Helical Bar Regulatory News (HLCL)

24 July 2015

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

Interim Management Statement

LONDON FOCUS CONTINUES TO DRIVE GROWTH

Helical Bar plc today announces its Interim Management Statement covering its activities for the period 1 April 2015 to 23 July 2015 ("the Period").

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

"In what remains a competitive market, our development team continues to find exceptional opportunities to add to the London portfolio, exemplified by the recent Drury Lane deal. This is a typical Helical transaction, requiring vision, commitment and an ability to deal with complex issues. During the period, we have made significant progress with lettings agreed at The Bower, EC1 and sales at our Barts Square, EC1 scheme and expect to announce further good news on both in the near future. We remain committed to increasing our investment in London and believe that continued economic growth will continue to provide opportunities for future income and capital appreciation for some time to come.

"Having rotated out of our shopping centres in the last financial year, we have continued to add to our regional portfolio of industrial/logistics assets with £47m acquired and £33m under offer."

Highlights

· 80,000 sq ft Covent Garden residential and retail scheme added to substantial London development programme for delivery Q1 2019.

· Significant letting progress with over 46,500 sq ft of new lettings secured and a further 47,500 sq ft under offer at the soon to be delivered refurbishment/redevelopment schemes at C-Space, EC1 and The Bower, EC1.

· Good sales progress at Phase One of the residential element of Barts Square, EC1 with 86 sales exchanged (£114m) (up from 64 as at 28 May 2015) and six reservations (£5m) out of 144 units released to date (92 as at 28 May 2015).

· Planning application submitted at 23-28 Charterhouse Square, EC1 with a decision expected by Q4 2015.

· Exit from Poland completed with sale of retail developments at Europa Centralna, Gliwice and Wroclaw.

· Since 1 April 2015, we have completed on the sales of 14 retirement village units generating gross proceeds of £6.3m, and currently have a further three sales exchanged and 38 units reserved with a total sales value of £17.7m.

· In July 2015, we completed on the sale of eight industrial units for £28.5m, a 6% premium to book value.

· Since 1 April 2015, we have completed on the purchase of £47m of industrial/logistics assets at an average yield of 7.6% with a further £33m of purchases under offer.

London Portfolio

· At The Bower, Old Street, London EC1, the sixth floor of 12,217 sq ft is under offer to Farfetch UK to add to the fourth and fifth floors which they have already taken. A further 35,370 sq ft is also under offer. The Studio (18,363 sq ft offices and 4,155 sq ft restaurant use) and Empire House (17,244 sq ft hotel and 3,300 sq ft restaurant use) are both fully let. Phase 1 is due to complete in October 2015 and, once financing has been arranged, Phase 2 is expected to commence by Q4 2015.

· At Barts Square, London EC1, we have exchanged contracts on 86 residential units in the first phase of 144 units (£114m) with a further six units (£5m) under offer.

· At C-Space, London EC1 we have let 46,510 sq ft of the 61,847 sq ft of refurbished offices at rents of up to £63.50psf (average of c. £56psf). We hope to let the remaining space around completion of the refurbishment works, due in August 2015.

· At Drury Lane, London WC1, we have entered into a development agreement with clients of Savills Investment Management to redevelop their long leasehold interest in 26-35 Drury Lane and 8-12 Dryden Street, London WC2. A planning application will be submitted by September 2015 for an 80,000 sq ft mixed use scheme comprising 16,000 sq ft retail and 70 residential apartments.

· At 23-28 Charterhouse Square, London EC1 we have submitted a planning application for the redevelopment of the existing 34,000 sq ft office building and are hopeful of receiving approval by September 2015.

Asset Management

· At New Loom House, Whitechapel E1, a £5m refurbishment of the envelope and common parts of this 112,000 sq ft office building, to include the creation of new café space and three large "duplex" office units, is underway and due to complete by March 2016.

· At Artillery Lane, Bishopsgate E1, we have let the restaurant to Manicomio for a rent of £158,000. Building works continue with completion expected by September 2015, following which the sale of the asset to Standard Life will complete.

