Annual Results for the Year to 31 March 2022

Helical, Delivering a Sustainable Future

Gerald Kaye, Chief Executive, commented:

“Today marks the opening to the public of the Elizabeth Line, one of the largest transport infrastructure projects in the UK, increasing Central London’s rail capacity by 10% and bringing an additional 1.5 million people within 45 minutes of Central London. Our £1bn portfolio of sustainable, amenity rich London offices, of which 99% by value are situated within a 12 minute walk of a nearby Elizabeth Line station, will continue to benefit from their proximity to this new arterial route through Central London. It is this connection, together with the improving strength of the prime London office market, that has underpinned a strong set of results after emerging from the Covid-19 pandemic following two difficult years.

“Our Total Accounting Return (“TAR”) for the year, a key performance indicator for Helical, was 15.0% on our net assets measured under IFRS and 10.2% based on our EPRA net tangible assets. Over the three years to 31 March 2022, the compound annual growth rate of our EPRA TAR was 7.8% pa, an indication of the strength and consistency of the financial performance of the Group, despite the challenges of the period. These results were driven by growing rental income and strong valuation surpluses from both our completed development schemes, now held for long term income growth and future asset management opportunities, and our schemes under development.

“This morning we published our Net Zero Carbon Pathway to becoming a net zero carbon business by 2030, as our contribution, as a responsible business, to the decarbonising of the UK economy by 2050. In continuing this journey, we have identified meaningful ways of reducing both our embodied and operational carbon emissions. As part of this process, we have signed up to the Better Buildings Partnership Climate Commitment, which provides an accountable and transparent framework for delivering net zero carbon for a property portfolio.

“We will continue to see bifurcation between the best-in-class new sustainable buildings and the older less sustainable buildings. This will be reflected in strong rental growth for the former and rental decline for the latter.  Helical is well positioned to capitalise upon a period of opportunity within the sector over the next 10-20 years, changing the older “brown” buildings into “green” sustainable buildings.

“In the last year, we have deployed capital to acquire 100 New Bridge Street, EC4, with this exciting redevelopment due to start by the end of 2023, following the expiry of the current tenancies. Along with 33 Charterhouse Street, EC1, due for completion in September 2022, and continuing asset management opportunities in the remaining, completed investment portfolio, we are optimistic that our successful track record of outperforming the market and delivering strong financial returns will continue.”

Operational Highlights

• Major boost to the development pipeline with the acquisition of 100 New Bridge Street, EC4. Delivery of a c.185,000 sq ft office scheme planned for early 2025.
• Practical completion of 33 Charterhouse Street, EC1, a 205,369 sq ft BREEAM “Outstanding” office development, on track for September 2022.
• 14 residential units at Barts Square sold in this 236 unit residential scheme, leaving 14 apartments available at the year end of which one has since been sold and two are under offer.
• 12 new lettings completed across the portfolio, totalling 54,118 sq ft, delivering contracted rent of £3.3m (Helical’s share £3.0m) at 1.8% above the 31 March 2021 ERV (excluding managed lettings).
• 8% of all rent contracted and payable for the financial year collected with 2.2% to be collected following the end of the Government’s general moratorium and 2.0% having been written off or agreed concessions.
• Post year end disposals of:
• Trinity, our last remaining asset in Manchester, for £34.55m, at a net premium of c.£2.0m to our 31 March 2022 book value and representing a net initial yield of 5.0%.
• 55 Bartholomew, EC1, for £16.5m (our share £7.6m), at a 3% premium to 31 March 2022 book value, reflecting a net initial yield of 4.5%.

Financial Highlights

Earnings and Dividends

• IFRS profit after tax increased to £88.9m (2021: £17.9m).
• See-through Total Property Return¹ of £89.5m (2021: £48.6m):
• Group’s share¹ of net rental income of £31.2m (2021: £25.0m) – up 24.8%.
• Net gain on sale and revaluation of investment properties of £51.7m (2021: £23.9m).
• Development profits of £6.6m (2021: losses of £0.3m).
• Total Property Return, as measured by MSCI, of 10.7%, compared to the MSCI Central London Offices Total Return Index of 7.9%.
• IFRS basic earnings per share of 72.8p (2021: 14.8p).
• EPRA earnings per share¹ of 2p (2021: loss of 1.8p).
• Final dividend proposed of 8.25p per share (2021: 7.40p), an increase of 11.5%.
• Total dividend for the year of 15p (2021: 10.10p), an increase of 10.4%.

Balance Sheet

• Net asset value up 13.0% to £687.0m (31 March 2021: £608.2m).
• Total Accounting Return¹ on IFRS net assets of 15.0% (2021: 3.3%).
• Total Accounting Return¹ on EPRA net tangible assets of 10.2% (2021: 4.5%).
• EPRA Total Accounting Return CAGR¹ for the three years to 31 March 2022 of 7.8% (2021: 7.2%).
• EPRA net tangible asset value per share¹ up 7.3% to 572p (31 March 2021: 533p).
• EPRA net disposal value per share¹ up 13.6% to 551p (31 March 2021: 485p).

Financing

• See-through loan to value¹ increased to 36.4% (31 March 2021: 22.6%).
• See-through net borrowings¹ of £402.9m (31 March 2021: £193.9m).
• Average maturity of the Group’s share¹ of secured debt of 3.0 years (31 March 2021: 3.2 years), increasing to 3.7 years on exercise of options to extend current facilities and on a fully utilised basis.
• Change in fair value of derivative financial instruments credit of £18.0m (2021: £2.9m).
• See-through average cost of secured facilities¹ of 3.2% (31 March 2021: 3.5%).
• Group’s share¹ of cash and undrawn bank facilities of £132m (31 March 2021: £423m).
• Helical elected to become a REIT, effective 1 April 2022, and will be exempt from UK corporation tax on relevant future property activities.

Portfolio Update

• IFRS investment property portfolio value of £938.8m (31 March 2021: £740.2m).
• 0% valuation increase, on a like-for-like basis¹ (5.6% including sales and purchases), of our see-through investment portfolio, valued at £1,097.3m, compared to £839.4m at 31 March 2021.
• Contracted rents of £46.4m (31 March 2021: £37.8m) compared to an ERV¹ of £67.1m (31 March 2021: £52.1m).
• See-through portfolio WAULT¹ of 5.6 years (31 March 2021: 6.9 years).
• Vacancy rate reduced from 10.5% to 6.7%.

Sustainability Highlights

• Helical’s “Net Zero Carbon Pathway” published today setting out our commitment to becoming a net zero carbon business by 2030.
• Better Building Partnership’s Climate Commitment adopted, providing an accountable and transparent framework for delivering net zero carbon for a property portfolio.
• Improvements across sustainability measures and ratings with a 4* Green GRESB rating (85/100), MSCI ESG of AAA and an EPRA Sustainability BPR rating of Gold.
• 96% of the space in our buildings has been recently developed or refurbished (excluding 100 New Bridge Street, EC4) with 99% of our investment portfolio, by value, having an A or B EPC rating.