Helical Bar Regulatory News (HLCL)

25 September 2019

Helical today provides a portfolio and a trading update for the period 1 April 2019 to 24 September 2019 ("the Period"), in advance of today's tour of its City and Tech Belt properties for analysts and investors.

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

"The first half of the year has shown continued letting success, achieving rents at a premium to 31 March 2019 ERVs and demonstrating the underlying quality of the portfolio. The acquisition of 33 Charterhouse Street, in joint venture, adds to the pipeline and supports our view that interesting opportunities can still be found.

"The completion of the amended and restated £400m revolving credit facility ("RCF") in the Period, which refinanced the £200m development facility at The Bower and the existing £150m RCF, had the benefit of both extending the Group's average debt maturity whilst reducing its cost of debt."

Operational Performance

Acquisitions

·; On 17 May 2019, we acquired 33 Charterhouse Street, a c.195,000 sq ft office development site located in Farringdon, London EC1, in a 50:50 Joint Venture with AshbyCapital.

Lettings

·; During the Period we have completed 15 new office lettings in London, representing 133,218 sq ft, delivering contracted rent of £9.8m (Helical's share £3.0m at 6.3% above 31 March 2019 ERV), including:

- 82,459 sq ft let to The University of Chicago Booth School of Business, InfraRed Capital Partners and Sopra Steria at One Bartholomew, EC1;

- Letting of the 14th floor, representing 9,568 sq ft, to Snowflake on a 'Plug & Play' basis and the 16th floor, representing 11,306 sq ft, to Incubeta at The Tower, EC1;

- 7,564 sq ft let to Sia Partners across the fourth and fifth floors at 90 Bartholomew Close, EC1;

- Six new lettings at Power Road Studios, W4, representing 16,160 sq ft; and

- Three new lettings of 6,161 sq ft at The Loom, E1.

·; In Manchester we have completed three new lettings at Churchgate & Lee to Capita Business Services representing 35,118 sq ft, in line with 31 March 2019 ERVs. We have also completed two new lettings of 4,524 sq ft at Fourways House at 12.7% above 31 March 2019 ERVs.

Other Portfolio Matters

·; We have completed the sale of a further two residential units in Phase One at Barts Square, EC1, leaving just eight residential units available for sale. In Phase Two we have exchanged contracts for the sale of a further seven units, taking the total number of units exchanged to 44.

·; The sale of our 10% shareholding in the One Creechurch Place joint venture to HOOPP and the return of the equity invested in the scheme took place on 6th September 2019, completing our involvement in the development and generating net proceeds of circa £20m.

London Portfolio

33 Charterhouse Street, EC1

We acquired in a 50:50 joint venture with AshbyCapital the long leasehold interest in a major development site in the heart of Farringdon, further growing our presence in this vibrant area. The site is situated on the corner of Charterhouse Street and Farringdon Road, just 100m from Farringdon Station and 350m from our development, Kaleidoscope, at the opposite end of the Farringdon Elizabeth Line platform.

The site has an existing planning consent for c.195,000 sq ft of offices and ground floor retail and work is currently being undertaken to enhance the existing design. Demolition has already been undertaken and the site is now vacant. Construction will commence later this year with completion anticipated early in 2022.

The Bower, EC1

The Bower is a landmark estate immediately adjacent to the Old Street roundabout and features 312,575 sq ft of innovative, high quality office space along with 20,606 sq ft of restaurant and retail space. The Warehouse comprises 122,858 sq ft of offices and The Studio 18,283 sq ft of offices with 10,298 sq ft of retail space at the two buildings, all of which is currently let. The Tower, completed in August 2018, offers 171,434 sq ft of office space with a contemporary façade and innovatively designed interconnecting floors, along with 10,308 sq ft of retail space across two units.

In the Period we have let the 14th floor on a new 'Plug & Play' lease to Snowflake, provider of the data warehouse built for the cloud, and 16th floor to Incubeta, a multi-national marketing group. Following this letting, The Tower is now 82% let.

Barts Square, EC1

In a joint venture with The Baupost Group LLC, Helical owns the freehold interest of Barts Square, a 3.2 acre site between St Paul's and Smithfield Market, consisting of 236 residential apartments, three office buildings of 214,434 sq ft, 24,013 sq ft and 10,286 sq ft together with 21,330 sq ft of retail/A3 at ground floor as well as major public realm improvements.

·; In the Period we have completed on the sales of two residential units in Phase One, leaving just eight apartments to sell.

·; Construction works on Phase Three continue to progress with the 92 apartments and 11,815 sq ft of retail space due tocomplete in phases from October 2019. We have exchanged contracts on seven more units in the Period taking the total number of exchanged units to 44, leaving 47 units left to sell and one additional unit to be released at a later date.