Regional Portfolio

· Since 1 April 2015 we have completed on £47.4m of purchases of distribution/logistics warehouses with a further £33m in solicitors' hands. The purchases include units in Bristol, Stevenage, Sunderland, Alfreton, Chester and two in Stone. The average net initial yield on these acquisitions is 7.6%.

· In July 2015 we completed the sale of a portfolio of eight industrial units for £28.5m, a premium of 6% to book value. The portfolio, comprising 296,000 sq ft of logistics/industrial space, reflected a 6.3% NIY on exit and comprised assets in Barking, Maidenhead, Chichester, Gloucester, Gravesend, Milton Keynes, Northampton and Bedford.

Asset Management

· At the Morgan Quarter, Cardiff, the first phase (8,000 sq ft) of the Creative Quarter is complete with 80% of the space let or under offer. In total, the capex programme will open up c. 20,000 sq ft for new commercial use.

· At 25 King Street, Bristol, we have completed two new lettings since purchase in December 2014 at rents of £21.50. The building is now fully let.

· At Churchgate and Lee House, Manchester, ongoing refurbishment works on 23,000 sq ft of office space are due to complete in August 2015. We have removed break options from five leases with tenant Economic Solutions, which has secured income of £246,762pa until 2023, and have signed agreements for lease on the fourth floor on 9,750 sq ft at £16.50 for ten years.

Poland

· In July 2015, we completed the sale of our 50% share in the 720,000 sq ft retail development at Europa Centralna, Gliwice, Poland to our joint venture partners, clients of Standard Life, in accordance with a pre-agreed contractual exit two years post completion. The sale, at book value, reduces gross property assets by £41m and takes £26m of debt out of our see-through figures.

· In July 2015, we also completed the sale of our 103,000 sq ft retail development at Wroclaw, Poland at €17m, a small premium to book value.

The sale of these two assets completes the exit of our joint venture in Poland.

Financing

Since 1 April 2015, we have:

· Renewed our £100m revolving credit facility with RBS for an initial five year period with two one year extension options exercisable in April 2016 and 2017. Previously repayable in February 2017, the facility is now repayable in April 2020, subject to the extension options, with costs reduced by 60bp.

· Extended the expiry date of our £98.6m investment facility with Deutsche Pfandbriefbank from February 2019 to August 2020, reducing the costs by 50bp.

· Increased our revolving credit facility with Barclays from £75m to £90m.

· Agreed a £65m five year facility with HSBC for our retirement village development programme to refinance existing facilities repayable in September 2016 (£9m), December 2016 (£23m) and May 2018 (£12m), reducing the costs by 30bp.

· In July we repaid £7.1m of debt, due to be repaid in August 2015, following the sale of Wroclaw, Poland and have disposed of our interest in Gliwice, Poland, thereby transferring our share of the associated bank debt to the purchaser of £25.6m.

At 30 June 2015, the Company's bank facilities comprised:

· £395.6m of investment facilities of which £338.2m was drawn down. These borrowings had an average maturity of 5.3 years (31 March 2015: 4.6 years) and a weighted average cost of debt of 3.5% (31 March 2015: 3.7%).

· £68.3m of site acquisitions and development facilities of which £46.0m was drawn down. These borrowings had an average debt maturity of 2.0 years (31 March 2015: 2.0 years) and a weighted average cost of debt of 3.6% (31 March 2015: 3.7%).

· A share of bank facilities in joint ventures of £110m of which £71.7m was drawn down. These facilities had an average maturity date of 2.1 years (31 March 2015: 3.0 years) and a weighted average cost of debt of 4.6% (31 March 2015: 4.5%).

Including the £80m retail bond and the £100m convertible bond, Helical's share of debt as at 30 June 2015, including in joint ventures, was £635.9m (31 March 2015: £674.6m), with an average maturity date of 4.5 years (31 March 2015: 4.3 years) and a weighted average cost of debt of 4.0% (31 March 2015: 4.1%).

At 30 June 2015, the Group had £176.8m (31 March 2015: £229m) of cash and undrawn bank facilities, including those in joint ventures, and £88.1m of debt free properties (31 March 2015: £131m).

Helical's loan to value, based on 31 March 2015 valuations plus acquisitions at cost, less sales in the period, including the two retail developments in Poland, is 55% (31 March 2015: 52%).

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