Half year results for the six months to 30 September 2024

Funding in place to deliver on Central London development pipeline - now is the time to build 

Matthew Bonning-Snook, Chief Executive, commented:

“In my first six months as Chief Executive of Helical we have been implementing the strategy agreed following the business review undertaken earlier this year and have focused on shaping the Company to best capture the cyclical growth opportunity. Our substantial development pipeline is set to deliver “best-in-class” office developments into a supply-constrained 2026 and beyond. Recycling equity through £245m of sales at a surplus to book value has underpinned a return to profitability, alongside an increase in Net Asset Value and a positive Total Accounting Return. These sales have also reduced our post balance sheet pro-forma LTV to 15.9%, its lowest ever level. Importantly, this provides the Group with all the anticipated equity it needs to complete its current development pipeline, including those schemes not yet started, providing the means to our future growth.

“While retaining a focus on offices, we are widening our offering to incorporate alternative uses, such as the student accommodation being planned above Southwark tube station, and we will continue to seek the best value use for sites in central London. Our exciting development pipeline, delivering in joint venture with equity partners, will provide valuation surpluses as well as new revenue streams of significant development management fees and promotes. This pipeline will be supplemented with additional “equity-light” opportunities as building owners seek specialists in development and refurbishment to partner with them to maximise the value of their assets.

Financial Highlights 

Operational Activity During the Period

Good letting progress
•    During the half year we completed 12 new lettings, comprising 62,015 sq ft with a contracted rent of £5.0m per annum (our share: £2.8m), 1.3% (our share 0.9%) above March 2024 ERVs. Following the Period end, we have signed one additional lease for 9,499 sq ft at a contracted rent of £0.7m, 3.6% above March 2024 ERVs. In addition, we have completed five lease renewals of 14,260 sq ft during the Period and one following the Period end of 10,046 sq ft, totalling 24,306 sq ft.
-    At The JJ Mack Building, EC1, we let 45,624 sq ft (our share 22,812 sq ft) at a 1.8% premium to 31 March 2024 ERVs. On the sale of Helical’s 50% share in the asset, 90% of the building was let at an average office rent of £95 psf, with just one floor remaining.
-    At The Tower at The Bower, EC1, following the Period end, we have let the refurbished, ex WeWork, fourth floor at a 3.6% premium to 31 March 2024 ERVs, and have agreed terms for a five year renewal of the lease on the 13th floor to the existing tenant at its 31 March 2024 ERV. Refurbishment works on the fifth and sixth floors have just completed and these are now available to let. The third floor is undergoing refurbishment.
-    At The Loom, E1, we let 16,391 sq ft, for a contracted rent of £0.7m, 1.8% below 31 March 2024 ERVs. 

Sales
•    In April 2024, we completed on the £43.5m sale of 25 Charterhouse Square, EC1.
•    In May 2024, we entered into a joint venture arrangement for the redevelopment of 100 New Bridge Street, EC4, selling a 50% interest in the site for £55m structured on a preferred equity basis to a vehicle led by Orion Capital Managers. At the same time, the parties entered into a £155m development financing arrangement with NatWest and an institutional lender, as well as a building contract to deliver the scheme.
•    In August 2024, we exchanged contracts to sell The Power House, W4 for £7.0m, with completion due at the end of November.
•    In October 2024, we completed on the sale of our 50% interest in Charterhouse Place Limited, the owner of The JJ Mack Building, EC1 to our joint venture partner, AshbyCapital, for £71.4m. The transaction reflected a value of £139.2m for Helical’s 50% share of the property. As this was a corporate sale, the £71.4m reflected the consolidated net asset value of Charterhouse Place Limited at the date of sale, which included bank finance and other working capital items.

Development Pipeline

On Site
•    100 New Bridge Street, EC4 – This 194,500 sq ft “carbon friendly” redevelopment of the existing building is progressing with a planned completion date for April 2026.
•    Brettenham House, WC2 – The repositioning of this 128,000 sq ft building (including 6,000 sq ft of retail) is well underway with the building scaffolded to facilitate the cleaning and repair of the external stonework and new window installation. Completion of the works is due April 2026.
•    10 King William Street, EC4 – The first of three initial sites to be developed in joint venture with Transport for London’s (“TfL”) property company, Places for London, this eight-storey office development will deliver 139,000 sq ft of “best-in-class” new office space with 2,000 sq ft of ground floor retail. Practical completion is programmed for December 2026.

