8 Mar 2021 07:00
8 March 2021
Circle Property Plc
("Circle", the "Company" or the "Group")
Trading Update and Disposal
Circle Property Plc (AIM: CRC), which invests in, develops and actively manages well-located regional office assets, is pleased to provide the following update.
Rent Collection
Since the outbreak of the COVID-19 pandemic in March 2020, we have continued to actively engage with our tenants which has resulted in an average rent collection of 90.5%. Rent collection for the quarter ended December 2020 has improved since last reported and now stands at 92% and for the current quarter stands at 84%.
The majority of the arrears are attributable to the Company's limited retail assets - two public houses and one restaurant in central Birmingham. The tenants remain solvent and the businesses are expected to re-open when lockdown restrictions are lifted and legislation permits, after which time we expect the majority of the arrears to be paid.
Our rental income has been increasing throughout the year as rent free periods on more recently granted leases come to an end and net income now stands at £7.9m per annum - over £1m more than at the start of the financial year. Our offices remain under-rented which in turn means that tenants are less likely to operate break clauses, making our income more robust in these testing times.
Lettings and Tenant Demand
The Company is pleased to report that it has pre-let 135 Aztec West, Bristol to Fertility Bristol Ltd on a 15- year lease with a tenant break option at the end of the 11th year. As previously reported, the building is being refurbished at a cost of £1.5m. The property was vacated by Davies & Partners in mid-January 2021 and refurbishment works which commenced at the end of January, are expected to be completed by June 2021. The 13,800 sq ft building will generate an income of £296,893 per annum (£21.50 p.s.f).
As anticipated, the number of viewings has increased as we approach the expected end of lockdown restrictions. It has been noted that tenants, being reluctant to fund expensive office fit-outs, are now preferring to take on fully fitted space in the regions, generally where a tenant has recently vacated and has either left all fixtures and fittings in place or where the landlord has provided a good quality Category B fit out. Having identified this trend, we have been undertaking our own fit-outs of some of our vacant suites within our portfolio at Birmingham and Maidenhead and are pleased to report a notable increase in viewings and requests for letting proposals on these suites. These works have been funded from working capital.
Disposal
The Company is pleased to report that it has exchanged contracts to sell Power House, Davy Avenue, Milton Keynes to Stephen Eagell Group, the largest Toyota Dealership in Europe, the current tenants within the building, who will hold the building for their continued occupation and part investment. The sale price of £3.55m represents a 9.23% increase on the September 2020 valuation of £3.25m and the disposal will complete before the financial year-end at the end of March 2021.
John Arnold, CEO of Circle Property Plc, commented:
"From our direct experience during the period, we are pleased to see that there is plenty of activity in the regional office sector, with strong demand for well designed office space, which provides office workers with flexible, safe environments. We believe that as the UK progresses out of the pandemic, office workers will be keen to return to the workplace and we aim to ensure that our offices provide attractive working conditions fit for the future."
Circle Property Plc | +44 (0)207 930 8503 |
John Arnold, CEO Edward Olins, COO | |
Cenkos Securities | +44 (0)207 397 8900 |
Katy Birkin Mark Connelly |
|
Radnor Capital | +44 (0)203 897 1830 |
Joshua Cryer Iain Daly | |
Camarco | +44 (0)203 757 4992 |
Ginny Pulbrook Oliver Head |
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.