Brightwells Yard developer Crest Nicholson has issued a third profit warning in a year blaming losses associated with the Farnham redevelopment scheme.

Last August, the FTSE 250 firm warned shareholders it stands to lose almost £16 million on its 239-home £115 million regeneration of land south of East Street, which it blamed on an extra £11m in “incremental costs”.

This, and other “exceptional” costs across its business, have led Crest to downgrade its profit forecast to £41m. Its initial profit forecast for the year to October 31 was £74m.

It has increased speculation that Crest could become a takeover target unless its fortunes reverse, and comes just days before it is expected to issue its full-year results.

Crest Nicholson told investors that climbing costs linked to Farnham's Brightwells Yard regeneration scheme, as well as other projects, would shave up to 18 per cent off its adjusted profits, which are estimated to come in at £41m for 2023.

The company also said it would earmark £13m for potential legal costs linked to a fire at one of its low-rise apartment schemes in 2021.

The warning meant Crest was one of the biggest fallers on the FTSE 250 this week, with its shares dipping 5.8 per cent in the five days to January 18.

The Surrey-based development giant first downgraded its profits in August, when it said it was likely to make £50m in profit for the financial year, compared with about £74m it had expected back in June.

Crest is yet to open any commercial units at Brightwells Yard almost a year and a half after its “big bang” opening was first due to take place in autumn 2022, and 21 years since it was awarded the contract to redevelop East Street by Waverley Borough Council.

This will change when Brightwells' new six-screen REEL Cinema opens its doors on February 2, but no opening dates have been confirmed for the remaining commercial units.

These include Coppa Club, Nando's and Heaven's Kitchen.

Once completed, Surrey County Council will pay Crest almost £60 million for a long-term lease on the retail and commercial elements of the scheme, using the commercial rent to prop up its ailing finances.