Future of Humberts is in the balance

Permalink: Future of Humberts is in the balance
by Lin Freestone

Following the suspension of its shares in mid-May 2008 pending clarification of its financial condition, Humberts has appointed professional services firm Smith & Williamson to advise on options for the company’s restructure.

One option to place the estate agency chain into administration will be considered by the board this week. It is rumoured that there are several prospective buyers for the company.

Humberts has 80 branches and 700 members of staff, mainly in the south of England. The company has suffered recently from over-expansion, coupled with the worsening of the housing market.

If the future of Humberts cannot be secured, it would be the first high profile estate agency to fall in the housing market slowdown. During the past twelve months, research indicates that estate agencies throughout the UK are closing at a rate of 150 a week.

According to Debtwire, the number of estate agency branches has fallen to 12,000, from a figure of 13,000 at the beginning of the year and that an estimated 4,000 agencies could close by the end of the year if lending to mortgage applicants is not increased as a matter of urgency.

As part of an initiative to improve the company’s cash position, Humberts has sold two businesses at a substantial book loss.

Following its acquisition of Thomson Currie for £5.8m in September 2007, Humberts has sold it back to its original management for £1.9m. Halls Participations has also been sold back to its management for £1.9m after Humberts purchased it last year for £5.6m.

The proceeds from the sale of Halls will be used to repay in full Humberts’ overdraft, thus releasing the bank’s security. The proceeds from the sale of Thomson Currie will provide working capital for the company.