·; At 90 Bartholomew Close, an office refurbishment of 24,013 sq ft, we have completed the letting of the fourth and fifth floors to Sia Partners, taking the building to 61% let. The third and sixth floors are now under offer, leaving just the fully fitted second floor to let.

·; At One Bartholomew, a new 214,434 sq ft office building within Phase Two of Barts Square sold to clients of AshbyCapital, we have let the ground, first and second floor to The University of Chicago Booth School of Business, the sixth floor to Sopra Steria and the seventh floor to InfraRed Capital Partners, taking the building to 73% let. Two of the three remaining floors are under offer.

·; The refurbishment of 55 Bartholomew Close is ongoing and will provide 10,286 sq ft of offices, with completion expected in October 2019.

Kaleidoscope, EC1

The over-station development at the Farringdon East Elizabeth Line station will comprise a six storey 86,183 sq ft office building, with a 2,497 sq ft restaurant unit on the ground floor. Work is ongoing and handover is expected in January 2020.

Power Road Studios, W4

The site comprises 57,585 sq ft of offices across four studio buildings and is multi-let to a wide range of predominantly media tenants. In the Period we have completed six lettings representing 16,160 sq ft, at a 10.8% average premium to 31 March 2019 ERVs, including:

·; 5,495 sq ft to Taxify, a digital transportation business;

·; 1,971 sq ft to Kobayashi, a Japanese wholesaler;

·; 7,135 sq ft across two units to So Energy, a green energy provider;

·; 560 sq ft to Richard Jacksons Garden;

·; 999 sq ft to Stem Healthcare; and

·; The recently refurbished café to Metro Foods.

The Loom, E1

At this 108,640 sq ft former Victorian wool warehouse we continue to undertake careful asset management resulting in the letting of three units at a premium to 31 March 2019 ERVs and taking the building to 97% let.

The Manchester Portfolio

Churchgate & Lee, Manchester

This asset comprises 244,627 sq ft of multi-let offices. In the Period we have completed the lettings of the recently refurbished third floor in Churchgate House and the sixth and seventh floors in Lee House to Capita Business Services. Following the completion of these lettings the building is now fully let.

Trinity, Manchester

Trinity, purchased in May 2017 for £12.9m, underwent a full redevelopment which completed in January 2019. The repositioned building comprises 54,651 sq ft of office space and 4,300 sq ft of retail/restaurant space.

Fourways House, Manchester

This 59,067 sq ft Grade 2 listed former packing warehouse was acquired in July 2018 for £16.5m. We have begun to apply our asset management skills and have let two units in the Period at an 12.7% premium to 31 March 2019 ERVs. We have recently obtained planning permission to undertake a significant refurbishment of the atrium and common parts and works will commence shortly.

35 Dale Street, Manchester

35 Dale Street is a 55,243 sq ft office building situated in the Northern Quarter of Manchester, which underwent a comprehensive refurbishment that completed in June 2018. Couchbase have taken occupation of the newly reconfigured loading bay during the Period.

Financing

In the Period we entered into an amended and restated £400m revolving credit facility ("RCF") with four lenders, Barclays Bank PLC, HSBC UK Bank plc, National Westminster Bank Plc and Wells Fargo Bank N.A., London Branch. The new facility, initially repayable in July 2024, has two one-year extension options which, if exercised, would extend the repayment date to July 2026.

The facility replaces the existing £150m RCF and the £200m development facility on the Company's largest asset, The Bower, London, EC1, both of which have been repaid (to the extent drawn). The terms of the new RCF allow drawdowns of up to 60% of value and on completion the facility was £221m drawn (at 47% LTV), leaving £179m available for future acquisitions.

At 24 September 2019, the Company's bank facilities comprised:

·; £493m of investment facilities of which £314m was drawn down. These borrowings have an average maturity of 4.9 years, which increases to 6.3 years on exercise of options to extend the £400m RCF, and a weighted average cost of 3.25%;

·; £50m of development facilities with a maturity of 3.9 years and a weighted average interest rate of 5.0%. Excluding the impact of commitment fees, the weighted average interest rate of this facility is 4.2%; and

·; A share of a bank facility in joint ventures of £52m of which £48m was drawn down. This facility has a maturity date of 31 December 2021 and a weighted average cost of 4.0%.

The five year £100m Convertible Bond with a 4.0% coupon was repaid on 18 June 2019. This repayment reduces the Company's gross annual finance costs by £4.0m.

Board Appointments

In June 2019, the Board was pleased to be joined by Sue Farr as an independent Non-Executive Director and a member of the Audit and Risk, Nominations and Remuneration Committees. Sue brings considerable experience in marketing, branding and consumer issues to the Board.

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