Last checked at 1 Feb 2022 08:00
1st February 2022
BRUNTWOOD GROUP LIMITED
BRUNTWOOD INVESTMENTS PLC
BRUNTWOOD BOND 2 PLC
UPDATE STATEMENT ON 2021 ANNUAL RESULTS
Bruntwood Group Limited ("Bruntwood") today updates the market on the recent publication of the 2021 financial statements and a summary of the latest rent collection position.
The value of Bruntwood's 100% owned Bruntwood Works portfolio surpassed £1bn for the first time after reaching £1.03bn (2020: £973.1m). This followed new investment and strategic acquisitions in key cities.
Bruntwood SciTech's portfolio also grew, reaching £669.5m (2020: £545.7m) taking the total value of Bruntwood's assets to more than £1.7bn.
Chris Oglesby, CEO of Bruntwood, said
"Our ability to attract, retain and grow with our customers owes a huge amount to our unwavering commitment to invest in our offering, even when operating within the challenging economic environment of the past two years. The impact of this approach is clear to see in our strong financial performance last year.
In the early days of the pandemic, there was a lot of ill considered commentary about the decline of our city centres and their workplaces. But in fact, what happened was that businesses and people felt the impact their absence had on the innovation, collaboration and interactions that make our economies successful and our lives richer."
The first quarter of the current financial year began with further significant investments and leasing growth across the Bruntwood Group.
This included the acquisition by Bruntwood Works of the 84,000 sq ft, Grade II listed Pall Mall Court building in Manchester. Greater Manchester's tech success story, Autocab, recently announced its relocation to No.2 Circle Square and with it the aim to create 200 new jobs.
Financial Position
The Group filed its annual accounts for the year ending September 30th 2021. Despite the challenges presented by the pandemic, underlying performance was extremely encouraging. Key highlights include:
After suffering an £18.9m pandemic-induced loss in 2020, pre-tax profits returned this year (£44.9m) as core rental income and property valuations increased.
The result was even more noteworthy as pre-tax profits were stated after taking into account exceptional refinancing costs of £7.4m and the effect of deferred tax rate changes on our JV's (£4m), resulting in a like for like swing in profit of £75.2m.
Net asset value increased to £606.5m (2020: £588.6m) despite the on-going impact of the pandemic and social distancing restrictions since October 2020. Without a change in deferred tax rates, the like for like number would be £627m.
The Group's financial position continued to strengthen after the completion of two major funding deals including a new £276m, 15-year sustainability-linked facility with Aviva Investors and the extension of a £240m club loan with NatWest/HSBC/Barclays/Santander to March 2023.
The Group invested £18.6m into refurbishment and capital improvement projects across its portfolio last year, along with an additional £27.8m of equity injected into Bruntwood SciTech that was matched by Legal & General. SciTech committed £80.8m to new development schemes.
Operating Highlights
Bruntwood Works completed a transformative refurbishment at Bloc - which is now at 92% leased and 97% serviced occupancy - and 111 Piccadilly in Manchester, both of which were delivered under the Pioneer investment programme.
Bruntwood completed more than 745,000 sq ft of leasing transactions across its portfolio lettings during the period, with 73% of customers retained at lease break or expiry, a 53% improvement on 2020 levels. Vacancy levels were maintained at under 10%.
2022 has also started strongly with 578,000 square feet of new lettings instructed or exchanged.
The full financial statements can be found at:
https://bruntwood.co.uk/our-performance/disclaimer/retail-bond-2025/
As of 26th January, the Group has £9.2m of cash reserves, £28m of undrawn committed available facilities and £71m of unencumbered assets upon which further finance could be secured.
The Board has modelled various scenarios including reviewing estimated customer default rates, lower retention rates, higher concessions and valuation yield movement. Based on the output of these models, The Board considers there to be sufficient income and valuation headroom across Bruntwood's debt facilities and does not expect Bruntwood to breach any terms relating to them. We have modelled the forecast covenant performance on each loan facility. Valuation covenant headroom is in excess of 20% on all of our facilities. Income would have to fall by over 35% on all of our facilities before any interest cover covenants are breached. In addition, we would expect that the existence of £71m of unencumbered assets would provide the resources to remedy any breaches in such circumstances. The earliest major bank facility maturity is not until March 2023.
The 2025 bond covenants have been tested as at September 2021 and are met with significant headroom. The covenant testing and certificate are reported on the Bruntwood website (link as above).
Impact on Operations
As of 20th January 2022, 98% of June quarter rents and 97% of September rents were collected with the balance being on payment plans or being actively pursued at the date of this announcement. If we exclude retail customers, the relevant metrics increase to 98% of June rent and 98% of September.
As at 24th January 2022, 89% of December quarter rents had been collected. This is comparable to the September / June quarters at the same point. We continue to speak with all our customers on a regular basis and work with every customer to support them as far as possible through what remain challenging times.
ENDS
For further information, please see Bruntwood's website at https://bruntwood.co.uk/or contact:
Kevin Crotty (Chief Financial Officer) | +44 (0) 161 212 2222 |
Sean Davies (Director of Financing & Investment) Patrick King (Peel Hunt) Mark Glowery (Allia C&C)
| +44 (0) 161 212 2222 +44 (0) 203 597 8622 +44 (0) 203 039 3465 |
Forward-Looking Statements: This announcement contains certain forward-looking statements with respect to Bruntwood's expectations and plans, strategy, management objectives, future developments and performances, costs, revenues and other trend information. These statements are subject to assumptions, risk and uncertainty. Many of these assumptions, risks and uncertainties relate to factors that are beyond Bruntwood's ability to control or estimate precisely and which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Certain statements have been made with reference to forecast process changes, economic conditions and the current regulatory environment. Any forward-looking statements made by or on behalf of Bruntwood are based upon the knowledge and information available to Directors on the date of this announcement. Accordingly, no assurance can be given that any particular expectation will be met and Bruntwood's bondholders are cautioned not to place undue reliance on the forward-looking statements. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), Bruntwood does not undertake to update forward-looking statements to reflect any changes in events, conditions or circumstances on which any such statement is based. Past bond performance cannot be relied on as a guide to future performance. Nothing in this announcement should be construed as a profit forecast. The information in this announcement does not constitute an offer to sell or an invitation to buy securities in Bruntwood or an invitation or inducement to engage in any other investment activities.