Helical Bar Regulatory News (HLCL)

17 July 2024

HELICAL PLC

("Helical" or the "Company")

Trading Update for the Period Since 1 April 2024

Ahead of its Annual General Meeting ("AGM") which will take place at 9.00am today, Helical provides an update covering its trading activity for the period 1 April 2024 to 16 July 2024 ("the Period").

Commenting on the Company's activities, Gerald Kaye, Chief Executive, said:

"The leasing market for new "best-in-class" office developments and major refurbishments remains strong and these assets are showing continued rental growth. Our pipeline of new developments being delivered into a supply constrained market should enable Helical to deliver surpluses over a sustained period.

"As well as the sale of 25 Charterhouse Square, EC1 and the 50% sale of 100 New Bridge Street, EC4, we have achieved some notable letting success across the portfolio in the Period, including reducing the vacancy at The Loom, E1 by nearly 8% and closing in on 100% occupancy at The JJ Mack Building, EC1. We are encouraged by improving occupier sentiment.

"This is my last update as Chief Executive of Helical plc before handing over the role to Matthew Bonning-Snook later today following the 2024 AGM. I wish him well and have every confidence in his ability to take the business forward as a London focused development company."

Operational Performance

Developments

100 New Bridge Street, EC4

· On 17 May 2024, Helical entered into a joint venture arrangement for the redevelopment of 100 New Bridge Street, EC4, selling a 50% interest for £55m on a preferred equity basis to a vehicle led by Orion Capital Managers. Simultaneous to the joint venture being signed, the parties entered into a £155m development financing arrangement which will fund all construction costs.

· The joint venture has signed a building contract with Mace, who have commenced construction work on site. Once completed in Q1 2026, this 194,000 sq ft building will provide 10 storeys of office accommodation, including an exceptional terrace on the eighth floor, as well as ground floor retail space and much improved public realm.

Brettenham House, WC2

· Enabling works have commenced on site and the main contractor selection process is currently being undertaken. The refurbishment works will start in Q3 2024, which will enable this 1930s heritage office building located on the Thames to be upgraded to a "best-in-class" modern office that will be available to occupy from Q1 2026. The owner of Brettenham House, WC2 has concluded the development arrangement with the freeholder in the Period, which will enable Helical's "equity-light" participation to be finalised shortly.

Places for London Joint Venture ("PfLJV") with Transport for London

10 King William Street, EC4

· Initial facilitating works have commenced on site prior to the PfLJV's acquisition of the site on 1 October 2024. Design work is continuing to enhance the new eight-storey office development, including modifications to the reception, mezzanine and seventh floors to create additional amenity as well as improve the cycle arrival experience and transform Abchurch Lane into a shared space. 

Southwark Over Station Development, SE1

· Pre-application discussions with Southwark Borough Council and local stakeholder engagement sessions are continuing ahead of the anticipated submission of a planning application in late summer 2024 for a purpose-built c.430 studio unit student accommodation scheme, along with a significant quantum of on-site affordable housing. The PfLJV intends to commence construction following acquisition of the site in July 2025.

Paddington Over Station Development, W2

· In the Period, consent has been obtained for the introduction of terracing to each individual office floor which will significantly enhance the tenant amenity provision in this 235,000 sq ft, 19-storey office building. The design team is continuing to refine the scheme ahead of the site acquisition in January 2026.

Lettings

The Loom, E1

· At The Loom, E1, following the introduction of a new dynamic pricing model, we have let 12,103 sq ft across six units, to four new tenants, at an average rent of £43 psf. In addition, two existing tenants have restructured their respective lease arrangements, extending their occupancy within the building. As a result of the asset management undertaken the vacancy rate has reduced by 7.8%, from 34.9% at 31 March 2024 to 27.1% at present.

The JJ Mack Building, EC1

· At The JJ Mack Building, EC1, the 23,566 sq ft fourth floor has been let to the Global Business Travel division of Amex, achieving a contracted rent of £2.2m p.a. (Helical's share £1.1m p.a.), in line with 31 March 2024 ERVs.

· The 13,409 sq ft 10th floor and 1,526 sq ft last remaining retail unit are currently under offer and are expected to complete imminently. The only remaining space within the building is the 21,734 sq ft fifth floor, which benefits from 1,298 sq ft of private terrace space.

The Bower, EC1

· Refurbishment works on three of the former WeWork floors are progressing to schedule, with completion of the fourth floor planned for early August 2024 and the fifth and sixth floors scheduled to complete early September. There has already been significant interest in these floors, with a launch planned for the end of the summer.

Sales

· The sale of 25 Charterhouse Square, EC1 to a real estate fund managed by Ares Management for £43.5m completed on 25 April 2024.

Financing

Sustainably Linked £300m Revolving Credit Facility ("RCF")

· At 30 June 2024, the Group had drawn £188m under its RCF with an effective interest rate of 1.9%, reflecting the impact of interest rate swaps on £250m of debt, with a maturity of 2.1 years. The RCF benefits from interest rate swaps at an average of 0.9% plus margin on 100% of the drawn amount for the remaining term of the facility to July 2026. Helical is in advanced discussions with lenders to renew and extend this facility.

Other Facilities

· In our joint ventures, we had drawn £66.7m of the £69.9m (our share) facility with PIMCO to develop The JJ Mack Building, EC1. Following practical completion and current letting progress of the development, the final margin reduction has been achieved and the effective interest rate on the loan is 2.3%, including commitment fees on the undrawn amount.

· On 17 May 2024 and in joint venture with Orion Capital Managers, Helical entered into a £155m development financing arrangement with NatWest and an institutional lender to fund all construction costs for 100 New Bridge Street, EC4. The facility has a four-year term with a one-year extension option, with an initial margin of 4.65% decreasing to 2.25% once the building is completed and let. At 30 June 2024, this facility was undrawn.

At 30 June 2024, the Group had c.£66m of cash and £203m of undrawn loan facilities with an overall weighted average cost of debt of 2.2% and an average maturity of 1.8 years.

Sustainability

100 New Bridge Street, EC4 has been awarded a NABERS Design for Performance Reviewed Target Rating of 5 Stars. This is the first building within Helical's development portfolio to achieve this milestone and sets a new standard for energy efficiency and sustainability. Alongside this, 100 New Bridge Street, EC4 also received its WELL Precertification interim certificate with the building on track to meet its target of WELL Shell & Core Platinum once complete.

Board Changes

Matthew Bonning-Snook, Chief Executive Designate, will succeed Gerald Kaye as Chief Executive of the Company following the 2024 AGM later today. Gerald has agreed to lead the delivery of the Company's next "best-in-class" office developments at 100 New Bridge Street, EC4 and Brettenham House, WC2 as a consultant to the business.

Amanda Aldridge joined the Board on 1 April 2024 as an independent Non-Executive Director. Following the AGM, she will succeed Joe Lister, who is stepping down from the Board, to become Chair of the Audit and Risk Committee.

Dividend

The final dividend for the year ended 31 March 2024 of 1.78p, if approved by Shareholders at the AGM later today, will be paid on 2 August 2024. This will take the total dividend for the year to 4.83p (2023: 11.75p).

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