Helical Bar Regulatory News (HLCL)

24 October 2022

HELICAL PLC

("Helical" or the "Company")

Trading Update for the Period Since 1 April 2022

Helical today provides an update covering its trading activity for the period 1 April 2022 to 21 October 2022 ("the Period") in advance of the publication of its Half Year results which will be announced on Tuesday 22 November 2022.

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

"We have had a good first half of the financial year with both development and leasing targets being met or exceeded.

"We achieved practical completion of The JJ Mack Building, EC1 on 30 September 2022 and have a strong level of interest from occupiers seeking the best-in-class and most sustainable office space.

"Elsewhere, we recently sold Kaleidoscope, EC1 at a 4.25% net initial yield, having completed our exit from Manchester in July, as well as disposing of an office and further residential units at Barts Square, EC1.

"Today sees the opening of the new Bond Street Elizabeth Line station, completing the final link in this arterial route through central London. The new line improves East West connectivity enormously and we should all take considerable pride in this great feat of engineering."

Operational Performance

Good Leasing Performance during the Period

· We have completed four new lettings totalling 19,642 sq ft, delivering contracted rent of £1.3m (our share £1.2m) at a 2.2% premium to 31 March 2022 ERVs. In particular:

- The 12th floor at The Tower, EC1, comprising 9,572 sq ft, has been let to financial technology business Stenn Technologies at a rent of £80 psf, in line with 31 March 2022 ERVs, returning the building to 100% occupancy.

- We have let the ground floor at 25 Charterhouse Square, EC1, to natural stone purveyors, Solid Nature, in line with 31 March 2022 ERVs.

- We have completed a further letting at The Loom, E1, of 3,495 sq ft at a rent of £60 psf representing a 9.2% premium to 31 March 2022 ERVs.

- A retail unit of 4,695 sq ft at Barts Square, EC1 has been let to Restaurant St. Barts who opened for trading in early October. Two further retail units of 2,281 sq ft are currently under offer, leaving two final units of 3,400 sq ft available to let.

Good Progress on Developments

· Practical completion was achieved at The JJ Mack Building, EC1, on 30 September 2022, as scheduled. This highly sustainable 205,961 sq ft BREEAM Outstanding office development is now available to let and the formal launch took place on 6 October 2022.

· At 100 New Bridge Street, EC4, we have submitted a planning application for the sustainable refurbishment of the building, which should be determined soon. Once approved, the redevelopment work is anticipated to commence in late 2023 after vacant possession has been obtained.

Over £200m of Sales during Period, all above March Book Value

· On 21 September 2022, we completed the disposal of the single asset company, Farringdon East (Jersey) Limited, which owns the long leasehold interest in Kaleidoscope, EC1, to Chinachem Group. The disposal price of £158.5m reflects a capital value of £1,789 psf and a marginal premium to 31 March 2022 book value.

· We also completed the sale of Trinity in Manchester on 20 May 2022 to clients of Mayfair Capital for £34.55m (£590 psf), reflecting a net initial yield of 5%. The sale represented a premium to 31 March 2022 book value of c.£2.0m, net of rental top ups, and concluded the disposal of our Manchester office portfolio.

· At Barts Square, EC1:

- We completed the sale of the office building, 55 Bartholomew on 14 June 2022 to a private European investor for £16.5m (our share £7.6m), reflecting a net initial yield of 4.5% and a 3% premium to 31 March 2022 book value.

- We completed the sale of the freehold of the entire residential estate to its residents for £3.7m (our share £1.7m).

- Finally, we completed the sale of a further seven apartments leaving just eight apartments to sell in this 236-unit residential development. 

Rent Collection

· As at 21 October 2022, we had collected 97.2% of the September quarter rent (22 October 2021: 93.8%). We expect to collect a further 1.2% via agreed payment plans, with the remaining 1.6% subject to ongoing discussions.

Financing

£400m Revolving Credit Facility

During the Period, the Group undertook the following activity with regard to its £400m Revolving Credit Facility ("RCF"):

· Extended the RCF to July 2026 by exercising the remaining extension options on the facility.

· Repaid £150m following the sale of Kaleidoscope, EC1.

· Converted the RCF into a Sustainability Linked Loan ("SLL"), further demonstrating the Group's commitment to sustainability and aligning with its commitment to be Net Zero by 2030. The SLL contains three KPIs with annual targets, with the facility's margin increasing or decreasing by up to three basis points, depending on the extent to which the targets are met.

As a result, at 30 September 2022, the Group had drawn £250m under the RCF with an effective interest rate of c.2.7% and a maturity of 3.8 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.

Other Facilities

The Group has an undrawn £60m short term facility to December 2022.

In our joint ventures, we had drawn £55.7m of the £69.9m (our share) facility with Allianz to develop The JJ Mack Building, EC1. Following practical completion of the development on 30 September 2022, the effective interest rate on the loan is 4.2%, including commitment fees on the undrawn amount.

On 30 September 2022, the Group had c.£59m of cash and £234m of undrawn loan facilities with an overall weighted average cost of debt of 3.1% and an average maturity of 3.4 years.

Sustainability

On 24 May 2022, Helical published its "Net Zero Carbon Pathway" setting out its commitment to becoming a net zero carbon business by 2030 and, further to this, has become signatory to the BPF Net Zero Pledge.

Our commitment to sustainability has received external recognition and in October 2022 we achieved GRESB 5 stars, the highest rating, for both our standing investments and development portfolio. We also retained our EPRA Sustainability Best Practices Recommendations (sBPR) Gold Award, acknowledging our comprehensive and transparent sustainability reporting.

At the design stage of The JJ Mack Building, we achieved a 2018 BREEAM Outstanding rating and the building is rated EPC A and NABERS 5* for the commitment to achieve excellent energy efficiency in operation. All the heating, cooling and power supply is procured via green contracts or is renewable from the 144 PV panels, making the building Net Zero in operation.

The embodied carbon in the building is 42% lower than the RIBA business as usual target and this has been achieved with earth friendly concrete with a carbon saving of 50% over and above standard mixes, recycled steel as well as recycled content elsewhere in the building. The embodied carbon from construction is in the process of being offset so The JJ Mack Building will be Helical's first Net Zero Carbon building.

For further information, please contact:

Schelical@fticonsulting.com