Pipeline
•    Southwark Over Station Development, SE1 – We have submitted a planning application for a purpose-built student accommodation scheme of 429 studio units together with a separate building providing 44 affordable housing units. This will be the second development with Places for London and is expected to be delivered in Q2 2028.
•    Paddington Over Station Development, W2 – Situated close to the Elizabeth Line station at Paddington, this 19-storey building will provide 235,000 sq ft of office space. The site will be acquired in January 2026 with the intention to deliver the scheme in Q1 2029.

Financial and Portfolio Performance

Earnings and Dividends
•    IFRS profit of £4.7m (2023: loss £93.1m).
•    IFRS basic earnings per share of 3.79p (2023: loss of 75.85p).
•    EPRA earnings per share¹ of 2.25p (2023: 1.15p).
•    Interim dividend of 1.50p per share (2023: 3.05p).

Balance Sheet
•    Net asset value up 0.8% to £404.2m (31 March 2024: £401.1m).
•    Total Accounting Return¹ on IFRS net assets of 1.3% (2023: -15.9%).
•    Total Accounting Return¹ on EPRA net tangible assets of 0.8% (2023: -16.6%).
•    EPRA net tangible asset value per share¹ unchanged at 331p (31 March 2024: 331p).
•    EPRA net disposal value per share¹ up to 328p (31 March 2024: 327p).

Financing
•    IFRS net borrowings of £120.5m (31 March 2024: £199.0m).
•    See-through loan¹ to value of 31.5% (31 March 2024: 39.5%). 
•    Pro-forma see-through loan to value of 15.9%.
•    See-through net borrowings¹ of £188.1m (31 March 2024: £261.6m).
•    Pro-forma see-through net borrowings¹ of £77.0m.
•    Average maturity of the Group’s share¹ of secured investment debt of 3.0 years (31 March 2024: 2.1 years).
•    100% of drawn debt protected by interest rate hedging to expiry of facilities. 
•    Average cost of the Group’s share of secured investment facilities¹ of 3.0% (31 March 2024: 2.9%).
•    Group’s share¹ of cash and undrawn bank facilities of £176.1m (31 March 2024: £115.5m). 

Portfolio Update

•    Investment property valuations showed an improvement, on a like-for-like basis of 0.4% while the development portfolio value increased by 9.0% to provide a net 1.3% improvement overall. The true equivalent yield of the investment portfolio increased from 6.45% to 6.56% during the Period. 
•    IFRS investment property portfolio value of £371.9m (31 March 2024: £472.5m) reflecting disposals during the Period.
•    See-through investment portfolio¹, valued at £591.5m (31 March 2024: £660.6m).
•    Contracted rents of £30.5m (31 March 2024: £33.0m), compared to an ERV of £39.7m (31 March 2024: £60.8m). Following the sales of The JJ Mack Building, EC1 and The Power House, W4, the ERV falls to £29.4m.
•    See-through portfolio WAULT¹ of 6.8 years (31 March 2024: 6.6 years).
•    Vacancy rate on completed assets decreased to 16.1% at 30 September 2024 (31 March 2024: 17.6%).

Sustainability Highlights

•    Received a 5 star GRESB rating across both our development portfolio and standing investments with a score of 96/100 and 88/100 respectively. 
•    Design stage BREEAM certificate received for 100 New Bridge Street, EC4 with an Outstanding rating and a score of 95%. 
•    Sustainability Linked Revolving Credit Facility signed incorporating three ESG targets.

Interim Dividend Timetable

Announcement date: 26 November 2024
Ex-dividend date: 5 December 2024
Record date: 6 December 2024
Dividend payment date: 15 January 2025

A Dividend Reinvestment Plan (“DRIP”) is provided by Equiniti Financial Services Limited. The DRIP enables the Company’s Shareholders to elect to have their cash dividend payments used to purchase the Company’s shares. More information can be found at www.shareview.co.uk/info/drip. 

^{1. See Glossary for definition of terms. These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the UK and the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority. In common with usual and best practice in our sector, alternative performance measures have also been provided to supplement IFRS, some of which are based on the recommendations of the European Public Real Estate Association ("EPRA"), with others designed to give additional information about the Group’s share of assets and liabilities, income and expenses in subsidiaries and joint ventures.}