Helical Bar Regulatory News (HLCL)

22 Jul 2009 07:00

22 July 2009

Helical Bar plc ("Helical" or the "Company")

Interim Management Statement for the first quarter to 30 June 2009

Market Update:

Since reporting to shareholders in the preliminary announcement of 4 June 2009, Helical has seen an improvement in value in respect of properties let on long leases to tenants of undoubted covenant strength.  In particular, we are seeing positive yield movement in prime West End and City office investments, A1 out-of-town retail parks, industrial estates in the South East and in the auction market. However, average property values continue to fall as a consequence of declining rental values and investors need to exercise great caution. Helical and its partners are currently assessing a number of potential acquisitions and remain confident that it can take good advantage of continuing market uncertainties, whilst maximising the significant upside in its development and investment portfolio. 

Key activity:

During the quarter we completed 23 lettings, increasing our annualised income by £356,000. This included 14 lettings in the Hub, Glasgow (totalling £146,000 per annum) and Tile Giant completing a lease (£40,000 per annum) of the front unit of our trade counter development in Southampton. 

We completed six lease renewals, securing £455,000 of annual rent. Rent free periods came to an end on three leases, adding £95,000 per annum. This more than offset the impact of four tenants either vacating their properties or going into administration, with the consequent loss of £56,000 of income per annum.

At Riverbank House, London EC4, where we are acting as development managers for the new Man HQ for City of London and Pace Investments, construction is several weeks ahead of schedule and the building was recently topped out.

At Exeter a planning application for a retirement village of 248 units has been submitted.

At Bramshott Place, our retirement village development in Liphook, progress on sales continues to be encouraging. We have exchanged or completed on 10 units (£3.5m) and a further 17 (£6.9m) are under offer, leaving a further 15 currently available to buy in Phase 1. We have also released 13 units in Phase 2, seven of which (£3.5m) are under offer. The Clubhouse at the centre of this development will open in September. 

The retail development at Wroclaw, Poland is fully let and trading well. The other Polish retail developments at Opole and Europa Centralna, Gliwice are progressing as scheduled and both sites are expected to be 70% pre-let by autumn 2009. Since 1 April 2009 we have completed leases on 73,400 sq ft with a further 40,000 sq ft in solicitors' hands bringing the total to 560,000 sq ft.

In our development portfolio, the sale of a 5,200 sq ft unit at Cowley, Oxford has completed leaving us with two remaining units. At Southall, demand remains relatively strong despite the tough market. Sales of two units, totalling £2.3m, have been completed since March with a number of other units under offer.

Helical has renegotiated £134m of debt removing loan to value covenants for between two to three years on these loans, thereby enhancing the Company's financial and operational flexibility. 

Commenting on the Company's activity, Michael Slade, Chief Executive, said:

 "After two years of market uncertainty, Helical is now firmly on the front foot with both its existing portfolio as well as in respect of potential opportunities. We have made good progress with our asset management initiatives during the quarter, securing £850,000 of annual income in our investment and UK development portfolio and our planning and construction work is proceeding well. In addition, it is pleasing to report a total of £16m of sales either completed or in solicitors' hands.

"We are now starting to see much improved signs in parts of the UK market, with the valuation of certain types of assets clearly levelling out. The market remains a "curate's egg" and best left to experienced stock pickers, but one in which Helical will deliver value for our shareholders."

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