisitions.

After the purchase, Development Securities will remain within its current loan-to-value ratio range of 50 to 60 per cent, the company said in a statement.