Foxtons Expands with Two Strategic Acquisitions

LONDON - London-based real estate company Foxtons Group plc (LSE:FOXT) has expanded its presence in the UK property market by acquiring leading agencies Haslams Estate Agents and Imagine Property Group, based in the suburban cities of Reading and Watford, respectively. The initial consideration for these acquisitions is £12.6 million, with additional deferred payments contingent on performance targets.

Completed on October 29, 2024, this strategic move aims to leverage the Group’s existing operational strengths and enhance exposure to recurring rental income, which accounts for approximately 60% of the revenue for each acquired business. With these acquisitions, Foxtons' network has grown to 64 branches, while adding around 2,900 rentals to its portfolio, pushing the total rental count over 31,000.

Haslams, focusing on Reading and also covering Wokingham and Crowthorne, reported an unaudited total revenue of £6.5 million and an operating profit of £0.8 million for the year ending December 31, 2023. Watford-based Imagine reported revenues of £3.3 million and a profit of £0.5 million for the year ending March 31, 2024.

Significant improvements in profitability are expected for both acquired entities following the implementation of growth initiatives and operational synergies. The acquisitions are anticipated to enhance Foxtons' adjusted earnings per share for 2025, with further increases expected in 2026 as synergies fully materialize.

These acquisitions, financed through the Group’s revolving credit facility, are part of Foxtons' strategy to achieve £25-30 million in adjusted operating profit in the medium term. The Group's proforma net debt/adjusted EBITDA ratio is projected to remain slightly below 1x by the end of 2024.

Foxtons CEO Guy Gittins expressed confidence in the acquisitions, citing the quality of the businesses and their leading positions in local markets as key driving factors. Both managing directors of the acquired companies, Steve Woodford from Haslams and Mike Cole from Imagine, echoed Gittins' sentiments by highlighting the potential for growth and market advancement by leveraging Foxtons' operational platform.

This strategic expansion by Foxtons demonstrates its ongoing commitment to growing its lettings business and entering new markets with strong economic growth prospects.