Helical Bar Regulatory News (HLCL)

25 July 2014

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

Interim Management Statement

INVESTMENT AND DEVELOPMENT PROGRAMME CONTINUES TO BUILD MOMENTUM

FURTHER SUCCESS IN REGIONAL LETTINGS

Helical Bar plc today announces its Interim Management Statement covering its activities for the period 1 April 2014 to 24 July 2014 ("the Period").

Highlights

· Joint venture agreed with Healthcare of Ontario Pension Plan to fund our 275,000 sq ft office development at Creechurch Place, London EC3.

· Acquisition of 42-44 Little Britain, EC1A for £1.6m to complement our Barts Square holdings.

· Ongoing recycling of capital:

- The purchase of a mixed-use portfolio of ten properties for c. £40m at an 8.35% net initial yield.

- Sale of four assets for a combined total of £38m, all sold above book value.

· Successful issue of a five year £100m unsecured convertible bond with a 4.00% coupon and a 35% conversion premium, further diversifying sources of funding.

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

"We have had an excellent start to this financial year. Our recent oversubscribed £100m convertible bond issue, together with cash released from the sale of mature investment assets, have boosted our firepower to over £230m, as we strive to use our equity in the most effective manner to deliver shareholder value. We now have considerable resources to increase our holdings of cash generative investment assets, primarily expected to be offices in regional cities and industrial/distribution warehouses. At the same time we are able to allocate additional capital to our existing central London development programme as well as finance new opportunities."

Investment Portfolio

Purchases

· In April we acquired a mixed-use portfolio of ten properties for £40.15m, reflecting an 8.35% net initial yield. The portfolio, comprising 633,000 sq ft of modern high bay logistics facilities and regional headquarter office space, generates c. £4.1m of gross rental income per annum.

Sales

· In July we sold the Guineas Shopping Centre, Newmarket for £18.235m reflecting a yield of 8.0%, and a 64,000 sq ft research and development facility in Fordham, near Newmarket, in which Helical had a 53% stake. Helical also completed on the sale of Luminous House in Milton Keynes for £2.6m, in which it had a 50% stake, and on a 39,000 sq ft building in Preston for £1.7m. Each asset was sold above book value and, in aggregate, the gross proceeds represented a 6.9% premium over book value.

· During the Period, we completed the sale of three units at our retirement village at Bramshott Place, Liphook, for £0.9m, bringing the total completed sales to 139 out of 151 units with a further three exchanged and two reserved, for a combined sales value of £1.7m.

· At our development at Durrants Village, Horsham, we completed the sale of eight units during the Period for £3.8m with a further two exchanged and 13 reserved, for a combined sales value of £7.1m.

· At Millbrook Village, Exeter, we have 20 units reserved with a further one exchanged and at Maudslay Park, Great Alne, near Stratford-upon-Avon, we have six reservations of a first phase of 49 units. The combined value of the exchanged unit and the reservations at the two villages is £12.2m.

Asset Management

· Strong leasing progress at Churchgate House, Manchester with 34,000 sq ft of lettings agreed and a further £372,000 of income extended by seven years to 2024.

· Planning consent achieved for Artillery Lane, London E1 refurbishment and part change of use to A3 (restaurant) use.

· New headline rent of £37.50 psf set at Shepherds Building, London W14, compared to an average rent of £24.50.

· First phase (1,625 sq ft) of Cardiff's "Creative Quarter", involving the refurbishment of vacant office space above the arcades, is now fully let at an annual rent of £30,500 pa. A further 18,000 sq ft is being refurbished.

· One third of the office building (8,000 sq ft) at Botleigh Grange, Hedge End, Hampshire, now let at a rent of c. £16.50 psf with all remaining space (15,000 sq ft) under offer on a 10 year lease.

Development Programme

· In May we entered into a joint venture agreement with HOOPP (Healthcare of Ontario Pension Plan Trust Fund) to develop Creechurch Place, London EC3. Under the terms of the agreement, HOOPP and Helical will fund the project on a 90:10 split with Helical acting as development manager, for which it will receive a promote payment depending upon the successful outcome. The new building will comprise 271,000 sq ft of offices and 2,000 sq ft of retail space. Completion is due in Q4 2016.

· At Barts Square, London EC1, we have agreed terms to acquire 42-44 Little Britain from The Worshipful Company of Butchers for £1.6m. A marketing suite is currently under construction and will be completed in time to launch the first phase of 92 residential units in September 2014.

· At The Bower, Old Street, London EC1, we have pre-let Empire House to Z Hotels on a 35 year lease. Under the retail parade, 10,000 sq ft has been let to Gymbox on a 25 year lease. The refurbishment and extension of 211 Old Street continues, with completion due April 2015.

· At Maple House, City Road, London EC1, a refurbishment of the building has started which will add an additional 10,000 sq ft. The refurbished building will comprise 62,000 sq ft in total and will incorporate an additional floor and extensions to the third floor, a landscaped courtyard with entrance "pavilion" and amendments to the façade to significantly improve light to the lower floors.

Financing

Since the beginning of the Period, we have:

· Raised £100m through the issue of an unsecured five year 4% convertible bond with a conversion price of 496.94p, a 35% premium to the weighted average share price on the day of launch. Upon receipt of the net funds, Helical repaid £50.0m of its revolving credit facility with RBS.

· Drawn down £38m to fund the acquisition of a mixed use portfolio, £4m to fund expenditure on the retirement village development programme and £4m to refinance an office investment at The Hub, Glasgow.

· Repaid £10m from the sale of Fordham, Newmarket.

At 30 June 2014, the Company's bank facilities comprised:

· £308.4m of investment facilities of which £235.4m was drawn down, leaving £50.0m to fund future acquisitions and £23.0m to fund capital expenditure. These borrowings had an average maturity date of 3.5 years (31 March 2014: 3.7 years). Since 30 June 2014 we have used a further £30.0m of the net proceeds of the convertible bond issue to repay part of our revolving credit facilities.

· £72.5m of site acquisition and development facilities of which £52.1m was drawn down, leaving £20.4m to fund the retirement village development programme and future site acquisitions. These borrowings have an average debt maturity date of 2.6 years (31 March 2014: 3.0 years).

· A share of bank facilities in joint ventures of £89.3m, of which £74.4m was drawn down, leaving £14.9m available to be utilised. These facilities have an average maturity date of 2.1 years (31 March 2014: 2.5 years).

Including the £80m retail bond and the £100m convertible bond, Helical's share of debt as at 30 June 2014, including in joint ventures, was £542.4m, with an average maturity date of 3.9 years (31 March 2014: 3.9 years) and a weighted average cost of debt of 4.7% (31 March 2014: 4.5%). Of the borrowings, £423.8m (78%) is fixed at an average rate of 4.75% with the remaining £118.6m (22%) floating at an average rate of 4.15%. The Group has interest rate caps on £150.0m of floating rate debt protecting it against base rate rises up to 4.0%. At 30 June 2014, the Group had £230m of cash and undrawn bank facilities, including those in joint ventures, and £95m of debt free properties.

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