Helical Bar Regulatory News (HLCL)

11 July 2019

Helical today releases an update covering its trading activities for the period 1 April 2019 to 10 July 2019 ("the Period").

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

"We have continued to make good progress in the Period since 1 April 2019, against a background of ongoing political uncertainty. The acquisition of a new development project to add to our pipeline and the letting of space at our completed schemes at strong rental levels auger well for the future. Having focused the portfolio on offices located in London and Manchester and reduced our borrowings through the sale of assets we are well placed to take advantage of any compelling opportunities that arise.

"However, today will be noted by the Company and its employees as the day that Mike Slade, our Chairman and former Chief Executive, steps down from the Board. All at Helical wish him well for the future and thank him for his great contribution to the considerable success of the Company over the last 35 years."

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 completed eleven new lettings at five London assets, representing 100,943 sq ft and delivering contracted rent of £7.2m (Helical's share £2.0m at 5.0% above 31 March 2019 ERV), including:

- 62,854 sq ft, let to The University of Chicago Booth School of Business and InfraRed Capital Partners, at One Bartholomew, EC1;

- 11,306 sq ft, let 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

- One new letting of 3,059 sq ft at The Loom, E1.

· In Manchester we 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.

London Portfolio

33 Charterhouse Street, EC1

We acquired in a 50:50 joint venture with AshbyCapital the long leasehold interest of a major development site in the heart of Farringdon, further enhancing 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 with 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 is due to 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 which 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 let the 16th floor of The Tower to Incubeta, a multi-national marketing group, at a rent in line with March 2019 ERVs. Following this letting, The Tower is now 78% let with just the twelfth to fifteenth floors remaining.

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 to complete 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.

· At One Bartholomew, a new 214,434 sq ft office within Phase Two of Barts Square, which was forward sold to clients of AshbyCapital, we have let the ground, first and second floor to The University of Chicago Booth School of Business and the seventh floor to InfraRed Capital Partners, taking the building to 64% let.

· The refurbishment of 54 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 completion is due in December 2019.

One Creechurch Place, EC3

One Creechurch Place is a landmark City office scheme comprising 272,505 sq ft of offices and 786 sq ft of retail, which was fully let in March 2019.

In the Period we have exercised our option to sell our 10% shareholding in the joint venture to HOOPP, with completion of this sale expected shortly and the proceeds being available to recycle into new development opportunities.

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 occupiers. In the Period we completed six lettings representing 16,160 sq ft, at a 10.8% average premium to 31 March 2019 ERVs, including:

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

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

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

· 999 sq ft to Stem Healthcare;

· 560 sq ft to Richard Jacksons Garden; 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 one unit at a premium to 31 March 2019 ERVs. The two remaining vacant units have also been placed under offer.

The Manchester Portfolio

Churchgate & Lee

This asset comprises 244,627 sq ft of multi-let offices. In the Period we have let 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 fully let.

Trinity

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

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 a 12.7% premium to 31 March 2019 ERVs. We recently submitted a planning application to undertake a significant refurbishment of the common parts.

35 Dale Street

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. The building is fully let with all tenants in occupation.  

Financing

At 30 June 2019, the Company's bank facilities comprised:

· £443m of investment facilities of which £310m was drawn down. These facilities have an average maturity of 3.2 years, which increases to 4.1 years on exercise of options to extend the £150m RCF. The amount drawn down had a weighted average cost of 3.9%;

· £50m of development facilities with a maturity of 4.1 years and a weighted average interest rate of 5.6%. Excluding theimpact 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 £49m was drawn down. This facility has a maturity date of 31 December 2021 and a weighted average cost of 4.0%.

The loan to value ("LTV") based on values at 31 March 2019, plus capital expenditure during the Period, was 34.6% (31 March 2019: 30.6%).

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

Dividend

The final dividend for the year ended 31 March 2019 of 7.50p, if approved by Shareholders at the AGM later today, will be paid on 19 July 2019. This will take the total dividend for the year to 10.10p (2018: 9.50p), an increase of 10.5%.

Board Changes

At todays Annual General Meeting, Mike Slade will step down from the Board after 35 years having served as Chief Executive and more recently as Chairman. Michael O'Donnell also leaves the Board after eight years as a Non-Executive Director. The Company, its Board and all employees thank Mike and Michael for their contributions to the success of Helical.

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