Half year results for the six months to 30 September 2022

Leasing Progress with Strong Rents for Best-in-Class Portfolio

Gerald Kaye, Chief Executive, commented:

“Helical has had a good half year. Lettings were achieved at significant premiums to March ERVs and development gains were generated at The JJ Mack Building, EC1, with these successes offset by yield expansion on our standing investments as a consequence of higher interest rates.

“We are seeing strong demand from tenants for best-in-class office space, as evidenced by the Partners Group letting at The JJ Mack Building, EC1. We believe there is an intrinsic shortage of this top quality space as demand exceeds supply over the short and medium term.

“The bifurcation that has been evident for a few years in the leasing market, between the best-in-class most sustainable buildings and the rest, has now appeared in the investment market, accentuated by rising bond yields and interest rates. We anticipate this will accelerate, with yields stabilising and rents continuing to grow for the best-in-class most sustainable buildings, such as those that comprise the Helical portfolio, and yields moving outwards and rents falling for the rest.

Operational Highlights

Strong Leasing Performance
• We completed four new lettings during the Period 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.
• Since the half year, we have let 37,880 sq ft at The JJ Mack Building, EC1, delivering contracted rent of £3.8m (our share £1.9m) at an 11.7% premium to 31 March 2022 ERVs. Two further lettings totalling 4,818 sq ft have completed, delivering contracted rent of £0.2m (our share £0.2m).

Good Progress on Developments
• Practical completion was achieved at The JJ Mack Building, EC1, on 30 September 2022, as scheduled. Two floors are now let in this highly sustainable 205,958 sq ft office development and the remaining space is being marketed.
• 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 achieved.

Over £200m of Sales during the Period, all above March Book Value
• During the Period we sold over £196m of investment properties, all at premiums to 31 March 2022 valuations, and £5m (our share) of residential apartments at Barts Square, EC1.

Financial Highlights

Earnings and Dividends
• IFRS profit after tax of £17.2m (2021: £22.2m).
• IFRS basic earnings per share of 14.1p (2021: 18.2p).
• EPRA earnings per share1 of 4.8p (2021: 0.9p).
• Interim dividend increased by 5.2% to 3.05p per share (2021: 2.90p).

Balance Sheet
• Net asset value up 0.8% to £692.7m (31 March 2022: £687.0m).
• Total Accounting Return1 on IFRS net assets of 2.3% (2021: 3.9%).
• Total Accounting Return1 on EPRA net tangible assets of -2.5% (2021: 5.1%).
• EPRA net tangible asset value per share1 down 3.3% to 553p (31 March 2022: 572p).
• EPRA net disposal value per share1 up 1.5% to 559p (31 March 2022: 551p).

Financing
• See-through loan to value1 reduced to 26.4% (31 March 2022: 36.4%).
• See-through net borrowings1 of £241.8m (31 March 2022: £402.9m).
• Average maturity of the Group’s share1 of secured debt of 3.4 years (31 March 2022: 3.0 years).
• 100% of drawn debt protected by interest rate hedging to expiry of facilities.
• Gain in valuation of derivative financial instruments of £26.6m (2021: £4.6m).
• See-through average cost of secured facilities1 of 3.0% (31 March 2022: 3.2%).
• Group’s share1 of cash and undrawn bank facilities of £293.1m (31 March 2022: £132.3m).

Portfolio Update

• IFRS investment property portfolio value of £738.5m (31 March 2022: £938.8m).
• Our see-through investment portfolio, valued at £907.7m (31 March 2022: £1,097.3m), is down 2.2% with like-for-like yield expansion of 22bps offset by 4.3% ERV growth.
• See-through contracted rents1 of £37.0m (31 March 2022: £46.4m) compared to an ERV of £59.7m (31 March 2022: £67.1m).
• See-through portfolio WAULT1 of 4.6 years (31 March 2022: 5.6 years).
• Vacancy rate increased from 6.0% to 7.0% on a like-for-like basis and from 6.7% to 19.2% for the whole portfolio, following practical completion of The JJ Mack Building, EC1.

Sustainability Highlights

• Net Zero Carbon Pathway published in May 2022, setting out our commitment to becoming a net zero carbon business by 2030. Signatory to the BPF Net Zero Pledge and the Better Build Partnership Climate commitment.
• The JJ Mack Building, EC1 achieved 2018 BREEAM “Outstanding” at the design stage and an EPC A rating following practical completion. A NABERS 5 Star rating is anticipated, reflecting our commitment to achieve excellent energy efficiency in operation.
• Improvements across sustainability measures, with 5 Star GRESB ratings awarded for both our standing investments and our developments, and retention of MSCI ESG AAA and EPRA Sustainability BPR Gold.