REG - Helical PLC - Trading Update

HelicalAnnouncement

22/04/2024 07:00

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RNS Number : 4128L  Helical PLC  22 April 2024

 

22 April 2024 HELICAL PLC

("Helical" or the "Company")

Trading Update for the Period Since 8 January 2024

 

 

 

Helical today provides an update covering its trading activity for the period
8 January 2024 to 19 April 2024 ("the Period") in advance of the publication
of its Full Year results, which will be announced on Thursday 23 May 2024.

 

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

 

"We continue to build on the momentum since our last update in January with
new leases signed at The JJ Mack Building and The Bower at values above 31
March 2023 ERVs, with further space under offer, while rent collection for the
year remains robust at 99%.

 

"The sale of 25 Charterhouse Square, EC1, continues the recycling of equity
from our investment portfolio. The proceeds will be used to reduce our
borrowings in advance of us progressing our funding for the next stage of our
development pipeline.

 

"The above activity, coupled with wider market data points, provides further
encouragement that the prime London office letting market is trending
positively. We are looking ahead to the rest of year with cautious optimism as
we progress the delivery of best-in-class office space into what is becoming
an increasingly undersupplied market."

 

The JJ Mack Building, EC1

 

The JJ Mack Building, EC1 is a best-in-class office building comprising
200,611 sq ft of office space across 11 floors, together with 5,439 sq ft of
ground floor retail. During the period, we completed:

 

·       The letting of the 15,484 sq ft eighth floor to Three Crowns
LLP, a leading international arbitration firm, at a premium to the March 2023
ERV.

·       The letting of two of the three ground floor retail units to
Sainsbury's.

 

In addition, the fourth floor (23,566 sq ft) and the ground floor office space
(7,128 sq ft) are under offer. On completion, a total of 169,421 sq ft (82%)
will be let with good interest being shown in the remaining fifth and tenth
floors and ground floor retail unit.

 

The Bower, EC1

 

The Bower, EC1 is a landmark scheme comprising 312,573 sq ft of office space
across The Tower, The Warehouse and The Studio, together with 21,059 sq ft of
restaurant and retail space.

 

·     On 27 October 2023, following non-payment of rent for the September
quarter, we exercised our right to forfeit the individual leases for six
floors let to WeWork in The Tower. Subsequently, we entered into a short-term
licence arrangement with them to re-occupy the space until 25 December 2023,
following receipt of a fee equivalent to the whole of the September quarter's
rent and service charge due under the terms of the previous contractual
arrangements.

·       Since then, we have:

-        Signed a lease with WeWork to 14 June 2024 outside the
Landlord and Tenant Act at the pre-existing rent on the third floor, to enable
them to continue to meet their obligations to their customer Stripe.

-        Let the 11,306 sq ft 16(th) floor as expansion space for
Verkada, who also occupy the 17(th) floor, at 31 March 2023 ERVs.

-        Let the 9,568 sq ft 14(th) floor to Incubeta, who are an
existing tenant moving from the 16(th) floor, at a rent above the March 2023
ERVs.

-        Signed a management agreement with InfinitSpace to provide
serviced offices on the first and second floors at The Tower, which were
previously let to WeWork. InfinitSpace has subsequently signed five of the
previous members of WeWork, comprising circa 90 desks and representing
approximately half a floor of The Tower. A marketing campaign to attract
further members to the scheme has commenced which has generated a significant
uptake in interest in the remaining space.

 

Following these initiatives, The Tower is 85% let, up from 62% following the
forfeiture of the original WeWork leases, with good interest being shown in
the remaining space from existing and potential new tenants. The Warehouse and
The Studio remain 100% let.

 

Operational Performance

 

Rent Collection

 

·    As at 19 April 2024, we had collected 98.4% of the March quarter rent
(5 April 2023: 97.6%) and expect to collect a further 1.6% via agreed payment
plans.

·    We have now collected 99.0% of all rent contracted and payable for
the financial year to 31 March 2024. Of the balance, 0.6% remains to be
collected via payment plans with the remaining 0.4% subject to ongoing
discussions or written off.

 

Sales

 

We exchanged contracts on the sale of the long leasehold interest in 25
Charterhouse Square, EC1 for £43.5 million to Ares Management on 25 March
2024, reflecting a 6.5% discount to 30th September 2023 book value. The sale
will complete on 25 April 2024 and the proceeds will be utilised to repay
borrowings on our revolving credit facility. The six-storey, 42,921 sq ft
scheme was redeveloped by Helical in 2017 and at the point of sale, the office
space was let to Anomaly, Hudson Sandler, Entain and SolidNature.

