CEO's Review 2022

3 Highlights

• 108 apartments at Horizon almost completed for occupation

• IFC 6 superstructure complete and project on target

• Interest rate risk management decision delivered rewards

With the strains of Covid-19 diminishing, a cost of living crisis, soaring inflation, significantly increased interest rates, labour shortages and heightened geopolitical risk were not envisaged in the business plan for 2022. Pre-empting issues and collaboration with our stakeholders to find solutions was vital to successfully meeting our live project objectives for the year at Horizon and IFC 6. Mitigating the impact of rising finance costs was a concern that we acted upon swiftly, securing an interest rate swap agreement in January, to protect interest expenditure on £22m of development loans for the medium term.

The advancement of the Company’s projects and maintaining programmes as closely as possible would not have been possible without a dedicated and experienced team and a supportive Board. I would like to take this opportunity to thank the Board and Team, our Joint Venture Partner, Groupe Legendre and our commercial site main contractor Rok-Regal Construction Limited, as well as our professional design teams, that have all pulled together to ensure delivery of these important projects for Jersey.

The key future pipeline projects which we had aimed for significant progress on in 2022 were delayed by external factors, but we have listened, engaged and responded accordingly, resulting in revised plans for the South Hill development and an Addendum for SWSH Waterfront, submitted to the Planning Department.

Communication and stakeholder management was a key focus area on our 2022 Strategic Business Plan and we have held regular meetings with our Shareholder representatives, increased our media communications, met with many newly elected members of the States Assembly and engaged with the public, whether during our consultation over revised South Hill plans or through the hosting of so many public events on our land in St Helier. We are committed to authentic public engagement where feedback can genuinely influence the end design or use.

Horizon Joint Venture project

We were hopeful at the start of the year that the first of the three blocks at Horizon, providing 108 units of much needed accommodation, would complete before the end of the year, realising an initial share of positive returns from this project.

Whilst we had previously seen substantial interest in the ground floor commercial and retail units available as part of the development, which will offer convenience retail amenities to the residents and food and beverage outlets to the wider community, the current economic conditions, including labour shortages and the cost of living crisis have resulted in caution and reluctance to commit. We are focused on placemaking however and are working on solutions to make more attractive arrangements to help businesses to be able to invest.

Residential projects

The Government is focused on housing, both in terms of affordability and supply. We recognise that accessibility to quality housing is vital both for retaining our current islanders and to enable recruitment from off-island. To support this, we advanced and refined two planning applications during the year for a total of 1,123 new units of accommodation. These applications followed extensive public and stakeholder engagement over the previous 30-month period.

Planning refusal on our proposed redevelopment of South Hill came as a surprise to us, as we had worked closely with the Planning Department and the Jersey Architects Commission to ensure the design was in line with policy as well as offering an exemplar sustainable development for the island, with provision for affordable housing, facilities for children and thoughtful consideration of the natural environment.

However, due to the heightened risk environment, with geo-political impacts causing soaring inflation and a cost of living crisis, we experienced supply chain issues and most significantly labour shortages locally. This meant the achievement of this objective was under severe pressure. We worked closely and proactively with our Joint Venture partner and main contractor, Groupe Legendre who secured additional labour from outside the island to minimise further delays. Although we were not able to issue practical completion before the year end, the building works were substantially completed by midJanuary 2023 and handed over to purchasers.

Our next challenge was increasing interest rates, but again we worked with purchasers and mortgage providers to find solutions and all purchasers affected have still been able to complete. With significant demand for residential accommodation in the local market, only 4 of the 280 units in the development remained not pre-sold at year end.

Going back to the drawing board resulted in a wider range of unit sizes and allowed for its construction to be modular, a construction method that may become essential for some future developments if the island is to meet the delivery of the targets set out in the Island Plan.

The detailed Planning application for 139 new homes at South Hill, to be known as Westward, was resubmitted in December and this development incorporated the regeneration of the Parish of St. Helier children’s playpark. Had it been approved, South Hill would have been the most sustainable residential apartment development in Jersey, having been designed to Passivhaus low energy principles and BREEAM ‘Outstanding’ rating. Structured as Flying Freehold as opposed to Shared Transfer, thereby ensuring that only locally qualified individuals could purchase, sales would have been focused on Owner Occupiers only; with a minimum of 15% of the units to be made available as Shared Equity to eligible First Time Buyers.