Helical sold £328m of investment properties in the year to the end of March as it completed its transformation to an office-focused investment and development company, exiting logistics, retail and retirement villages.
Chief executive Gerald Kaye said the group had been transformed from a “multi-sector, geographically spread UK property company, into an office-led investment and development company focused purely on London and Manchester”.
As at 31 March 2018, the group’s portfolio stood at £910m and comprised eight London and four Manchester assets with three remaining non-core assets either subsequently sold or marketed for sale.
This compares with 75 separate assets two years ago. Some 86% of its portfolio is in London, 11% is in Manchester, while 3% is in the remaining non-core assets.
‘Continued growth’
Explaining the radical transformation, Kaye said Helical had a “track record of performance” in the London office sector, where he believed there would be “continued growth”. He said he did not “necessarily follow the argument” that we were in late cycle market, predicting a turn “won’t happen before 2023-25 based on previous cycles lasting around 15 years and downturns resulting from either over-lending by the banks of over-borrowing by real estate which we are not currently seeing”.
Helical is looking to enlarge its development pipeline, focusing on high-quality buildings that will attract companies responding to the “war for talent” and offering flexible leases.
The company reported an EPRA net asset value per share drop of 1.1% to 468p over the financial year. Kaye said the fall was due to a write-down on its retirement village portfolio, which was sold to L&G Capital in November at a 13.5% discount to book value. He said the early repayment of its retail bond, which led to a £9m write-down, also contributed to the EPRA NAV per share fall.
Underlying numbers
However, he said the “underlying numbers are good”.
In London, 41 new office lettings across 268,336 sq ft generated £5.7m for Helical’s share of rental income.
It had 294,000 sq ft of office developments under construction for delivery in 2018-19, including the 89,000 sq ft office development started at Farringdon East Elizabeth Line Station for delivery in Q4 2019.
Helical has proposed a final dividend up by 12.9% year-on-year to 7p per share.
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