CRC.L Regulatory News (CRC)

4 November 2019

Circle Property Plc

("Circle" or the "Company")

Valuation and Trading Update and Notice of Interim Results

On track to deliver industry-leading NAV growth

Circle Property Plc (AIM: CRC), which invests in, develops and actively manages well-located regional office assets, is pleased to provide an update on valuation and trading ahead of the Company's interim results for the six months ended 30 September 2019, which are expected to be announced on 9 December 2019.

Valuation Update

Circle's identification and active management of regional office assets in a niche market is supported by strong fundamentals. There still remains strong regional office demand as a result of the regulation in relation to Permitted Development Rights.

The portfolio, of which 99% is focused in the office sector, has been independently valued at £135.6 million as at 30 September 2019 (31 March 2019: £124.6 million). Over the six-month period, net asset value per share ("NAV") has been maintained reflecting an unaudited estimated NAV of £2.78 per share (31 March 2019: £2.77 per share). The Company is expecting to see most NAV growth in the second half.

Contracted rental income growth for the six months ended 30 September 2019, has increased by 7.2% to £8.2 million (31 March 2019: £7.6 million) which has been driven by the letting of space in the Company's well-located redevelopment and refurbishment pipeline. All of these lettings will allow Circle to generate increased earnings to the benefit of the shareholders in line with the Company's progressive dividend policy. Management's work on further refurbishments is on track to commence in the next few months and is expected to deliver an uplift in returns.  

HY 2020 Highlights:

·; K2, Milton Keynes - letting of 20,482 sq ft to Grand Union Housing, contractual rent of £352,625 pax on a 10-year lease with a CPI rent review in the fifth year.

·; Concorde Park, Maidenhead - acquisition of 71,500 sq ft business park for £14.6 million. Contracted passing rent (excluding rent free) £627,372 pax with a reversion to £1.55 million.

Post HY 2020 Highlights: providing significant upside in H2

·; Victory House, Northampton - re-geared lease with Regus for a further 12 years, increase in contracted rental income to £360,000 per annum of which 30% will be based upon turnover.

·; Concorde Park, Maidenhead - completed two lettings totalling approximately 21,000 sq ft increasing the contracted passing rent (excluding rent free) by a further £485,234 pax. Total gross contracted rental income at the site has increased by 76% since acquisition by the Company to over £1.1 million per annum with a gross rental income target of over £1.55 million per annum. The speed of these lettings since acquisition has been achieved by the Company's asset management expertise.

·; K3, Milton Keynes - refurbishment on track to commence in December 2019. Once completed the 13,500 sq ft office building will be offered to let at an ERV of approximately £270,000 pax.

·; 135 Aztec West, Bristol - refurbishment on track to commence in January 2020. Once completed the 13,258 sq ft self-contained office will be offered to let at an ERV of approximately £245,300 pax.

John Arnold, Chief Executive of Circle Property Plc, said:

"During the first six months of this year we have been highly active in creating a pipeline of well located, income generating assets to complement our portfolio, which are expected to provide significant upside and deliver strong NAV growth over the full year. The regional office market remains structurally strong and our active management of our property portfolio, alongside the negotiation of new existing lettings, continues to generate market-leading returns. Having established this momentum, we look forward to the full year ahead with confidence."

ENDS

This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.

About Circle Property Plc

Circle is the best performing quoted UK real estate company by NAV total return (NAV growth and dividend)1 having delivered consistent returns with 86% 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.

As well as already delivering substantial increases in NAV, the Company's portfolio has significant reversionary potential with current total estimated rental values of approximately £10.9 million per annum, compared to contracted rent of £8.2 million at 30 September 2019. The Company has a portfolio of 15 regional commercial property investment and development assets in the UK valued at £135.6 million as at 30 September 2019.

1 Source: Radnor Capital research, 31 March 2019