 

Development Pipeline

 

·    100 New Bridge Street - Our best-in-class office development at 100
New Bridge Street, EC4, is adjacent to City Thameslink and a short walk from
Farringdon and Blackfriars stations. In the period, we have obtained a Section
73 planning approval to enhance the ground floor amenity and improve the
floorplate efficiency. This carbon friendly, new building will provide 194,000
sq ft of office space across seven retained floors and three new floors once
completed in Q1 2026. We are progressing talks with a 50:50 joint venture
partner, which we anticipate concluding in the near future, and expect to sign
the main construction contract and development debt facility at the same time.

 

·    10 King William Street - This eight storey office development located
above the recently opened Bank station entrance on Cannon Street will deliver
142,000 sq ft of prime space. Since formation of the joint venture with Places
for London (TfL), we have been progressing the enhancement of the scheme
alongside Fletcher Priest Architects and the wider professional team. We have
submitted a non-material planning amendment application under Section 96a to
introduce significant public realm improvements, making Abchurch Lane a shared
space and a much improved cycle arrival experience, and the inclusion of a
wellness lounge at mezzanine level. Initial enabling works are due to take
place over the course of the summer in readiness for a formal start on site in
October of this year. Construction tendering is ongoing and we aim to achieve
practical completion of the scheme by December 2026.

 

·    Paddington OSD - Situated close to the Elizabeth Line station at
Paddington, this 19-storey building will provide 235,000 sq ft of office
space. In the period, we have submitted a non-material planning amendment
application under Section 96a to introduce terracing to each individual office
floor and we continue to develop the design to enhance the scheme with a
particular focus on the end of trip facilities and arrival experience. We are
due to acquire the site, in joint venture with Places for London, in January
2026.

 

·    Southwark OSD - We are having detailed discussions with Southwark
Borough Council regarding a purpose-built student accommodation scheme
comprising c.430 studio units together with the delivery of a separate on-site
affordable housing building. We aim to submit a planning application during
the summer with the ambition to have an implementable consent by the time the
site is purchased in July 2025.

 

Financing

 

£300m Revolving Credit Facility ("RCF")

 

During the period the Group cancelled £100m of its RCF, reducing it from
£400m to £300m. At 31 March 2024, the Group had drawn £230m with an
effective interest rate of 2.9% and a maturity of 2.3 years. Following the
completion of the sale of 25 Charterhouse Square, EC1, referred to above, the
amount drawn is expected to be reduced to £188m. 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.

 

Other Facilities

 

In our joint ventures, at 31 March 2024, we had drawn £66.1m of the £69.9m
(our share) facility with Pimco (formerly Allianz) to develop The JJ Mack
Building, EC1. As a result of the strong letting progress during the Period,
the margin on the facility has fallen from 3.50%, at 31 March 2023, to 2.25%.

 

Cash and Undrawn Facilities

 

At 31 March 2024, the Group had c.£24m of cash and £84m of undrawn loan
facilities with an overall weighted average cost of debt of 2.9% (31 March
2023: 3.4%) and an average maturity of 2.1 years.

 

Sustainability

 

We continue to perform well against our sustainability goals and targets,
receiving a CDP score of B in February 2024 and scoring the highest in our
peer group for GRESB Standing Investments. Most notably in the period, we
received our final Outstanding BREEAM certification for The JJ Mack Building
EC1, achieving a score of 96.4% which is currently the highest score of a
commercial development in the UK under the New Construction 2018 scheme. This
impressive result supports our continued commitment to drive sustainability
forward on all our developments and demonstrates what is possible when
sustainability is embedded as a key driver from the outset.

 

Non-Executive Board changes

 

In February 2024, Robert Fowlds joined the Board as an independent
Non-Executive Director and this was followed by the appointment of Amanda
Aldridge who joined the Board on 1 April 2024 as an independent Non-Executive
Director and Audit and Risk Committee Chair Designate.

 

Subject to Amanda's re-election at the 2024 AGM, it is intended that she will
succeed Joe Lister to become Chair of the Audit and Risk Committee
("Committee") following the conclusion of the AGM. Joe, who has successfully
served as the Chair of the Committee for the last five years, has decided to
step down from the Board following his appointment as Chief Executive of Unite
Group plc in January 2024. He will continue to serve as Chair of the Committee
until the 2024 AGM.

 

Notice of Results

 

The Group confirms that it will announce its full year results for the 12
months ended 31 March 2024 on Thursday 23 May 2024. There will be a
presentation for analysts on the morning of the results, for further details,
please contact FTI Consulting.

 

For further information, please contact:

 

 Helical plc
 Gerald Kaye (CEO)  Address: 5 Hanover Square, London W1S 1HQ
 Tim Murphy (CFO)   Website: www.helical.co.uk (http://www.helical.co.uk)

                    Tel: 020 7629 0113

 FTI Consulting
 Dido Laurimore     Tel: 020 3727 1000

 Richard Gotla

 Andrew Davis

Schelical@fticonsulting.com (mailto:Schelical@fticonsulting.com)

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