16 Oct 2020 07:00
16 October 2020
Circle Property Plc
("Circle" or the "Company")
Trading and Valuation Update
Circle Property Plc (AIM: CRC), which invests in, develops and actively manages well-located regional office assets, is pleased to provide the following update further to the announcements on 14 July and 25 September 2020.
Rent collection
Since the outbreak of the COVID-19 pandemic in March 2020, we have continued to focus on rent collection and we are pleased with our performance to date. As at the date of this announcement, the Company is pleased to report 75% rent collection for the quarter to December 2020 reflecting both the lack of exposure to retail and the strength of our covenants. Taking into account agreed monthly payments, the September quarterly rent collection stands at 80% of rent due.
Rent collection for the March and June 2020 quarters has improved since last reported and now stands at 93% and 89%, respectively. The Company remains in constant and constructive dialogue with all tenants, adopting a flexible approach to the payment of arrears according to need, and anticipates these rent collection numbers will continue to increase further.
Valuation update
The Company's investment and development portfolio, which is almost entirely focused in the regional office sector with no exposure to retail (other than two public houses and one restaurant in Birmingham), has been independently valued at £137.85 million as at 30 September 2020* (31 March 2020: £139.45 million). This marginal valuation decline is due to the earmarked strategic investment of approximately £1.6 million to refurbish two assets (K3 in Kents Hill, Milton Keynes and 135 Aztec West, Bristol), rather than negative market movement.
Over the six-month period, net asset value per share ("NAV") has decreased by 1% reflecting an unaudited estimated NAV of £2.83 per share (31 March 2020: £2.85 per share).
Financing and liquidity
The Company has a financing facility in place with RBS and HSBC for £100 million. The senior revolving facility is for £65 million (of which the Company has drawn £62.3 million) with an 'accordion' option for a further £35 million. As at 30 September 2020, the Company had £4.5 million cash on balance, reflecting a gross LTV of 43.77%. In aggregate, the Company has £7.2 million of immediate liquidity at its disposal.
As previously announced, with all of the challenges arising from COVID-19, and the likely implications for the economy, the Board considers it prudent to reduce gearing from the current level. We have a number of assets that have benefited from our active management approach and where we have added considerable value following redevelopment, lease restructures or renewals. We believe these investments, with secure tenants and long-term income attached, will be highly sought after as investors look to secure income in an uncertain and low yielding macroeconomic environment.
John Arnold, CEO of Circle Property Plc, commented:
"We have continued to work closely with our tenants and this has resulted in strong levels of rent collection. Despite the disruption caused by the COVID-19 pandemic, our focus on regional offices and our notable lack of exposure to retail property has allowed us to maintain a strong portfolio valuation of £137.85 million. We continue to actively manage our portfolio and we look forward to updating investors further on the progress made at our Interim Results in due course."
* taking into account the impact of Covid-19 and the Company's valuers' inclusion of a 'material uncertainty clause' on the independent valuations (in accordance with VPS3 and VPGA 10 of the RICS valuation - Global Standards)
This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.
Circle Property Plc | +44 (0)207 930 8503 |
John Arnold, CEO Edward Olins, COO |
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Cenkos Securities | +44 (0)207 397 8900 |
Katy Birkin Mark Connelly |
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Radnor Capital | +44 (0)203 897 1830 |
Joshua Cryer Iain Daly |
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Camarco | +44 (0)203 757 4992 |
Ginny Pulbrook Oliver Head |
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About Circle Property Plc
Circle is amongst the best performing quoted UK real estate companies by NAV total return (NAV growth and dividend) having delivered consistent returns with 101% NAV growth since IPO in 2016 in absolute terms.
Circle focusses on acquiring assets in regional cities, many of which have significant office supply constraints, and on office assets with active management potential (refurbishment opportunities, under-rented or vacant properties or short leases), rather than just maximising initial rental yields.
Circle is not a Real Estate Investment Trust (REIT) and can actively recycle proceeds from asset sales into its refurbishment and redevelopment pipeline, as well as future investment opportunities, therefore targeting a broader range of returns for shareholders, which are primarily driven by NAV growth.