Helical plc Half-Year report 2021

HELICAL, A SUSTAINABLE INVESTMENT

Gerald Kaye, Chief Executive, commented:

• “The performance for the half year to 30 September 2021 is the result of a decision taken five years ago to focus solely on the redevelopment, refurbishment and repositioning of office buildings. That we are able to announce such strong results, coming out of a global pandemic and when uncertainties remain about the strength of the economic recovery and the impact of inflationary pressures, is testimony to the quality of our portfolio and the dedication and drive of our experienced management team.
• “Helical is moving forward in all areas with corporate and property sustainability at the forefront. We are making progress on our Pathway to Net Zero and improving our sustainability benchmark ratings. Our property portfolio, which is EPC A or B and highly rated under the BREEAM criteria, provides superior wellness, technology and amenities, all contributing to deliver best-in-class office space.
• “As we anticipated, we are seeing increasing levels of bifurcation in both the leasing and investment markets between the green buildings and the “brown” buildings. Recent research from Knight Frank noted a significant rental premium for BREEAM “Outstanding” and “Excellent” buildings and the investment market is showing strong demand from investors seeking the most sustainable properties.
• “We are now focused on adding a pipeline of new opportunities to our portfolio and are actively engaged in the market, identifying, appraising and bidding for Central London assets. At the same time, we are maintaining our discipline, ensuring that any new scheme will be accretive to our business and continue our growth.”

Strong Operational Performance

Delivery of 33 Charterhouse Street, EC1 on Track

• At 33 Charterhouse Street, EC1, the topping out ceremony was held on 28 September 2021 to mark the completion of the superstructure works. Work continues to progress in line with the programme and practical completion is targeted for September 2022.

Leasing Market Rebounding

• In London, we completed two new lettings at The Tower, EC1 and 55 Bartholomew, EC1, totalling 12,731 sq ft, in line with 31 March 2021 ERVs. At The Warehouse, EC1 we have completed two rent reviews at an average of 2.1% above 31 March 2021 ERVs and achieving an uplift of 18% on the previous contracted rent. We have also completed three lease renewals at The Loom, with average rents in line with 31 March 2021 ERVs. Since 30 September 2021, we have let 9,268 sq ft across two units at 25 Charterhouse Square, EC1 at a 0.5% premium to 31 March 2021 ERVs.
• In Manchester, we have let the 5,588 sq ft seventh floor at Trinity at a rent of £34 psf, a 2% premium to 31 March 2021 ERV.  

 Improving Rent Collection

•  As at 22 November 2021, we have collected 94.5% of the September quarter rent (86.8% at 24 November 2020), helped by the reopening of our food and beverage tenants, and expect to receive a further 2.6% via agreed payment plans. Concessions have been granted on 0.9% and the remaining 2.0% is subject to ongoing discussions.
• We have collected 93.7% of the March and June quarter rents, with a further 0.6% to be collected under payment plans. Concessions have been granted over 3.7% and the remaining 2.0% is subject to ongoing discussions.

Enhanced Sustainability Credentials

•  In April, Helical launched “Designing for Net Zero”, a guide to assist our professional teams as they collaborate with us to reduce carbon in our development projects, following on from our new Sustainability Strategy, “Built for the Future”, launched in 2020.
• We have improved our sustainability measures and ratings, with a GRESB 4* Green Star rating and EPRA Sustainability BPR award of Gold.
• 96% of the space in our buildings has been recently developed or refurbished with 99% of our investment portfolio, by value, having an A or B EPC rating.

Financial Highlights

Earnings and Dividends

• IFRS profit before tax of £31.0m (2020: loss of £12.7m).
• See-through Total Property Return¹ of £44.9m (2020: £6.9m):

–  Group's share¹ of net rental income of £14.1m (2020: £11.9m), up 18.5%.

–  Development profits of £1.0m (2020: loss of £0.5m), after provisions of £0.2m (2020: £0.3m).

–  Net gain on sale and revaluation of Investment properties of £29.8m (2020: loss of £4.5m).

• IFRS basic earnings per share of 18.2p (2020: loss of 8.9p).
• EPRA earnings per share¹ of 0.9p (2020: loss of 1.0p).
• Interim dividend proposed of 2.90p per share (2020: 2.70p), an increase of 7.4%.

Balance Sheet

• Net asset value up 2.4% to £622.6m (31 March 2021: £608.2m).
• Total Accounting Return¹ on EPRA net tangible assets of 5.1% (2020: -2.5%).
• EPRA net tangible asset value per share¹ up 3.4% to 551p (31 March 2021: 533p).
• EPRA net disposal value per share¹ up 2.3% to 496p (31 March 2021: 485p).

Financing

• Change in fair value of derivative financial instruments credit of £4.6m (2020: charge of £5.3m).
• See-through loan to value¹ of 25.2% (31 March 2021: 22.6%).
• See-through net borrowings¹ of £227.1m (31 March 2021: £193.9m).
• Average maturity of the Group's share¹ of secured debt of 3.4 years (31 March 2021: 3.2 years), increasing to 4.4 years on exercise of options to extend current facilities and on a fully utilised basis.
• See-through average cost of secured facilities¹ of 3.6% (31 March 2021: 3.5%).
• Group's share¹ of cash and undrawn bank facilities of £336.5m (31 March 2021: £422.7m).

Portfolio Update

• IFRS property portfolio value of £761.3m (31 March 2021: £740.2m).
• 3.9% valuation increase, on a like-for-like basis¹, of our see-through investment portfolio¹ of £888.9m (31 March 2021: £839.4m).
• Contracted rents of £37.6m (31 March 2021: £37.8m) compared to an ERV¹ of £52.2m (31 March 2021: £52.1m).
• See-through portfolio WAULT¹ of 6.6 years (31 March 2021: 6.9 years).
• Vacancy rate increased marginally from 10.5% to 11.2%.