Bruntwood Bd 6% Regulatory News (BRU2)

UPDATE STATEMENT ON COVID-19 RENT COLLECTION AND INTERIM RESULTS

Bruntwood Group Limited ("Bruntwood") today updates the market on the impact of the Covid-19 pandemic on its business and a summary of the latest rent collection position.

Chris Oglesby, CEO of Bruntwood, said

"Over the last quarter we have continued to keep our buildings open for customers and support them to work safely and effectively from them. There has been a phased return to workplaces with footfall stabilising around 40% during this quarter. In parallel customers are preparing for more substantial numbers of staff to return as the national Covid restrictions are lifted.

This quarter saw the successful conclusion of the Manchester ID procurement process for Bruntwood SciTech and also the acquisition of Castle House which will enhance our footprint in Leeds.

We know from engagement in the business communities in our cities the value that businesses are placing on their offices as places for people to collaborate, create and develop strong business cultures. There is a growing recognition about the impact of long term homeworking on colleagues mental wellbeing and career development both of which have major impacts on individuals and businesses"

Financial Position

On 30th June Bruntwood agreed a new £276m, 15-year sustainable-linked loan facility with Aviva Investors. The agreement sees Bruntwood consolidate and extend the maturity of its long-term funding facilities until 2036 by refinancing and increasing an existing credit line of £114m to £155m and extending the term of the existing £121m Aviva facility originally due to mature in 2031.

As at 16th July, the Group had £30m of cash reserves (compared to £17m on 20 April, the date of the last update), £40m of undrawn committed available facilities and £68m of unencumbered assets upon which further finance could be secured. In addition, the group has £19m of retained bonds which it could issue to the market.

Bruntwood 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% across our facilities. Income would have to fall by over 30% on all of our facilities before any interest cover covenants are breached. In addition, we would expect that the existence of £68m of unencumbered assets would provide the resources to remedy any breaches in such circumstances. The earliest major bank facility maturity is not until March 2022.

Impact on Operations

As of 16th July 2021, 95% of March quarter rents and 98% of December rents were collected with the balance being on payment plans or being actively pursued at the date of this announcement.

Some 85% of June rents had been collected as at the same date. This is consistent with the March / December quarters at a comparable 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 these challenging times. We will continue to work closely with all customers and where support is required we will seek to reach a fair solution for everyone.

Strong cash collection and a focus on controlling non-essential expenditure has ensured that the business continues to stay cash positive before capital outlay is taken into account. Retention levels at break and expiry are in excess of 70% and vacancy levels are currently 9.9%, showing a consistent positive trend across the year.

Headline rents remain consistent with previous run rates although there is some evidence of pressure on the rent free concessions and fit out contributions required to secure new lettings, albeit consistent with our forward plan assumptions.

Since the last update, Bruntwood SciTech has continued to make significant traction on it's lettings plan at both Alderley Park (the 1m sq ft life science campus) and the newly completed Circle Square scheme (400k sq ft of commercial office space aimed at the digital and tech sectors). SciTech continues to advance its growth plans with the 120k sq ft Enterprise Wharf development on the digital focussed Innovation Birmingham campus starting on site, planning permission for the first phase of Birmingham Health Innovation Campus being secured and further acquisition opportunities being investigated.

In May 2021 Bruntwood SciTech was selected as the preferred development partner by the University of Manchester in respect of the ID Manchester site in the heart of the city centre's innovation district after an almost two year procurement process. This will see Bruntwood SciTech working in Joint Venture with the University of Manchester to deliver a 4 million sq ft mixed use campus across the final major development site of scale left in Manchester City Centre.

ENDS

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.