Bruntwood Bd 6% Regulatory News (BRU2)

UPDATE STATEMENT ON COVID-19 RENT COLLECTION AND ANNUAL 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

"Since the start of January's national lockdown we and most of our customers largely operated remotely although our buildings remain open to support those who cannot work from home. Footfall in our buildings had been around 25% of pre pandemic levels initially but we have seen this change sharply as the Government restrictions have begun to ease. As of early April, footfall was 40% of pre pandemic levels and we expect to see this continue to rise over the coming weeks as businesses begin a phased return to the workplace. 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"

Financial Position

As at 20th April, the Group has £17m of cash reserves, £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 35% on the majority of our facilities and in excess of 20% on our NatWest Club facility. 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 £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 20th April 2021, 95% of December 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 are 96% of December rent and 97% of September.

As at 20th April 2021, 80% of March quarter rents had been collected (81% excluding retail). This is consistent with the December / September 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 9.3%, a level which has barely moved in the last year.

Weighted average unexpired lease term has improved from 4.9 to 5.2 years following completion of a new 60,000 sq ft building at Booths Park that has been let to Portswigger on a 15 year lease.

Headline rents remain consistent with previous run rates although we are beginning to see some evidence of increasing pressure on the rent free concessions or fit out contributions required to secure new lettings, something which is fully factored into our forward plans.

In February 2021, Bruntwood Scitech Ltd ("Scitech") acquired Melbourn Science Park, Cambridge for £46.2m, growing our national network of innovation districts and forming a new strategic partnership with leading independent technology and product development company TTP plc. The partnership is intended to enhance the potential for our community of customers to access finance, new markets, products and prototyping opportunities.

SciTech will work closely with the local planning authority in the coming months to develop a new ambitious masterplan for the 16.4 acre site; creating a long term vision for the future growth of the science park as a leading science and technology cluster in Cambridge.

In addition, the 400,000 square foot first commercial phase of Circle Square (part of the SciTech JV with Legal and General) reached practical completion in February 2021 with 75% of the first phase either already let or under instruction. No future phases are committed at this stage as future development schemes will only proceed based on the achievement of pre-let hurdles or a strengthening in market demand.

Bruntwood SciTech also completed a 3 year extension to its third party funding facility with its banking syndicate. The new £280m facility (an uplift of £95m on the previous facility) will support the continued investment in the business' development of life science and technology ecosystems.

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.